By Bjorn Fehrm
11 March 2015, c. Leeham Co: After having analyzed the different alternatives which would be available to Boeing for its Middle Of the Market, MOM, studies and having singled out the most competitive configurations, we will now add revenue to the equation. In the work to establish Cash and Direct Operating Costs for the aircraft, we saw which variant had the best cost for a certain capacity and utilization. We could not see which aircraft would be the most profitable however; this requires that we bring in the revenue side.
Revenue management analysis of different aircraft types on an airlines network is a science in it selves. Sophisticated fare class strategies with connected marketing activities makes such studies elaborate and beyond the scope of our analysis. Our primary goal is to understand the difference in operational efficiency of a single versus dual aisle aircraft with the same seating capacity. For this, a simpler average margin concept will work that shows us the effects of single versus dual aisle for aircraft margins in the MOM segment.
We select based on Cash and Direct Operating Costs the best aircraft for the different market segments.
To understand the revenue earning capability of the different alternatives we introduce a revenue model which takes into account aircraft utilization.
With the costs and the revenue side represented we can develop a good understanding for the cross over between single and dual aisle for MOM.
We will use this knowledge as we subsequently look into Airbus response to what Boeing would bring to the market.