Importance of Fleet Management for Airlines

Business

Aircraft Fleet Management

The fleet planning of an airline deals with the way airlines decide which type of aircraft to acquire and then utilize their aircraft on different routes. The main aim of fleet planning is usually to add value to the airlines operations by increasing efficiency. For example, operating a large wide bodied jet on a short route with only a few passengers would be highly inefficient, due to the higher overhead costs than a smaller, lighter jet. Likewise, if only smaller aircraft are available for the most popular route the airline may not be maximizing their potential to generate revenues and profit due to limited capacity (Clark, 2007). This demonstrates that fleet planning requires forward thinking and can be a strategic element of airlines ongoing operations.

Different strategies may be adopted by airlines. Southwest Airlines, known as the first low cost carrier, adopted a strategy which saw the airline using only Boeing 737's; a strategy which continued until the acquisition of AirTran (Southwest Airlines, 2014). This approach provided some benefits in terms of efficiency, the aircraft could all be easily interchanged, which reduced potential difficulties associated with repairs and maintenance, as well as eliminating the problems of staffing replacement aircraft with appropriately trained staff (Freiberg, 1998). This also reduced the administrative overhead associated with fleet, as it simplified planning (Clark, 2007). The airline also had lower overheads associated with the maintenance with parts only for the Boeing 737 and engineers trained for that aircraft, reducing the overheads associated with maintenance (Freiberg, 1998). However, although there were advantages, these advantages also created limitations, and it was found that Southwest Airlines elect the flexibility and help them to operate more efficiently (Clark, 2007). Other airlines were able to manage costs, by optimizing operating efficiency with the matching of different aircraft characteristics and the demands of different routes. The short-term the strategy of utilizing a single model fleet may have been satisfactory during the early days of Southwest airlines, but as the organization and management routes, and a different demand conditions, the organization may have been better placed are able to allocate different aircraft a different route.

Research undertaken by Naumann, Suhl, & Friedemann (2012), different strategies to increase in operating efficiency of airlines assessed. It was estimated that in any environment with high aviation fuel costs the most efficient operating strategies increased value was active management. It was estimated that airlines could save up to 14% of their fuel costs with the optimal allocation of aircraft to different routes to maximize occupancy, as well as minimize fuel costs (Naumann et al., 2012). Furthermore, it was estimated that effective fleet management could provide more value to an airline than an active and successful fuel hedging strategy (Naumann et al., 2012).