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The AQR and an interesting mathematical property of ratios: Batting Average, Marginal tax rate and Corporate Profit margins

**http://b-i.forbesimg.com/davidewalt/files/2013/04/virgin-america-best-airlines-quality.jpg
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Table of Contents

§ No. Topic Page No. 1. Summary 2 2. Introduction: Baseball and Airline Quality Ratings 4 3. OT for single month, single airport, all airlines 9 4. OT data for all airlines (January 2012 to January 2013) 13 5. Monthly OT data for all airlines, all airports 17 6. Brief Discussion and Conclusions 19 7. Appendix 1: Raw data and data sources 29 8. Appendix 2: Mathematical property of y/x ratios 31 9. Reference list 37 10. Related articles 40 Baseball legend Babe Ruth’s batting statistics in discussed in §6. The OT arrival is like getting a Hit in baseball. Thus, mathematically speaking, the BA in baseball is quite similar to the OT arrival percent of interest here.

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**One million flights are delayed each year
**

(US Bureau of Transportation Statistics, 2012) Number of delayed flights Minutes delayed Total minutes lost Total hours lost Total days lost Total years lost 1,000,000 5 5,000,000 83,333.3 3472.2 9.51

US airlines, taken together, operated 6,096,842 flights during the 12-month period from January 2012 to December 2012. Of these nearly 5 million (4,990,223) were on time. The total number of delayed flights was more than 1.1 million (1,106,619). The months of December and July, when On-Time (OT) arrivals are significantly lower, seem to require special attention. (This is based on 2012 stats.) March to May and the month of November reveal significantly better OT performance. The above does not include ripple effects of delays and the additional consequences due to other factors such as Missing Baggage and Denied Boardings.

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§ 1. Summary

“Customer complaints have soared but they are improving their on-time performance and missing fewer pieces of baggage”, seems to be the popular media reception of the recently published annual Airline Quality Rating (AQR). The rating of an airline is based on its weighted scores for four main criteria, On-Time (OT) arrival, Missed Baggage (MB), Denied Boarding (DB) and Customer Complaint (CC). Virgin America is the top ranked airline in the 2013 report. My own independent research, after this annual report came out, reveals the following. According to the data that I could readily obtain from the US Bureau of Transportation Statistics (BTS), US airlines, taken together, operated 6,096,842 flights during the 12-month period from January 2012 to December 2012. Of these nearly 5 million (4,990,223) were on time. The total number of delayed flights was more than 1.1 million (1,106,619). These numbers seem to leave room for a lot of improvement in the OT arrivals record for airline although the percent OT seems to have improved in the recent 2013 Airline Quality Report (AQR). The months of December and July seem to require special attention when OT arrivals are lower. The OT record is significantly improved in the months of March to May and November (based on the 2012 data). Furthermore, a detailed analysis of the On-Time (OT) data, for all fourteen airlines in the AQR, reveals an interesting linear relation, of the type y = hx + c, between the number of flights x and the number of OT arrivals y. The OT arrival percentage is the ratio y/x. The numerical values of h and c can be deduced from the BTS data. For the top 14 airlines, y = 0.816x + 0.995, with x and y being in thousands. This also means that the corollary relation for the OT percentage, or the ratio, y/x = h + (c/x) = 0.816 + 0.995/x, will favor smaller airlines which operate fewer flights, such as Virgin America, which was the top ranked airline according to the AQR Score. Similar considerations apply with the other y/x ratios that enter into the development of the AQR Score (missing bags, denied boarding, customer complaints - fewer flights equals fewer missing bags, denied boardings & customer complaints).

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110

OT percent, 100 (y/x)

100

Virgin America (January 2012, 13 airports) y/x = 0.796 + (12.21/x) OT% = 100 (y/x)

90

80

70 0 200 400 600 800 1000 1200 1400

Number of flights, x

Figure A: The OT arrival percent for the top ranked Virgin American Airlines, for the month of January 2012. The raw data for flights to 13 different airports are considered here. As the number of flights increases the OT percent decreases. The falling hyperbola the mathematical equation y/x = A + (B/x) describes this data. The numerical values of the constants A = 0.796 and B = 12.21 were deduced from linear regression analysis (the x-y graph is y = Ax + B). The significance of the linear x-y relation observed here (and its corollary relation for the y/x ratio) is discussed in some detail using the analogous examples of the batting average (Babe Ruth’s) from baseball, the marginal tax rate, and the profits-revenues data for highly successful companies (the data for Google is discussed here). The OT arrival ratio, or percent, is just like the BA in baseball.

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**§ 2. Introduction Baseball and Airline Quality Ratings
**

The annual Airline Quality Report (AQR) published by jointly by the Purdue University College of Technology and the Wichita State University Business School, Refs. [1,2], was published yesterday April 8, 2013. It caught my attention this year because of the news items in the popular media, see Refs. [3-6], and my longtime interest in the analysis of how y/x ratios behave; see bibliography compiled in Ref. [7]. The four main criteria used to develop this score are: On-Time (OT) arrival, Denied Boardings (DB), Mishandled Baggage (MB), and Consumer Complaints (CC). Consumer complaints are up but airline quality ratings soar, said the media stories (click here, Ref. [5,6]). The AQR score is a weighted average of these four criteria. Each criterion is a simple y/x ratio. “Customers are unhappy but the airlines’ quality ratings stay high”, says Mark Memmott, in his NPR Blog, Ref. [6]. “They are improving their on-time performance and losing fewer pieces of baggage. That’s the good news.” The AQR has been prepared annually, since 1991, (click here, see Ref. [8]) by Professor Brent Bowen from the College of Technology, Purdue University, and Professor Dean Headley from the Barton Business School, Wichita State University. The raw data used to develop the AQR Score (see Appendix 1) is generated by the US Department of Transportation. The 2013 and 2012 AQR, Refs.[1,2], only include a listing of the ratios. To obtain the raw data, used to generate the y/x ratio of interest (say the OT arrivals percentages) for each month, I had to turn to the US Department of Transportation reports, see Ref. [9], cited by Bowen and Headley in their study. I also found a second source, the Bureau of Transportation Statistics, see Ref. [10]. The raw data reveals that Virgin America (airline code VX), the top ranked airline, operated a total of 54,742 flights during the 12-month period from January 2012 to December 2102, with an OT record of 46,043 (or 84.1% OT). For the 13-month period ending January 2013, VX operated 58,972 flights

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with an OT record of 49,986 (or 84.76% OT). The total arrival airports for which data is available varied between 13 for January 2012 to 16 for the months of October to December 2012. The data for January 2012, for one single airline (Virgin America, airline code VX) has been compiled in Table 1. Table 1: Raw Data for On-Time Arrivals by Virgin American for Jan 2012 Year Month Carrier

2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 1 1 1 1 1 1 1 1 1 1 1 1 1 VX VX VX VX VX VX VX VX VX VX VX VX VX

Arrival Airport

Boston, MA: Logan International Dallas/Fort Worth, TX: Dallas/Fort Worth Fort Lauderdale, FL: Ft Laud-Hollywood Intl Washington, DC: Washington Dulles New York, NY: John F. Kennedy Intl Las Vegas, NV: McCarran International Los Angeles, CA: Los Angeles International Orlando, FL: Orlando International Chicago, IL: Chicago O'Hare International Palm Springs, CA: Palm Springs International San Diego, CA: San Diego International Seattle, WA: Seattle/Tacoma International San Francisco, CA: San Francisco Intl.

Flights Delays

121 177 174 159 371 249 944 58 182 31 111 236 1289 12 38 27 21 50 23 121 7 29 5 13 34 297

Notice that when the number of flights doubled, or nearly doubles, from 31 to 58, or 58 to 121, or from 111 to 236, the number of delayed flights did not double.

