Assignment-2

Analysis of Fleet Age and Maintenance Costs in North-South Airline

Analysis of Average Fleet Age and Maintenance Costs:

The correlation between average fleet age and maintenance costs, I have conducted a
thorough analysis of the data provided for Northern Airlines and Southeast Airlines.

Airframe Maintenance Costs:

Upon careful examination, it is evident that there is a discernible correlation between the
average age of the B737-200 fleet and airframe maintenance costs. As the average fleet age
increases, airframe maintenance costs tend to rise. This is consistent with the industry belief
that maintenance costs are influenced by the age of the aircraft.

Engine Maintenance Costs:

Similarly, the data indicates a correlation between the average fleet age and engine
maintenance costs. The trend suggests that older fleets tend to incur higher engine
maintenance expenses. This aligns with the general understanding in the airline industry.

Quantitative Descriptions:

To provide a quantitative perspective, I have computed the correlation coefficients between

average fleet age and both airframe and engine maintenance costs.

Correlation coefficients between average fleet age and airframe maintenance cost is
calculated as below for Northern Airlines Data:

r=

Where,

Average
age 6512.00 8404.00 11077.00 11717.00 13275.00 15215.00 18390.00
hours (x)

Airframe
$ 51.80 $54.92 $ 69.70 $ 68.90 $ 63.72 $ 84.73 $ 78.74
cost per

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 aircraft
(y)

Solution:

Here, n = 7

Let us find ∑x, ∑y, ∑xy, ∑x², ∑y²

For simplifying, divide x by 100.

x y xy x2 y2
65.12 51.80 3373.22 4240.6144 2683.24
84.04 54.92 4615.48 7062.7216 3016.206
110.77 69.70 7720.67 12269.9929 4858.09
117.17 68.90 8073.01 13728.8089 4747.21
132.75 63.72 8458.83 17622.5625 4060.238
152.15 84.73 12891.67 23149.6225 7179.173
183.9 78.74 14480.29 33819.21 6199.988
∑x =845.90 ∑y =472.51 ∑xy =59613.16 ∑x²=111893.53 ∑y²=32744.15

As per the formula,

17595.9131
r= = 0.887 ≈ 0.89
20060.15

Same way as above, if we calculate Correlation coefficients between average fleet age and
Engine maintenance for Northern Airlines Data:

17897.6085
r= = 0.782 ≈ 0.78
22869.639

Following the same method, Correlation coefficients between average fleet age and airframe
maintenance cost is calculated as below for Southern Airlines Data:

2929.067
r= = 0.624 ≈ 0.62
4687.49

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Same way as above, if we calculate Correlation coefficients between average fleet age and
Engine maintenance for Southern Airlines Data:

3716.671
r= = 0.678 ≈ 0.68
5480.4

Graphical Representations:

Attached are graphical representations of the relationships between average fleet age and
airframe/engine maintenance costs. The graphs visually demonstrate the increasing trend in
maintenance costs as the fleet ages for Northern Airlines Data:

Airframe cost per aircraft

$90.00
$80.00
$70.00
$60.00
$50.00
$40.00
$30.00
$20.00
$10.00
$-
0.00 2000.00 4000.00 6000.00 8000.0010000.0012000.0014000.0016000.0018000.0020000.00

Engine Cost per aircraft

$90.00
$80.00
$70.00
$60.00
$50.00
$40.00
$30.00
$20.00
$10.00
$-
0.00 2000.00 4000.00 6000.00 8000.0010000.0012000.0014000.0016000.0018000.0020000.00

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Attached are graphical representations of the relationships between average fleet age and
airframe/engine maintenance costs. The graphs visually demonstrate the increasing trend in
maintenance costs as the fleet ages for Southern Airlines Data:

Airframe cost per aircraft

$40.00

$35.00

$30.00

$25.00

$20.00

$15.00

$10.00

$5.00

$-
0.00 2000.00 4000.00 6000.00 8000.00 10000.00

Engine Cost per aircraft

$40.00

$35.00

$30.00

$25.00

$20.00

$15.00

$10.00

$5.00

$-
0.00 2000.00 4000.00 6000.00 8000.00 10000.00

Recommendations:

Considering the observed correlations, it would be prudent for North-South Airline to factor in
the impact of fleet age when planning maintenance budgets. Additionally, assessing the
cost-effectiveness of fleet renewal or implementing proactive maintenance strategies for
aging aircraft could be explored.I trust this analysis provides the insights you were seeking.

-Parth Vishnukumar Limbachiya

STUDENT ID: Jul-23.MBA-OG10

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