Page 39 - MA - May 2017

integral modules, performance of cost and outcome REVENUE DETAILS
based budgeting has been emphasized. Lasting benefits
would accrue to the system by developing performance TRAIN PROFIT / LOSE PER TRIP
costing framework to identify appropriate cost and profit (IN `)
centers and then to allocated cost to such centers. Once
costs and benefits are made available, pricing decisions, Lokmanyatilak - Ernakulum - 10,90,480
efficiency measurement and investment priorities can Source: Bibek debroy Committee Report
be driven.
Application in Aviation:
REVENUE DETAILS
ABC and ABB are more used in the closed loop model
PROFIT / LOSE PER TRIP of airline services. The strength of the model is that it
TRAIN has both sides of resource planning and control. All
(IN `)
activities, within the loop are the bloodlines to adjust
Rajdhani each time there is a change in the supply or demand.
Closed loop is a continuous process from setting a plan
New Del hi-Mum bai 3,14,516 to actual performance with new insights for betterment.
This would include both the financial and operational
New Delhi - Rajendra Nagar 2,57,716
loops, spanning with resource allocation, activities,
demand requirement, price adjustments, products and
Howrah - New Delhi 69,100
services etc.
Connectivity has to established between activity based
Sealdah - New Delhi 64,982
costing and activity based budgeting through resources
New Delhi - Dibrugarh Town -6,34,211 and activities so as to strengthen the system to enable
decision making and to sustain low cost carrier status.
Dibrugarh - New Delhi -14,48,252 In order to provide lowest airfares to the customers,
the airlines strives to reduce their direct operating cost
by focusing on efficiency in airplane related costs or
passenger related costs.
Satabdhi Known crew capacity and activity rate, the cost per
flight hour is determined for actual crew consumption.
New Delhi - Habibganj 2,49,994 Budgeting is based on the set number of flight hours
with the calculated cost per flight hour. There are
New Delhi - Amritsar 1,91,149 challenges with respect variable and zero fixed costs,
planned and idle capacity and non-monetary resources,
New Delhi - Kalka 1,56,548 while this needs to be bridged with activity based
resource planning tools and lean techniques.
Kalka- New delhi 71,528
Air Asia in its operations in India, strives to achieve
low cost carrier status with ABC and ABB analysis
New Delhi - Allahabad -65,987
leading to changing flight patterns and discontinue
non-value added routes.

Duranto Air ASia India - As of 4th December 2014

Pune - Nizamuddin -33,204 Pattern - 1
ORGN DEST STD STA BLK T/A AT DEST
Yasvsntpur - Howrah -4,41,535
BLR GOI 6:20 7:35 1:15 0:30
Mumbai - Howrah -2,09,044
GOI BLR 8:05 9:15 1:10 0:25
Yasvsntpur - Delhi - 4,69,177

www.icmai.in May 2017 l The Management Accountant 39