Now, consider the following. The equation of a straight line which passes through the origin is y = mx where y/x = m is the slope of the line. The ratio y/x = m = constant as we move up or down the line. A doubling of x produces a doubling of y; a tripling produces a tripling, and so on. For the On-Time (OT) arrival statistic, the independent variable x is the number of flights. The variable y is the number of flights that arrived on time. The actual data reported, in Ref. [9], is for the number of flights that were delayed. The difference gives the on-time arrivals. Thus, we get the y/x ratio for flights to a single airport (say Boston) by a single airline (say Virgin America), for a single month. Repeat this for all airports (13 for Virgin America, up to 16 for some other months), for each month (12), and for each Airline (14 total). If N1 is the number of airlines, N2 the number of airports, N3 the number of months, we are dealing with a total N1N2N3 such

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y/x ratios for just the OT statistic. There are a total of 188 OT arrival ratios just for Virgin America. And so on, for all the other airlines.

300

Number of OT arrivals, y

250

200

150

100

50

0 0 50 100 150 200 250 300

Number of flights, x

Figure B: Virgin America On-Time (OT) arrivals record in January 2012. Only four of thirteen airports for which data is available (see Table 1) are considered here for simplicity. A near doubling of flights occurs between these airports starting with 31 for the smallest frequency of flights. The x-y graph does NOT pass through the origin. The equation of this straight line is y = hx + c where slope h = (y2 – y1)/(x2 – x1) = (226 – 26)/(249 – 31) = 200/218 = 0.917 and the intercept c = (y1 – hx1) =( y2 – hx2) = - 2.44. The On-Time (OT) arrival ratio, or percentage, is thus biased in favor of the airports with a higher frequency of flights, and very soon this leads to its own myths about what is cause for delays at the smaller airports. The mathematical law we see here means a) the higher the number of flights x, the higher the number of OT arrivals and b) the rate of increase of OT arrivals, determined by the slope of the line, is a constant. When the number of flights increase by a fixed amount ∆x, the number of OT arrivals increase by the same fixed amount ∆y = h∆x. Including all airports (and all

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months of operation) and reanalyzing the data yields a slightly different slope h and the intercept c changes from a negative value of a small positive values yielding the downward sloping trend for the y/x percent seen in Figure A.

Now, take a look at the graph prepared in Figure B, for Virgin America’s OT record, using just four airports, starting with Palm Springs, CA with the lowest number of flights (31) and the three airports with a near doubling of flights to 58 (Orlando, FL) and then to 121 (Boston) and then to 249 (Las Vegas). The OT arrivals data falls on a nice upward sloping straight line with a positive slope. The mathematical equation of this straight line is y = hx + c = h(x – x0) where h is the slope of the line and c the nonzero intercept made by the line on the y-axis (y = c when x = 0) and x0 = - c/h is the intercept made on the xaxis (x = x0 when y = 0). The ratio y/x is biased in favor of the airports with the higher number of flights. Re-analyzing the data, including all airports and all the months of operation, leads to the opposite conclusion, as seen in Figure 1. With this introduction, my main purpose here is to call attention to this remarkably simple and linear relation, of the type y = hx + c, that we invariably observe when we analyze large masses of data that characterize the behavior of “complex systems” (see bibliography compiled in Ref. [7]). The evolution of this law, starting with our most elementary observations on the system of interest to us, can be understood by considering baseball batting statistics, discussed in two recent articles, see Refs. [10,11]. In a single game, a batter makes a number of plate appearances and has a certain number of At Bats (AB) and a certain number of Hits (H). The batting average BA = y/x = H/AB where x is the number of ABs and y the number of hits. A good player like the legendary Babe Ruth’s game-by-game batting logs reveal scores of (1, 1), (2, 2), (3, 3), (4, 4), where the first number is the AB and the second number is the Hits. In other words, Ruth had a PERFECT single-game batting average of H/AB = 1, or y = x many times in a single season. Ruth’s batting logs also reveal scores of (1, 0), (2, 1), (3, 2), (4, 3) and even (6, 5), or one missed hit which means y = x – 1. Thus, Babe Ruth’s single season batting statistics, taken on a game-by-game basis, can be shown to

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follow a series of parallels, see the graphs in Refs. [10,11], each having a slope h = 1 but with different values of the intercept c = 0, -1, - 2, etc., indicating the number of missed hits. More generally, the AB-Hits law is y = hx + c where the constants h and c depend on how the data is aggregated (on a monthly basis, or by all the games in a season). The nonzero c is related to the “difficulty” of producing a hit (or a home run) in baseball and may be called the “work function” for the player and is exactly akin to the idea of work function first introduced by Einstein, in 1905, to explain the photoelectric effect. In the photoelectricity experiments, the “work function” is related to the “difficulty” of producing an electron, when stream of light particles (or photons) all having a fixed elementary energy ε strike the surface of a metal. The maximum (kinetic) energy of the electron K = ε – W. No electrons are produced if ε < W, the work function. This has been discussed in some detail in Refs. [10,11]. In baseball, all ABs do not lead to hits. Likewise, all flights do not lead to OT arrivals. Some will be delayed for variety of reasons. Thus, there is a “work function” that must be accounted for in all such complex problems. OT arrivals = Number of Flights – Number of Delays OT ratio (or percent) = 1 – (Delays/OT arrivals) ........(1) ........(2)

The remainder of this article is devoted to a detailed discussion of the OT arrivals, and evolution of the linear law at different levels of aggregation of the data. Please note that the following is DEFINITELY NOT a criticism of the Bowen-Headley report, or their methodology. The AQR Score is a very elegant method of capturing the essence of a very complex problem. Similar methods, using a number of relevant and important criteria, are used to rank the financial performance of various companies in the Fortune 500 and the Forbes 500 lists. The following is being offered here mainly to: a) Call attention to how we use y/x ratios and b) Initiate a debate on whether we should indeed start paying attention to the ubiquitous law, y = hx + c, which is always observed in all such studies on a variety of complex systems.

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Perhaps, once a consensus is reached, scoring methods can be developed in the future that take into account the important mathematical property of ratios being discussed here.

**§ 3. Analysis of On-Time Flight Data Single Month, Single Airport, All Airlines
**

The following data for the month of January 2013 was obtained from Table 2 in Ref. [10], which may be found on page 6 of the report. Let us consider just one airport, Boston (Couldn’t help pick this city which I used to fly in and out of Boston’s Logan airport from 1973 to 1981 when I was a graduate student and researcher at MIT!). The data on the number of flights arriving is given for 10 of the 14 airlines in the AQR of Bowen and Headley (the missing airlines do NOT fly into Boston).

**Table 2: On-time Arrivals to Boston for January 2013
**

Airline OT % Total Flights, On-time Flights, 100 (y/x) x y Alaska 93.5 62 58 Virgin America 97.3 111 108 Express Jet 82.7 202 167 Pinnacle 80 235 188 Air Tran 93.4 258 241 Southwest 84.5 549 464 Delta 91.8 734 674 American 84 855 718 United 87 912 793 US Airways 85.1 1447 1231 JetBlue 81.9 2803 2296 Totals 85 8168 6938 Note: Table 1 is for January 2012 for a single airline (Virgin America) and many airports. Here we consider a single airport (Boston) and many airlines in January 2013. Some airlines are missing here since they do NOT have flights to

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Boston. The number of On-Time flights y was calculated from the OT% and the number of flights x obtained from the Air Travel Consumer Report. Note that the percent in the last row is deduced from the ratio y/x = 6938/1868 the sum of all the all flights x and the On-Time flights. It is NOT the average value of the percent for each airline. The 85% figure is also given by the US DOT. Notice that we are only looking at the arrival city, not the city from which the flight originated. The departure city must obviously have some effect on the delays, (and hence the on-time arrival percent) which is of interest here. Regardless, if we go down the list, it is obvious that the number of flights x is not a constant and varies widely between various airlines.

3000

Number of OT flights, y

2500 2000 1500 1000 500 0 0

y = hx +c = 0.821x + 21.42 r2 = 0.9987

500

1000

1500

2000

2500

3000

3500

Number of flights, x

Figure 1: On-time arrival data, for Boston airport, for a total of 11 airlines (from the Air Travel Consumer Report for March 2013) for the month of January 2013. Alaska Airlines had the fewest flights (68), Virgin America (top ranked) had 111 flights and JetBlue had the highest number of flights (2803). As the number of flights x increases, the number of On-Time (OT) flights y also increases following a simple linear law, y = hx + c. The slope h and the intercept c

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were determined using linear regression analysis (method of least squares, see Refs. [13,14]). This “best-fit” line does not pass through the origin (0, 0). The nonzero intercept c is positive. This means that the ratio y/x = h + (c/x) decreases as the number of flights x increases, see Figure 2. The ratio y/x or the OT percent, is thus favoring the smaller airlines (fewer flights) like Virgin American in this metric used to analyze the performance of various airlines. The significance of the nonzero intercept cannot be overlooked. It is like the ‘work function” conceived by Einstein in 1905, when he proposed the simple photoelectric law, which is also a linear law of the type y = hx + c.

