Berkeley Consulting
Case Interview Workshop
September 15th, 2011
Agenda
Introductions
What is a Case Question?
Sample Case Question: Air France Profitability
General Tips for Case Questions
Small Group Breakout Section
Introductions
Introductions
Sharvani Srivastava
Olivier Bouan
Year: Junior
Year: Senior
Semesters in BC: 4
Semesters in BC: 6
Major: ORMS
Major: IEOR / Global Poverty Minor
Positions Held:
Positions Held:
• Consultant
• Consultant
• PM
• PM
• AM
• AM
Summer 2012: Intern at
Retargeter (Tech Startup)
Summer 2012: Associate Consultant
Intern at Bain & Co.
Summer 2013: Currently
recruiting
Summer 2013: Industry Internship
What is a Case Question?
What is a Case Question?
A case question is a type of interview question which is designed
to test an individual’s ability to succeed during an actual
consulting project. By presenting candidates with the type of
questions and data typically faced during an actual project, the
case question is a preferred way to test an applicant’s abilities.
What Does the Case Interview Consist of?
Case interviews usually test the following skills:
• Behavior Section
• Fit with the culture of the organization
• Commitment to work
• Quantitative Skills
• Ability to do basic calculations quickly
• Ability to organize numerical data and draw insights
• Comfort with data presented in various ways
• Qualitative Skills
• Creativity of ideas
• Organized and logical thought process
• Ability to communicate meaningfully and concisely
Sample Case Question: Air France Profitability
Question Background
Air France has hired BC to review it’s operations and help it define
a path to increased profitability.
Quantitative Section - Guesstimate
To begin the case, please estimate Air France’s total ticket revenue
in 2011.
Quantitative Section - Guesstimate
• Let’s break down Air France’s network into it’s short-, medium-,
and long-haul components.
• As a large airline, I estimate that France has roughly 200
destinations.
• I assume that these are evenly split among short-, medium-, and
long-haul
• Use the following formula for each component:
• ($/seat)*(seats /flight)*(flights/day)*(# destinations)*(% seats
filled)*(# days in year)
Quantitative Section - Guesstimate
• Short Haul:
• $100 per seat,100 seats per flight, 3 *round trip* flights per
day, 70 destinations, 2/3 fill rate
• 100*100*3*2*70*(2/3)= ~ $2.8M/day
• Medium Haul
• $200 per seat, 150 seats per flight, 2 RT flights per day, 70
destinations, 2/3 fill rate
• 100*100*2*2*70*(2/3)= ~ $5.4M/day
• Long Haul
• $600 per seat, 300 seats per flight, 1 RT flight per day, 70
destinations, 2/3 fill rate
• 600*300*1*2*70*(2/3)= ~ $16.6M/day
Quantitative Section – Almost there
• Sum across all three segments
• 2.8M+5.4M+16.6M= ~$25,000,000 per day
• 25,000,000*360 = a royal P.I.T.A., but really…
• (25M*300)=75M*100=7,500M=$7.5B
• (25M*60)=150M*10=1,500M=$1.5B
• 7.5B+1.5B= $9,000,000,000 per year
Quantitative Section - Guesstimate (Abstraction)
Do you think this number is higher or lower than the actual FY2011
revenue, and why do you think this?
Any guesses?
Quantitative Section - Guesstimate
The answer is likely a bit low:
• From personal experience, it seems airline are generally
able to fill airplanes more than 2/3 most of the time, so we
probably underestimated the fill rate. (10% higher fill rate
would increase our number by about $1B)
• We didn’t account for business class. If 10% of passengers
are business and pay 3X more, that’s roughly a 20%, or
~$2B increase.
• Flight frequencies may be low, particularly for
international flights. Going from 1 daily roundtrip to 1.5
daily roundtrips on international legs would increase
revenue estimate by ~3B.
Quantitative Section - Guesstimate (Abstraction)
Actual Result: $24,000,000,000
Quantitative Section - Graph
An Air France intern has provided you with the following chart
about different segments of the Air France business. Please
identify the major trends and give some reasons as to what may
be behind those trends.
