Answer

The Air Transportation Analysis Proposal

A major problem that many new aircrafts experience relates to travel costs and time. Many individuals look at the options that will be more convenient for them so that they can arrive at their destination on time without having to spend too much. This is especially true for employees who may need to travel every now and then. The aircrafts need to ensure that they do not end up experiencing losses when travelling below capacity, and burning excessive fuel. In this proposal, the main goal is to identify the best options for an airline which will ensure that time and costs of travel are reduced significantly. This goal will be achieved through the following objectives;

1. To determine how an on-demand transportation model can save on the airlines’ travel costs and time.
2. To compare the strengths and weaknesses being experienced by various corporate airframes in order to determine the state of the market.
3. To use the selection matrix to choose the best model that would guarantee design optimization and meet the needs of the aircraft company.
4. To compare the multiple airframes and on-demand methods with the aim of establishing a cost of operation.

City-Pair Analysis

            It is interesting to learn that making an on-demand transportation model would significantly save airlines’ travel costs and time. Managing air transportation demand and capacity features a series of trends and opportunities. When capacity constraints are experienced, congestion is experienced as a result. Also, there is a low reliability on the schedule, which alongside the other setbacks, plays a major role in the high costs experienced by the airlines and their passengers (Štimac et al., 2020). Unfortunately, the level of capacity increases required to resolve these problems are not expected to be introduced any time in the near future. Hence, only marginal increases can be implemented, along with the better management of the airline’s demand and available capacity.

            A reliable, yet efficient air transportation system offers a substantial benefit to the community since it connects various economies. Unfortunately, the problem of poor reliability and the substantial costs of the air transportation systems is further triggered by the current relationship between capacity and demand (Štimac et al., 2020). This is especially true when the airline has a busy commercial airport. In the highly congested airports, scheduled demand may exceed the airport runway capacity. It does not matter whether the weather is good, or what hour of the day it is. For other airports, this relationship between capacity and demand only occurs during the days and hours when weather conditions are poor. The delays experienced at these service facilities can last for hours on end, not just when the demand is more that capacity, but also when demand is so much less. In such instances, the delay variability is also large, leading to extreme deviations in waiting time.

            Hence, of the on-demand transportation model can be implemented, then purchasing an aircraft can save travel costs and time. Chief Operation Officer (COO) of the fictitious company travels frequently, meaning that there is a chance of experiencing some of these challenges of capacity and demand. The airline needs to ensure that travel costs are reduced significantly so that the COO is also not subjected to high travel costs (Wang & Gu, 2015). On the other hand, the airline should ensure that he will not be kept at the airport following delays that will last for very many hours. In the fictitious company, the total employee trip miles for the last year were are 30,867.8 miles, while COO travel miles were 751.7.

            To better understand the market’s travel demand, two airlines will be analyzed including Honda HA-420 and Pilatus PC12 NG. The findings are shown in figure 1 and 2 below.

Figure 1: Honda HA-420

Figure 2: Pilatus PC12 NG

            From these figures, it is evident that purchasing an aircraft could maximize the service time for the employees since 17.7 aircraft hours are lost and 30.5 employee hours for the Honda HA-420 and 23.5 aircraft hours lost and 36.3 employee hours for the Pilatus PC-12 NG. An aircraft purchase will enable the saving of so much time since employees appear to be the biggest time losers.

On-Demand model

            Using the on-demand model, measures will be taken to ensure that the factors of capacity and demand which lead to great losses will be minimized. When considering the COO’s travel history, it is clear that the total time saved using the on-demand model will be an average of 600 hours in relation to the output field hours, and an average of 700 hours in relation to the expansion into OK.  Thus, it can be concluded from the analysis of City-Pair data, that purchasing an aircraft would increase travel hours for the employees and COO, and flight hours for the company. Hence, the company should consider an Expansion into OK considering the opportunities which it will present in terms of saving time and costs.

Market Analysis

To better understand the market environment for the fictitious airline company, the best approach is to use the already available airlines. The strengths and weaknesses of each one of them will help in determining some of the issues which the current airline should also anticipate. The company should be able to choose the kind of aircraft that will ensure that it is able to operate on demand, and at the highest capacity possible. This is meant to aid in the attraction of more travelers since they will find confidence in the reliability of scheduled time.