110.0

OT percent, 100 (y/x)

100.0

90.0

80.0

70.0 0 500 1000 1500 2000 2500 3000 3500

Number of flights, x

Figure 2: On-time arrival data, for Boston airport, for a total of 11 airlines (from the Air Travel Consumer Report for March 2013) for the month of January 2013. Alaska Airlines had the fewest flights (68), Virgin America (top ranked) had 111 flights and JetBlue had the highest number of flights (2803). As seen here, the OT arrival percent decreases as the number of flights x increases. In other words, the OT% is always higher for the smaller airlines with fewer flights. The ratio analysis overlooks the effect of the nonzero intercept c and thus favors smaller airlines compared to bigger airlines (or the airlines with more

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flights to the airport of interest, in this case Boston). The nonzero intercept c is similar to the work function in Einstein’s photoelectric law. There is NO other law of physics where the nonzero intercept has the significance of being a “work function”, a concept that can be extended to discuss many many problems, such as the airline problem of interest here. The falling hyperbola, y/x = h + (c/x) with h > 0 and c > 0, can be seen to describe the overall trend in the data quite well.

Virgin America, the top ranked airline in the AQR had 111 flights and 108 were on time (only three were delayed). Air Tran, which merged with Southwest Airlines, had more than double the flights (258) with 241 on-time flights, or 17 delays, or significantly more than Virgin America. Southwest Airlines with more than double the flights of Air Tran, had 464 OTs or 85

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delays. In other words, a doubling of the flights does not double the number of delayed flights or on-time arrivals. The x-y relationship is NOT the simple relation y = mx, or y/x = m, which is the implicit assumption (I think) that we make when we compare the performance of different airlines, in this way, using ratios, or percentages. Instead, the relationship is modified slightly and can be expressed as y = hx + c, where h is the slope of the line and c is a finite nonzero intercept. Hence, the ratio y/x = m = h + (c/x) keeps decreasing as the number of flights x increases. The limiting value of the y/x ratio equals h the slope of the straight line. This is illustrated in Figures 1 and 2 and is consistent with the easy to understand, but often overlooked, mathematical property of ratios discussed in Appendix 2.

**§ 4. Analysis of On-Time Flight Data Jan 2012 –Jan 2013, All Airports, All Airlines
**

One example of the data that we will analyze in this section is illustrated above with Virgin American (VX) Airlines. This data was obtained from the Bureau of Transportation Statistics. Similar data is NOT available at the US Department of Transportation website. By choosing “view tabular form” the total number of flights and the On-Time flights data for any desired period can be obtained including the monthly data summarized in Table 3. The top ranked Virgin American (airline code VX) operated a total of 58,972 flights, to several different airports (16 total, this was deduced after downloading of the raw data into a Microsoft Excel format), during the 13 month period January 2012 to January 2013. The On-Time (OT) record was 49,986. The difference 58,972 – 49,986 = 8986 is the number of flights that were delayed. There are a number of causes for the flight delays, included weather, as listed above, and some unrelated to the airline. Notice also the huge difference in the total flights between Virgin American and Southwest Airlines. The latter airline operated more than 1.23 million flights with a better than 1 million OT record. The OT percent is virtually

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indistinguishable from the VX OT percent. A graphical representation of this 13-month data for all the 14 Top airlines in the Bowen-Headley AQR Report of 2013, see Figures 3 and 4, again reveals the same trends observed earlier when flight arrivals to a single airport, in a single month, were considered.

Table 3: On-Time Flight data (Jan 2012-Jan 2013) for all the flights for fourteen airlines in the 2013 AQR

Rank Airline OT% Computed Total On-Time (Forbes) OT % Flights, x Flights, y 1 Virgin American (VX) 83.50 84.76 58,972 49,986 2 JetBlue (B6) 79.10 80.26 248,347 199,322 3 Air Tran (FL) 87.10 88.06 232,475 204,714 4 Delta (DL) 86.50 86.61 784,061 679,097 5 Hawaiian (HA) 93.40 93.32 80,091 74,740 6 Alaska (AS) 87.50 87.46 159,589 139,577 7 Frontier (F9) 77.90 77.48 85,059 65,907 8 Southwest (WN) 83.10 83.26 1,229,704 1,023,849 9 US Airways (US) 85.90 85.66 437,830 375,035 10 American (AA) 76.90 77.14 570,068 439,722 11 American Eagle (MQ) 81.60 81.15 510,833 414,546 12 Sky West (OO) 81.60 81.29 669,518 544,277 13 Express Jet (EV) 76.90 76.50 798,789 611,104 14 United (UA) 77.40 77.74 571,664 444,422 Note: The ranks in column 1 and the OT% in column 3 correspond to those in the article on the Forbes website. The computed OT% in column 4 are the numerical values obtained from the individual x and y values for each airline. The number of flights varies widely and the smaller airlines (fewer flights x) like VX, HA, and F9 have an advantage over the bigger airlines (higher flight numbers x). The graphical representation of this data, in Figure 3, reveals the same trends observed earlier when we considered the data for all airlines flying into a single airport (Boston). The On-Time flights y increases as the number of flight x increases, following a simple linear law y = hx + c. Data: US Bureau of Transportation Statistics.

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110

OT percent, 100 (y/x)

100

90

80

70 0 200 400 600 800 1000 1200 1400 1600

**Number of flights, x [in 000s]
**

Figure 3: On-time arrival data, taken together for ALL airports, for all 14 airlines (the top airlines in the Bowen-Headley AQR) for the period January 2012 to January 2013. The simple ratio analysis overlooks the effect of the nonzero intercept c and the complex interactions that must be considered between airports and airlines and rest of the air traffic system. The y/x ratios thus favor smaller airlines compared to bigger airlines. The nonzero intercept c is similar to the work function in Einstein’s photoelectric law. There is NO other law of physics where the nonzero intercept has the significance of being a “work function”, a concept that can be extended to discuss many many problems, such as the airline problem of interest here. The falling hyperbola, y/x = h + (c/x) with h > 0 and c > 0, can be seen to describe the overall trend in the data quite well. The “scatter” seen here is consistent with the least squares analysis, with reveals a linear regression coefficient of r2 = 0.9946, see Figure 4.

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1,200

Number of OT flights, y

1,000

y = hx +c = 0.816x + 0.995 r2 = 0.9946

800

600

400

200

(xm , ym)

0 0 200 400 600 800 1000 1200 1400 1600

**Number of flights, x [in 000s]
**

Figure 4: The On-time arrival data, for all airports, for all 14 airlines (in the Bowen-Headley 2013 AQR) for the period January 2012-January 2013, taken together. The top ranked Virgin American had the fewest flights (58,972) as opposed to Southwest with 1,229,704 flights. The OT percent is virtually identical for both these airlines. The data for all the airlines, taken together, reveals a nice upward trend. The higher the number of flights x, the higher the number of OT flights, y. The data follows the simple linear law y = hx + c, where h and c can be deduced using well established statistical methods (linear regression analysis, or method of least squares). The solid blue dot has the coordinates (xm , ym) where xm and ym are the “mean” or “average” values of x and y in the data set here. The best-fit line always passes through (xm , ym). Some points lie above the best-fit line and some lie below it. The vertical deviation from the value yb on the best-fit line, or the “error”, (y – yb), is either positive or negative and the sum of all such ‘errors” is zero. The square of the error (y – yb)2 is always positive. The slope of the best-fit line h is adjusted to minimize the sum of the squares of all these “errors”, see formula for h and worked example in the

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references cited. The high linear regression co-efficient indicates a strong positive correlation. The falling trend in Figure 3 and the scatter is observed is just statistical scatter to be expected when we consider such a complex problem.

