Problem #1
a) * Good weather capacity
* 70% passenger load
* Delays costs for: 19-seat turboprop – $348/plane/hour; 50-seat regional jet –
$640/plane/hour; 150-seat conventional jet – $1585/plane/hour
* Passenger cost: $25.7/hour
Based on attached Excel exercise, we have:
– If arrival rate is 50 planes/hour – 6.54 minutes of delay/plane
– If arrival rate is 55 planes/hour – 12.52 minutes of delay/plane
– If arrival rate is 59 planes/hour – 60.6 minutes of delay/plane
Therefore, per plane operational delay costs and passenger delay costs are:
50 planes/hour:
– Turboprop: (6.54/60) * 348 + (6.54/60) * 25.7 * 19 * 70% = $75.19
– Regional jets: (6.54/60) * 640 + (6.54/60) * 25.7 * 50 * 70% = $167.81
– Conventional jets: (6.54/60) * 1585 + (6.54/60) * 25.7 * 150 * 70% = $466.9
55 planes/hour:
– Turboprop: (12.52/60) * 348 + (12.52/60) * 25.7 * 19 * 70% = $144.17
– Regional jets: (12.52/60) * 640 + (12.52/60) * 25.7 * 50 * 70% = $321.76
– Conventional jets: (12.52/60) * 1585 + (12.52/60) * 25.7 * 150 * 70% = $895.25
59 planes/hour:
– Turboprop: (60.6/60) * 348 + (60.6/60) * 25.7 * 19 * 70% = $696.71
– Regional jets: (60.6/60) * 640 + (60.6/60) * 25.7 * 50 * 70% = $1554.9
– Conventional jets: (60.6/60) * 1585 + (60.6/60) * 25.7 * 150 * 70% = $4326.34
b) According to FAAs definition of delay, the flight is delayed if it arrives or departs more
than 15 minutes past schedule. Based on the delays time per plane above, there are delay
costs only in case of the arrival rate of 59 planes per hour. In fact, the delay time is 60.6
*€“ 15 = 45.6 minutes.
So the per plane delay costs are:
– Turboprop: (45.6/60) * 348 + (45.6/60) * 25.7 * 19 * 70% = $524.26
– Regional jets: (45.6/60) * 640 + (45.6/60) * 25.7 * 50 * 70% = $1170.02
– Conventional jets: (45.6/60) * 1585 + (45.6/60) * 25.7 * 150 * 70% = $3255.46
c) Based on the analysis above, we think that if we use peak period pricing, we can reduce
the arrival rate to 50 planes per hour, or at least 55 planes per hour, and as a result, a lot of
money due to delay costs could be saved.
Problem #2
a) * Estimated revenue per passenger:
– Turboprop: $230/passenger
– Regional jet: $154/passenger
– Conventional jet: $402/passenger
* Assuming that 70% passenger load per plane
Based on Exhibit 2, the revenues per plane are:
– Turboprop: 230 * 19 * 70% = $3059
