Air Transport World

Fleet planning and equipment pricing; American's view. (Buying and Pricing Aircraft, part 1)

"Airline executives never know for sure whether they've bought the right airplane until they've used it for ten or 15 years." The purchase decision, whipsawed by the same variables that rob executives of early affirmation of their judgments, "is clearly the largest and one of the longest term (commitments) an airline ever makes. It determines much of the operational flexibility, risk, cost structure and related investment for the company," said Robert E. Martens, American Airlines VP-financial planning and analysis.

Speaking at Lloyd's of London conference in New York, Martens detailed the process American uses to decide what airplanes to buy. Some of his comments are common sense, some are traditional industry ideas and some are based on a new awareness of how to do business in an unregulated environment. Taken as a whole, Martens comments deserve attention.

Expansion or replacement

First step in the American aircraft selection process is defining the airplane's mission, including such particulars as general descriptions of size, range and passenger/cargo loads. An additional element of this step at American, and at more and more airlines with two-tier crew pay scales, is deciding whether the aircraft is to expansion or for replacement of older aircraft.

"If the answer is replacement, then the aircraft can't be credited with the benefits of growth economics since the employes necessary to fly it and support it will merely be moved from an old aircraft to a new one. A growth aircraft, on the other hand, can be staffed fully with new employes at market rates," Martens said. …

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