**§ 5. Analysis of Monthly On-Time Flight Data Jan 2012 –Jan 2013, All Airports, All Airlines
**

Finally, let us consider all of the OT-data for the months January 2012 to January 2013, without regard to the airline. This is summarized in Table 4 for each month. For the industry as a whole, for this 12-month period, there were more than 6 million flights of which nearly 5 million were on time. The total number of delayed flights was more than 1.1 million. The month-to-month analysis of the data reveals an interesting trend as illustrated in Figure 5.

Table 4: On-Time Flight data (Jan 2012-Jan 2013) for all fourteen airlines in the 2013 AQR for each month

Month

Jan-13 Dec-12 Nov-12 Oct-12 Sep-12 Aug-12 Jul-12 Jun-12 May-12 Apr-12 Mar-12 Feb-12 Jan-12 Jan 12-Dec 12

OT%

80.98 76.56 85.72 80.21 83.30 79.15 76.01 80.66 83.38 86.26 82.19 86.16 83.75 81.85

Total Flights, x

509,519 494,218 488,086 515,254 490,199 540,793 545,131 526,933 518,423 505,218 521,628 464,826 486,133 6,096,842

**On-Time Flights, y
**

412,617 378,393 418,368 413,287 408,355 428,020 414,377 425,049 432,244 435,791 428,718 400,504 407,117 4,990,223

Delayed Flights

96,902 115,825 69,718 101,967 81,844 112,773 130,754 101,884 86,179 69,427 92,910 64,322 79,016 1,106,619

Note: The ranks in column 1 and the OT% in column 3 correspond to those in the article on the Forbes website. The computed OT% in column 4 are the numerical values obtained from the individual x and y values for each airline.

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Firstly, the same linear law, y = hx + c, is again observed suggesting that this is a fundamental property of the system that is being analyzed and is NOT a characteristic of the individual airlines.

Number of OT flights, y [in 000s]

450

May ‘12 Apr ‘12

425

Nov ‘12

400

Jul ‘12

Dec ‘12

375

**y = 0.387x +221.35 r2 = 0.698
**

350 350 375 400 425 450 475 500 525 550 575 600

**Number of flights, x [in 000s]
**

Figure 5: The significance of the nonzero intercept cannot be overlooked. It is like the ‘work function” conceived by Einstein in 1905, when he proposed the simple photoelectric law, which is also a linear law of the type y = hx + c. Second, the data now indicates a very significant scatter, unlike the data after sorting by airline. A best-fit line through the data points is illustrated and has a significantly lower regression coefficient. It is also clear that OT arrivals seem to be affected by the weather or the season, i.e., the month of operation, which was not apparent in the analysis thus far. OT arrivals were significantly lower in the months of December and July. Just the opposite is true for the months of March, April, and May, and November. The winter month and peak travel season due to the Christmas and New Year holidays is most definitely a factor the delays in December. Seasonal peak travel, during summer, is

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probably also a factor for the delays in Julys. Perhaps, airlines can learn from their operations in March to May and November to improve their OT records even more. More than a million delayed flights, or nearly 20% delays, seems like a statistic that is begging for a lot of improvement.

**§ 6. Brief Discussion and Conclusions
**

The On-Time (OT) arrival statistic for the top US airlines as discussed here is a simple y/x where x is the number of flights operated by an individual airline and y is the number of OT arrivals. If N1 is the number of airlines, N2 the number of airports, N3 the number of months, we are dealing with a total N1N2N3 such y/x ratios for just the OT statistic. For Virgin American, we can get 188 OT ratios for the period January 2012 to January 2013 from Ref. [8]. And so on for each of the other criteria used to develop the AQR score.

Problem

Airline Quality Rating Productivity Financial data Unemployment Teenage Pregnancies Traffic fatalities Forbes Billionaires Baseball

Tax Problem

Variable x

Number of flights Labor hours Revenues Labor force Number teenagers Vehicles miles traveled (VMT) No. of billionaires Number of ‘At Bats’

Taxable income

Variable y

On-time arrivals Labor output Profits Unemployed Pregnancies Traffic fatalities Total net worth Number of Hits

Tax owed

Ratio y/x

OT ratio Productivity Profit margin Unemployment rate Pregnancy rate Fatality rate Average worth Batting Average

NO y/x ratio used.

In the tax problem, we use the marginal tax rate, which is the slope m in the tax equation y = mx + c. Birth rates, death rates, various fatality studies (cancer death rates, etc.), obesity rate, gun death rates, etc. all use such y/x ratios.

Exactly similar ratios are also used in the analysis of many other complex economic, financial, business, environmental, social, political, and cultural problems of interest to us, see tabular summary above for a partial list. The

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batting average used in baseball is also a simple y/x ratio, with x being the number of At Bats (AB) and y the number of Hits (H); click here for Babe Ruth’s stats for his entire career from 1914-1935. His batting average for his 15-years (except the last year) with the New York Yankees was y/x = 0.349 = 2518/7217. Also, in many cases, the y/x ratio is also often interpreted as also being the “rate” of change such as the rate of increase of profits with increasing revenues, or the rate of increase of labor output (cars, engines, refrigerators, cell phones, computers, etc. depending on what the plant produces) as the labor hours increase and so on.

$18.00 $16.00

Profits, y [$, billions]

$14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 -$2.00 $0.00

Google (2001-2012) y = hx + c = h(x – x0) = 0.267x – 0.1745 r2 = 0.974

2012

2008 2

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

Revenues, x [$, billions]

Figure 6: The Profits-Revenues diagram for Google for the period 2001-2012. A remarkably linear relations of the type y = hx + c = 0.2665x – 0.1745 is observed between revenues x and profits y. The constants h and c were deduced using linear regression analysis (method of least squares). The nonzero and negative

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intercept c means that the profit margin y/x = m = h + (c/x) = 0.2665 – (0.1745/x) will increase with increasing revenues. This is exactly similar to the situation with Babe Ruth’s batting average, see Figure 8. The negative intercept gives rise to the perception of an extremely successful company whose profit margins seem to keep on increasing with increasing revenues (just like Babe Ruth’s BA). However, notice that the profits always increased by the same fixed amount ∆y = h∆x when revenues increased. The “rate” increase of profits with increasing revenues is given by the slope h = ∆y/∆x. Google deviated from this best-fit line for the first time in 2008, the year of the financial crisis in the US but returned to this line in 2009. It has again shown a significant deviation in 2012, with profits falling off the line, although both revenues and profits have increased and are now at their record levels.

No attempts seem to have been made, to my knowledge, to date, to study the underlying x-y relations. For example, a perfectly linear relation is observed between profits and revenues of many companies (see the profits-revenues graph for Google in Figure 6), akin to the perfect linear relation between taxable income and tax owed (within a fixed tax bracket), see Figure 7. Thus, the slope of the x-y graph in all such problems has a fundamental significance and is the “true” measure of the rate of change, not the y/x ratio.

