Eastern Airlines Fleet Planning

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 threaten

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rule was applied to the determination of the number of aircraft required in a specific year, which held that the number of aircraft required would be that number which resulted in the smallest capacity excess or shortage with respect to the seat replacement requirements indicated in Table 2. As the data presented in Table 3 indicate, the total number of aircraft required varies substantially, according to the alternative solution. The aircraft requirements are 117 727200s, 92 757s, 82 767s, 67 A300s, and 83 A310s. 7 Table 3 Alternative Aircraft Requirements ForSatisfaction of Seat Replacement Demands: 19831989 =============================================================== Seat Replacement Requirements By Year [(number of aircraft)total seats]  Alternative 1983 1984 1985 1986 1987 1988 1989          1277  1330  2426  1753  1753  5343  2192        727200 (9) (10) (18) (13) (12) (39) (16) (137 seats) + 1233 + 1370 + 2466 + 1781 + 1644 + 5343 + 2192
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Some common words found in the essay are:
Revenues Revenues, Cumulative Excess/, Fuel Costs, Replacement Requirements, Available Total, University Virginia,  , Payment Schedules$, Miles ReplacedAircraft,   , ANALYSIS ALTERNATIVES, RequiredPer Alternative, ====== ======,  , ====== ====== ======, table continued,  1753 ,  1753, @ 137, 1753 , aircraft @, fall 1978, nominal discounted,   , 1986 1987 1988,
Approximate Word count = 3160
Approximate Pages = 13 (250 words per page)

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