Transportation Intermodal

1
Transportation - Intermodal

• Via Water
• From sails to steam (1838 15 day crossing)
• Cruising (Now vs. Then)
• Point to Point vs. Repositioning (1957)
• Ferries (now up to 42 mph)
• Via Rails (UK 1825 US 1829, 1869 transcont.)
• Decline
• US Highway Act (1956), Jet service, Post office
  (1967)
• Amtrak (1971) Future??
• International Chunnel, Eurailpass (Japan,
  Russia, India)

2
Transportation by land

• Automobiles (Model T in 1908)
• 84 of all over-night travelers
• Car rentals increasing (75 business)
• Motorcoaches (busses)
• Intercity vs. Charter/Tour
• 1980 12, now only 6 of Interstate
• 1982 Bus Reform Act (deregulated)
• Less Interstate, more Intercity
• Main Market?

3
Air Travel

• Passenger Service (1919 London/Paris)
• 1926 (LA to SLC)
• Jet Service (1952 London/Johannesburg)
• 1958 (NYC to Miami)
• Past 20 yrs. 70 reduction in price)!
• Frequent Flyer 1981 American Airlines
• Load factor
• of revenue pax miles/ of avail seat miles

4
Deregulation Act of 1978

• Prior to
• No Price Competition
• Difficult to fly to new cities or discontinue
• Civil Aeronautic Board
• Tour Business not allowed
• Point to point flights

• Result of
• Complex pricing
• (multiple tiers)
• Fewer Airlines
• Package tours
• Hub and Spokes
• Bottlenecks at Hubs
• Sabre

5
Yield Management (Revenue Mgmt)

• Allocating capacity to customers at the right
  price to maximize profits
• Developed in 1988 by Bell Labs
• Initially a scheduling tool
• Results in
• Saving seats for Business Travelers
• Overbooking flights
• Cheap fares late (Priceline.com)

6
Yield Management (Cont.)

• Works best when
• Capacity is fixed
• Demand can be separated into segments
• Inventory is perishable
• Services can be sold in advance
• Demand fluctuates (Holidays)
• Marginal sales costs are low (1 seat), but
  marginal capacity costs are high (1 plane)