Market Sizing - Number of Business and First class seats

Question

Hi everyone,

I read a case on a producer of Business and First class plane seats. The interviewers wanted the candidate to estimate the market size. How would you approach the problem? I don't have the correction; just a few hints like the fact that the seats are renewed every 5 years and that the candidate used the number of planes produced by year apparently ...

Many thanks to all

Answer 1

Existing Plane Market (Upkeep)

Estimate # of flights taken globally
- Domestic vs. International
Extrapolate to # of planes
- Domestic (medium size) vs International (large)
Estimate # of 1st/Business seats per plane
- Domestic (almost 0 1st and 5-10 Biz), International (more)
Divide by 5 to get replacement rate

New Plane Market (Initial Install)

Lifecycle of a plane
1 divide by lifecycle = x% of planes need to be replaced each year
Apply to # planes from above
Apply across biz/domestic numbers from #s above

And voila!

Answer 2

Hello!

First of all, the case would always have a little bit more info (e.g.,

Who is your client
What they want to achieve -maximize profits? maxime plane occupancy? etc.-
some basic data on the population

)

Once we have that, the approach would be clear.

For instance, if they want to maximize revenue, this would be more an optimization problem to be solved with an easy excel than a consulting case.

Hope it helps!

Cheers,

Clara