Monday, December 16, 2013

The Importance of Fleet Planning Process to Long Term Management Decision Making in an Airline

Aircraft evaluation, comparison, route analysis, aircraft acquisition, matching supply to demand,
all these components in combination is what comprises fleet planning. The dilemma of fleet
planning is that it is highly complex and decisions must be long term as markets are volatile and
networks heterogenous. Therefore it is must be understood that compromises are inevitable.

The factors that go towards making longshort term planning considerations for aircraft
acquisition are both purchasing as well as leasing new aircraft. Probably short term planning
stress would be more on aircraft acquisition through leasing and less on aircraft purchase, as
considerably more capital outlay is involved in aircraft purchase. The following are among the
factors which go into these decision making

Aircraft Evaluation - The fleet is highly complex and any decision must be long term as
 markets are volatile and networks are heterogeneous. Aircraft evaluation includes comparison of size and operational costs, and also the terms of the aircraft acquisition.
Aircraft comparison -Flexibility is of paramount importance as the ability to adapt rapidly
has a play on operational profitability. The use of multi sized aircraft versions with ease of reconfiguration can be used for this purpose.

Route Analysis - Operational flexibility allows the best use of resources, especially crew and this also takes into future range requirements. Here a dynamic management approach is very important, as it will be able to take into consideration various factors which will come into play as operations commence. The evaluation of coming requirements and growth planning is an important input for purchase planning.
Aircraft acquisition - Mixing firm and option commitments allows for acquisition flexibility. Comparisons of aircraft economic performance based heavily on DOC (cash flow) analysis and net present value (NPV) analysis can be used to incorporate time value of money. Considerations of future value and lease versus purchase and a mix of these two  are options to be  taken into consideration

For smooth development, various factors come into play and this includes start-up costs like Training, Tooling and aircraft customization. These are considerations  which  also play a part  in the choice of the aircraft.

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