Journal of Information Technology Teaching Cases (2016) 6, 23–35

© 2016 JITTC Palgrave Macmillan All rights reserved 2043-8869/16

palgrave-journals.com/jittc/
JIT085
Teaching case

Data analysis and decision making: a case

study of re-accommodating passengers
for an airline company
Jongsawas Chongwatpol
NIDA Business School, National Institute of Development Administration, Bangkok, Thailand

Correspondence:
J Chongwatpol, NIDA Business School, National Institute of Development Administration, 118 Seri Thai Road, Bangkok,
Bangkapi 10240, Thailand.
Tel: +0867769686

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.
Journal of Information Technology Teaching Cases (2016) 6, 23–35. doi:10.1057/jittc.2015.16
Keywords: business intelligence; analytics; airline; misconnecting; customer lifetime value

inherited from the two predecessor carriers.

O
n a busy day in May 2015, Bob, the senior vice president
of Thai ABC Airline, was still thinking about the Airline’s
problem of poor customer satisfaction rate that he had just
spent the better part of the morning discussing with two key
members of his team. He had called the meeting to ascertain
whether both members had any innovative ideas that the
Airline might implement to address the poor customer
satisfaction rate that had long afflicted the carrier and the
two predecessor airlines whose late-2014 merger had formed
it. With approxi- mately 1.5 complaints per 10,000 passengers
per year, the Airline had the dubious distinction of having
the highest ratio of passenger complaints among all the
carriers in SEA. From his earlier investigation of complaints
filed by passengers with the Airline’s representatives, Bob
already knew before the meeting with his team members
that the most common complaint concerned canceled or
delayed flights, a chronic ‘legacy’ problem
 Bob understood those issues, none of which were unique
to Thai ABC Airline, but believed that if a new method of
re- accommodating passengers could be devised in cases of
canceled or delayed flights, a couple of short-term
advantages would accrue to the Airline. Specifically, the
proper handling of passengers when they were about to
miss their flight would not only alleviate the situation and
minimize passenger complaints, but also retain value
passengers for the Airline while maintaining passenger
satisfaction levels. Longer term, however, Thai ABC also
had plans to tackle the issue of mechanical problems that
were known to be the core problem that accounted for a
sizable proportion of the reasons for delayed and canceled
flights. That is, by investing in the new technologically
advanced airplanes that offered both better fuel efficiency
and systems maintenance, the Airline planned to reduce
substantially the number of canceled and delayed flights
that led to passenger complaints in the first place.
 Data analysis and decision making
24
Having just ‘brainstormed’ with his team the issue of how
the current passenger re-accommodation method could be
greatly improved, Bob was mentally reviewing all that the
team had discussed. ‘Conceivably,’ he heard himself exclaim
aloud, ‘we just might have surfaced a method of passenger
re- accommodation with the potential to both minimize
passen- ger complaints and optimize Airline revenue when
delayed or canceled flights do occur!’ He could hardly
contain his excitement about the prospect, but nevertheless
deemed it wise to continue to ponder the new method before
taking a firm decision.
Overview of Thai ABC airline
Thai ABC Airline was the outcome of a merger of two
erstwhile competitor carriers, Bangkok ABC Airline and
Thai XYZ Airline. Bangkok ABC had been for years the
second largest airline in Thailand and the fifth largest
airline in Southeast Asia (SEA). Thai XYZ Airline had been
in the business for over 20 years before being forced into
bankruptcy in late 2012 by its fifth consecutive year of
annual losses. The losses were attributable to a combination
of poor customer satisfaction ratings and inefficient opera-
tions, resulting in not only a reduction in the number of
passengers but also substantially increased operating costs.
As Thai XYZ’s bankruptcy proceedings had entered 2014,
Bangkok ABC perceived a business opportunity in its
former competitor’s misfortune and expressed an interest
in a possible merger with Thai XYZ. The merger was viewed
as particularly attractive, as it would give the consolidated
carrier exclusive routes across SEA and the United States.
Hence, in mid-2014, Bangkok ABC announced its intention
to merge with Thai XYZ; and, after all passengers’ award
mileage and elite-qualifying activity were combined in the
fourth quarter of the year, the merger was finalized at the
end of 2014 and the newly merged entity, ‘Thai ABC
Airline,’ took flight.
As the merger had moved toward its anticipated consum-
mation, Bob had been hired as the senior vice president of
Thai ABC Airline with the explicit mandate to solve the
problem of poor customer satisfaction that had afflicted the
carrier for years. Indeed, with the imminent consummation of
merger with Thai XYZ, this was a matter of top priority
because, at 1.5 complaints per 10,000 passengers, Thai
XYZ’s own customer complaint ratio was equally dismal,
and like Thailand ABC’s, among the highest among the
carriers in SEA. Moreover, Bob had been given to
understand that the low level of passenger satisfaction indicated
by such complaint rates had been one of the two main factors
