Examination of cost-efficient aircraft fleets using empirical operation data in US aviation markets

Abstract

Efficient fleet configuration is a critical problem for air carrier management. This study is primarily concerned with empirical aircraft operating costs and examines the optimal fleet adapted to numerous flight routes longer than 1000 nautical miles. An aircraft-specific operating cost model is derived to estimate market average direct operating costs (DOC) of 22 aircraft types operated by 22 US airlines. It is used as a base in a fleet configuration optimization model to figure out the variability of optimal fleets for segment markets of varying sizes and lengths as well as in response to the dynamics of market circumstances. While recognizing the superior fuel burn performance of narrow-body aircraft such as Boeing 737 and Airbus A320 series, we find operating cost efficiency of wide-body aircraft (B777 and A330 series) due to the economies of scale in the non-fuel operating costs associated with aircraft size. There is a possible reduction of DOC by substituting the wide-body aircraft for smaller ones that are dominant in the current US domestic markets. And the cost efficiency of the wide-body fleet is more robust in dense and longer distance markets (particularly longer than 2000NM), especially considering fuel price fluctuations. Finally, the optimal fleet analysis with empirical traffic data suggests a mixed-size aircraft fleet, configured with narrow- and wide-body aircraft, as an alternative for a wide range of segment markets that vary in size and length.