Business 2.0 has an interesting feature this month: Road Warrior’s Guide to Travel (at the time of publishing, the site didn’t have the April issue content up). The best of the Road Warrior (?) tips involve air travel. Check out Flight Stats.
The best way to see the value immediately is through the Flight Report. I can imagine scheduling all my business travel through an engine like this. And imagine if you actually paid for performance? I’ll use LGA to ORD as the test flight. It would work something like this:
First, if you delve into on-time performance metrics, you’ll see that on-time is relative. I can travel from New York to Chicago and have a scheduled flight time of 2 hours and 26 minutes if I leave at 6 am and 2 hours and 35 minutes if I leave at 7 am. The later flight has 9 extra minutes built in. Why should I pay the same for a flight that is scheduled for 6% longer for me, all things equal.
The key there is “all things equal.” If price adequately reflects demand (which we shouldn’t assume) we have to understand the components of demand. Comfort, speed, convenience, meets schedule needs, etc…
So let’s go back to the LGA to ORD example. There are five flights that leave on a weekday between 6 and 7 am. Say I need to get to a 10 am meeting in the loop. My primary concern is making the meeting on time–but I also don’t want to get up any earlier than I need to. These five flights are all in play.
| Flight # |
Airline |
Departs |
Arrives |
| AA 301 |
American |
6:00 am |
7:26 am |
| UA 667 |
United |
6:00 am |
7:30 am |
| AA 303 |
American |
6:30 am |
7:59 am |
| UA 669 |
United |
7:00 am |
8:34 am |
| AA 305 |
American |
7:00 am |
8:35 am |
So I’ll start with the two 7 am flights. How much time will I have from the time I land until the meeting? I want to give myself 60 minutes from the arrival. That means I have to arrive by 9:00. Looks like I won’t have a problem with either flight. But what are the chances of landing on time? The United flight (669) is on time (within 15 minutes of sked arrival) 78% of the time. The American (305) does a little better at 81%.
The next check is, if it is late, how late will it be? United averages 14 minutes delay with a standard deviation around 11. American comes in with an average of 15 minutes and a high standard deviation of around 31 minutes. So while they have a good chance of being on time, the American flight has much more variance in arrival time–if it is late it will have a much greater chance of being significantly late.
So based on performance, how much more or less will I pay for the American flight over the United flight?
Rather than using Flight Stats on-time percentages, I’m using their average and standard deviation on delays to come up with the 90% Minutes metric: I have a 90% chance of being no more than x minutes late.
For American flight 305, my 90%m is 55 minutes — 90% chance of arrive by 9:29 am.
United flight 669 90%m is 29 minutes — 90% chance of arriving by 9:03 am.
or
I have an 85% chance of arriving by my target time on United 669–subtract a 6% chance of the flight being cancelled = 79% chance of success.
I have a 62% chance of arriving by my target time on American 305–subtract a 6% chance of the flight being cancelled = 56%
This is just the start. If the meeting start time is very important–I’m depending on other people also arriving at certain times, 79% might not even be good enough. This also is using an average that hasn’t accounted for seasonality or additional weather concerns, that I can tell. Without taking this all the way through, so far I decided I have a 24% probability advantage on United. I’ll work some more on this in a later post.