Buying the Big Jets: Fleet Planning for Airlines

by Paul Clark

Overview

Selecting the right aircraft for an airline operation is a vastly complex process, involving a multitude of skills and considerable knowledge of the business. Buying The Big Jets was first published in 2001 to provide guidance to those involved in aircraft selection strategies. This Second Edition brings the picture fully up to date, incorporating new discussion on the strategies of low-cost carriers, and the significance of the aircraft cabin for long-haul operations. Latest developments in aircraft products are covered and there are fresh examples of best practice in airline fleet planning techniques.

Product Details

ISBN-13:	9781409484936
Publisher:	Ashgate Publishing Ltd
Publication date:	10/01/2012
Sold by:	Barnes & Noble
Format:	eBook
File size:	5 MB

About the Author

Paul Clark worked for more than 20 years at Airbus, then established and managed AirBusiness Academy in Toulouse for three years. He spent almost two years at the helm of IATA’s global training operation based in Montreal, followed by four years in the United Arab Emirates where he ran an aircraft maintenance academy on behalf of the Abu Dhabi government. He is currently based in the UK, where he runs his aerospace consultancy called Through The Looking Glass Ltd (www.ttlglearn.com). Paul is a former Visiting Professor at both City University and Cranfield University in the UK and a Fellow of the Royal Aeronautical Society. He is the author of Stormy Skies and the creator of the SkyChess airline business simulation.

