1. Calculate the CLV for each customer assuming: the dis- count rate is 10%; the chance that losing customers to the competitors is 20% annually; and, a 5% chance that each customer increases the business if a passenger decides to stay with the airline.

2. Discuss which two passengers should be on the Flight TB- 8882, and which five would stay overnight in Bangkok.

Abstract

This case is designed to illustrate the conceptual foundations of business intelligence; thus, the analysts can develop an understanding on how to utilize the business intelligence framework to make proper decisions in the turbulent and competitive business environment. The case started when Bob, the senior vice president of Thai ABC Airline, had to implement a new method of re-accommodating passengers in the case of canceled/delayed flights. The first incident was reported that the flight from Bangkok, Thailand (BKK) to Hong Kong (HKG) was expected to be delayed and seven passengers would definitely miss the original connecting flight from Hong Kong to Chicago, USA. Unfortunately, the next available flight to Chicago was almost fully booked and could accommodate only two more passengers. Thus, Bob and his team had to decide which two passengers should be on the next available flight and which others would have to stay overnight in Bangkok for the morning flight to Chicago on the next day. The following topics are discussed in or raised by the case: (1) Airline Industry and the incidence of passengers’ dissatisfaction because of delayed/ canceled flights, (2) Business intelligence concept, (3) Customer acquisition and customer retention, (4) Social media and key influencers, and (5) Decision making based on different airline’s strategic direction.

 

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Table A1 Flight, Status, and Booking Information (Tier #1) No. Name Routing 1 2 3 4 5 6 7 Joe Jane Premier Status Match Challenge program. Jennie Tom Michael Danny Ben Appendix B 1 2 3 4 5 6 7 Table B1 Historical data on the Qualified Miles (Tier #2) No. Name Routing SIN-BKK-HKG-ORD BKK-HKG-ORD BKK-HKG-ORD BKK-HKG-ORD-LAS BKK-HKG-ORD BKK-HKG-ORD BKK-HKG-ORD Jennie Tom Michael Danny Ben Joe Jane Appendix C *Premier Status Match Challenge program. "As of May 2015. 6 7 1 Jennie 2 Tom H 3 Michael 4 Danny 5 Ben Joe Jane Status Table C1 Revenue, Profit Score, and Frequency Trend (Tier #3) No. Name Mile 230,000 120,000 160,000 SIN-BKK-HKG-ORD BKK-HKG-ORD BKK-HKG-ORD BKK-HKG-ORD-LAS BKK-HKG-ORD Regular BKK-HKG-ORD Regular BKK-HKG-ORD Regular $5500 $55,000 Status Gold Gold Million Miler, Gold Diamond Gold Gold Million Miler, Gold Diamond Regular Regular Regular Lifetime Lifetime YTD 1,530,000 $198,000 $2500 $130,000 $7090 550,000 Revenue $0 SO SO $2900 $15,000 $6250 $60,000 $9500 2012 2500 40,000 = 30,000 35,000 7 Booking class Economy Business/First Business/First Business/first Time as loyalty (Years) 20 5 1 1 Economy Economy Business/first 4 4 2013 25,000 12,000 9000 123,000 109,000 110,000 BKK-HKG-ORD 10,500 39,500 Qualified miles Fare Booking fare Promotional Price. Award Booking Full Fare Award Booking Full fare Promotional Price Promotional price $750 $0 $5500 $0 $2900 $800 $3500 2014 YTD-2015¹ 51,000 45,000 41,000 20,000 30,000 50,000 25,000 Profit score Low Medium High Medium Medium Low High Fare Lifetime 1,530,000 550,000 $750 $0 $5500 $0 $2900 $800 $3500 230,000 120,000 160,000 Frequency trend Up Same - Down Up Up Table A1 Flight, Status, and Booking Information (Tier #1) No. Name Routing 1 2 3 4 5 6 7 Joe Jane Premier Status Match Challenge program. Jennie Tom Michael Danny Ben Appendix B 1 2 3 4 5 6 7 Table B1 Historical data on the Qualified Miles (Tier #2) No. Name Routing SIN-BKK-HKG-ORD BKK-HKG-ORD BKK-HKG-ORD BKK-HKG-ORD-LAS BKK-HKG-ORD BKK-HKG-ORD BKK-HKG-ORD Jennie Tom Michael Danny Ben Joe Jane Appendix C *Premier Status Match Challenge program. "As of May 2015. 6 7 1 Jennie 2 Tom H 3 Michael 4 Danny 5 Ben Joe Jane Status Table C1 Revenue, Profit Score, and Frequency Trend (Tier #3) No. Name Mile 230,000 120,000 160,000 SIN-BKK-HKG-ORD BKK-HKG-ORD BKK-HKG-ORD BKK-HKG-ORD-LAS BKK-HKG-ORD Regular BKK-HKG-ORD Regular BKK-HKG-ORD Regular $5500 $55,000 Status Gold Gold Million Miler, Gold Diamond Gold Gold Million Miler, Gold Diamond Regular Regular Regular Lifetime Lifetime YTD 1,530,000 $198,000 $2500 $130,000 $7090 550,000 Revenue $0 SO SO $2900 $15,000 $6250 $60,000 $9500 2012 2500 40,000 = 30,000 35,000 7 Booking class Economy Business/First Business/First Business/first Time as loyalty (Years) 20 5 1 1 Economy Economy Business/first 4 4 2013 25,000 12,000 9000 123,000 109,000 110,000 BKK-HKG-ORD 10,500 39,500 Qualified miles Fare Booking fare Promotional Price. Award Booking Full Fare Award Booking Full fare Promotional Price Promotional price $750 $0 $5500 $0 $2900 $800 $3500 2014 YTD-2015¹ 51,000 45,000 41,000 20,000 30,000 50,000 25,000 Profit score Low Medium High Medium Medium Low High Fare Lifetime 1,530,000 550,000 $750 $0 $5500 $0 $2900 $800 $3500 230,000 120,000 160,000 Frequency trend Up Same - Down Up Up

Answer rating: 100% (QA)

a Calculate the CLV for each customer CLV Revenue per year x 1 Attrition rate x Upsell rate Discount rate 1 Attrition rate Where Revenue per year 500 given Attrition rate 20 given Upsell rate 5 Discou... View the full answer