Case Study

BRIEF 1: Initial Analysis

Objective: Discuss various pricing strategies/methodologies employed by Industries other than airlines.
Identify one or more such strategies that can be translated to the commercial airline business.
Things to consider (but not limit to):
• Restrict the scope to pricing strategies that are not in use currently by airlines.
• Risks associated with your recommendation and an approximate value of revenue opportunity
BRIEF 2: Objective Analysis
Background
A senior executive at Etihad Airways has asked you to work on the viability of implementing Surge Pricing
at Etihad.
Understanding surge (Source: Uber)
When many people are trying to request a ride at the same time, fares surge to ensure that you can
request and receive the quick and convenient pickup you rely on. A variety of circumstances cause fares
to surge. For example, heavy rain, local sports events, and holidays can contribute to a temporary increase
in demand for rides that requires surge pricing. Surge pricing has two main effects. Some riders may choose
to wait a few minutes or take another form of transportation, causing demand in the area to decrease.
Drivers encouraged by surging fares will head to areas where rides are needed most. Once demand for
rides returns to normal levels, surge pricing ends. Fare estimates include any current surge pricing in your
area. Your app also notifies you when surge pricing is in effect. In order to request a ride, you’ll need to
agree to the current surge multiplier, which displays on your screen as a whole number and decimal when
you tap to request a ride. Please note that the surge multiplier only applies to the base, time, and distance
of your trip fare. Cancellation fees, tolls, and per-trip surcharges are not subject to surge pricing.
Here’s an example of how a fare would be charged for a surge rate of 1.5x on a $10 (USD) trip:
$2 base
$3 distance
$5 time
SUBTOTAL: $10
Surge multiplier of 1.5x = $15
Toll: $1
TOTAL: $16 ($15 + $1 toll)
Objective: Evaluate the application of Uber Surge Pricing to the airline industry.
You know Etihad’s network – select at most three traffic flows of Etihad. You are able to research and use
any publicly available data sets – traffic flows, fares, look to book ratios & schedules. If you do not find
access to any airline data, you can describe the data, creating dummy information if necessary. Your focus
should be on the commercial viability, through Etihad indirect and direct channels. Primary focus should
be on the revenue management aspect of the problem statement.
Structure your response to the commercial question of how do you identify what the surge multiplier
should be for airline fares. Demonstrate how you would analyze data, visualize it, and construct a
presentation to explain your recommendation. It is expected to provide an approximate value of the
revenue opportunity

TIMELINES: You have a maximum of 15 minutes to deliver your presentation.

(TIP: Please take this into consideration the time limit when designing your presentation – The total
number of slides AND the content could have an impact on this)

Page 2 of 2