A Better Approach for Mishandled Bags Industry Measure

Since 1987, the US Department of Transportation (DOT) has ordered US airlines to report baggage handling statistics. The Code of Federal Regulations (CFR), requests each U.S. carrier to report monthly the total number of passengers enplaned, and the total number of mishandled baggage reports (MBR), including lost, pilfered, damaged and delayed baggage. The U.S. DOT also created a mishandled-baggage rate, which represents the total number of MBRs divided by 1,000 passengers enplaned. This KPI is monthly published at the Air Travel Consumer Report. And it is used worldwide to make comparisons between regions, airports, and airlines, characterizing efficiency and consistency in service and setting a benchmark for the industry. The problem with this indicator created in 1987 is that it only considers passengers, not checked baggage. The customer\u27s behavior has changed a lot after airlines started charging for the checked baggage, influencing KPI results. Therefore, in January 2019 US DOT proposed a new mishandled bags KPI for the airline industry, instead of dividing the original KPI per 1,000 passengers, the new KPI proposes dividing the total number of mishandled baggage report per 1,000 checked baggage. This KPI considers checked bags, correcting this flaw, and creates a more accurate and reliable indicator, avoiding incorrect investment decisions and loss of money. Desde 1987, o Departamento de Transportes dos Estados EUA (DOT) ordena que as companhias aéreas dos EUA reportem as estatísticas de manuseio de bagagem. O Código de Regulamentos Federais (CFR) solicita a cada transportadora dos EUA que reporte mensalmente o número total de passageiros embarcados e o número total de relatórios de bagagem extraviada (MBR), incluindo bagagem perdida, furtada, danificada e atrasada. O DOT dos EUA também criou um índice de bagagem extraviadas, que representa o número total de MBRs dividido por 1.000 passageiros embarcados. Este KPI é publicado mensalmente no Air Travel Consumer Report. E é usado em todo o mundo para fazer comparações entre regiões, aeroportos e companhias aéreas, caracterizando eficiência e consistência no serviço e estabelecendo uma referência para o setor. O problema com esse indicador criado em 1987 é que ele considera apenas passageiros, não bagagem despachada. O comportamento do cliente mudou muito depois que as companhias aéreas começaram a cobrar pela bagagem despachada, influenciando os resultados do KPI. Portanto, este estudo propõe um novo KPI de malas mal manejadas para o setor aéreo. Esse KPI considera as malas despachadas, corrigindo essa falha e cria um indicador mais preciso e confiável, evitando decisões incorretas de investimento e perda de dinheiro

Harmful Unbundling

Companies have been unbundling their product: they have been selling separately products and services that were traditionally sold together.  In doing so, they have raised their profits.  This paper uses a model to show how companies can use unbundling to increase profits and decrease competition.  Unbundling raises problems when it increases information cost, information asymmetry, and barriers to entry.  This paper also discusses the US case laws that have grasped with these issues of bundling and unbundling

Harmful Unbundling

Companies have been unbundling their products: they have been selling products and services separately that were traditionally sold together. In doing so, they have raised their profits. This paper uses a model to show how companies can use unbundling to increase profits and decrease competition. Unbundling raises problems when it increases information cost, information asymmetry, and barriers to entry. This paper also discusses the U.S. case law that has grasped with these issues of bundling and unbundling

Do bags fly free? An empirical analysis of the operational implications of airline baggage fees

In 2008, the majority of U.S. airlines began charging for the second checked bag, and then for the first checked bag. One of the often cited reasons for this action by the airlines’ executives was that this would influence customers to travel with less baggage and thus improve cost and operational performance. A popular customer belief, however, is that airline departure delays got worse due to an increase and size of customer carry-on baggage. A notable exception to the charging for checked bags trend was Southwest Airlines, which turned their resistance to this practice into a “Bags Fly Free” marketing campaign. Using a publicly available database of the airlines’ departure performance, we investigate whether the implementation of checked bag fees was really associated with better operational performance metrics. At the aggregate level, using all publicly recorded U.S. flights from May 1, 2007, to May 1, 2009, we find that the airlines that began charging for checked bags saw a significant relative improvement in their on-time departure performance in the time periods after the baggage fees were implemented. Surprisingly, we also find that airlines that did not charge for checked bags also saw an improvement, although not as big, when competing airlines flying the same origin-destination city markets implemented the fees. The improvement in on-time departure performance was the largest for flights during peak evening departure time blocks

