After Northern Airlines and Southeast Airlines merged, the new North-South Airline inherited 737–200 aircraft, an ageing fleet of Boeing. Together with the fleet of aircraft, North-South Airline also inherited Stephen Ruth, former secretary President and chairman of the board. Stephen Ruth has a challenge of reducing costs associated with the aircraft maintenance. Since the airline is characterized by ageing aircrafts, there is need company’s new president to come up with the most effective approach of ensuring low maintenance costs of the new airline is sustained (McNeil, Embrechts, and Frey 23).
We will write a custom Case Study on North-South Airline’s Maintenance Problem specifically for you
301 certified writers online
With respect to the current management issue at the new North-South Airlines, the aim of this paper is to provide definition of the problem at the new North-south airline and report objective. Using a linear programming approach, this paper will establish the computations as well as quantitative methods used, this paper will arrive at a conclusion so as to give recommendations that will help in addressing the current issue.
Definition of the Problem at the new North-South Airline and Report Objective
The merger of Northern Airlines and Southeast Airlines was aimed at developing the fourth largest airline in the US. However, the greatest challenge to the new airline company (North-South Airline) is that it is characterized by aged aircrafts. Since these airlines have served for a longer period, they present a challenge of high maintenance costs. Therefore, North-South Airlines should adopt a low maintenance approach to achieve the objective of becoming America’s fourth largest airline (McNeil, Embrechts, and Frey 27). As far as the current maintenance issue at North-South Airline is concerned, the primary objective of this paper is to provide the most effective approach of maximizing on the profits while reducing the maintenance costs.
Computations and Quantitative Methods Used
There is need to carry out a quantitative analysis to establish if the average fleet age had a correlation to direct airframe maintenance costs. In this section, a regression analysis will be a valuable tool that Stephen Ruth, North-South Airline president can use to understand the relationship that exist between the variables (McNeil, Embrechts, and Frey 27). Therefore, the most effective computation and quantitative method of arriving at the relationships would be regression analysis. In addition, regression analysis will help in predicting the value of one variable using another variable.
The best approach of establishing the correlation between variables is utilizing the regression analysis approach. In this case, using regression analysis will help Stephen Ruth to predict a constant dependent variable from the broad range of independent variables (De Crescenzio et al. 100). Understanding the existing relationships will help in determining the most effective approach of maintaining the fleet at the lowest costs and maximum profits. Using an approach that will minimize maintenance costs will help South-north airline achieve its objective of becoming America’s fourth largest airline.
Correlation between Fleet Age and Direct Airframe Maintenance Costs
As established in the simple linear regression analysis, there is a negative correlation between the age of the flight and the maintenance cost. This is to mean that fleet age is closely associated with the increased airframe maintenance costs (McNeil, Embrechts, and Frey 45). With this approach, there is need for North-south airline to adopt the most effective strategies in minimizing these costs. Factors that could be promoting the increased maintenance costs of the fleets could the old materials, which have a close association with increased maintenance costs.
Correlation Between Engine Maintenance Costs and Average Fleet Age
As established in the simple regression analysis, there is a positive correlation between engine maintenance costs and average fleet age (McNeil, Embrechts, and Frey 56). This means that an increase in age has a direct effect on the maintenance costs. The older the aircraft, the more expensive it will be to maintain the engine. There is need for the company to use the most appropriate approach to reduce the associated engine maintenance costs.
Conclusion and Recommendations
When companies merge, they are faced with serious challenges. When teething problems are not effectively addressed, these companies may generate a great deal of losses. With respect to the prevailing issues at the new North-South Airline, there is need to create a cost effective maintenance approach (McNeil, Embrechts, and Frey 45). This section provides three recommendations that will help North-South Airline to maximize on profits while reducing costs associated with aircraft maintenance.
To begin with, basing on the fact that there is a strong correlation between fleet age and direct airframe maintenance costs, there is need for North-South to utilize approaches that will minimize the maintenance costs. For instance, the company could purchase new aircrafts to replace them with the old ones (McNeil, Embrechts, and Frey 26). By purchasing new aircrafts, the company will reduce the maintenance costs. With respect to the results of simple regression analysis, when these planes get older, costs associated with maintenance increase. Increased costs associated with the aged fleets could be greatly reduced if the company could consider replacing the most affected aircrafts with new ones.
Secondly, this paper proposes since there is a close relationship between engine maintenance costs and average fleet age, the company could replace the old engines with new ones. Instead of using costly means to maintain old engine, the company could purchase new engines (McNeil, Embrechts, and Frey 27). Since maintenance costs increase with the age of the engine, buying new engines to the existing crafts would provide a good opportunity to maximize on profits while minimizing costs associated with maintenance.
Lastly, the use of high standard materials throughout the repair and replacement process will help the company maintain an edge in the industry. High quality parts are directly associated with reduced maintenance costs. As a major commercial airline in the US, the North-South Airline should be able to understand all its functional requirements so as to be able to provide a high quality output using the minimum possible cost per hour.
As argued by De Crescenzio et al. (98), in aircraft engineering as well as maintenance, there are three key approaches that can be utilized minimize the maintenance costs. These approaches include minimizing the airline turn time, limiting the need of engine spares, as well as reducing the overall costs associated with maintenance. There is need for the new company to be able to provide unparalleled aircraft engineering flexibility.
The importance of offering unparalleled aircraft engineering flexibility is to help in meeting the companies maintenance needs across the globe. As North-south continues to repair, remanufacture, and replace its fleet components, it should always maintain highest standards. Maintaining high standards will help the company not only attain a competitive edge in the marketplace, but also become America’s fourth largest airline.
De Crescenzio, Francesca, et al. “Augmented reality for aircraft maintenance training and operations support.” Computer Graphics and Applications, IEEE 31.1 (2011): 96-101.
Get your first paper with 15% OFF
McNeil, Alexander J, Paul Embrechts, and Rüdiger Frey. Quantitative Risk Management. Princeton, N.J.: Princeton Univ. Press, 2015. Print.