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How airlines decide their fleet mixes: Key considerations

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How airlines decide their fleet mixes: Key considerations
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Of all the decisions an airline has to make, determining its fleet mix is crucial. The choice of aircraft impacts various operational aspects such as route networks, flight frequencies, cabin classes, and fare prices. This decision-making process involves extensive analysis and risk assessment as airlines weigh the advantages and disadvantages of different aircraft models.

The process of selecting aircraft for a fleet is complex and interconnected with other strategic business decisions like route choices and fare structures. Fleet commonality plays a significant role by allowing airlines to benefit from economies of scale in maintenance and pilot training.

Aircraft manufacturers design their planes with market needs in mind, often consulting directly with airlines during development. Aircraft are generally categorized into narrowbody for short to medium-haul flights and widebody for longer routes. However, there are many variables within these categories. For instance, Airbus's A330neo typically seats fewer than 290 passengers with a range of 6,550 NM (12,130 km), while the A350-900 accommodates around 325 passengers with a maximum range of 8,100 NM (15,000 km).

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When acquiring new aircraft, airlines face delays due to production backlogs. A study in the Journal of Air Transport Management highlights that "the fleet planning process is very complex for an airline," requiring consideration of factors like demand, economics, commonality, performance, finance options, type preferences on routes, and market conditions.

Route network compatibility is another critical factor. Airlines analyze their current or future network plans to determine suitable aircraft types. Long-haul carriers prefer long-range planes while low-cost carriers might opt for single-aisle jets suitable for multiple daily turnarounds.

Each aircraft model has unique technical attributes such as fuel efficiency, passenger capacity, range capabilities, maintenance costs, reliability factors, and fleet commonality which can influence decision-making. These factors help calculate key profitability metrics like Cost Per Available Seat Mile (CASM).

Return on Invested Capital (ROIC) is essential when purchasing new aircraft as it measures the returns generated versus costs incurred over an asset's service life. Colin Dobson from TransParagon Global explains that assessing commercial viability involves considering lifecycle costs including maintenance solutions and crewing arrangements.

Airlines have several financing options: outright purchase; leasing; or sale-and-leaseback agreements where upfront acquisition costs are transferred to third parties before leasing back assets at higher yearly overheads due to fees involved.

Political influences may also affect decisions—certain regions expect local manufacturers' preference while Western carriers face similar pressures favoring domestic brands like Boeing or Airbus depending on geographic location.

Long-term relationships between airlines and manufacturers often result in more favorable deals due to established partnerships over time.

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