Airline Economic Impact Computer Model. Volume I. Detailed Discussion

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Airline Economic Impact Computer Model. Volume I. Detailed Discussion

G. W. Jordan / S. X. Smith / W. L. Metzger / R. C. Gibson

The report describes the development of a computer model which determines the economic impact of aircraft retrofit on the airline industry. The purpose of the model is to provide the Federal Aviation Administration with an effective procedure to rapidly and reliably determine the economic impact on the U.S. airline industry of an aircraft sound suppression retrofit program under a wide variety of reasonable assumptions and alternatives. The model is capable of handling 20 airlines, 15 aircraft types and 20 years. The major computational areas of the model are: airline traffic, revenue, investment base, direct operating expenses, retrofit kit cost, change in direct operating cost due to retrofit, required capital and change in investment base due to retrofit, critical route revenue loss due to retrofit, indirect operating costs, airline rate of return on investment and fare elasticity of traffic demand. Twelve sample cases have been run to demonstrate the model's utility. The cases consist of changes in retrofit kit design, government policy and the types of aircraft covered.