Airplane Cost Slides Simple

Biography for William Swan
Chief Economist, Seabury-Airline

Planning Group. AGIFORS Senior
Fellow. ATRG Senior Fellow.
Retired Chief Economist for Boeing
Commercial Aircraft 1996-2005
Previous to Boeing, worked at
American Airlines in Operations
Research and Strategic Planning
and United Airlines in Research and
Development. Areas of work
included Yield Management, Fleet
Planning, Aircraft Routing, and
Crew Scheduling. Also worked for
Hull Trading, a major market maker
in stock index options, and on the
staff at MITs Flight Transportation
Lab. Education: Masters,
Engineers Degree, and Ph. D. at
MIT. Bachelor of Science in
Aeronautical Engineering at
Princeton. Likes dogs and dark
beer. ([email protected])
Scott Adams
Simple Aircraft Cost Functions
Prof Nicole Adler

University of Jerusalem
Dr William Swan
Boeing
2 July 2004
ATRS Symposium, Istanbul
Overview
1.
Cost vs.. Distance is Linear
2.
Cost vs.. Airplane Size is Linear
3.
Illustration
Explanation
Calibration
Why we care
Illustration
Explanation
Calibration
Why we care
Cost vs.. Distance and Size is Planar
Why we care
Cost vs. Distance is Linear

Cost for a single airplane design
Example 737-700
Cost based on Engineering cost functions

Data from 25-year Boeing OpCost program
Divides cost into engineering components
Fuel, crew, maintenance, ownership
Calibrates components from airline data
Records of fuel burn

Knowledge of crew pay and work rules
Schedule of recurring maintenance and history of failures
Market Ownership Rents allocated to trips
Engineering Approach is Different

Not a black box
We made what is inside the box
Not a statistical calibration

Although components are calibrated against data
Less an overall average

OpCost calibrations based on detail records
OpCost estimates costs

For standard input cost factors: fuel, labor, capital
Ongoing function recalibration
This report from 2001 version
2004 version now in use
We Generate Perfect Data Points

Cost for exactly the same airplane
At different distances
Each point with identical input costs

Fuel, labor, capital
Superb spread of data points
Costs at 1000, 1500, 2000, 3000, 4000, 5000km distances

Much larger than spreads of averages for airlines
Comparable overall average distance
Much greater sensitivity to slope
Objective is to learn the shape of the relationship

Find appropriate algebraic form
For ratios of costs at different distances
Cost is Linear With Distance

737-700 Example
30
Trip Cost (index)
25
20
15
10
Cost Data
Linear (Cost Data)
5
0
0
1000
2000
3000
Distance (km)
4000
5000
Explanation:
Why is Cost Linear With Distance?
Most costs are per hour or per cycle
Time vs. distance is linear: speed is constant
(roughly hour plus 500 mph)
Departure/arrival cycle time is about hour

Some costs are allocated
Allocation is per hour and per cycle
Ownership, for example
Very small rise in fuel/hour for longer hours

Beyond 8 hours, crew gains 1 or 2 pilots
Does not apply to regional distances.
Cost Formulae are Linear

Airplane cost/seat-km km/departure
a318
0.039
691
737-600
0.038
700
737-700
0.035
692
a319
0.036
705
A320-200
0.033
727
737-800
0.031
701
737-900
0.030
715
A321-200
0.030
725
757-200
0.029
782
757-300
0.027
815
seats
107
110
126
126
150
162
177
183
200
243
R-Squared
0.9998
0.9997
0.9997
0.9997
0.9998
0.9997
0.9997
0.9998
0.9999
0.9999
Observations
All airplanes cost vs.. distance was linear

Calibration using 6 perfect data points
Least squares
Slopes per seat-km similar
Intercept in equivalent km cost similar
757s designed for longer hauls
Otherwise comparable capabilities
Why we Care
Costs Linear with distance means
Average cost is cost at average stage length
We generally know these data
We can adjust and compare airlines at standard
distance
Cost of an extra stop are separable

Stop cost independent of where in total distance
Simplifies Network Costs

Costs are depend on total miles and departures
Costs Are Linear with Airplane Size

(Example at 1500 km)
16
trip cost at 1500 km (index)
14
12
10
8
6
Data
Linear (Data)
4
2
0
100
120
140
160
180
200
220
seats for comparable single-aisle designs
240
Why we Care
Costs Linear with Seats means
Average cost is cost at average size
We generally know these data
We can adjust and compare airlines at a standard size
Cost of Frequency and Capacity are Separable