The interest in the variety of aircraft available is to meet the travel needs of the company. Purchasing an on-demand transportation aircraft model would significantly save airlines’ travel costs and time. A suitable model will have the best range; the maximum distance that an aircraft can possibly travel with a certain amount of fuel (Roy et al., 2017). This means that more travelers will get to travel to their destination using a specified amount of fuel that is meant to help save costs for the company. The current challenge that many airlines are facing relate to the use of excess fuel for a specific distance, thereby raising the travel costs. The speed of an aircraft is the distance covered per a given time. This is also an important consideration since the longer the time it takes, the more fuel is consumed and the more the resulting delay will be. Hence, the aircraft that will be chosen needs to be one that can handle the best speeds that will not place the lives of travelers at risk, but instead ensure that destinations are arrived as expected. The normal cruising speed being 575mph or slightly higher (Roy et al., 2017).

Analysis of a suitable aircraft also considers available seats; the maximum number of seats in an aircraft. An aircraft can be designed in such a way that it requires too much fuel, travels slowly, and can only carry a limited capacity. This will lead to a loss for the airline since the paid travel tickets may need to be pried so much higher, thereby leading to the loss of potential customers to competitors. On the other hand, pricing the tickets within the normal range may lead to loss in revenue for the company since the total may not be enough to cover for the flight expenses and still generate profits for the company (Wang & Gu, 2015). Therefore, it is important to ensure that the chosen aircraft model is one that features the right capacity, speed, and fuel consumption. The model’s purchase price should also be within the budget range for the airline, otherwise another issue of affordability will be experienced (See figure 3).

Figure 3: Model Names and their Purchase Price

            From the figure 3 above, Honda HA-420 is estimated to cost Rs 31.94 crore. Pilatus PC-12 NG features an acquisition cost of $4,467, 060. Pilatus PC-24 costed $8.9 million by 2017. Lastly, the 2009 King Air 350 costs $349, 032. The current airline should thrive to purchase a model that is in line with its set goals (Wang & Gu, 2015). Just because a product is cheap, it does not mean that it is the best purchase. It may turn out to be the worst decision since the challenges relating to demand and capacity will not have been dealt with effectively. They will only become worse, and even lead to the downfall of the airline. That is why an analysis of the specifications and performance of each model should be conduct first (See figure 4).

Figure 4: Different Specifications and Performance Data

            In the figure 4 above, it is clear that the model with the most sets available for purchase is the 2009 King Air 350 with 13 sets. It is followed closely by Pilatus PC-12 NG then with Pilatus PC-24 and Honda HA-420. The range of model for Honda HA-420 is 1358 NM, for Pilatus PC-12 NG is 1608 NM, for Pilatus PC-12 NG is 2143 NM, and finally the 2009 King Air 350 has 1652 NM. The most expensive unit cost is $8.9 million featuring the Pilatus PC-24. The lowest unit cost is $3.5 million featuring the 2009 King Air 350. Honda HA-420 and Pilatus PC-12 NG have only a slight difference in pricing. In relation to the cruise speed, it is evident that Pilatus PC-24 performs better than the rest since it is the only amount closer to 500 kts. Unfortunately, this is the only speed allowed for the aircraft, unlike Honda HA-420 which has an allowance from 368.44 kts to 419.71 kts.

Estimated Hours of Utilization Based on the Travel Miles

            Aircraft hours of Utilization determines its productivity (Lappas et al., 2018). Aircraft Utilization is typically presented in block hours per day. For the, Pilatus PC-24, the estimated hours of utilization is 200 hours per year, basing on its travel miles (Lappas et al., 2018). The number rises to 250 hours per year in Pilatus PC-12 NG. Considering 2009 King Air 350, the estimated number of hours for utilization will be 300 hours per year. Honda HA-420 aircraft will have the maximum number of hours of utilization, estimated to be 2500 hours per year.

Selection Matrix

            The interest is in 2009 King Air 350 Aircraft for output selection matrix that would guarantee design optimization to meet the travel needs of the company. The pros and cons for the design will be realized through on-demand transportation together with costs and time savings. The design will have the best range, the maximum distance that an aircraft can possibly travel with a certain amount of fuel (Roy et al., 2017). The block speed of 290 nm trip will be experienced. Key employee trip miles have been determined at $ 30,867.8 for 7 overnights and $ 36,839.40 for 12 overnights. The airline model will have an estimated travel cost of $ 70,577.00 for 55 overnights and $ 84,017.00 for 63 overnights.

