Summary:
Air Utopia is the national airline of the Principality of Wonderland in the
heart of Europe.
As part of a
change in strategic direction, its new president, Mr. Moullart asked his
accountant to help develop dashboard steering (No. more than twenty indicators,
otherwise it is not appropriates) in order to follow the business plan.
Pedagogical objectives:
The purpose of this case study is:
-To apply the principles for building a performance management dashboard to a concrete situation, that year of airline
-To understand the utility of these principles
-To understand the limitations of performance management dashboards and to
distinguish between different types of dashboard
In the first
hand, participants will be asked to build a performance management dashboard,
as defined in Fundamentals of Management Control, Pearson, 2011. To do
this, they need first to identify the qualitative dimensions (objective,
critical performance variables) that must be translated into indicators, then
choose indicators on the basis of this performance modelling. The perspective
here company-wide; this case
study does not deal with the deployment of these indicators has more local
levels of responsibility. In the second part, participants are made
aware of the limitations of the 'performance management' type of dashboard and
the utility of indicators that allow managers to monitor a broader set of
variable performance - which is the specific function of panoramic dashboards.
Subjects:
Costs - Balanced Scorecard - Performance - Introduction box - Market share
Special features:
The case study covers a presentation with 26 slides for teachers and a presentation with 5 slides for students.
Part I:
Air Utopia is the national company of the Principality of the Wonderland located in the heart of Europe.
It operates since 10 years with 5 airbus A320, between the capitals of neighboring countries, and its main base Utopia city, the capital of the Principality. Flights are generally filled to 60% depending on the destinations and the fill rate may reach 80 percent according to the promotions offered during the high tourist season. The company has little debt, but its profitability (net income compared to the turnover) did not exceed the 2% over the last 5 years... It was not the main purpose of this public company. The initial goal, at the creation of the company, was to open up this Principality. With the new privatization of the company, its profitability becomes a key issue.
Mr Moullart, new president of Air Utopia, wants to make his mark to the newly privatized national airline and especially to satisfy its shareholders. On the financial side, Mr. Moullart wants to reach a profitability of 5% within three years, which requires to grow to a certain size. Given the historical positioning of Air Utopia as a unique and national company, Mr Moullart would like to maintain it as a traditional company without falling into the current trend of 'low cost '. During the last IATA conference, which he is a member, he understands that the growth and maintenance of a traditional positioning through the creation and the development of a hub on its main base, to improve supply in terms of destination and matches.
In fact, Utopia city to all the assets to become the Hub of Air Utopia: the city is at the heart of Europe, a third runway is in construction at the airport. Air Utopia is more regularly consulted for the eventual expansion of the airport. Thereby, it grows a lot for a hub infrastructure: flights to contact (access of customers see the plane through gateways), facilitated connections, baggage sorter, maintenance bay nearby, etc.
Finally, Moullart wants to show his skills as a manager by implementing an economic plan, including on the service at the airport and service on board.
Mr Moullart shall convene its Board of Directors to present the business project 201 X of Air Utopia. The Director of strategy for its part exposes the different actions and investments necessary for the realization of the hub and all the projects to revive the company Air Utopia.
§ The acquisition of 4 new Airbus A319, which would include the expected growth of the consecutive activity is the realization of the hub, but also a drop in the fuel Bill.
§ Track equipment: door containers, truck push, etc to be able to treat several flights at the same time
§ The hiring of officers at the station in TDCI, so including handle in good conditions a greater flow of passengers in transit
§ The use of temporary workers and outsourcing ground handling for the treatment of passengers, of the luggage and the plane (activity affected: all activities around the aircraft between the landing and take-off) so as to better adapt the cost structure to changes in activity
§ The hiring of personnel: commercial (hostess and steward) and technical (Captain and co-pilot) due to the anticipated rotation and enlargement of the fleet
§ The training of the staff
§ A reprogramming of the flights in order to better position Air Utopia with the GDS (Global Distribution System) as Amadeus. In these computer reservation systems, relations appear depending on the flight time. The management of the airports as a hub are intended to decrease the waiting time between flights. It is accepted in the profession to predict time of correspondence between 45 and 60 minutes. With such programming, it is obviously essential to ensure a good flight punctuality.