Essays In the Airline Industry

In 2008, most U.S. airlines implemented checked baggage fee policies to generate additional revenue to help with their financial distress caused by abnormally high fuel prices. Since this time, the fees have provided a steady revenue stream and often are the difference between a profit and a loss. Recently, some literature in the operations management field has postulated that altering consumer behavior in a manner that is beneficial to both the firm and customers is an additional purpose of these fees. In Essay 1, we empirically investigate the airline perspective of this hypothesis by considering the operational impact of airline baggage fees as measured by the airlines\u27 departure delays. We do so by using primarily data collected by the Bureau of Transportation Statistics for the time periods immediately before and after fees for one and two checked bags were imposed by most U.S. airlines in 2008, and using a Tobit regression model to assess the impact of the fees on departure time performance. According to the 2013 North America Airline Satisfaction Study by J.D. Power & Associates, the baggage fees are still a source of passenger dissatisfaction. In Essay 2, we empirically investigate the customer perspective of the above hypothesis by considering the benefits provided by the service of checking bags. Thus, we examine airline service attributes that affect customer choice itinerary, and how checking or not checking bags influence these relationships, by employing discrete choice models estimated on stated-preference survey data

A review of short-term event studies in operations and supply chain management

The short-term event study method, grounded in the Efficient Market Hypothesis, is one of the most widely used tools for quantifying the impact of a specific event on a firm's shareholder value. As the short-term event study method has been increasingly employed by researchers to investigate various operations and supply chain management (OSCM) events, it is timely to conduct a systematic review of the method to examine how it has been implemented in the OSCM literature and what could be improved to deploy it for future OSCM research. Analyzing 29 short-term event studies published in renowned OSCM journals between 1995 and 2017, we find that OSCM researchers generally follow the standard procedures in conducting event studies, but pay less attention to some methodological issues ranging from addressing the confounding events to expanding the event windows. Based on our analysis, we provide several recommendations for future event studies in OSCM, such as the opportunity for studying external events in the non-U.S. context, the caution of expanding the event windows, and the need to deal with the self-selection bias

Operational Drivers of Hospital and Physician Adaptation to Industry Change

Hospitals and physicians are often required to adapt their operations in response to macro changes in their industry environment. This dissertation examines the operational factors which influence and incentivize changes in hospital and physician operating performance. The first essay in this dissertation investigates how legislative political support and competition in the area in which a hospital operates influences hospitals’ investments and commitment to complying with performance mandates implemented by the Patient Protection and Affordable Care Act (ACA) legislation in the United States. Leveraging United States hospital performance data from 2007 to 2014, results indicate a differential impact of government ideology on recently introduced patient experience metrics versus traditional clinical metrics. These findings contribute to the research regarding the impact of firms’ operating environments on the effectiveness of industry policy adoption, particularly in situations where future uncertainty of existing legislative mandates is high. The second essay in this dissertation focuses on the unintended impacts to physician opioid prescribing behavior created by the passage of the ACA. This study aims to enhance our understanding of the factors associated with opioid prescription behavior and provide prescriptive insights to reduce opioid prescribing, which serves as the principal gateway to opioid addiction. Specifically, this study examines how v prescriber workload, introduction of the Value Based Purchasing (VBP) program, and market competition influence opioid prescribing. Results demonstrate an increase in opioid prescription rates following the introduction of the VBP program, along with a moderating impact of prescriber workload and market competition on opioid prescription rates. These findings inform the discussion on the health and societal impacts of the opioid epidemic in the United States, while providing prescriptive implications to hospital managers, prescribers and policymakers about the influence of operational and competitive factors on opioid prescription rates. Together, these studies provide empirical support for the influence of operational factors on hospital and physician responses to environmental changes in the US healthcare industry