Research Bytes - Information market

In general, business travellers are less price sensitive than leisure travellers; and, airlines exploit this by charging higher fares for tickets with characteristics valued more highly by business travellers than by leisure travellers. Thus observe R. Preston McAfee and Kenneth Hendricks in Evolution of the Market for Air-Travel Information

Business travellers, for example, often book flights without advance notice, value flexible itineraries, travel during weekdays, and value their time highly, the paper notes. “On the other hand, leisure travellers tend to plan their travel well in advance and maintain their travel plans. As a consequence, airlines charge higher fares depending upon features such as (1) purchase without advance notice, (2) lack of travel restrictions (for example, a Saturday night stay), and (3) whether the ticket is fully refundable or exchangeable.”

The authors compare the market for information for air travel with that for housing, labour, and automobiles. In each of these markets, the buyers’ lack of information about the suppliers’ products and prices creates a market for that information, which is supplied by “information suppliers,” one learns. “Real estate agents provide listings of houses for sale and their ‘asking’ prices; Internet agencies like Monster.com provide resumes to prospective employers; and the Sunday newspaper provides retail price information to consumers.”

It may be of historical interest to read in a section on ‘‘Computer Reservation Systems’’ about the first airline reservation system launched in 1964 when American Airlines created the Sabre (Semi-Automated Business Research Environment) system. Prior to Sabre, which allowed real-time access to flight inventory in all its offices, inventory was managed through centralised reservation systems consisting of groups of operators in a room with physical cards that represented inventory (that is, seats on planes), the paper traces.

Educative read.

Sustainable supply chain

With emphasis on sustainable supply chain management (SCM), aerospace supply chains are reconfiguring themselves to fit into government regulatory policies, observes A Framework for Managing Risks in the Aerospace Supply Chain using Systems Thinking research paper — authored by Abhijeet Ghadge, Samir Dani and Roy Kalawsky — mentions a few concepts to achieve a balance between demand and supply and thus create sustainability.

Postponement strategies utilise product and process design concepts such as standardisation, commonality, and modular design to delay the point of product differentiation, the authors note, for example. “This helps to reduce risks and stock in the system. It is a mass customisation tool to handle demand fluctuating market like the one observed in aerospace supply chain systems.” Another concept discussed in the paper is that of the strategic stock, that is, safety stock of critical components to ensure that the supply chain continues to function smoothly while facing disturbances. “This could be best utilised in case of environmental risk arising out of natural or man-made disasters like floods, hurricanes, terrorist attacks etc.”

Of value to SCM professionals in aerospace.

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