that had tipped Thai XYZ into bankruptcy in the first place.
Some way had to be found to avoid having that fate befall the
soon-to-emerge new carrier, Thai ABC.
Over the course of the next several months, as Bob had
begun investigating the complaints that passengers had filed
with the airlines’ representatives over the previous 5 years,
he had surmised that passenger complaints tended to fall into
one of several categories. In descending order of their
frequency, the following were the major ones:
●
Canceled or delayed flights – whether attributable to
weather (50%) or to mechanical issues (50%). This was by
far the most common complaint.
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●
Inconsiderate and unhelpful customer service, especially
in the treatment of delayed passengers.
●
Damaged or delayed baggage.
●
The handling of refunds in the case of missing flights, fare
adjustments, and unused or lost tickets.
●
Over-sales – for instance, the overbooking of seats on flights.
Examining the list, it occurred to Bob that the design and
implementation of a better method of re-accommodating
passengers in the case of canceled/delayed flights might
enable the Airline to make a big dent in the number one
complaint
As it happened, a new re-accommodation situation has
just arisen and needed to be sorted out on the Bangkok
(BKK) to Chicago (ORD) via Hong Kong (HKG) flight, the
most problematic international route. This might be, Bob
thought, a serendipitous test case in which to further
develop his thinking about improvements in the re-accom-
modation rebooking scheme that he had just thrashed
around with Peter and John.
The BKK-HG-ORD problem route and the current rebooking
scheme
The perennial problem route: BKK-HKG-ORD
The instant need for rebooking decisions had arisen, as it
often did, from a delay in the flight from Bangkok to Hong
Kong. This time, there were seven passengers, who would
definitely miss the connecting flight from Hong Kong to
Chicago, USA. It was the airline’s responsibility to resche-
dule those passengers either to the next flight later in the
day or to a flight on the next day. However, because of the
limited seat-availability during the high travel season as the
year-end approached, the next flight to Hong Kong that
would enable an on-time connection to the flight to Chicago
could accommodate only two passengers. The other five
passengers would have to stay overnight in Bangkok. To
determine how the decision as to which two passengers
would be boarded and which would have to be re-sched-
uled, Bob had wanted to learn, first, how the dilemma would
be resolved with current re-accommodating strategies and,
then determine whether the analysis of various other factors
might facilitate a superior solution for the Airline and the
passengers alike. The resulting insights could then be
adopted as a ‘best practice’ and be implemented as the
Airline’s core strategy for handling misconnected passen-
gers on other routes.
With that in mind, earlier that morning, he had urgently
called together Peter, formerly business intelligence expert at
Bangkok ABC Airline, but now senior business intelligence
expert at Thai ABC Airline, and John, formerly manager of the
customer relations division at Thai XYZ Airline, for a
meeting to discuss flight TB-8880 that was about to miss its
schedule because of an engine-related problem. The incident
reported from the engineering team was as follows:
Flight (TB-8880) from Bangkok, Thailand (BKK) to Hong
Kong (HKG) from 01.00 to 04.45 PM was at best expected
to be delayed for at least 2 h as one of the engines was
overheated and could not be easily fixed. There was a high
chance that the fight would be cancelled.
 Data analysis and decision making
In perusing the passengers’ schedule on both direct and
connecting itineraries, John noted that:
The next flight operated by Thai ABC Airline to Hong
Kong (TB-8882) was scheduled at 03.00–06.45 PM;
meanwhile, the flight operated by its alliance [partner]
would not leave until 05.00 PM.
It was, therefore, clear to the team that several passengers
would definitely miss the connecting flight (TB-676) from
Hong Kong to Chicago scheduled at 09:00 PM. The problem
was that the flight operated by Thai ABC Airline to Chicago
was only scheduled for once a day, and the earliest flight to
Chicago with its partner would depart at 09:00 AM on the
next day.
Bob knew that, from the perspective of passengers, it was
quite frustrating when things went wrong. He also knew that
the Airline could not afford losing its clients or leaving
passengers with disappointment and low expectations again
and again. With a furrowed brow, he emphasized to his team
that:
The first task is to reschedule passengers leaving for Chicago
to Flight TB-8882 so that they would able to catch the
connecting flight in Hong Kong. Otherwise, they will end up
staying overnight in Bangkok. The problem unfortunately,
is that the Fight TB-8882 is almost fully booked and can
accommodate only two more passengers and only in
economy cabin.
Then, turning to Peter, the senior business analyst, Bob asked
him to share with the team his successful experiences at
Bangkok ABC Airline in resolving such rebooking
dilemmas. After all, Bob pointed out, that after the
completion of airline merging processes, the legacy systems
of the two companies – including database, operating systems,
accounting, reservation systems, and so on. – had been
combined, with the business intelligence (BI) framework of