Quantitative Section - Graph
Profitability across flight segments
66% 63% 65%
70% 75% 71%
85% 75% 84%
Fill Rate
50%
40%
30%
Profitability
20%
Economy
10%
Business
Total
0%
-10%
-20%
-30%
Short Haul
Medium Haul
Long Haul
Quantitative Section - Graph
Observations:
• Short haul flights are highly unprofitable, driven by an unprofitable
economy class
• Short haul economy class suffers from a low cabin fill rate
• Short haul also faces competition from high speed rail
• Business Class remains profitable across all segments, despite
comparatively low fill rates.
• Long haul segments are most profitable overall, driven by a successful
economy class which likely accounts for most of the revenue.
• Medium haul flights break even thanks to the business class offering
• Fill rate seems to be the critical profitability driver for economy class
Qualitative Section – Idea Generation
After facing declining profitably over the last five years, the client
would like to implement new strategies that can boost profitably.
What possible steps can Air France take to increase their profits?
Qualitative Section – Idea Generation
Cost
• Reduce cost of short haul flights by adopting no-frills culture (ex. Southwest)
• Streamline short haul flights to reduce staff overhead and labor expenses
• Invest in new fuel-efficient planes
• Focus on second-tier airports to reduce operating fees
Revenue
• Improve ancillary fee revenue
• Extra bags, ticket changes, better seats
• Improve fill rate
• Bag checking services, pricing relative to driving and train alternatives
• Better transportation to and from city centers for biz and econ passengers
• Reduce time spent at airports during departure and arrival
• Better boarding procedures, mobile ticketing
• Introduce economy plus and Wi-Fi options to short haul flights
• Design special planes for areas with high number of business class passengers
Qualitative Section – Advanced
Due to steep losses in its short haul network, the client is
considering divesting from its short haul network. Evaluate some
of the benefits and disadvantages the client may face in divesting
from its short haul network.
Qualitative Section – Advanced
Benefits
• Cutting a significant cost center to focus on more profitable long haul routes
• Opportunity to rebrand as a premium airline by reinvesting in medium and
long haul network services (ex. Emirates)
• Cutting high maintenance costs of short haul aircrafts and streamline
maintenance along fewer large aircraft models
• Opportunity to partner with train line competitors rather than competing
against them
Disadvantages
• Loss of domestic-to-international passengers to competitors without proper
train service integration
• Restrictive use of membership points
• Loss of profitable business class passengers
• Less future insulation against highly competitive airlines
• May lead to PR issues and poor brand image since lack of local flights may hurt
local economies and many employees may lose jobs (=Strikes)
• Alliance partners may not approve
Qualitative Section - Recommendation
You are now at the conclusion of the project and the client has
asked that you present your strategic recommendations. Based on
the data that has been presented to you and the conclusions that
you have drawn in this interview, take a few minutes to prepare a
final recommendation on how Air France can reach profitability
and what should be done about it’s ailing short haul offering.
Pretend we are the CEO and board of directors of the client
company; walk us through your final recommendation and the
rationale you used to reach your conclusions.
Qualitative Section - Recommendation
• My revenue estimate suggests that most of Air France’s business comes from
Medium and Long Haul Business, which are currently profitable.
• The Short Haul segment is weighing down on profits, leaving leadership with
two options: divest from it or turn it around.
• Not only would dropping Short Haul service be difficult from a PR and alliance
perspective, but it could drive non-Paris based international customers to
other airlines.
• Focus should be on driving the Short Haul service to profitability by retooling
and reinvesting in the domestic network in the following ways to better
compete with high speed rail:
• Streamline flight routes to reduce cost overhead (e.g. Southwest bus
model) and improve fill rate.
• Invest in Airport time saving services for customers
• Offer services like Wifi and City-Center Transportation to offer a more
competitive travel experience.
Some General Tips for Case Interviews
General Tips for Case Question
• Ask as many clarifying questions as you think are necessary
• Make sure you take time to think through the question – nobody
expects you to respond right away
• The first/most obvious answer may not always be the best
• Use numbers that are easy to work with – rounding numbers /
approximating numbers is OK
• Divide larger populations into smaller groups that are more
specific and easier to work with
• Organization of your ideas is as important as what your ideas are
• Be creative and think about the scenario from different
perspectives
• Be confident, have fun, and take everything as a learning
experience!
Questions?
Any Questions?
Small Group Breakout
Please break up to assigned groups
Small Group Breakout
Please break up to assigned
groups