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Susan Lopez, a consultant with Deloitte & Young, has just begun an engagement at Four Corners Airlines, which is based in Santa Fe, New Mexico. The company has fallen on hard times of late despite record profits for the rest of the airline industry. Management is somewhat set in its ways and could probably use some “new blood,” as the most recent hire to the firm’s executive team was 12 years ago.

In Lopez’s first meeting with the team, the airline’s chief executive officer commented that “all that mattered in this industry were load factors—the percentage of seats sold on scheduled flights. If load factors were adequate, everything else would take care of itself.” Lopez noted that while this measure was important, other, broader facets of operation were significant as well. She asked if any of the management team had heard of the balanced scorecard, and received dead silence as a response.

Based on her experiences with other engagements, including two that involved airlines, Lopez was convinced that the balanced scorecard could provide benefits in helping to solve the airline’s woes. After a presentation about the philosophy of the balanced scorecard, Four Corners Airlines’ management team accepted her idea, feeling that a shift in operating philosophy was needed for survival.

3. Identify the type of measure used to evaluate the key elements below. (Hint: There are 6 financial measurements, 6 customer-satisfaction measures, 8 internal business process measures, and 5 Learning and growth measures.)

table

Aircraft turnaround time between flights

Average age of aircraft in fleet

Average trip length (in miles)

Average wait time when calling reservations center

Cost per meal served

Earnings per share

Employee satisfaction scores

Employee training programs

Employee turnover

Enhancements to product line (new class of service)

Load factors

Market shareNet income

New unique features of frequent-flier club

Number of aircraft in fleet

Number of bags lostNumber of cities/new cities served

Number of passenger complaints

Operating expenses per seat mile

Passenger revenue per seat mile

Percentage of on-time arrivals

Percentage of on-time departures

Percentage of tickets sold through travel agents, reservation agents, and the Internet

Response time for resolving customer problems

Revenue growth

Answer 1

3.

Financial measures:

Net income   Operating expenses per seat mile

Earnings per share Cost per meal served

Passenger revenue per seat mile   Revenue growth

Customer-satisfaction measures:

Load factors   Number of bags lost

Number of passenger complaints   Market share

Average waits time when calling Response time for resolving

reservations center   customer problems

Internal operating measures:

Percentage of on-time arrivals Number of cities/new cities served

Percentage of on-time departures   Number of aircraft in fleet

Average trip length (in miles)      Average age of aircraft in fleet

Percentage of tickets sold through Aircraft turnaround time between

travel agents, reservation         flights

agents, and the Internet

Innovation/learning measures:

Enhancements to product line     Employee turnover

(new class of service)       Employee satisfaction scores

New unique features of frequent-flier Employee training programs

club