Assignment- Quantitative Techniques for

Management Applications

Subject: Report on Fleet Age and Maintenance Costs Analysis

To: Stephen Ruth

From: Peg Young

Date: November 26, 2002

Dear Mr. Ruth,

I hope this message finds you well. As per your request, I have conducted a comprehensive
analysis of the relationship between average fleet age and maintenance costs at North-
South Airline, with a specific focus on direct airframe and engine maintenance costs.

Key Findings:

1. Correlation Between Fleet Age and Airframe Maintenance Costs:

After an in-depth analysis, we found a strong negative correlation (-0.832) between

the average fleet age and direct airframe maintenance costs for Northern and
Southeast Airlines. This implies that, historically, as the average fleet age increased,
airframe maintenance costs tended to decrease.

2. Relationship Between Fleet Age and Engine Maintenance Costs:

Similarly, there exists a moderate negative correlation (-0.659) between the average
fleet age and direct engine maintenance costs for Northern and Southeast Airlines.
This suggests that as the fleet age increased, engine maintenance costs tended to
decrease.

Graphical Representations:

I have attached quantitative and graphical representations of these relationships, providing

a visual understanding of the data.

Possible Explanations:

Several factors may contribute to these findings, including:

 Maintenance Practices: Differences in maintenance practices between the two

airlines could influence cost variations.
  Technological Advancements: Newer aircraft may benefit from technological
advancements, reducing maintenance requirements and costs.
 Scale of Operations: The scale of airline operations, including the number of aircraft
and routes, can impact maintenance costs.

Recommendations:

To further explore the reasons behind these disparities and optimize maintenance cost
management, I recommend:

 A detailed examination of maintenance practices and contracts for both Northern

and Southeast Airlines to identify best practices.
 Comparing our findings with industry benchmarks to assess whether our
maintenance costs align with industry norms.

I would like to discuss these findings with you in more detail and explore potential strategies
for improving our financial stability through cost-effective maintenance practices.

Thank you for entrusting me with this analysis. I believe that by understanding and
leveraging these correlations, we can make informed decisions for the benefit of North-
South Airline's future success.

Please let me know your availability for a meeting to discuss this report in person.

Sincerely,

Peg Young Vice President, Operations and Maintenance North-South Airline