AVIATION MANAGEMENT

Fleet Planning Coursework B - Aviation Management

Fleet Planning Coursework B - Aviation Management

British American Aviation (BAA)

British American Aviation was formed with a vision to provide convenient air travel to passengers flying between London and USA. It currently operates only from London-Heathrow airport to several destinations in the United Stated and has an aim to use this business model in the future. It currently operates with a fleet of 17 aircraft offering 25,000 Annual Seat Kilometres (mills). The utilization of its capacity is 20,000 Revenue Passengers Kilometres (mills). It carries out its operations using three variants of aircraft namely Airbus A340-300, Airbus A340-600, and Boeing 747-400.

The management of the airline is currently deciding whether to expand their business, maintain the same trends, or reduce the size of the airline keeping in mind the tough competition it faces. Another important decision that the management has to make is to decide on the replacement of it fleet.

Forecast Till 2016

The world aviation industry is spearheaded by two major manufacturers, Boeing from USA and Airbus from Europe. Both these manufactures cumulatively cater to the needs of almost every airline in the world. The quality and reliability of their offerings make it difficult for other competitors to enter the market. Although there are some competitors who are trying to take a share from them, they have not been able to do so.

In 2011, Boeing published its forecast for the years up to 2031. It has forecasted the revenue passenger-kilometres (RPK) to increase by 5% annually, the number of passengers would increase by 4% annually, and the aircraft fleet to increase by 3.5% annually. It has also forecasted most of the demands to come from Asia Pacific region followed by Europe and North America (Boeing, n.d.). It has also predicted that most of the demand for new aircraft will be for single aisle aircraft what offer a seating capacity of up to 200 passengers. This shows that most of the demand will be for point-to-point travel between cities located within around 5,000 miles of each other.

Just like Boeing, Airbus also came up with its 20 year predictions for the years 2011-20321. The figures of airbus are slightly lower compared to that of Boeing since they took a slightly more conservative look. It has forecasted the revenue passenger-kilometres (RPK) to increase by 4.7% annually, the number of passengers would increase by 4% annually in developed countries and 6% annually in developing and underdeveloped countries, and the aircraft fleet to increase by 3.8% annually. It has also expected world aircraft traffic to increase by 4.7% annually (Airbus, n.d.). The following chart summarises the predictions made by both companies.

Boeing

Airbus

Revenue Passengers-Kilometre

5%

4.7%

Number of Passengers

4%

4% - 6%

Aircraft Fleet

3.5%

3.8%

Although Airbus has predicted a lower growth in revenue passengers-kilometre but a higher demand for aircraft fleet is that it believes that the current rise in fuel prices will remain consistent in the future, hence airlines will tend to replace their fleet with in order to reduce the fuel ...