Influence of Interviews on Selection of Weight Factor

            This model is selected because it has low purchasing price at $ 3,500,000. It also features a long lifespan of 10 years. The capacity is also essential since there is a high cabin volume of 421. There is also a low wing loading value of 48.4 and a high payload maximum fuel at 1,640. This model features a low range with a maximum payload of 899. It features a high DOC/hour for 300 Nm mission at $ 1,252. The overall maintenance cost is also low at $271 per hour. Considering these characteristics, it is clear that the 2009 King Air 350 Aircraft is best for the current airline. It features characteristics that will not financially drain a startup airline company. It features a long lifespan, thereby guaranteeing many years of service without the need of replacing the aircraft (Roelofs, Kurowicka & Vos, 2020). The high cabin volume ensures that more travelers can be transported at the same time, hence saving on fuel. The high payload maximum volume serves to ensure that the aircraft can move over a long distance with the fuel amount that will be loaded.

Weight Factor

            The values of assigned weight factors ranges from 1 to 4. The factor value for the various items is given as a product of weight factor and item scores. The weight percentages, favorable to the company on its choice of acquiring 5 King Air 350 aircraft are given as a percentage of factor value on the total score (See figure 5 below).

Figure 5: Weight Factor

            From the analysis of selection matrix summary, purchasing 2009 King Air 350, aircraft would increase the travel hours for the employees and COO, the flight hours for the company, and even save the cost of acquiring and maintenance.

Cost of Operation

            Choice for the associated costs benefits is shown for the various aircrafts. Highlights of how aircraft block speed influences utilization hours, estimation of costs per hour and estimated yearly costs is given. The COO will be able to make a choice to acquire the best aircraft based on its purchasing price. That is because all the essential information has been provided.

Comparison of Fixed and Variable Costs

            Pilatus PC-24 has the highest fixed costs at $ 293,700 while Pilatus PC-12 the least at $ 202,530. The variable cost of Pilatus PC-24 is the highest of $1,532 while aircraft Pilatus PC-12 has the least variable cost of $ 683. The block speed changes increases from 290 nm, for the King Air 350 up to 367 nm, for the Pilatus PC-24, affecting the yearly costs and estimated hours of utilization among the four aircrafts.

Figure 6: Aircraft Models Comparison Table

            From the analysis of cost of operation in figure 6 above, purchasing an aircraft increases with block speeds and estimated hours of utilization. Thus, the COO will need to further consider how these two factors may impact his decision.

Operating Structure

            The current airline company will focus on the middle to premium class business travelers. It aims to provide the best value propositions so that it can position itself effectively in the airline industry. It will capitalize on the long-haul travel that exists between business and economy class. It will focus on the busiest routes by offering direct flights, rather than the usual connecting flights. It aims to fit the aircrafts with latest forms of technology that will enable the business traveler to manage time effectively even during travel.

Figure 7: Organizational Chart

            In figure 7 above, John Friedman is the chairman. He is the head of the company, and is responsible for overseeing any operations. Markus Scott is the managing director. He works with the team to ensure that the goals of the company are achieved. The finance director is responsible for overseeing the financial operations of the company. The corporate sales manager works with the team to ensure that various targets are set with regards to ticket sales, before considering measures to see to it that these are achieved. The marketing director is in charge of all marketing operations of the company, such as the formulation of marketing campaigns. Lastly, the technical director oversees all the technical needs, ensuring that these are met.

            In this company, some scheduling and operating restrictions are expected. For instance, during bad weather, the company may find it hard to stay in operation, especially since this is a limitation which human beings cannot control (Wang & Gu, 2015). On the other hand, the airline will not allow personal use of the aircrafts where politicians may want to hire for personal use or for use in their own political campaigns.

Conclusion

            With the aid of this proposal, the COO is expected to make the right choice in picking the aircraft model. The design and cost implications have all been identified and highlighted. In addition, the market itself has been analysed to determine the strengths and weaknesses which the current company should anticipate.

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