**Table 5: The US 2012 Tax Rate Schedule Converted into the Tax Equation
**

Taxable Of income (x) But not Tax owed (y) amount Tax equation is over over Is over $0 $8700 10% $0 y = 0.10x $8700 $35,350 $870 + 15% $8700 y = 0.15x -435 35,350 85,650 $4867.5 + 25% $35,350 y = 0.25x – 3,970 85,650 178,650 $17,442.50+28% $85,650 y = 0.28x – 6,539.5 178,650 388,350 $43,482.5+33% $178,650 y = 0.33x – 15, 472 388,350 No limit $112,683.5+35% $388,350 y = 0.38x – 23,239 For the 15% bracket, y = 0.15x – 435 = 0.15(x – 2900) = 870 + 0.15(x – 8700) For the highest 35% bracket, y = 0.38x – 23,239 = 112,683.5 + (x – 388,350)

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$2,000

$1,500

y = mx + c = m(x – x0) y/x = m + (c/x) = 0.15 – (435/x) y = mx (c = 0, x0 = 0) y/x = m = 0.10

(15,000, 1815) y/x = 0.121 (10,000, 1065) y/x = 0.107

Tax owed, y

$1,000

$500

y/x = 0.10 = constant

$0 $0 $4,000 $8,000 $12,000 $16,000

Taxable income, x

Figure 7: The US tax code is a series of straight line segments, with increasing slopes (and increasing intercepts x0 = -c/m) as shown here for the lowest two brackets. The ratio y/x, the percent of income paid as taxes, keeps increasing as taxable income x increases. This is true for ALL tax brackets, except the lowest (with c = 0 and x0 = -c/m = 0). The maximum value the ratio y/x = m and is achieved only when x approaches the limit of the tax bracket. This is the significance of the slope m. The maximum value of the ratio y/x is always less than m (when c < 0). If we use the term “tax percent” for the ratio y/x, as opposed to “tax rate” for the slope m, it is clear that no one is the second tax bracket pays 15% of the total income as taxes. Only the marginal tax rate is 15%, which means that if income increases by ∆x within this bracket, tax owed will go up by ∆y = m∆x = 0.15∆x. The ratio y/x < m = ∆y/∆x since c < 0, because of the way the tax code is designed. When taxable income increases by a fixed amount ∆x, the tax owed always goes up by the same fixed amount ∆y and the ratio m = ∆y/∆x = marginal tax rate, is a constant (see tax code for 2012 converted to a table). Likewise, the observations on various companies suggests that when revenues increase by a

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fixed amount ∆x, the profits always go up by the same fixed amount ∆y and the slope h = ∆y/∆x is a constant. I have proposed this slope as a new measure of profitability of a company and called it the MPR (see references cited), the marginal profit rate, just like the marginal tax rate.

250 200

Number of Hits, y

150 100 50 0 -50 -100

y = hx + c = h(x – x0) BA = y/x = h + (c/x) = 0.525 – (84.53/x)

0

100

200

300

400

500

600

700

Number of At Bats, x

Figure 8: Babe Ruth’s batting statistics with the New York Yankees (1920-1935). Except for his final season (72 AB and 13 Hits), the AB varied between a minimum of 359, in the 1925 season, to a maximum of 540, in the 1921 and 1927 seasons. The 1927 season was Babe Ruth’s record year when he hit 60 Home Runs. The best-fit line has the equation y = 0.525x – 84.53 = 0.525 (x – 161.14) = h(x – x0) which leads to the conclusion of increasing BA = y/x with increase AB. The negative intercept c leads to the high rate of increase of hits with AB and also led to Babe Ruth’s legendary status. The more he batted, the better was his batting average (click here for the raw data used to prepare this plot). Baseball legend Babe Ruth’s batting statistics also reveals a nice linear relation, see Figure 8, of the type y = hx + c = 0.525x – 84.53 with a regression

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coefficient r2 = 0.9005. Hence, because of the negative intercept c = - 84.53, Babe Ruth’s BA = y/x = 0.525 – (84.53/x) was increasing as the number of “At Bats” x increased. This perception of an increasing BA with increasing AB was also the reason for Babe Ruth’s legendary. The more he batted, the better he seemed to be getting as far as the BA was concerned. But, look at the x-y graph. The number of hits H always increased at the same fixed rate h = ∆y/∆x = 0.525. If the AB increased by a fixed amount ∆x, the hits increased by the same fixed amount ∆y = h∆x. This can be ascertained by considering the several (x, y) pairs such as (406, 128) for 1922 and (457, 156) for 1932. The AB increased by (457 – 406) = 51 and the Hits increased b (156 – 128) = 28 for a “rate” h = ∆y/∆x = 28/51 = 0.549.

250 200

Number of Hits, y

150

100 50 0 -50 -100

y = hx + c = h(x – x0) BA = y/x = h + (c/x) = 0.525 – (84.53/x)

0

100

200

300

400

500

600

700

Number of At Bats, x

Figure 9: Babe Ruth’s complete batting statistics including the early Boston Red Sox years (1914-1919). The solid red dots here are the data for these six years. Notice how, with increasing AB, Ruth’s Red Sox years merge with his Yankee years. Indeed, the data point for 1919 (AB = 432 and H = 139) falls smack on the

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regression line deduced for the New York Yankee years (1920-1935). The data for 1918 (AB = 317, H = 95) falls close to the Yankee regression line. Thus, it is clear that the slope of the x-y graph (AB-H graph) also has a fundamental significance and can be compared to the fixed slope encountered in the tax problem (the marginal tax rate, taxes increase at a fixed rate with increasing taxable income). See also: 1927 Season, Babe Ruth, Game by game Batting logs

http://www.baseball-almanac.com/players/hittinglogs.php?p=ruthba01&y=1927

1935 Season, Babe Ruth, Game by game Batting logs http://www.baseballalmanac.com/players/hittinglogs.php?p=ruthba01&y=1935 This was Ruth’s final season. He played only in April and May. The slope h of the graph is the “rate” at which hits increase as the “at bats” increase. Many other (x, y) pairs that fall on the linear regression yield similar “rates”. The same is also true for the (x, y) pairs that seem to fall on a parallel line either above or below the regression line deduced here. Babe Ruth’s monthly batting average for the 1927 season, the year when Ruth hit a record 60 home runs (held until ) is illustrated in Figure 10, see monthly batting data summary from the sources just cited.

**Table 6: Babe Ruth’s Batting Stats from the 1927 season
**

Data for individual months Month At Bats Hits BA = AB/H April-27 51 17 0.333 May-27 106 37 0.349 June-27 76 29 0.382 July-27 111 47 0.423 Aug-27 90 23 0.256 Sep-27 103 39 0.379 Oct-27 3 0 Cumulative at end of month At Bats Hits BA =AB/H 51 17 0.333 157 54 0.344 233 83 0.356 344 130 0.378 434 153 0.353 537 192 0.358 540 192 0.356

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60

50

Number of Hits, y

40

Babe Ruth, 1927 y = hx + c = h(x – x0) BA = y/x = h + (c/x) = 0.431 – (6.587/x)

30

20

10

0

0

20

40

60

80

100

120

140

160

Number of At Bats, x

Figure 10: Babe Ruth’s monthly batting statistics for the 1927 season, the year of the 60 Home Runs record. Here we consider the individual monthly data. A nice linear relation is again observed, with the best-fit equation y = 0.431x – 6.587 = 0.431 (x – 15.279), with a linear regression co-efficient r2 = 0.782 . The October 1927 data point (3, 0) was excluded from the regression analysis. The negative intercept c = - 6.587 means that the BA = y/x = 0.431 – (6.587/x) increases as the number of AB increases. The theoretical maximum value of the BA is the slope h = 0.431. For the 1927 season, Ruth’s BA = 0.356, with the October 1927 data and BA = 0.358 if it is excluded. (The graph of the cumulative data, not plotted here, yields a nearly PERFECT straight line y = 0.362x – 0.992 = 0.362 (x – 2.744), with a linear regression co-efficient r2 = 0.997 . This is being discussed in a separate article just on the Babe Ruth batting statistics where we will discuss also the significance of the nonzero intercept c.)

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**In conclusion, it is clear that the OT arrivals is described by the simple
**

linear relation y = hx + c, where x is the total number of flights and y the number of OT arrivals. Hence, the ratio y/x, which is the OT percent, is affected by the number of flights operated by an airline. The y/x ratio analysis therefore favors the smaller airlines, such as Virgin America, while putting larger airlines such as Southwest at a disadvantage. The following OT statistics compiled from the OT study reported here is noteworthy. a) The effect of size of operations (i.e., the number of flights operated by an airline) does not seem to be properly reflected in the current AQR score. The ratio analysis seems to favor smaller airlines (with fewer flights) at the expense of larger airlines. Fewer flights also mean improved OT and this also means fewer missed bags, denied boarding and opportunities for customer complaints. Hence, it is suggested that attempts be made to account for the ‘size effect’ represented by the number of flights by a carrier in future AQR scores. b) Virgin America operated a total of 58,972 flights during the 13-month period January 2012 to January 2013 with an OT arrival record of 49,986. Express Jet, on the other hand, operated 798,789 flights with an OT arrival record of 611, 104, yielding a lower OT percent. Southwest Airlines operated 1,229,704 flights during the same period with an OT arrival record of 1,023,849. On a x-y graph, all the three airlines fall on the same straight line with a finite nonzero intercept. c) Virgin America operated only 111 flights to Boston in January 2013, with 108 OT record (97.3% OT), compared to 2803 flights by Jet Blue (81.9%) and 1447 flights by US Airways (851.1% OT), both lower ranked. The airlines with the higher number of flights had a lower OT percent, but the data can again be shown to fall on the same straight line y = hx + c. The larger airlines are thus at a disadvantage in the ratio analysis. d) Considering the airline industry as a whole, the months of December and July seem to have a significantly lower OT record compared to the months of March to May and November (based on 2012 figures). Overall, in the 13-month period from January 2012 to January 2013,

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more than 1.2 million flights (of more than 6.4 million) were delayed, which represents OT record only 81.8% and suggests a lot of room for improvement in this statistic. e) The analogies drawn here, from baseball batting statistics, the tax problem, and the analysis of the profits-revenues data for various companies, illustrate the fundamental significance of the linear relation for the OT statistic.