Table of Contents

	List of Figures	xiii
	List of Tables	xvii
	Preface	xix
	Acknowledgements	xx
1	Today's Perspectives	1
	What, Exactly, is Fleet Planning?	1
	Who Controls Fleet Planning?	3
	Where Should the Fleet Planner Fit in the Organisation?	4
	Reporting Lines	5
	Alliance Issues	7
	Why Manufacturers and Airlines have Different Timing Perspectives	7
	The Life of an Aircraft	7
	Why the Fleet is a Long-Term Issue	9
	Resolving Conflicts of Time Perspectives in Fleet Planning	11
	Adapting to Timing Differences	12
	Coping with the Cycle	14
	Gigantism - the Challenge of Size	16
	Strategic Alliances and Fleet Planning	17
	Hub-and-Spoke Networks	19
	In Summary	22
2	Attributes of a Fleet Plan	23
	Valuing the Assets	23
	Defining Overall Objectives and Goals	24
	A Marketing Objective	24
	A Development Objective	26
	An Alliance Objective	26
	An Economic or Financial Objective	27
	So, What Does Make a Good Fleet Plan?	28
Attribute 1	Adaptability	28
Attribute 2	Flexibility	35
Attribute 3	Continuity	36
	Key Decision Criteria	37
	Timing is Everything	38
	The Diminishing Effect of Technology	38
	The Impact of External Forces on Decision Criteria	39
	Fixing the Key Decision Criteria	39
	Trends in Tools and Data	42
	In Summary	44
3	The Market Evaluation	45
	Setting the Scene	45
	Measuring Production	48
	A Macro Approach to Fleet Planning	51
	Macro Study - the Demand	53
	Macro Study - the Supply	55
	A Micro Approach to Fleet Planning	56
	Market Segmentation and Spill	58
	Motivations of Travel Demand	58
	Variations in Travel Demand Over Time	63
	Modelling Spill for Fleet Plans	65
	The Normal Distribution	66
	Modelling on a Single Sector	73
	Calibrating the Model	75
	Modelling on a Network	83
	Preference Factors	85
	Interaction Between Schedule and Fleet	88
	The Micro-Network Model	92
	The Network Matrix	94
	Market Share Modelling	100
	The S-Curve	100
	Quality of Service Index	103
	In Summary	104
4	The Airline and Aircraft Product	105
	How Should we Conduct the Evaluation?	105
	The Airline Product	105
	How the Cabin Product has Evolved	106
	The Aircraft Product	110
	Evolution of Aircraft Demand	111
	Product Line Development	112
	Fragmentation and Consolidation	114
	The Family Concept	116
	Cost Savings Through Commonality	116
	Defining the Data	121
	Aircraft Manufacturer Documentation	123
	Airline Documentation	125
	Interior Configuration	128
	In Summary	132
5	Aircraft Performance	135
	Why is Aircraft Performance so Important?	135
	Some Background on Aircraft Certification Practice	136
	Aircraft Weight Build-Up	137
	Defining the Initial Weight	137
	Building the Payload	140
	Building the Payload-Range	143
	How Design Changes Affect the Payload-Range Envelope	146
	Interpreting the Payload-Range Envelope	150
	The Airfield Performance Analysis	152
	Speed Definitions	152
	Climb Performance	157
	Obstacles	158
	Ambient Conditions	161
	Runway Loading	166
	The En-Route Performance Analysis	168
	Setting the Performance Analysis Parameters	169
	The Flight Profile	176
	Reserve Policies	177
	Summary of Definitions	181
	Special Practices	181
	Extended Twin Operations	184
	Combining Probabilities	192
	Does the Aircraft Really Fit?	193
	In Summary	193
6	Aircraft Economics	195
	Why is Aircraft Economics so Important?	195
	Classification of Costs	196
	Cost Components	197
	Fuel Costs (DOC)	198
	Maintenance Costs (DOC)	200
	Factors Influencing Maintenance Costs	203
	Maintenance Cost Modelling Parameters	206
	Maintenance Reserves	208
	Maintenance Cost Per Hour Agreements	208
	Crew Costs (DOC, and sometimes IOC)	209
	Landing Fees (DOC)	211
	Navigation Fees (DOC)	212
	Insurance Costs (DOC)	212
	Ownership Costs (DOC)	213
	Handling Costs (DOC and IOC)	215
	Passenger Service Costs (sometimes DOC, and IOC)	216
	Ticketing, Sales and Promotion Costs (IOC)	217
	General and Administration Costs (IOC)	217
	Grouping the Cost Items	217
	Evolution of Operating Costs	219
	Methods of Cost and Revenue Measurement	220
	Break-Even Load Factor	220
	Operating Leverage	221
	Cost Escapability	222
	Fan Diagrams	223
	Equivalent-Cost Modelling	226
	Profit Profile Modelling	230
	Sizing Models	232
	Dynamic Fleet Management	233
	Some More Drivers of Aircraft Operating Economics	239
	Scheduled vs Charter vs Low-Cost Operation	239
	The Effect of Fleet Size on Economics	240
	The Economic Impact of Alliances	241
	The Problem of External Factors	241
	Some Solutions to Improve Operating Economics	242
	Spares Provisioning	243
	In Summary	244
7	The Investment Appraisal	245
	Drawing the Threads Together	245
	The Impact of Aircraft Price in Aircraft Selection	245
	Scope of an Investment Appraisal	246
	Non-Operating Activities	247
	Segregating Profit and Cash	247
	Elements to be Included in the Investment Appraisal	249
	Residual Values	250
	Some Definitions	250
	Factors Influencing Residual Value	250
	Depreciation, Loan Payments and the Base Value	254
	Why Residual value is Important in Fleet Planning	255
	The Life of a Project	256
	Choosing the Right Decision Tool	256
	Payback	257
	Return on Investment	257
	The Time Value of Money	257
	Net Present Value	258
	The Internal Rate of Return	263
	Choosing Between Competing Projects	264
	Selecting the Right Time Period for a Cash-Flow Study	264
	Making the Choice	265
	In Summary	266
8	Conclusion	267
	Is Fleet Planning an Art or a Science?	267
	In Summary	269
	Abbreviations	271
	Index	275

Editorial Reviews

‘Buying The Big Jets is a comprehensive reference book for anyone with an interest in understanding how to go about selecting aircraft products and fleet planning. Paul Clark takes a methodological approach to explaining the process of fleet planning.’ — Dr Fariba Alamdari, Boeing Commercial Airplanes

‘Unlike numerous other academic studies of airline practices, Paul Clark has created a practical, concise and understandable book that reflects the issues and methods used by real airlines to evaluate aircraft purchases. It is an excellent addition to any reference library for engineers and MBAs alike.’ — David Anvid, Aerofed Associates