Bangkok ABC adopted as the ‘best practice’ and, therefore,
as the main system of the new Thai ABC Airline. Hence, the
instant re-accommodation problem, he believed, was a good
time for the team, including John, to familiarize themselves
with Thai ABC’s new approaches to BI technology and re-
bookings issues, with the view to ascertaining how
satisfactorily it would solve the instant problem and, longer
term, improve passenger satisfaction.
Existing and contemplated rebooking schemes at Thai ABC airline
Swinging into action, Peter quickly retrieved data from Thai
ABC’s data warehouse to get some sense of each
passenger, while John spoke telephonically with Thai ABC’s
airline agent at the counter explaining the situation. The only
good news at the moment was that check-in had not yet
begun, as the Airline counter would not be ready for
about another hour. (See Appendix A for the flight, status,
and booking informa- tion on each passenger that Peter
had pulled up from the database.)
From Peter’s query of the database, most of the passengers
were starting the trip from Bangkok for the final destination
of Chicago, with the exception of Jennie, who had been on
the connecting flight from Singapore (SIN) and had been
already
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25
waiting at the airport lounge for several hours. Meanwhile,
Danny had a final destination of Las Vegas, NV, shown in
Appendix A.
With respect to frequent flyer status, Tom was a 2015
diamond member, the highest status granted to a frequent
flyer of the Airline, which was earned when a passenger had
reached the 100,000 qualified miles in the previous year. Jennie
was a million miler, having flown with the Airline and its
partners for over a million qualified miles and, therefore,
having automatically received a gold member status, the
second highest status with the Airline’s frequent flyer pro-
gram. Danny had earned gold status when he reached 50,000
qualified miles in 2014. Michael also held gold status, as he was
currently participating in the Premier Status Match Challenge
program, where he could earn the premier diamond member
if he could fly more than 30,000 qualified miles on flights
operated by Thai ABC Airline within the next 90 days. Ben,
Joe, and Jane were all in the basic traveler category without any
elite status.
Chiming in at this point, John explained further that the
current re-accommodating scheme was based on the booking
class and fare, with business/first class ticketed passengers
receiving the top priority.
That’s how we [i.e., Thai XYZ Airline] did [it]. It’s
quite simple. [T]hey paid for the better service especially
in
business or first class. Thus, they deserved better care from
our side, didnt they?
Peter did not argue with John about whether that was a right
or wrong approach, but insisted that there were ‘so many
factors needed to be considered’ before deciding too quickly.
As members of top management, it was very important to
gather relevant, complete, and up-to-date data before making
any decision, Peter explained. Bob nodded in agreement and
asked Peter to pull up the historical data on the number of
qualified miles earned so that he could understand the
traveling patterns of each passenger.
So many factors that needed to be considered
Historical data on qualified miles (degree of loyalty and trends)
With a few clicks on his keyboard, Peter soon brought forth
from the database the last three years of data on each of the
seven passenger’s lifetime miles earned with the Airline.
As presented in Appendix B:
●
Jennie, who had flown over 1,500,000 total miles, had not
traveled as frequently as she once did. However, it seemed
that she had started traveling again this year; and, so far
she had earned a fairly modest amount of miles at 20,000
miles in 2015.
●
Tom was a steady traveler with approximately over
100,000 accrued miles annually for three consecutive
years. He also had traveled quite often in 2015, having
earned 30,000 thus far. His lifetime miles also placed him
among the top travelers.
●
Michael and Ben were definitely new travelers as there
were no records of them in the house file.
●
Danny had been with the airline for some time and had
seemed to increase his travels gradually since 2012.
 Data analysis and decision making
26
●
Joe had only occasionally traveled with the airline in past
years. However, his travel pattern had drastically changed in
2014, making him the first traveler among the seven to
reach 50,000 qualified miles in 2015.
●
Jane had traveled a bit in 2015. Although she had never
reached gold status, her average miles earned, at approxi-
mately 40,000 miles annually, were quite significant.
While Peter was gathering information and presenting the
historical data for each customer, John added that by looking
at the Premier Status Match Challenge Program, it could be
seen in the application form that Michael was holding the
highest elite status with the Airline’s competitors, in that
he flew over 100,000 miles annually. He had begun
participat- ing in the Challenge Program because he had just
moved to Bangkok, the hub of the Thai ABC airline,
meaning more flight schedules offered, fewer connecting
flights, and some- what cheaper fares.
Profit matrix/scores
As a senior vice president, Bob realized that revenue and
profit
were important factors measuring the performance of the
organization in the long run. Therefore, he next asked John to
delineate the revenue generated solely from the ticket fares
