Life cycle cost (LCC) is defined as the total cost of a project over its life span that begins at the initialization of the project and ends at the finalization of the project. This chapter describes a methodology based on LCC to economically evaluate replacement strategies for aging aircraft from the perspective of an airline. A case study is conducted to demonstrate how to use the methodology as a decision support tool to economically evaluate and compare aircraft types and assess operation dynamics and replacement strategies. The scenarios are constructed in the case study to define replacement strategies with different types of aircraft and acquisition strategies, including purchasing through financial leasing and short-term and long-term operating leasing. The analysis considers acquisition and sustaining costs, including depreciation and passenger spill costs. In addition, a sensitivity analysis for critical parameters and a strategic comparison based on competitive fitness factors are performed. The results suggest the replacement of old aircraft immediately at the beginning of the horizon and recommend a new-generation aircraft for replacement alternative due to the maintenance and fuel cost advantage. The results also reveal the importance of including age effect on fuel and maintenance, which may change the economic assessment.


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    Title :

    Life Cycle Cost Methodology for Replacement Decisions of Aging Aircraft


    Additional title:

    Sustainable aviat.


    Contributors:


    Publication date :

    2022-01-20


    Size :

    19 pages





    Type of media :

    Article/Chapter (Book)


    Type of material :

    Electronic Resource


    Language :

    English