The Value of Loyalty
#Transportation
#Travel & Hospitality
Practice this intermediate profitability case interview question in the Transportation sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
ProHub Comment
This case tests quantitative profitability analysis by requiring candidates to model incremental revenues and costs across customer segments before reaching a recommendation. The structure moves from identifying key customer differences, calculating revenue shifts, determining loyalty program costs, and finally assessing overall viability—a strong example of structured problem-solving in pricing and customer economics.
Estimated Time
26 minutes
Difficulty
Medium
Source
Queen's
10
/ 100
Your client is Southwest Air. The CEO wants to institute a loyalty program to boost the number of deluxe seats sold on a given flight. He believes that this strategy will be a good way to capture market share from competitors. How would you evaluate this proposal?
Clarifying Information
- Policy is designed so that each mile flown in a deluxe seat per year earns 1 point
- Points can be redeemed for free flights at a rate of 10,000 points per flight in a deluxe seat
- Deluxe seats cost $500, plus $2 per mile
- Regular seats are $300, plus $1 per mile
- Instituting this program will cause business travelers to take deluxe seats 75% of the time and recreational travelers to take deluxe 50% of the time.