Problem Recognition, Definition, and Evaluation
In about 45 days my sister will be getting married and I need to plan travel to the United States. My biggest financial hurdle is the air travel to the wedding. My wife and I want to go business class on the long haul flight as it is very uncomfortable for me to sit in economy as I am 6’1” and don’t enjoy having my knees crunched against the seat in front of me for 12 straight hours.
As there are different prices for each classification of ticket, the question is which offers the best value?
Development of the feasible alternatives
- Pay for two full fare business class tickets (Class C or D ticket).
- Pay for two economy tickets and upgrade the long haul legs (Class Y ticket).
- Purchase enough miles to pay for one business class ticket, and buy a separate ticket (Class C or D ticket).
Develop the outcomes
- The cost of a full fare business class ticket is $2200 each for a total of $4400. The risk in choosing this outcome is I am out a large amount of cash, but I gain the most frequent flier miles.
- The cost of an economy ticket is $958.60 for a total of $1917.20. It will cost 100,000 miles to upgrade on the long haul flights. I have 83,000 miles and my wife has 5,000 miles. It will cost an additional $550.00 to transfer the miles and purchase the difference. For a total of $2417.20. This is the most cost effective model, but I have to use all of my frequent flier miles and gain miles at the economy rate for the flights taken. The airline will also charge an additional $1000 round trip to use the miles because of change of seat class and taxes for a final total of $3417.20
- It costs 125,000 miles to pay for a ticket with miles. To purchase the difference $1389.50 for the miles and an additional $2200 for the ticket. Total cost is $3589.50. One passenger would get no miles at all and the other passenger would get miles at the business class rate.
Selection of the criterion
|Attribute||Rank – (1= High)||Alternative Rank|
|Cost||1||Alternative 2 > Alternative 3 > Alternative 1|
|Miles||2||Alternative 1 > Alternative 2 > Alternative 3|
Analysis and comparison of the alternatives
As finances are tight, option 1 is economically unfeasible for me. If the costs were lower it would be the preferred method as it would guarantee me gold membership status for next year and allow me to upgrade at another date and time.
The second alternative is the most economically feasible. As well since I have had personal issues with the airline (missing 130,000 frequent flier miles and the verbal abuse I received in Dulles in 2009 won’t be forgotten) combined with the fact that the airline I usually fly on is no longer partnered with this airline requiring all actions and expenses of my miles to be used immediately. If the miles aren’t used by the end of the month they will be lost by the end of the year.
The third alternative doesn’t work as the cost per miles and the gain on the miles in return isn’t economically feasible.
Selection of the preferred alternative
The preferred alternative in this instance is alternative 2 as I get to use my miles before they expire and I gain frequent flier miles at the economy class rate for my flights.
Performance monitoring and post evaluation results
This is the most economically feasible option she is happy and accepted the outcome. However, the information is really difficult to come by because the airline isn’t very forthcoming with the fees, policies, and procedures when using the upgrade. It is disappointing to realize that you have to pay to use the miles that you earned which makes me all the more disgruntled towards the airline.
Sullivan, W., Wicks, E., & Koelling, C. (2012). Engineering Economy (15th ed.). New Jersey: Pearson.