for all flights that each passenger had purchased. Appendix C
presents both lifetime and YTD revenues for each passenger.
Jennie had the highest lifetime revenue, followed by Tom, Jane,
and Danny. This was reasonably in line with the lifetime
miles earned as presented in Appendix B. Both profit score
and frequency trend score were also calculated based on the
ticket fares, number of tickets, and qualified miles earned in
the past 3 years. These factors would provide a greater insight
into how each customer contributed to the Airline’s financial
perfor- mance throughout the time they were with the airline.
The profit scores indicated that Jane and Michael were the
airline’s excellent customers with the highest profit score.
The frequency score indicated that Jennie, Joe, and Jane had
traveled both more and more recently in comparison to
Danny, for whom this was his first flight in 5 months. Tom
was quite a steady traveler, but the Airline had no data for
Michael and Jane, as they were first-time flyers.
Cost of operations
At this point, Peter reminded Bob that cost of operations
related to serving passengers should also be considered in the
rebooking schemes as the airline spent a significant amount
of money on sales and promotions, passenger services,
adminis- tration, and infrastructure. John pulled up the record
and focused on the booking channel that the passengers had
used to reserve their tickets, along with the records from its
customer service division.
Per the monthly report shown in Appendix D, Jennie had
used only the Airline call center to find, book, and retrieve
the flight information and tickets – at a high cost to the
Airline. Tom mostly used corporate booking channels for his
flights for business trips. For personal trips, he used websites
to manage his account. Danny, Joe, and Jane were avid new
generation travelers with advanced skills in computers and
technology. They managed their travel through mobile and
web applications, and subscribed to all of the electronic
versions of items such as boarding passes, receipts, and
monthly statements. Danny sometimes contacted the call
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center when he needed to book multiple cities for an itinerary
with a stop-over in each city for a couple of days. The airline
did not have much data for Michael and Ben, as they were
new customers. Michael booked through the corporate
booking channels, and Ben bought her tickets from a travel
agency.
As the airline loyalty program allowed passengers to redeem
their miles for award tickets, Tom and Danny were among
those passengers collecting a significant amount of miles
from flight, credit card, and shopping portals; thus, they often
contacted the loyalty plus award call center to redeem their
mileage for mostly business class tickets for flights to almost
anywhere around-the-world, using both the Airline and its
alliance partners. Owing to the benefit of the award flight
redemption and the elite status they were holding, both Tom
and Danny often contacted the call center, as they were
allowed to change the flight schedule without paying the
changing fees. By contrast, Joe changed or canceled the
flight tickets from time to time but also paid a significant
amount of fees, as he was not holding any elite status with
the airline.
Peter’s subsequent calculation of the cost to serve each
passenger clearly revealed that it was quite costly to serve
Jennie, Tom, and Danny, as opposed to Joe and Jane. This
was as Bob had surmised from database information
concerning the differentials in call center usage.
More insights into passenger profiles
From online accounts and customer services
As Peter and John were summarizing the data to enable a
prioritization of the passengers for the next available flight,
Bob – realizing that for decisions such as this, ‘more is better’–
advanced the view that it would be better to gather more
information about each passenger. Fortunately, John could
retrieve some information on passenger backgrounds from the
online accounts and customer services. Here was the addi-
tional information that he added to the already retrieved
passenger data.
●
Danny was an avid around-the-world traveler, who owned
one of the most famous blogs ‘Travel More with Less’. He
continually provided reviews and deals on airlines, restau-
rants, and hotels on his blog.
●
Ben was a famous singer, who was a first-time flyer as well.
●
Jane was a politician, who was also happened to be
against the campaign, ‘Thailand – AEC Tourism Hub,’
that another political party was promoting, as she believed
the quality of service providers in Thailand was not yet
been ready for such as big project.
John believed social media was another important factor to
be considered. It was inevitable that the Airline would need
to understand how social media or networking influenced
pas- sengers’ perceptions, attitudes, and behaviors
concerning the Airline’s services and operations. For
instance, as presented in Appendix E, Joe and Tom seemed to
be the Airline’s most avid followers as they usually bought
flight tickets based on deals and promotions posted on social
media channels. Danny’s Blog had an affiliated link to the
Thai ABC Airline website. When Danny talked about the
Airline’s services and promo- tions in his blog, the number
of clicks through the affiliated link increased significantly.
Thus, Danny’s blog really played an important role for the
 Data analysis and decision making J Chongwatpol

