Airline7 - Mimis Orlando Shuttle by Ray Orrange Well, that...

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Mimi’s Orlando Shuttle by Ray Orrange “Well, that commitment we made on fuel costs should allow for some stability. I have locked in fuel costs for the next 12 months,” said Mimi McAulley, owner and operator of Mimi’s Orlando Shuttle, “I will pay $2.51 per gallon of jet fuel. Now on to a reservations strategy” Mimi has operated a daily round-trip Buffalo/Orlando airline service since 1986. The business has been profitable, and in 2003 went from one to two round-trip flights per day. However, the fuel crisis of 2008, coupled with a long time problem with “no-shows” has seriously impacted the bottom line. The service has standard 6 am and 2 pm departures from Buffalo and 10 am and 6 pm departures from Orlando. Historical data indicates a pretty steady 8% “no show” rate. No deposit is taken for reservations and no fee is imposed for cancellations. Mimi has steadfastly refused to overbook the flights in part because she has no policy for compensating “bumped” passengers. Mimi leases a Boeing 737 for $3.65 million per year. The plane seats 150 passengers. The lease entitles Mimi to use of a plane 7 days per week and the charges include maintenance. Mimi also has a “replacement” clause in her lease whereby the owner of the airplane guarantees a replacement within one hour in the event Mimi’s plane is unable to fly. Additionally, Mimi pays an annual insurance policy of $650,000. Flight time is calculated to be 2.75 hours per takeoff. While actual flight time varies, Mimi used this figure in locking in the
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This note was uploaded on 02/23/2011 for the course ECON 2023 taught by Professor Rush during the Spring '08 term at University of Florida.

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Airline7 - Mimis Orlando Shuttle by Ray Orrange Well, that...

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