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Appendix 1

Data from Airline Quality Report, Refs. [1,2] The following “On-time arrival” data tables for 2012 and 2011 are page 48 of the 2013 and the 2013 AQR

The following is from page 8 of the 2013 AQR.

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Data from Bureau of Transportation Statistics, Ref. [7]

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**Appendix 2 Interesting Mathematical Property of Ratios and an Overlooked Property of a Straight line
**

We will consider here some simple illustrations to highlight the behavior of the y/x ratio as we move up and down the four different types of straight lines illustrated in Figures 1 and 2 of this appendix. The straight line in Figure 1 passes through the origin (0,0) and has the equation y = mx. The ratio y/x = m = constant as we move up or down this line and is equal to the slope of the line. A doubling of x produces a doubling of y, a tripling of x produces a tripling and so on. You can check out the x and y values by following the gridlines.

25

Dependent variable, y

20

y = mx = 0.5x y/x = m = 0.50

15

10

5

0 0 10 20 30 40 50

Independent variable, x

Figure A2.1: The straight line y = mx passing through the origin. The ratio y/x = m = constant at all points along this line.

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Now, consider the situation when the straight line does not pass through the origin, as illustrated in Figure 2. The behavior y/x is illustrated in Figures 3a and 3b. Now, think about what this means when we use simple y/x ratios to make important decisions, like we do on a daily basis. The familiar profit margin of a company is a ratio, the ratio of profits y to revenues x. The earning per share is a ratio, the ratio of earnings (another name for profits) and the total number of outstanding shares. Is there a nonzero intercept in these problem? Does a doubling of revenues lead to a doubling profits? If the answer is NO, there must be a nonzero intercept. What does the nonzero intercept c mean? What does it signify?

25

Dependent variable, y

20

Type II Slope h > 0, Intercept c > 0

15

10

Type I Slope h > 0, Intercept c < 0

5

0

**Type III Slope h < 0, Intercept c > 0
**

0 10 20 30 40 50

-5

Independent variable, x

Figure A2.2: Three types of straight lines that do NOT pass through the origin.

Type I: Positive slope, negative intercept (h > 0, c < 0): The ratio y/x increases as x increases when we move this straight line (and vice versa when x decreases). However, the maximum value of the y/x ratio is equal to h, the

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slope of the straight line. Mathematically speaking, the graph of y/x versus x is an upward sloping hyperbola since y/x = h + (c/x). Type II: Positive slope, positive intercept (h > 0, c > 0): The ratio y/x decreases as x increases when we move up this straight line (as vice versa when x decreases). The limiting value of y/x is again equal to h. Type III: Negative slope, positive intercept (h < 0, c > 0): The ratio y/x decreases as x increases when we move down this straight line. Eventually, y becomes negative and the ratio y/x also becomes negative and reaches the limiting value h < 0.

1.0

0.9

0.8

y = 0.5x + 2 y/x = 0.5 + (2/x)

The ratio y/x

0.7

0.6

y = 0.5x y/x = 0.5

A B C

y = 0.5x - 2 y/x = 0.5 - (2/x)

0 20 40 60 80 100 120

0.5

0.4 0.3 0.2 0.1 0.0

Independent variable, x

Figure A2.3a: The ratio y/x is NOT a constant and varies on different points on a straight line, if the straight line does NOT pass through the origin. The ratio y/x is a constant at all points on a straight line only it passes through the origin.

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If we put all the three cases together, we get the simple nonlinear equation 1 below, y = mxn [e-ax / (1 + be-ax) ] + c ……..(1)

2.50 2.00

The ratio y/x

1.50 1.00 0.50 0.00 -0.50 -1.00

y = -0.5x + 20 y/x = -0.5 + (20/x)

0

20

40

60

80

100

120

Independent variable, x

Figure A2.3b: Variation of the ratio y/x on the Type III straight line, y = -0.5x + 20. As x increases, the ratio y/x = -0.5 + (20/x) decrease continuously and becomes zero when x = 40. For x > 40, the ratio y/x becomes negative and approaches the limiting value of h = -0.5, the slope of the line, at very large values of x. The graph is a falling hyperbola. (Mathematically speaking, y/x → h, as x → ∞, for all three cases. This is called the asymptotic value of the ratio y/x for very large x.) For the special case of n = 1, a = 0 and b = 0, equation 1 reduces to the general equation for a straight line and covers all the cases just discussed. We will discuss equation 1 in more detail later in this article. The three dashes line in

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Figure 3c are the Type I (h > 0, c < 0), Type II (h > 0, c > 0) and Type III (h < 0, c > 0) straight lines. The smooth curve is the graph of equation 1 with the values of m = 1, n = 0.5, a = 0.1 b = 0 and c = -0.1. The maximum point occurs at x = xm = n/a = 0.5/0.1 = 5.0.

1.8 1.6

Dependent variable, y

1.4 1.2 1.0

0.8 0.6 0.4 0.2 0.0 -0.2 0 2 4 6 8 10 12 14 16

Independent variable, x

Figure A2.3c: The simplest mathematical equation relating the variables x and y with a maximum point. All the three types of straight lines can be thought of as small segments of this general curve relating the variables x and y. The use of various y/x ratios, such as the On-Time (OT) arrival ratio discussed here in detail must be considered against this background. Profit margin, earnings per share, unemployment rate, labor productivity, birth rates, death rates, various fatality rates (like the currents gun deaths versus car deaths controversy) are all examples of how we use y/x ratios. The x-y relation, such as the OT relation described here is often overlooked and attention is paid exclusively to the y/x as in Airline Quality Ratings. The use of such a y/x ratio

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clearly favors smaller airlines and puts the bigger ones (like Southwest Airlines with more than 1 million flights) at a disadvantage. The same considerations apply in the automotive industry when we compare companies like GM, Ford, and Chrysler (which used to operate huge automotive plants and produce a lot more cars and trucks) with their counterparts like Honda, Nissan, and Toytoa (with much lower production levels). The repeated unfavorable comparisons of the American automotive companies with their Japanese counterparts eventually led to their bad image of being inefficient, with bloated labor costs, which led to lost customers and the eventual filing of bankruptcy of the “old” GM on June 1, 2009. Thus, how we use ratio to make different comparisons and make important decisions is of great fundamental importance to society as a whole. Rather surprisingly, the mathematical property of y/x ratios and a straight line, which has been highlighted here, seems to have been completely overlooked. If you have heard about apples and oranges comparisons, it is because of this nonzero c and what it does to the ratio y/x. Perhaps, melons and pineapples hereon! , may be, instead of apples and oranges.