Airline and was considered another 27

 Data analysis and decision making
28
channel that linked Thai ABC Airline to other customers,
both current and potential. On the other hand, Ben was quite
in another extreme. Her opinion on Social Media sites
potentially drew big attention because she was so popular
among the younger generation. With her lifestyle and
personality, she usually tweeted only about bad experiences
she had recently faced during her last trip or event,
promoting the spread of misinformation or biased opinions to
her followers. Bob could only imagine what the situation
would look like when Ben found out that she could miss the
flights to Chicago. Regard- less of whether her trip was for
business or a personal vacation, Bob would have a hard time
to dealing with the negative feedback, especially from her
fan club. A potentially big headache for Bob, actually!
From social media
Peter had foreseen how tough could be the impact of social
media on decision making. He proceeded to do a quick
visualization from the data warehouse as an example to
figure out the behavior of all passengers who were using
tweeter. There were many customers who tweeted a lot, but
whose opinions did not have a significant impact on their
followers. As presented in Appendix F, both Joe and Tom
tweeted infre- quently and clearly did not have many followers.
A celebrity like Ben also did not tweet that much; but, when
she did, her followers and her fan club would definitely pick-
up on her. The key player here, however, was Danny, who not
only blogged a lot on his website and twitter, but also had a
lot of followers. When he ‘blogged’ or ‘twittered,’ his
followers definitely paid attention to his comments or
recommendations.
To make the situation even more concerning, John
reminded Bob that the biggest problem might emanate from
Jane. Although Jane did travel with Thai ABC sometimes,
her perception toward the airline might impact its future
direc- tion, especially when the airline needed the
government’s support to promote Thailand as the hub of
tourism in SEA. She had not had a pleasant experience the
last time she flew with Thai ABC Airline, based on her
complaint to the Airline’s customer service department. She
had complained of ‘chaos’ because of overcrowded
passenger conditions that had caused about a half an hour
delay. In addition, she complained that she found her
baggage to be damaged when she arrived at the destination
airport. It was not difficult to imagine her reactions when she
figured out that her flight would be delayed again. Another
headache for Bob, again!
From mobile/web application data
After the merger of the two airlines, the recently
implemented web and mobile applications had allowed the
airline to track all passengers’ activities, starting from when
they logged into their accounts within the last 6 months. Any
queries posed by passengers as they searched through the sites
were recorded, as were any changes in passengers’
preferences, such as favorite locations, seat selection, or
meals. (Appendix G contains Peter’s demonstration of this
new feature.) For instance, captured data indicated that Tom
was interested in redeeming miles for a business class ticket
to Europe for his own personal use, as he had searched award
flights 15 times in the past 6 months The routes he searched
were for three of his favorite cities in Western Europe, that
is, Prague, Budapest, and Bratislava.
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The system also calculated the expected revenue based on
the search queries to give the airline an idea of the potential
revenues gained from each customer, should his or her
queries result in the purchase of an actual ticket. As
presented in Appendix F, the expected revenue for Tom was
US$0 as all queries were for award redemption tickets. In
contrast, Joe seemed to be planning a big spending spree for
travel in the near future. He was looking to book flights with his
five friends or families for trips to Tokyo and Seoul. A
recorded total of 50 queries for two possible routes suggested
that these were high-potential trips with respect to the
revenue that the Airline would gain if they should materialize.
That is, although the fares would be for economy class, the
expected revenue, based on the flights searched, was
estimated at $12,000. In addition, the Airline could see the
potential demand from Danny and Jane as well, given their
approximately 10–15 search queries, respectively, for
excursions that would yield expected revenue of $1250 and
$3000, respectively.
Passenger-centric display
At this point, Peter, believing that the team had culled about
as much information on the seven passengers as the
databases contained, introduced his idea about how to
develop a business intelligence ‘dashboard’ to aid in this
genre of decision making. Developed when he worked as a
senior business intelligence expert at Bangkok ABC Airline,
the business intelligence dash- board was just a graphical
interface that displayed the current status of information
about or factors needed concerning a specific goal or goals.
As an example, he quickly developed a passenger-centric
display (see Appendix H) that consolidated all relevant data
specific to Tom, and displayed the metrics needed for a
specific decision making purpose into a single frame. These
metrics included Tom’s current and future flight information,
past incident reports, profit score, frequency trend, or cost to
serve indicators. This passenger-centric display was customized,
with the ability to pull real-time data from multiple data
sources together in order to indicate the status of each
passenger at a specific point in time. For instance, the display
indicated that the previous flight that Tom had flown with the
airline experienced a 50 min delay on 2 February 2015, and
also that he had not been satisfied with the services, as his
baggage had been lost on his October 2014 flight.
As John played with the newly developed interface and
had a quick glance at each passenger on the display, he could
see the benefit of having such an interface because it greatly
facilitated ready access to needed information and in a short
period of time. He could inform Bob that, for instance,
Michael and Danny were based in the United States and that
approximately 80% of the trips for Danny were flights from
Bangkok to major cities in the United States. For his part,
Bob fully agreed with Peter that the interface was complete,
customizable, and easy to use, especially in gathering all the
information he really needed to justify his decision.
Thai ABC airline policy
Thai ABC Airline was committed to providing an
exceptional travel experience for all customers. The Airline
constantly strived very hard to enhance its service delivery
and improve its current systems and policies with
customers in mind. In addition, the Airline always took
 Data analysis and decision making J Chongwatpol