Frequency cost is independent of capacity
Powerful Independence in Network Design

Costs and values of Frequencies
Cost and need for capacity
Calibration for Planar Formula

NOT
Cost = a + b*Seats + c*Dist + d*Seats*Dist
Yes:
Cost = k * (Seats + a) * (Dist + b)
= k*a*b + k*b*seats + k*a*Dist
+ k*Seats*Dist
NOTE: only 3 degrees of freedom
Why We Care
Planar function is VERY easy to work with

Decouples frequency, size, distance
Vastly simplifies network design issues
Allows comparison of airline costs after
adjustment for size and stage length
Calibration with broad ranges of size and
distance means slopes are very significant
Calibration Techniques
Calibrate each airplane vs.. distance
Two variables, k and b
Calibrate a for least error

Unbiased
Least squared
Compare to least % error (log form)

Compare to size-first process
Results very similar
Results also similar to 4-variable values
Calibration Formula
Cost = $0.019 * (Seats + 104) * (Dist + 722)
Where
Cost means total cost 2001US $ per airplane trip,
non-US cost functions.
Seats means seat count in standard 2-class regional
density.
Dist means airport-pair great circle distance in
kilometers.
One try at Fair Relative Seat Counts

Regional Configurations
Airplane
Nominal (all Y)
2-class (as used)
A318
117
107
737-600
122
110
737-700
140
126
A319
138
126
A320
160
150
737-800
175
162
737-900
189
177
A321
202
183
757-200
217
200
757-300
258
243
Another Try at Fair Relative Seat Counts

Long-haul Configurations
Airplane
Nominal (all Y) 2-class (long)
767-200
238
163
767-300
280
200
767-400
315
229
A330-2
355
233
A330-3
379
268
777-200
415
308
777-300
510
385
747-400
553
429
Cost is Linear With Distance

777-200 Example
120
Trip Cost Index
100
80
60
40
Data
20
0
3000
Linear (Data)
4000
5000
6000
Distance (km)
7000
8000
9000
Costs Are Linear with Airplane Size

(Example at 6000 km)
100
Trip Cost at 6000 km (index)
90
80
70
60
50
40
30
20
10
0
100
150
200
250
300
Long-haul seat count
350
400
Calibration Formula
Cost = $0.0115 * (Seats + 211) * (Dist + 2200)
Where
Cost means total cost 2001US $ per airplane trip,
non-US International trip cost functions.
Seats means seat count in standard 2-class long haul
density.
Dist means airport-pair great circle distance in
kilometers.

Airplane Cost Slides Simple

Uploaded by

Copyright:

Available Formats

Airplane Cost Slides Simple

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Airplane Cost Slides Simple

Uploaded by

Copyright:

Available Formats

Biography for William Swan

Chief Economist, Seabury-Airline

Simple Aircraft Cost Functions

Prof Nicole Adler

Cost vs.. Distance is Linear

Cost vs.. Airplane Size is Linear

Cost vs.. Distance and Size is Planar

Cost vs. Distance is Linear

Cost based on Engineering cost functions

Records of fuel burn

Engineering Approach is Different

Not a statistical calibration

Less an overall average

OpCost estimates costs

We Generate Perfect Data Points

Each point with identical input costs

Superb spread of data points

Costs at 1000, 1500, 2000, 3000, 4000, 5000km distances

Objective is to learn the shape of the relationship

Cost is Linear With Distance

Trip Cost (index)

Departure/arrival cycle time is about hour

Very small rise in fuel/hour for longer hours

Cost Formulae are Linear

All airplanes cost vs.. distance was linear

Cost of an extra stop are separable

Simplifies Network Costs

Costs Are Linear with Airplane Size

trip cost at 1500 km (index)

Cost of Frequency and Capacity are Separable

Powerful Independence in Network Design

Calibration for Planar Formula

Planar function is VERY easy to work with

Calibrate a for least error

Compare to least % error (log form)

One try at Fair Relative Seat Counts

2-class (as used)

Another Try at Fair Relative Seat Counts

Cost is Linear With Distance

Trip Cost Index

Costs Are Linear with Airplane Size

Trip Cost at 6000 km (index)

You might also like