Sunday, February 13, 2011

Gondolas and Cable Cars

2 weeks ago I was riding the Ahornbahn cable car from its base station in Mayrhofen in Austria’s Tyrol region to its summit 1300m above on the Ahornspitze mountain near the Italian border. My long time friend Karin, a local born in the village, was explaining to me the economics of cable cars versus gondolas for transporting skiers to the summit of mountains.

The Ahorn ski area is the much smaller of the two areas accessible from the village of Mayrhofen. It offers a couple of drag tows and two chair lifts providing access to some easy wide blue runs for beginners and a longer slightly steeper red run for intermediate skiers. There isn’t much variety. As a result the mountain isn’t busy.

However, the Ahorn offers the knowledgeable tourist and the locals the option of the 1300m vertical drop back to the base station via the exit run or “abfahrt.” The game the locals like to play is “race the cable car.” Exiting at the top of the mountain, a short walk out of the station to the snow, on with your skis and off. A reasonably fast run is 7 minutes. Allowing for the setup time at the top, less than 10 minutes since the cable car docked and disembarqued its load of up to 160 skiers. On a good day, I can finish this run in 8 minutes. Usually arriving at the bottom just as the cable car returns to the station. My friend is standing waiting for me with her skis off already.

The Ahornbahn is one of the world’s largest cable cars. Mayrhofen has two of the largest in the Alps. The other holding up to 150 passengers connects the other Mayrhofen ski area of Penken and Horberg with the Rastkogel above the village of Lanersbach in the Tux valley.

Most skiers in Mayrhofen access the Penken area via the Penkenbahn gondola. This is a mass transit system constructed of gondolas hanging on wires approximately 100m apart and each holding up to 14 passengers. The Penkenbahn can transport around 2500 skiers on to the slopes in an hour.

Gondolas move more people, they are more convenient, faster, and provide a better skier experience. So if gondolas are better, why did the Zillertal sky area recently build two of the largest and most sophisticated cable cars? Why connect the busy Penken and Horberg areas with the more difficult red and black runs on the Rastkogel above Lanersbach with a cable car? Why not a gondola? A gondola would be more convenient for skiers provide a smooth ski down, ride immediately back up experience.

The explanation is simple - economics!

In Lean terms, gondolas provide a flow system, while cable cars provide a batch transfer system.

The flow system of the gondola reduces waiting time and maximizes skiing time. However, a gondola has to be operated constantly. It costs a lot more to operate than a cable car. On the other hand, the cable car is a batch transfer system, where the batch is controlled by the size of the cabin.

The lift company estimates demand and forecasts it out over a 10 to 20 year period in the future. They know which days of the week and which times are likely to be busier and what grade of skiers are visiting the resort and which types of runs they prefer. They know all of this because they collect data from the RFID tag lift pass system.

If they anticipate peak demand at say 600 skiers per hour connecting between Horberg and the Rastkogel then a cable car holding 150 people operating once every 15 minutes is the economically optimal way to move those skiers.

As Lean practitioners we understand that flow systems are more desirable. They offer the shortest cycle time and this usually correlates to the highest customer satisfaction. However, a flow system may not always be the most economically efficient. A discrete batch transfer system may be better for our business, even if customer satisfaction is lower.

This example also shows us that switching from a batch system to a flow system isn’t always easy. Perhaps 20 years from now the lift company may desire to replace the Rastkogelbahn with a gondola. To do so will require tearing down the existing system and constructing a whole new one. The project will take 9 months through the spring, summer and autumn seasons and involve tens of millions of Euros.

There are many lessons from this example. We should choose batch or flow systems based on demand forecasts. The best choice from the customer perspective may not be the most economically viable for us as a business. And switching our choice later may be a strategic investment that will take lots of time and money.

[Americans reading this should translate “cable car” as “tram”]