Description
Case Study Alabama Airlines
Alabama Airlines opened its doors in June 1995 as a commuter service with its headquarters and only hub located in Birmingham. A product of airline deregulation, Alabama Air joined the growing number of successful short-haul, point-to-point airlines, including Lone Star, Comair, Atlantic Southeast, Skywest, and Business Express.
Alabama Air was started and managed by two former pilots, David Douglas (who had been with the defunct Eastern Airlines) and Savas Ozatalay (formerly with Pan Am). It acquired a fleet of 12 used prop-jet planes and the airport gates vacated by the 1994 downsizing of Delta Air Lines.
With business growing quickly, Douglas turned his attention to Alabama Air’s toll-free reservations system. Between midnight and 6:00 a.m., only one telephone reservations agent had been on duty. The time between incoming calls during this period is distributed as shown in Table 13.15. Douglas carefully observed and timed the agent and estimated that the time taken to process passenger inquiries is distributed as shown in Table 13.16.
All customers calling Alabama Air go on hold and are served in the order of the calls unless the reservations agent is available for immediate service. Douglas is deciding whether a second agent should be on duty to cope with customer demand. To maintain customer satisfaction, Alabama Air does not want a customer on hold for more than 3 to 4 minutes and also wants to maintain a “high” operator utilization.
Table 13.15 Incoming Call Distribution
TIME BETWEEN CALLS (MINUTES) PROBABILITY
1 0.11
2 0.21
3 0.22
4 0.20
5 0.16
6 0.10
Table 13.16 Service Time Distribution
TIME TO PROCESS CUSTOMER INQUIRIES (MINUTES) PROBABILITY
1 0.20
2 0.19
3 0.18
4 0.17
5 0.13
6 0.10
7 0.03
Table 13.17 Incoming Call Distribution
TIME BETWEEN CALLS (MINUTES) PROBABILITY
1 0.22
2 0.25
3 0.19
4 0.15
5 0.12
6 0.07
Further, the airline is planning a new TV advertising campaign. As a result, it expects an increase in toll-free-line phone inquiries. Based on similar campaigns in the past, the incoming call distribution from midnight to 6 a.m. is expected to be as shown in Table 13.17. (The same service time distribution will apply.)
Discussion Questions
What would you advise Alabama Air to do for the current reservation system based on the original call distribution? Create a simulation model to investigate the scenario. Describe the model carefully and justify the duration of the simulation, assumptions, and measures of performance.
What are your recommendations regarding operator utilization and customer satisfaction if the airline proceeds with the advertising campaign?
