Fleet Planning Process: Considerations and Challenges in Airlines

This report provides a comprehensive analysis of the fleet planning process in the airline industry. It begins by exploring the short-term and long-term planning considerations that airline managers must address when purchasing new aircraft, including stakeholder expectations, passenger capacity, technological advancements, and legal considerations. The report then delves into the main challenges associated with aircraft purchasing, such as limited financial resources, maintaining passenger-preferred interiors, low-budget airline status, comfort and safety, fuel price volatility, and controlling unexpected expenses. The conclusion highlights the importance of considering factors like traffic on routes, aircraft utilization, purchase values, and profit, as well as the adoption of fuel-efficient airplanes and advanced technologies to drive efficiency and environmental performance. The report emphasizes the need for airlines to focus on interior design and passenger comfort to enhance revenue opportunities. The report is supported by references to books, journals, and online resources.

Fleet planning process
in Airline Industry

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Long and short-term planning considerations by airline managers during purchase of new
aircraft.........................................................................................................................................3
Main challenges associated with aircraft purchasing based on the extensive timeline between
purchase decision and commercial operation.............................................................................5
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Fleet planning is considered as one of most significant aspect in the airline industry
because it helps in sustainable development of the organization. In other aspect, it can be referred
as one of critical step that plays key role in airline planning process. It provides a right selection
of aircraft at the right time so that business can have impressive level of success (Merkert,
2011). Present study key purpose is to gain effective learning in regard to fleet planning so that
challenges can be overcome in effective manner. Study will focus on various short term and long
term considerations that manager need to have during purchase of new aircraft. Limitation of the
study can be to access the evidences that businesses has adopted in regard to the fleet planning.
Long and short-term planning considerations by airline managers during purchase of new
aircraft.
As per the detailed study, there are number of short term and long term considerations
that managers have during the purchase of new aircraft. It provides an effective development of
the organization and leads business to sustainable development. It has been identified that the
future profitable growth and increasing stakeholder returns is one of significant aspect that
managers covers (Tsai, 2012). Stakeholders key expectation is to have advancement in profit
margin ratio and if purchased aircraft is not providing any kind of benefit in monetary firm. In
this situation the managers may face critical issue. It clearly indicates that the businesses must
ensure about stakeholder expectations and profit margin ratio.
In addition to this, it has been identified that the passenger capacity is also one of key
consideration that provides effective fleet planning. Number of airline companies are focusing on
purchase of new aircraft as per reflection of customer needs and demand in the market
(Belobaba, 2015). For example, the 777X is one of Boeing firm that has focused on aircraft

capacity so that the demand in the market can be accomplished in appropriate manner. Moreover,
the customer needs and preferences are also considered by the managers so that goals and
objective can be meet in optimistic form. During the launch of 777X Boeing at Dubai Airshow
the company has considered review of four customers (Smith, 2009). It has provided an
information about customer perception and helped in decision making process during fleet
planning.
Technological advancement is also taken into account by the managers so that purchase
decision of aircraft can be in appropriate manner. If technological aspects are not referred in
appropriate manner then it will influence the growth of business. For example, the Easyjet has
purchase new craft but it does not cover the latest technological aspect such as low noise of
engine (Yu, 2012). In this situation company may face issue which may impact business in long
term. It is one of key reason that the 777X has introduced the latest innovative technologies that
covers advanced fuel efficiency in commercial engine. The GE9X is engine that covers five
percent more fuel efficiency in its class.
Moreover, legal consideration is also essential during the purchase of new aircraft. It
means the government policies and airport authorities association guidelines also need to be
cover during fleet planning. It is because any kind of avoidance in such aspects may influence
business in short term as well as long term manner. For example, the Alaska Airlines has
considered the average high capacity of craft as per guidelines of airport authorities association,
during the purchase of Boeing 737 and MD-80 in year 2008 (Laporte, 2012). Further permissions
are also required for the new craft so the managers also need to focus on it effectively and meet
expectations in appropriate manner. In addition to this, there are few key factors that need to be
consider by managers during fleet planning in airline sector. Classification of factors can be as

traffic on the route, utilization of Boeing, values of purchase and profit from the purchase. As per
report of Boeing outlook the demand of air services has increased by 6 percent and it is going to
be increase in next years (Yu, 2012). It means the airline firms can have purchase of new
Boeing's for better future. Scheduling is also considered as one of critical factor during the fleet
planning. It has been identified that the Emirates has focused on it effectively during the
purchase of new aircraft A380. Customer satisfaction is also considered during the decision
making process of new purchase during fleet planning. Craft interior must be designed according
to customer needs and preferences so that their satisfaction level can be accomplished in desired
form (Smith, 2009).
Main challenges associated with aircraft purchasing based on the extensive timeline between
purchase decision and commercial operation
Limitation of financial resources: The major challenge of airline companies is of
limited financial resources which is associated with the purchase and leasing decision on a fleet.
This is to be noted that the issue can be arisen to a low budgeted airline. For an example: Jet
Airways plans big fleet expansion from 2018, however, the financial performance of company is
to be assessed at the time of taking purchase decision (Jet Airways Plan best cost control. 2016).
Maintaining Passenger-Preferred Interior: The major aim of airline is to meet the
expectations of air passengers which is to be done by maintaining passenger-preferred interior. It
include a huge operational cost for business entity. The issue will affect both the purchasing as well
as operational decisions that in long run will affect the profitability of business. The major challenge
is to provide larger windows, a wider cabin, new lighting and enhanced architecture in aircraft if
business is havening low budget
Considering Low budgeted airline status: Within air industry, price war has become a
major challenge to the corporate entities who are dealing in the airline business. It has become