into account profound 29

 Data analysis and decision making
30
differences in the value of various customers and segments
not only to appropriately allocate sale forces and other
resources and best serve the right customers, but also provide
the greatest value in return to the enterprise. In fact, over the
years, the Airline had instituted some major changes in
flights award bookings. Also planned for implementation in
the next few years was a switch to a revenue-based mileage-
earned formula, meaning that passengers would earn
qualified miles based on how much money passengers spend
per flight rather than the distance of the flights they actually
flew.
Returning to the BKK-HKG-ORD rebooking problem,
Bob and his team had determined that there were a number
of factors that had to be taken into account when arriving at
the value that the Airline placed on its passengers, including
actual ticket price, fare class, purchased ticket routing, and
elite status. Further, any changes to the airline policy usually
resulted in a decrease in the number of customers or
customer satisfaction. For example, as Bob looked at the
historical data, he could see that each year the Airline lost
approximately 20% of its customers, especially when
customers perceived nega- tively the policy changes that
were made, for example, the devaluation of an award chart or
a higher bar imposed for earning qualified mileage. However,
he also realized that those customers who stayed with the
airline usually increased the revenues by approximately 5%.
The average revenue earned for all passengers (both active
and inactive) was estimated at
$500 per year. Considering the discount rate of 10%
annually, Bob decided to calculate the average customer
lifetime value (CLV) for all passengers as a reference point
(see Figure 1). Currently, the average CLV was
estimated at $2000 per passenger.
Figure 1 Customer lifetime value.
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Bob mentioned that this year the Airline’s board of
directors had decided to budget approximately $10M dedi-
cated for TV and Internet advertisement, and promotional
campaigns, especially for the elite members, not only to
reward and increase satisfaction of its customers, but also to
compete with its competitors. It had been estimated that with
the current campaign, the number of lost customers (also
called, ‘customer attrition rate’) could be reduced from 20 to
19%. Similarly, Bob was also thinking about setting up a
budget of about the same amount as allocated to its credit
card partners to attract those customers, who had not yet
flown with Thai ABC Airline but had great potential as these
customers always aimed to collect mileage either through
actually flying with the Airlines or from credit card spending.
The ultimate goal was to gain the option to redeem
those collected miles to travel around without having to pay
more to purchase tickets. John estimated that the average cost
to persuade these new customers would be around $750
per person.
John also reminded Bob that the airline core business
routing was that of SEA/Europe. From the approximately
400,000 customers, both active and non-active members, in
the database, John could see a trend of gradually decreasing
flights to Europe and significantly increased demand for
flights to the United States in the past 8 months. He believed
it was a good time for the airline to expand its routes to the
United States. Currently, Thai ABC Airline was ranked fifth
in market share of the Asia/US routings, following Singapore
Airline, Cathay Pacific, Japan Airline, and ANA airline.
Another point to consider was the effects of social media
on the airline industry. Currently, Thai ABC Airline used
the
 Data analysis and decision making
social media and online channels to establish personal rela-
tionships with its customers and leverage social pressure
affecting purchasing decisions. It was one of John’s
important tasks to respond to any unforeseen changes or the
spread of negative customer reviews in its social media
channels such as Facebook and Twitter, or blogs such as
tripadvisor.com or flyertalks.com. In the past several years,
John had observed many enterprises collapse because of not
having a proper social media policy in place or