§ "Tags" to measure the satisfaction of the customer throughout his career with Air Utopia: the purchase of the transport service, during his time in the airport initially as on arrival and also during the flight.
§ The introduction of a loyalty program: points are earned (points earned) based on the price paid, they can then be used (burnt points) for the purchase of a ticket.
§ A economic plan on the provision of services at the station
§ A economic plan income from service on board
This new project is voted by the Board of Directors with reservations: Mr Moullart doesn't have the authorization to hire more station agents. He has to find internal resources within.
Mr Moullart had also planned to restructure its business and boost its website service (which represents only 10% of sales), this channel is in strong development. He had finally decided that this project was not a priority, because it seemed difficult to carry it out front with the creation of a hub. But the Board of Directors reserves today lead him to reconsider his position, because in addition to the benefits he could get, this restructuring would enable him to convert the agents of commercial services in station agents. So that this project is consistent, the website should he become the first distribution channel for his company.
After asking a benchmark of its website with those of the major airlines, he decides:
§ Decrease sales face to face (agencies in cities and counter at the airport)
§ To increase the fees and to pay by the Call center sales
§ To reduce the fees for all sales made directly from its website
§ To offer all tickets on the website (all types of fares, unaccompanied children and back by an airport differ (poen Jaw), tickets pay with points of fidelity...)
§ To propose changes and refunds for eligible tickets to these functions
§ To propose the payment of tickets by credit cards, transfers, levy,.
§ To allow consultation of departures and arrivals in real time
§ To propose the purchase of travel insurance
§ Upstream travel services: printing of the boarding, seat selection and meals on board, purchase of additional luggage
§ To offer the possibility to book a hotel room or a rental car
Madam Gastout, newly in charge of the Internet site, wish to 'boost' traffic to his site. For this she is interested in the different methods of SEO. Indeed, she hoped that the sales are carried out on its site and no travel agencies online.
Administrations gathered at Mr Moullart the following year in order to make the point with him on the achievement of the objectives he has presented them.
Mr Moullart asks his management controller to help him develop a management dashboard (not more than 20 indicators, otherwise it is them ownership) in order to follow the business project and rectify the situation in the event of slippage of the results. He also wishes to either partly published in order to empower staff.
You are the controller. To develop a proposal, you answer the following questions:
Questions:
1. What are the stakeholders of the company and their expectations? How can we define the aims of the company?
2 What are the various components of the strategy of Air Utopia?
3 What are the priorities defined by Mr. Moullart? Confront these priorities to the analysis of the previous questions. What does that tell you?
4 Build a grid O/VA at the level of the company
§ Based on the identified priorities was question 3, define the priority objectives for the coming year, which will be the objectives selected for the construction of the grid O/VA will
§ Identify action variables and build the grid O/VA going to corresponding
5 Accordingly choose indicators constituting the cockpit dashboard, using the indicators presented in Appendix.
Part II.
However, six months after the opening of the hub, and this despite encouraging financial results, commitments for sales of next months are down sharply. Mr. Moullart does not include these figures, totally unexpected for him. Indeed, no Harbinger did not anticipate this decline in commercial activity
During the management of the following month, he learns:
§ Sales Manager, a dramatic increase in customer complaints, and yet, absolute punctuality of flights index remains stable at 70%. So there is a dissatisfaction of passengers which was not reflected in the dashboard
§ HRD, personnel of the stopover would explode, a strike would be for the holiday departures. Indeed, the quality of service rendered by the companies of service delivery leaves to be desired: teams know a strong absenteeism, beaded strikes. These problems must be awards by the staff of Air Utopia.
§ The Director of the hub, that counters correspondence officers are overwhelmed by passengers lost, having missed their connection. The Director of the hub also highlights the lack of training of the new station agents
§ Chief Financial Officer, last minute accommodation and cost despite weather (a bad weather, leading to flight delays, in principle to be the main cause of these accommodations).
Questions:
1. In the list of indicators in the Appendix, some might identify the problem, which?
2 Cockpit dashboard is sufficient to control the activity of Air Utopia?