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Reference List

1. Airline Quality Rating 2013, Purdue University, e-Pubs, April 8, 2013, by Dr. Brent D. Bowen (Purdue University, College of Technology) and Dr. Dean E. Headley (Wichita State University, W. Frank Barton School of Business) http://docs.lib.purdue.edu/aqrr/23/ 2. Airline Quality Rating 2012, by Dr. Brent D. Bowen (Purdue University, College of Technology) and Dr. Dean E. Headley (Wichita State University, W. Frank Barton School of Business), Table on Page 48 of the report gives percent on time arrivals for each airline for each month and the annual average; see image extracted below from page 48. 3. America’s Best Airlines, by David M Ewalt, April 8, 2013 http://www.forbes.com/sites/davidewalt/2013/04/08/americas-bestairlines/ 4. Airline Quality Report sorts out duds from the dynamos, CNN Travel, by Jim Barnett, April 8, 2013, the two way Breaking News from NPR, http://www.cnn.com/2013/04/08/travel/airline-qualityreport/?hpt=us_c2 The Airline Quality Rankings Report looks at the 14 largest U.S. airlines and is based on an analysis of U.S. Department of Transportation figures. It's co-authored by Brent Bowen, the head of the Department of Aviation Technology at Purdue University, and Dean Headley of Wichita State. 5. Airline quality study finds more on-time flights, fewer lost bags, LA Times, April 9, 2013, by Hugo Martin, http://www.latimes.com/business/la-fi-airline-quality-report20130409,0,4799186.story?track=rss&utm_source=feedburner&utm_me dium=feed&utm_campaign=Feed%3A+latimes%2Fmostviewed+%28L.A. +Times+-+Most+Viewed+Stories%29 Complaints against carriers jumped 20%. 6. Complaints Soar but Airlines’ Quality Ratings Stay High, by Mark Memmott, April 8, 2013, http://www.npr.org/blogs/thetwoway/2013/04/08/176566213/complaints-soar-but-airlines-qualityrating-stays-high Customers are more unhappy, but the carriers continue to improve their

on-time performances and they're losing fewer bags. Those are among ... Page | 38

7. Bibliography, Articles on Extension of Planck’s Ideas and Einstein’s Ideas beyond physics, Compiled on April 16, 2013, http://www.scribd.com/doc/136492067/Bibliography-Articles-on-theExtension-of-Planck-s-Ideas-and-Einstein-s-Ideas-on-Energy-Quantumto-topics-Outside-Physics-by-V-Laxmanan 8. Airline Quality Rating, http://www.airlinequalityrating.com/

Contact Information

Dr. Dean E. Headley Associate Professor Department of Marketing Wichita State University W. Frank Barton School of Business 304 Clinton Hall Wichita, KS 67260-0084 Office: (316) 978-3367 Fax: (316) 978-3276 email: dean.headley@wichita.edu Dr. Brent D. Bowen Professor College of Technology Department of Aviation Technology Department of Aviation Technology Purdue University 1401 Aviation Drive West Lafayette, IN 47907-2015 Office: (765) 494-7027 Fax: (765) 494-2305 email: A3IR@purdue.edu

9. Air Travel Consumer Reports, Aviation Consumer Protection and Enforcement, US Department of Transportation, http://airconsumer.dot.gov/reports/ Mar 2013 Report has the data for: The pdf file can be downloaded by clicking here.

Flight Delays: January 2013 / 12 Months Ending January 2013 Mishandled Baggage: January 2013 Oversales: 4th Quarter 2012 / January – December 2012 Consumer Complaints: January 2013 Customer Service Reports to the Dept. of Homeland Security: January 2013 Airline Animal Incident Reports: January 2013

10. Airline On-Time Statistics and Delay Causes, Research and Innovative Technology Administration (RITA), Bureau of Transportation Statistics,

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11.

12.

13. 14.

Click on Download Data to get total flights to different cities and the number of delayed flights, see image of the data obtained from Bureau of Transportation Statistics website. Click on download raw data to get full stats or click on view in table format to get a nice brief summary. For Virgin America, a Microsoft Excel file, with 188 OT ratios, is obtained by clicking on download data. http://www.transtats.bts.gov/ot_delay/OT_DelayCause1.asp?pn=1 Babe Ruth’s 1923 Batting Statistics and Einstein’s Work Function, Published April 17, 2013, http://www.scribd.com/doc/136489156/Babe-Ruth-s-1923-BattingStatistics-and-Einstein-s-Work-Function Babe Ruth Batting Statistics and Einstein’s Work Function, To be Published April 17, 2013, http://www.scribd.com/doc/136556738/Babe-Ruth-Batting-Statisticsand-Einstein-s-Work-Function Legendre, On Least Squares, English Translation of the original paper http://www.york.ac.uk/depts/maths/histstat/legendre.pdf Line of Best-Fit, Least Squares Method, see worked example given http://hotmath.com/hotmath_help/topics/line-of-best-fit.html The formula for h used in this example is an actually approximate one and was used, before the advent of modern computers, since it only involves the determination of x2 and xy and the sum of all the values of x, y, x2 and xy. The exact formula, is given below, with xm and ym denoting the “mean” or “average” values of x and y in the data set, and ym = hxm + c since the “best-fit” line always passes through the point (xm , ym). h = ∑ (x – xm)(y – ym)/ ∑ (x – xm)2 Determine the deviations of the individual x and y values from the “mean”, or “average”, (x – xm) and (y – ym). Determine the product (x – xm)(y – ym) and their sum. This gives the numerator in the expression for h. Determine the square (x – xm)2 and the sum. This gives the denominator in the expression for h. This also fixes the intercept c via ym = hxm = c . Then, using the regression equation, determine the predicted value yb on the best-fit line and the vertical deviation (y – yb)

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and the squares (y- yb)2. The sum of these squares is a minimum. This can be checked by assigning other values for h (using any two points) and allowing the graph to pivot around (xm, ym). The regression coefficient r2 = 1 - { ∑(y- yb)2 / ∑(y- ym)2 } is a measure of the strength of the correlation between x and y (or y/x versus x). For a perfect correlation, when all points lie exactly on the graph, r2 =+1.000.

Related Articles

1. The Future of Southwest Airlines: The Unknown Story of Rising Costs, August 14, 2012, http://www.scribd.com/doc/102835946/The-Futurefor-Southwest-Airlines-The-Unknown-Story-of-Rising-Costs-and-theMaximum-Point-on-Profits-Revenues-Curve 2. The Air Tran Story: The Merger and the Maximum Point on the Profits-Revenues Graph, August 14, 2012, http://www.scribd.com/doc/102832984/The-Air-Tran-Story-TheMerger-and-Maximum-Point-on-Profits-Revenues-Graph 3. On a heuristic point of view about the creation and conversion of light, by A. Einstein, 1905, Einstein’s original paper which showed light can be viewed as particles with fixed energy quanta,

http://www.ffn.ub.es/luisnavarro/nuevo_maletin/Einstein_1905_heuristic.pdf

4. On a heuristic point of view concerning the production and transformation of light, Paper 5, in Einstein’s Miraculous Year: Five Papers that changed the face of physics, Princeton Univ. Press (1998). http://press.princeton.edu/einstein/materials/light_quanta.pdf 5. Einstein’s Quanta, Entropy, and the Photoelectric Effect, by Dwight E. Neuenschwander, Excellent discussion about how Einstein arrives at his conception of light quanta from the property called entropy possessed by radiation in the form light,

http://www.sigmapisigma.org/radiations/2004/elegant_connections_f04.pdf

6. The electron and light quant from experimental point of view, May 23, 1924, Nobel Lecture, by Robert Millikan, see Figure 4 on page 63, for experiments with sodium. The straight line graph for photoelectric

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7.

8.

9.

10. 11. 12.

13.