underestimating the impact of social media; and, the airline
was trying to avoid any surprises from its followers.
In the case of a delayed or canceled flight, the Airline had
clearly established policies to compensate its customers
fairly based on the ticket class, ticket price, elite status, and
other specific circumstances. Although it was quite costly to
the enterprise, the airline had good relationships with the
hotels nearby the airport and with other alliance partners to
accom- modate passengers for overnight stays when
necessary and for re-scheduling on partner flights when
needed. High ‘value’ customers received $400–$1600 for
delayed or canceled flights; others might receive 5000–
20,000 in extra bonus miles that were enough for redeeming
award flights in the future; and, still others might get
upgraded to the next available class of service. Hence, Bob
was much less worried about the compensation that would
have to be effectuated because of delay than he was about
how best to handle the situation.
Time to lock in the final choices
On the basis of what Bob had learned in the meeting with his
team, he knew that although the Airline always endeavored
to bring passengers to their final destination as scheduled, it
was inevitable that there would be times when flights were
delayed or canceled because of weather conditions and
operational or service issues. Hence, this was a great
opportunity for him to revisit Thai ABC’s current
rebooking/re-accommodating methods to ascertain whether
incorporation of the additional factors that that the team had
discussed would facilitate superior decisions for both the
passengers and the Airline. Given the departure delay
confronting Flight TB-8882 on the BKK-HKG-ORD route,
Bob now needed to decide, without further delay, which two
passengers should be on the Flight TB-8882 and which five
would, therefore, have to stay over- night in Bangkok.
Discussion questions
1. Please list all relevant factors that should be included in
the rebooking or re-accommodating schemes.
2. Please construct the business intelligence architecture for
the rebooking decision. Identify the components and their
interrelated function.
J Chongwatpol
31
3. 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.
4. Discuss the importance of customer acquisition and custo-
mer retention.
5. Discuss which two passengers should be on the Flight TB-
8882, and which five would stay overnight in Bangkok.
Note
The condensed data used in this case was acquired largely
through secondary resources. The case extends the original
work of Dave Schrader (2012) ‘BSI: The Case of the
Misconnecting Passengers,’ in which the author focuses on
enhancing the rebooking processes and improving customer
satisfaction at Air London, by integrating data and analytics
to enable smarter decision making by operations and gate
agent personnel. Schrader provides a 7.45 –min video to
present the story, which is published as a part of Business
Scenario Investigations series at the Terada University Net-
work in the United States.
Acknowledgements
The author would like to thank Professor Dr. Clifford E. Darden,
advisor to the NIDA Business School, for his thoughtful and
thorough feedback and comments on earlier drafts of the case.
Reference
Schrader, D. (2012). BSI: The Case of the Misconnecting Passengers. [WWW
document] http://www.teradatauniversitynetwork.com (accessed 15 June 2015).
About the author
Jongsawas Chongwatpol is a lecturer in NIDA Business
School at National Institute of Development Administration.
He received his BE in industrial engineering from
Thammasat University, Bangkok, Thailand, and two MS
degrees (in risk control management and management
technology) from Uni- versity of Wisconsin – Stout, and
Ph.D. in management science and information systems from
Oklahoma State University. His research has recently been
published in major journals such as Decision Support Systems,
Decision Sciences, European Journal of Operational Research,
Energy, Industrial Management and Data Systems, and
Journal of Business Ethics. His major research interests
include decision support systems, RFID, manufactur- ing
management, data mining, and supply chain management.
 Data analysis and decision making J Chongwatpol
30

