North-South Airline Case

Jordan Angel Amanda Romeo-Gallo Patrick Ryan Elba Taveras

In reviewing the North-South Airline case there was a lot of information that was put into the equation that needed to provide Mr. Ruth with the information that he needed to conclude what would go on within the company to save the most money. It was his concern that the correlation of the years that an aircraft had was impacting the amount of money that the company was putting into the aircraft to keep it functional. Since these two companies were merged it was a concern to save money and know exactly where this money was going. So it was Ms. Jones job to look at the data at hand and address the issue of the correlation of years of life of the aircraft to the amount money that was being put into it. Each airline needed to be looked at separately, since before they were combined they were separate entities and the production was not the same in either. When reviewing the items here you can see the average hours (age) that the boeing 737-200 jets went through. With these numbers it was easy to look and compare them to the cost per aircraft. When breaking down the Northern Airlines data you can see that the average hours goes up steadidly from 6,512 hours to 18,390. As that happens if you look at that cost it goes up as well until you get to about the 15,215 mark. There you have two of your lowest costs with the engine cost and the airframe. There seem to be modest correlations between maintenance costs and airframe age for Northern Airline. There is certainly reason to conclude, however, that airframe age is not the only important factor. Taking a look at the Southeast airline data it is a little more scattered. You have your prices in correlation to your average hours and it is all over the place. The highest age here is around 9,364 and when that is the case the average cost is about the same for the engine and airframe which is lower than the average hours at 8,259. The relationships between maintenance costs and airframe age for Southeast Airline are much less well defined. It is even more obvious that airframe age is not the only important. Northern Airline has the smallest variance in maintenance costs. This shows that the day to day procedures that Northern Airlines is looking at is in a low state. Maintenance costs seem to be more a function of airline than of airframe age. From an overall perspective, it appears that Southeast Airline may perform more efficiently on emergency repairs, and Northern Airline may place more emphasis on preventive maintenance. There is evidence to suggest that maintenance costs could be made to be a function of airframe age by implementing more effective management practices, checking to see if these aircraft need maintenance before their time to prevent further costs. The difference between maintenance procedures of the two airlines should be investigated, this will help with keeping the aircraft up to date and able to fly. The data with which she is presently working do not provide conclusive results. There would need to be other test implemented or put into place for her results to be more conclusive. Since any aircraft goes through different life-cycles it is important to choose aircraft that are closely

related and to give them more information to work with so human error is extracted as much as possible.

North-South Airline Data for Boeing 737-200 Jets Northern Airlines Data Southeast Airlines Data

Year 1998 1999 2000 2001 2002 2003 2004

Engine Engine Airframe Cost Average Airframe Cost Average per per Cost per Age Cost per Age Aircraft Aircraft (hours) Aircraft Aircraft (hours) $51.80 54.92 69.70 68.90 63.72 84.73 78.74 $43.49 38.58 51.48 58.72 45.47 50.26 79.60 6,512 8,404 11,077 11,717 13,275 15,215 18,390 $13.29 25.15 32.18 31.78 25.34 32.78 35.56 $18.86 31.55 40.43 22.10 19.69 32.58 38.07 5,107 8,145 7,360 5,773 7,150 9,364 8,259