An optimization approach to financial and operational viabilities of spare aircraft

Abstract

Purpose The airlines cancel their flights frequently because of factors that they do not have any control over. Spare aircraft can potentially address some of the issues caused by cancelled flights. This paper aims to offer an exploratory study into the financial and operational viabilities of spare aircraft for airlines. Design/methodology/approach Mathematical models are proposed to evaluate the financial and operational metrics under different scenarios. The models are applied to Delta, Spirit and Southwest Airlines with different business models. All data are extracted from US Bureau of Transport Statistics, Cirium Diio Mi and CAPA databases. The IBM Cplex solver was used to execute the binary linear program models. Findings The research revealed that factors such as airline network size, hub and spoke structure and average weekly flight cancellations are crucial in establishing the need for spare aircraft. For the number of weekly cancellations, there exist break-even values that reasonably justify spare aircraft. Practical implications Models can be customized and applied to other modes of transportations. Originality/value This study is the first to consider the use of spare aircraft in airlines from both financial and operational perspectives within the scope of the mathematical model. The analyses identify financial break-even points for a number of spare aircraft and their home base locations for three airlines. Operational utilization of spare aircraft is studied and contrasted with financial metrics.