Appendix A

Table A1 Flight, Status, and Booking Information (Tier #1)

No. Name Routing Status BKK-HKG-ORD

Booking class Booking fare Fare
1 Jennie SIN-BKK-HKG-ORD Million Miler, Gold Economy Promotional Price $750
2 Tom BKK-HKG-ORD Diamond Business/First Award Booking $0
3 Michael BKK-HKG-ORD Golda Business/First Full Fare $5500
4 Danny BKK-HKG-ORD-LAS Gold Business/first Award Booking $0
5 Ben BKK-HKG-ORD Regular Economy Full fare $2900
6 Joe BKK-HKG-ORD Regular Economy Promotional Price $800
7 Jane BKK-HKG-ORD Regular Business/first Promotional price $3500
a
Premier Status Match Challenge program.

Appendix B

Table B1 Historical data on the Qualified Miles (Tier #2)

No. Name Routing Status Qualified miles

2012 2013 2014 YTD-2015b Lifetime
1 Jennie SIN-BKK-HKG-ORD Million Miler, Gold 25,000 12,000 9000 20,000 1,530,000
2 Tom BKK-HKG-ORD Diamond 123,000 109,000 110,000 30,000 550,000
3 Michael BKK-HKG-ORD Golda — — — — —
4 Danny BKK-HKG-ORD-LAS Gold 30,000 35,000 51,000 — 230,000
5 Ben BKK-HKG-ORD Regular — — — — —
6 Joe BKK-HKG-ORD Regular 2500 10,500 45,000 50,000 120,000
7 Jane BKK-HKG-ORD Regular 40,000 39,500 41,000 25,000 160,000
a
Premier Status Match Challenge program.
b
As of May 2015.

Appendix C

Table C1 Revenue, Profit Score, and Frequency Trend (Tier #3)

No. Name Mile Revenue Fare Profit score Frequency trend

Lifetime Lifetime YTD Time as loyalty (Years)
1 Jennie 1,530,000 $198,000 $2500 20 $750 Low Up
2 Tom 550,000 $130,000 $7090 5 $0 Medium Same
3 Michael — $5500 $0 1 $5500 High —
4 Danny 230,000 $55,000 $0 7 $0 Medium Down
5 Ben — $2900 $0 1 $2900 Medium —
6 Joe 120,000 $15,000 $6250 4 $800 Low Up
7 Jane 160,000 $60,000 $9500 4 $3500 High Up
Appendix D

Table D1 Booking Channel and Cost to Serve (Tier #4)

No. Name Booking channels Loyalty plus award call Frequency of Frequency of flying with alliance partners Cost to
center changing or (award ticket) serve
canceled flights
Web/mobile

Data analysis and decision

app Corporate Travel The airline call With Without
booking agency center fees fees
1 Jennie High

2 Tom High

3 Michael -

4 Danny High

5 Ben -

6 Joe V. Low

7 Jane V. Low

3
 Data analysis and decision making J Chongwatpol

32
Appendix E

Social Media

Thai ABC Airline (Facebook and Twitter)

Ben’s Facebook and Twitter

n used social media to communicate with her fan clubs about her schedule and events. However, she also used this channel to complain about any incidents happening during her trip, such as bad service at a hotel or dela

Good Followers
(Joe and Tom)

Joe and Tom usually bought the fight tickets based on the deals/promotions posted in the social media.

Danny’s Blog “Travel More with Less”

No Data As a blogger, Dan significantly provided reviews on deals, promotions, locations, hotels, and airlines he’d recentl
(Jennie, Michael, and Jane)
Facebook and Twitter in the late 2008
Figure
The airline did E1 The
not have impactinformation
sufficient of social media
whether(tier #5).Michael, and Jane actually followed the airline’s social media site.
Jennie,
 Data analysis and decision making J Chongwatpol

33
Appendix F

Figure F1 Passengers’ behavior on social media.

 Data analysis and decision making J Chongwatpol

34
Appendix G

Figure G1 Potential trips from call center, mobile applications, and web search queries.
 Data analysis and decision making J Chongwatpol

35
Appendix H

Figure H1 Passenger-centric display (Tom).