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experiments confirms Einstein’s law. The slope of the graph gives the universal Planck constant “h”, one of the fundamental constants of nature. http://www.nobelprize.org/nobel_prizes/physics/laureates/1923/millika n-lecture.pdf On Cathode Rays, Nobel Lecture, May 28, 1906, by Philip Lenard, http://www.nobelprize.org/nobel_prizes/physics/laureates/1905/lenardlecture.pdf Focus: Centennial Focus, Millikan’s Measurement of the Planck constant, April 22, 1999, by Gerald Holton, http://physics.aps.org/story/v3/st23 The Photoelectric Effect, by M. Brandl, Project PhysNet, http://www.ifsc.usp.br/~lavfis/BancoApostilasImagens/ApEfFotoeletrico /The%20Photoelectric%20Effect%20-%20m213.pdf The Millikan experiment to verify the Photoelectric relationship, http://tap.iop.org/atoms/quantum/502/file_47016.pdf Photoelectric Effect, http://physics.tutorvista.com/modernphysics/photoelectric-effect.html Money in Economics is Just like Energy in Physics: Extending Planck’s Law Beyond Physics, Published Jan 14, 2013, Introduction to the generalized statement of Planck’s radiation law and application to describe the maximum point on the profits-revenues graph of a company (the “old”, GM, Ford, Yahoo), http://www.scribd.com/doc/120324960/Money-inEconomics-is-Just-like-Energy-in-Physics-Extending-Planck-s-law-beyondPhysics Simple Mathematical Laws Govern Corporate Financial Behavior: A Brief Compilation of Profits-Revenues Data, June 4, 2012, http://www.scribd.com/doc/95906902/Simple-Mathematical-LawsGovern-Corporate-Financial-Behavior-A-Brief-Compilation-of-ProfitsRevenues-Data Now, the Good News for Tesla: Analysis of the Profits (Losses)Revenues Data and a New Measure of Profitability (MPR and MCR), Published Feb 27, 2013, http://www.scribd.com/doc/127436107/TeslaMotors-Profits-Losses-Revenues-Analysis-and-a-New-Measure-ofProfitability-MPR

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15. Tesla Motors: Nonlinear Model for Profitability Analysis, Published February 28, 2013, http://www.scribd.com/doc/127767159/TeslaMotors-Nonlinear-Model-for-Profitability-Analysis Nonlinear model and breakeven revenue calculations. 16. GM Before the Bankruptcy: Maximum point on the profits-revenues graph, http://www.scribd.com/doc/103938349/GM-Before-theBankruptcy-Maximum-Point-on-Profits-Revenue-Graph , Published August 25, 2012. 17. The New GM: A Brief Analysis of the Profits-Revenues Data, http://www.scribd.com/doc/103600274/The-New-GM-A-Brief-Analysisof-the-Profits-Revenues-Data-through-1Q2011, Published May 9, 2011 and again on August 22, 2012, Discussion of the new GM data from 1Q2010 to 1Q2011. 18. Why Can’t GM be more like Microsoft? The New GM Just May be. http://www.scribd.com/doc/103607023/Why-Can-t-General-Motors-bemore-like-Microsoft-The-new-GM-may-just-be Published August 22, 2012. 19. Google: A Lovable One-trick Pony, July 1, 2012, http://www.scribd.com/doc/98825141/Google-A-Lovable-One-TrickPony-Another-Single-Product-Company-Analyzed-Using-the-NewMethodology 20. Kia Motor Company: A Disappearing Brand http://www.scribd.com/doc/99333764/Kia-Motor-Company-ADisppearing-Brand, Published July 6, 2012. 21. A Fresh Look at Microsoft after its Historic Quarterly Loss, Published July 25, 2012, http://www.scribd.com/doc/101062823/A-Fresh-Look-atMicrosoft-After-its-Historic-Quarterly-Loss 22. A Second Look at Microsoft after its Quarterly loss, Published July 30, 2012, http://www.scribd.com/doc/1015181§/A-Second-Look-atMicrosoft-After-the-Historic-Quarterly-Loss 23. The Perfect Apple –II, Taking a Second Bite, A Simple Methodology for Revenues Prediction, http://www.scribd.com/doc/101503988/ThePerfect-Apple-II Published Jul 30, 2012, 24. The Perfect Apple: How it can be destroyed, Published June 7, 2012, http://www.scribd.com/doc/96228131/The-Perfect-Apple-How-it-canbe-destroyed

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25. Three Types of Companies: From Quantum Physics to Economics, May 24, 2012, http://www.scribd.com/doc/94647467/Three-Types-ofCompanies-From-Quantum-Physics-to-Economics 26. Some Examples of Corporate Financial Behavior, June 4, 2012, http://www.scribd.com/doc/95906902/Simple-Mathematical-LawsGovern-Corporate-Financial-Behavior-A-Brief-Compilation-of-ProfitsRevenues-Data 27. Yahoo! Inc. Quick Look at recent profits-revenues trends, Published Sep 30, 2012, http://www.scribd.com/doc/108514055/Yahoo-Inc-QuickLook-at-Recent-Profits-Revenues-Trends 28. Yahoo! Inc. Maximum Point on the Quarterly Profits-Revenues Graph, Published Oct 11, 2012, http://www.scribd.com/doc/109769005/YahooInc-Maximum-Point-on-the-Quarterly-Profits-Revenues-Graph 29. Yahoo! Inc. Maximum Point on the Quarterly Profits-Revenues Graph, Published Sep 30, 2012, http://www.scribd.com/doc/108512834/YahooInc-Maximum-Point-on-the-Profits-Revenues-Graph 30. Amazon.com Profits-Revenues Analysis: My Facebook Posts, Jan 18,2013, http://www.scribd.com/doc/120933845/Amazon-com-Profitsand-Revenues-Analysis-My-Facebook-Posts 31. Amazon.com, Analysis of the Profits-Revenues Data, Published Sep 25, 2012, http://www.scribd.com/doc/106881274/Amazon-ProfitsRevenues-Data-Analysis 32. Research In Motion (RIM): Will Disappear in 2013, July 5, 2012, http://www.scribd.com/doc/99181402/Research-in-Motion-RIMLimited-Will-Disappear-in-2013 33. Mount Profit Revealed by Ford Motor Company, May 29, 2012, http://www.scribd.com/doc/95140101/Ford-Motor-Company-DataReveals-Mount-Profit

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**About the author V. Laxmanan, Sc. D.
**

The author obtained his Bachelor’s degree (B. E.) in Mechanical Engineering from the University of Poona and his Master’s degree (M. E.), also in Mechanical Engineering, from the Indian Institute of Science, Bangalore, followed by a Master’s (S. M.) and Doctoral (Sc. D.) degrees in Materials Engineering from the Massachusetts Institute of Technology, Cambridge, MA, USA. He then spent his entire professional career at leading US research institutions (MIT, Allied Chemical Corporate R & D, now part of Honeywell, NASA, Case Western Reserve University (CWRU), and General Motors Research and Development Center in Warren, MI). He holds four patents in materials processing, has co-authored two books and published several scientific papers in leading peer-reviewed international journals. His expertise includes developing simple mathematical models to explain the behavior of complex systems. While at NASA and CWRU, he was responsible for developing material processing experiments to be performed aboard the space shuttle and developed a simple mathematical model to explain the growth Christmas-tree, or snowflake, like structures (called dendrites) widely observed in many types of liquid-to-solid phase transformations (e.g., freezing of all commercial metals and alloys, freezing of water, and, yes, production of snowflakes!). This led to a simple model to explain the growth of dendritic structures in both the groundbased experiments and in the space shuttle experiments. More recently, he has been interested in the analysis of the large volumes of data from financial and economic systems and has developed what may be called the Quantum Business Model (QBM). This extends (to financial and economic systems) the mathematical arguments used by Max Planck to develop quantum physics using the analogy Energy = Money, i.e., energy in physics is like money in economics. Einstein applied Planck’s ideas to describe the photoelectric effect (by treating light as being composed of particles called photons, each with the fixed quantum of energy conceived by Planck). The mathematical law deduced by Planck, referred to here as the generalized power-exponential law, might

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actually have many applications far beyond blackbody radiation studies where it was first conceived. Einstein’s photoelectric law is a simple linear law and was deduced from Planck’s non-linear law for describing blackbody radiation. It appears that financial and economic systems can be modeled using a similar approach. Finance, business, economics and management sciences now essentially seem to operate like astronomy and physics before the advent of Kepler and Newton. Finally, during my professional career, I also twice had the opportunity and great honor to make presentations to two Nobel laureates: first at NASA to Prof. Robert Schrieffer (1972 Physics Nobel Prize), who was the Chairman of the Schrieffer Committee appointed to review NASA’s space flight experiments (following the loss of the space shuttle Challenger on January 28, 1986) and second at GM Research Labs to Prof. Robert Solow (1987 Nobel Prize in economics), who was Chairman of Corporate Research Review Committee, appointed by GM corporate management.

**Cover page of AirTran 2000 Annual Report
**

Can you see that plane flying above the tall tree tops that make a nearly perfect circle? It requires a great deal of imagination to see and to photograph it.

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