‘What aircraft type to buy, how many, when and how are the most critical investment decisions any airline makes. Paul Clark’s book, well-structured and peppered with case studies, brings the whole complex process of fleet planning to life. This is a unique must-read book for anyone who wants to understand the airline industry.’ — Professor Rigas Doganis, Olympic Airways

‘This book was invaluable when I led fleet planning at British Airways. I think it is essential reading for anyone studying air transport management. The third edition has comprehensive updates and important additions, particularly the perspective of the manufacturers.’ — Richard M. Wyatt, British Airways

‘Selecting the right aircraft for an airline is a hugely complex task. Paul Clark does a brilliant job in breaking down the complexity and laying out the foundations for greater and deeper journeys into the fascinating worlds of fleet planning.' — Rogério Leão, Emirates Airline

‘Buying The Big Jets is my personal guide to fleet planning and airline economics. It is insightful and self-explanatory with a wealth of case studies and examples drawn from the author’s vast industry and experience. A must-read!’ — Cesar Souto Pereira, Embraer Commercial Aviation

‘Buying The Big Jets has become over time an essential reading for any aviation professional involved in aircraft selection. It is a unique and comprehensive review of the underlying forces behind the always complex but exciting fleet planning process.’ — Roberto García Mayoral, Iberia

‘A concise and informative must-read for anyone dealing with fleet planning and aircraft procurement.’ — Olof Nittinger, Lufthansa

‘Earlier editions of Buying The Big Jets have been educating numerous Chinese aviation participants and reshaping the industry. Updated with latest developments and the author’s in-depth observations, the third edition reflects the evolving dynamics of the aircraft business. It is a great work that will certainly continue to inspire its readers.’ — Yong Qiu, Three Oaks Aviation Consultancy Ltd

‘Paul Clark’s Buying The Big Jets has been the most authoritative book on airline fleet planning for many years. This new third edition is more comprehensive and updated; a ‘must read’ for everyone in the aviation industry.’ — Dr Zheng Lei, University of Surrey

‘Buying The Big Jets is a well-written, comprehensive guide to the essentials of fleet planning and a joy to read. In an engaging manner, Paul Clark clearly describes a process that he has helped us successfully use for our airline clients. For readers at all levels this book will become a trusted and invaluable resource.’ — Martin Braun, IATA

'With so much in it, the book is hardly one to be read at a single sitting. It seems especially appropriate for two purposes: one as an accessory for a course in air transport, for which it is a great resource; and the other as a source of reference for somebody conducting research into some aspect of airline operations. It is written in an appealing style, so much so that this reviewer almost thought the author was writing for him personally! The book should come highly recommended; and this Third edition should be seen as a most worthwhile acquisition, even for those who already have an earlier edition.' - Dr J P Hanlon, University of Birmingham

Comments on earlier editions: ’This well organized book fills a huge gap in aviation literature. Clearly written, with excellent use of diagrams, it provides an insight into and an understanding of fleet planning, the cornerstone of airline management.’ Rigas Doganis ’The airline industry is very complex and one in which it has always been very difficult to make money. A key component of the multi-faceted challenge is the way to accommodate highly variable demand with a pre-determined number of aircraft, each with a fixed capacity in the short term. Paul Clark in his book Buying the Big Jets provides a comprehensive, lucid, and an informative guide for airline fleet planners to optimize their capacity resources in the fiercely competitive marketplace. It is a must-have book for airline practitioners responsible for fleet planning because of the experiential insights contained in the book on a broad spectrum of relevant topics and an equally beneficial book for students of the airline industry to learn about complex subjects such as market segmentation and spill, aircraft performance, and investment appraisals.’ Nawal K. Taneja, Ohio State University, USA ’Buying the Big Jets has succeeded in bringing together, in an easily understandable form, the many factors that currently influence the aircraft purchasing process...a useful tool to broaden the knowledge of specialists involved in the process...a good balance has been achieved between breadth and depth and the book will be of interest to a wide spectrum of technical and non-technical readers.’ The Aerospace Professional ’...a valuable examination of the current practices in aircraft evaluation and selection, clarifying the new fleet planning methodologies and decision making processes...of great value to professionals with fleet planning responsibilities, students of air transport and for the banking community, where insights into aircraft acquisition are vital.’ Air International

From the Publisher