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Aging aircraft cost analysis using system dynamics modeling

Fouladi, E ; Sharif University of Technology

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  1. Type of Document: Article
  2. Abstract:
  3. Ways to reduce an airline's cost has been studied for years. In fact, in order to achieve this goal, ones need to know different types of airline's costs including; fuel and oil, maintenance, Ticketing, passenger services, etc. and their impact on the total cost of an airline. According to announcement of ICAO [1], "maintenance cost (about 11% of total cost) is the second major cost after fuel and oil". Therefore, this may attract airline owners' attention to find ways to control maintenance cost and eventually the total cost of an airline. Though, there are many systematic approaches to analyze cost reduction and making policies, in this article, SD modeling is applied to develop a practical policy for maintenance cost reduction. SD is a modeling methodology with unique capabilities [2] suitable for management and policy analysis. This method is widely used for cost estimation and the behavior of an organization's cost growth over time. SD models which consist of causal relationships can support fleet management decisions as they age. Therefore, a mature dynamic model can alleviate degradation of aging aircraft and their growing costs. This paper concentrates on the solutions for reducing airline's costs by bringing the maintenance costs down. Along with the same lines, economizing on this sort of costs, an airline can save considerable money during its fleet's operation. So, in this study will use an SD model to estimating Total Life Cycle Costing of a fleet with regard to the "As Is" situation of airlines fleet and statistical data for maintenance of such fleet. Eventually we can use the LCC vs. Desired Average Age of Fleet (DAAF) to determine in witch average age the long term cost of airline will minimize. As System Dynamics Society states "System Dynamics is a computer-aided approach to policy analysis and design". This approach is used for complex system design and simulate in any field such as economics and management, social or ecological systems and it is a methodology for application of Systems Thinking and Holistic View [3]. This approach was developed by Jay W. Forrester at MIT in the 1960th and involves defining a Dynamical Complex System and provides Feedback Loop diagram between causes, effects and influences in the system. Therefor the outcome of SD model of "Aging Aircraft Life Cycle Costing" will be in the form of policies. Policies that airline managers can imply the in their decision making process, and the resulting decisions will be oriented toward a more cost efficient business model
  4. Keywords:
  5. Cost estimation ; Life cycle cost ; Air transportation ; Aircraft ; Aircraft control ; Computer aided analysis ; Cost estimating ; Cost reduction ; Costs ; Decision making ; Fleet operations ; Maintenance ; Oil shale ; System theory ; Aging aircraft ; Causal relationships ; Cost estimations ; Decision making process ; Lifecycle costs ; Modeling methodology ; System Dynamics ; System dynamics model ; Cost benefit analysis
  6. Source: 29th Congress of the International Council of the Aeronautical Sciences, ICAS 2014 ; 7-12 September , 2014 ; ISBN: 3932182804
  7. URL: http://www.icas.org/ICAS_ARCHIVE/ICAS2014/data/papers/2014_0736_paper.pdf