crucial for the airline companies to maintain their status as a low budgeted airline and it affects their
decision of aircraft purchasing and become a challenge at the time of operations. The purchase
decision and explosion of seat capacity is affected by the stats of an airline and its fares which is
considered to be the biggest challenge for business. The cost of Fuel, insurance, vehicle
maintenance can be high in the business (Fleet Planning. 2016).
Comfort and Safety: The fleet management includes passenger comfort as a major
focused area, therefore, airline companies always want to take advantage to the next level by
incorporating technologies and new advances so as to redefine the total passenger experience. It can
be further said that advanced technologies drive efficiency and environmental performance. In
addition maintaining safety and comforts are going to be considered at the very starting however, it
can be a challenge to business. To maintain comfort, interior design and technologies is a challenge
that will affect the revenue opportunities of business (11 Fleet Management Problems. 2016.).
Fuel price volatility: The major challenge which is going to affect the purchase and
operations of new aircraft is of fuel price volatility. According to an example: Jet Airways is
planning to induct 50 Boeing 737 MAX aircraft between 2018 and 2021, and IndiGo is also
conducting an expansion plan and the project fuel prices are going to be a biggest challenge in
future (Jet Airways Plan best cost control. 2016). However, the boing would offer 10% fuel
savings but increase in fuel price is going to be critical at that time. In addition to that the major
challenge of airline is to maintain environmental concern in the business (Fleet Planning. 2016).
Controlling unexpected expenses: In the operational process the company is going to
face the issue in relation to controlling unexpected expenses such as increasing fuel process,
change in taxation, other charges, technical up gradation and so on. This is to be seen as a major
expense of business. Hence, the biggest issue is of cost management and controlling unexpected
expenses.

CONCLUSION
The report herewith discussed about the long and short-term planning considerations
needed to be taken by airline managers when purchasing/leasing new aircraft and the challenges
associated with aircraft purchasing based on from the time of purchase decision and commercial
operation. It has been concluded that some of the challenges of business include imitated
financial resources, maintaining passenger-preferred Interior, Comfort and Safety, fuel price
volatility and unexpected expenses. In addition to this, there are few key factors that need to be
consider by managers during fleet planning in airline sector. Classification of factors can be as
traffic on the route, utilization of Boeing, values of purchase and profit from the purchase.
The airline industry dealers are suggested to consider the adoption of fuel efficient
airplanes as well as future volatility in fuel prices at the time of purchasing aircrafts and carrying
out fleet management. In addition, it has to focus on advanced technologies to drive efficiency
and environmental performance. At the time of fleet management the airline companies have to
focus on interior and must provide facilities such as larger windows, a wider cabin, new lighting
and enhanced architecture in aircraft so that they can enjoy comfort and convenience as it will
increase revenues in long run.

REFERENCES
Books and Journals
Belobaba, P., 2015. The global airline industry. John Wiley & Sons.
Laporte, G. eds., 2012. Fleet management and logistics. Springer Science & Business Media.
Merkert, R., 2011. The impact of strategic management and fleet planning on airline efficiency–
A random effects Tobit model based on DEA efficiency scores. Transportation Research
Part A: Policy and Practice. 45(7). pp.686-695.
Smith, B., 2009. Integrated airline fleet and crew robust planning. Transportation Science.
43(1). pp.2-16.
Tsai, W.H., 2012. A mixed activity-based costing decision model for green airline fleet planning
under the constraints of the European Union Emissions Trading Scheme. Energy. 39(1).
pp.218-226.
Yu, G. ed., 2012. Operations research in the airline industry (Vol. 9). Springer Science &
Business Media.
Online
11 Fleet Management Problems. 2016. [Online]. Available through: <
http://www.ctrack.co.uk/news-information/telematics-blog/entry/vehicle-tracking/solve-
fleet-management-problems.html> [Accessed on 4th May 2016].
Fleet Planning. 2016. [Online]. Available through: <
http://www.dlr.de/lk/en/Portaldata/57/Resources//FLottenplanung_Rosskopf-EN.pdf>
[Accessed on 4th May 2016].

Jet Airways Plan best cost control. 2016. [Online]. Available through: <
http://www.ibtimes.co.in/jet-airways-plans-better-cost-control-fleet-usage-measures-
666385> [Accessed on 4th May 2016].