Transcript Lufthansa Airlines

LUFTHANSA INFORMATION
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Flagship airline for Germany
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Largest airline in Europe in terms of passengers traveled & fleet
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Founding member of Star Alliance
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World's fourth largest airline
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Flies to 18 domestic destinations, 203 international in 78 countries
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Brand is synonymous with quality, innovation, reliability, competence,
and safety
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http://en.wikipedia.org/wiki/Lufthansa
AIRLINE INDUSTRY
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Airline industry was affected by Recession 2008
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Global air travel decreased from by 2.9% for the month of October in
2008 from the previous year
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African air travel decreased by 12.9% during this time frame
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Despite poor market conditions, Lufthansa actually increased
passenger traffic during this time frame to all markets except a small
decline in Europe
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Passenger traffic movement from
October 2006 to September 2008
This data will help us forecast
passenger traffic movement by using
4 methods:
o 4 period Moving Average
o Exponential Smoothing Average
o Holt's Model
o Winter's Model
4-PERIOD MOVING AVERAGE & FORECASTING
ERROR
4-PERIOD MOVING AVERAGE & FORECASTING
ERROR
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Moving average is used in situations when only deseasonalized data is
preset.
Trend and seasonality are not observed.
The 4 period moving average is calculated by averaging the passenger
traffic for the previous 4 periods.
In the same table the Absolute Error, the Mean Squared Error, the
Mean Absolute Deviation and the Mean Average Percentage Error are
also shown.
EXPONENTIAL SMOOTHING
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Like Moving Average, Smoothing Average is used only when level is
observed
ES tries to smooth the fluctuations in demand of different periods by
using Alpha
First: Calculate the Level of traffic flow of initial period by taking
average traffic flow for last eight quarters (2 years)
Alpha = 0.1
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Ft+1=
Dt
+
1-
(Ft)
EXPONENTIAL SMOOTHING
HOLTS MODEL
WINTERS MODEL
CONCLUSION
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Having the whole supply chain in mind it is important to look at not
only the supply side but also the demand side.
a. After observing demand we see that passenger traffic is not uniform
throughout the year.
In order to level out demand management can take a few steps.
a. Create more market strategies to develop demand in slower periods
b. Charge higher rates during peak periods to try and encourage some
passengers to take their flight at a less busy time.
c. Offer discounted rates at the slower periods to encourage passengers
to fly then.
d. Find new destinations that may be more appealing during slower
periods.
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Using the moving average, simple exponential smoothing, and Holts
and Winters models gives managers valuable information about
demand in different quarters.
a. This information allows them to make changes to move with the
demand of the customers.
This study did not take into consideration the current economy and
different security threats around the globe.
a. Because of this management will not be able to get the clearest picture
of why market trends increase or decrease.
b. Future studies should take this into consideration.
Winter's Model appears to have the lowest forecasting error and they
have followed historical patterns most closely.