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Eastern Airlines Fleet Planning

The purpose of this research is to analyze the case "Eastern Airlines: Fleet Planning."1 The time frame for the case is the fall of 1978.

With respect to fleet planning, the basic problem facing Eastern management in the fall of 1978 was the looming need to replace the majority of the airline's fleet during the mid and late1980s. From 1984 through 1989, 168 of the airline's fleet of 257 aircraft, or 65.3 percent, would reach the age of 20 years. Twenty years, in 1978, was considered to be the maximum economic life for airliner use by a major trunk carrier. After that age, safety, operating efficiency, and passenger comfort and convenience relative to more modern aircraft dictated against the use of the aircraft.

A subsidiary problem involved in this case is the question of fleet expansion, in addition to fleet replacement. Eastern management was oriented toward fleet expansion, as a means of both maintaining and building market share, and to maintain

1Case prepared by the Darden Graduate Business School, University of Virginia, 1985.

desirable revenue/cost relationships. In the fall of 1978, however, the western countries was just recovering from an economic recession induced by an Arab oil embargo. A lastingeffect of the embargo was a new and higher floor for fuel costs. At this time also, the Arab oil exporting countries were, simultaneously, considering new oil price increases, and threatening a second supply restriction. To say the least, the economic future for the western countries was cloudy in the fall of 1978.

For the commercial airline industry in the United States, the economic environment was even more uncertain. In 1978, the deregulation of the air transportation industry was in its early staged. Deregulation was to be implemented on a phasedin basis, which would extend into the early1980s. No one was quite sure what effects deregulation would have on the competitive structure of the industr...

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Eastern Airlines Fleet Planning. (1969, December 31). In LotsofEssays.com. Retrieved 14:34, March 28, 2024, from https://www.lotsofessays.com/viewpaper/1683902.html