Cookie and Privacy Settings

This website uses cookies to enable essential functions like the user login and sessions. We also use cookies and third-party tools to improve your surfing experience on preplounge.com. You can choose to activate only essential cookies or all cookies. You can always change your preference in the cookie and privacy settings. This link can also be found in the footer of the site. If you need more information, please visit our privacy policy.

Data processing in the USA: By clicking on "I accept", you also consent, in accordance with article 49 paragraph 1 sentence 1 lit. GDPR, to your data being processed in the USA (by Google LLC, Facebook Inc., LinkedIn Inc., Stripe, Paypal).

Manage settings individually I accept
expert
Expert with best answer

Paul

100% Recommendation Rate

14 Meetings

52 Q&A Upvotes

USD 149 / Coaching

2

Annual global turnover for Aircraft maintenance

Hello,

How would you approach the question on: what is the annual global turnover for aircraft maintenance?

Thanks

Marco

Hello,

How would you approach the question on: what is the annual global turnover for aircraft maintenance?

Thanks

Marco

2 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer
Book a coaching with Paul

100% Recommendation Rate

14 Meetings

52 Q&A Upvotes

USD 149 / Coaching

High level procedure (Revenue = Price * Quantity) - will give you just the starting point

First clarify perimeter of the market sizing (only passenger fleet or also cargo etc..). What do we include in maintenance (regular manteinance, what is the frequency for a normal aircraft? Extraordinary maintenance e.g. majour overhaul once every xx)

1) Estimate # of aircrafts currently in operations ( Quantity) i.e. the global fleet - I would divide planes that are currently in the sky and planes in airports

You can use both demand and supply slide to solve. Demand = estimate # of aircraft based on how many people are likely to travel in a certain moment. Supply side = based on the capabilities of the infrastructure (airports)

I would use supply side, probably estimate this for a country and then multiply for the ratio population world / population country (first order approximation - you can deep dive and segment nations based on air traffic and so on...).

So for example for US you can use the proxy of # of airports calculated based on number of cities (and states)

e.g. 50 states, 5 major cities per state, one airport in each city

Airports must have a decent traffic so for example if you assume 20 hours/day of operations and landing every 10 minutes (airplane who lands must come from somewhere so you do not double count with airplanes taking off): 6 planes / hour / airport

You know calculate how long the flight requires e.g. 2 hours, you calculate the overall airplane hours = # airplanes total * avg. flight = 6 planes / hour / airport * 2 hours flight = 12 plane hours / airport / hour

Total number of plane hours / hour = 12 plane hours / airport *500 airports = 6000 plane hours / hour

Now the number of aircraft is = 6000 plane hours / hour / 1h = about 6000 aircraft in the us

(Exact number is 7000 aircraft)

Now use an intelligent proxy to extrapolate this to the whole world ( population is not so right, maybe segment in Asia, US etc and give a weight to each continent e.g. asia high)

You should get around something around 20000-40000 aircraft in the world

2) Estimate cost Per single maintenance (€/maintenance)

Consider the labor hours for a major / vs. regular intervention and other cost associated (e.g. materials), quantify them in €/intervention and then decide how many times a year does a airplane goes through this.

e.g. if it is 3 times a year normal maintenance and 1 time major overhaul you do

(3* Normal maintenance cost per single aircraft+ 1 * major overhual cost per single aircraft) / 4 = cost of average maintenance [€/aircraft)

Hope this helps

High level procedure (Revenue = Price * Quantity) - will give you just the starting point

First clarify perimeter of the market sizing (only passenger fleet or also cargo etc..). What do we include in maintenance (regular manteinance, what is the frequency for a normal aircraft? Extraordinary maintenance e.g. majour overhaul once every xx)

1) Estimate # of aircrafts currently in operations ( Quantity) i.e. the global fleet - I would divide planes that are currently in the sky and planes in airports

You can use both demand and supply slide to solve. Demand = estimate # of aircraft based on how many people are likely to travel in a certain moment. Supply side = based on the capabilities of the infrastructure (airports)

I would use supply side, probably estimate this for a country and then multiply for the ratio population world / population country (first order approximation - you can deep dive and segment nations based on air traffic and so on...).

So for example for US you can use the proxy of # of airports calculated based on number of cities (and states)

e.g. 50 states, 5 major cities per state, one airport in each city

Airports must have a decent traffic so for example if you assume 20 hours/day of operations and landing every 10 minutes (airplane who lands must come from somewhere so you do not double count with airplanes taking off): 6 planes / hour / airport

You know calculate how long the flight requires e.g. 2 hours, you calculate the overall airplane hours = # airplanes total * avg. flight = 6 planes / hour / airport * 2 hours flight = 12 plane hours / airport / hour

Total number of plane hours / hour = 12 plane hours / airport *500 airports = 6000 plane hours / hour

Now the number of aircraft is = 6000 plane hours / hour / 1h = about 6000 aircraft in the us

(Exact number is 7000 aircraft)

Now use an intelligent proxy to extrapolate this to the whole world ( population is not so right, maybe segment in Asia, US etc and give a weight to each continent e.g. asia high)

You should get around something around 20000-40000 aircraft in the world

2) Estimate cost Per single maintenance (€/maintenance)

Consider the labor hours for a major / vs. regular intervention and other cost associated (e.g. materials), quantify them in €/intervention and then decide how many times a year does a airplane goes through this.

e.g. if it is 3 times a year normal maintenance and 1 time major overhaul you do

(3* Normal maintenance cost per single aircraft+ 1 * major overhual cost per single aircraft) / 4 = cost of average maintenance [€/aircraft)

Hope this helps

Hi Paul, I like your breakdown. Should your equation be 250 airports instead of 500? Also, do we need to add ground airplanes to your 6000 airplanes that are in the sky? — Nick on Jul 09, 2018 (edited)

Hey there!

I would estimate this figure by multiplying 2 components:

  1. The total value of airplanes currently in use (Worldwide) [in $]
  2. A maintenance ratio [average annual maintenance cost / catalogue value of airplane]. My assumption here is that the maintenance costs of an airplane wouid rise over time (as the airplane parts start to wear off), but on average they would represent an annual cost of 1% of the catalogue price of an airplane. (Not sure if this estimation is realistic)

By using this structure, it becomes a more straightforward exercise of estimating figures like:

  • Total amount of airplanes in service (Worldwide)
  • Average catalogue value of an airplane (100M $?)

I hope that this might have given you some inspiration on how to tackle such cases. Curious to hear other people's approach on how to estimate this. :)

Regards,

-M

Hey there!

I would estimate this figure by multiplying 2 components:

  1. The total value of airplanes currently in use (Worldwide) [in $]
  2. A maintenance ratio [average annual maintenance cost / catalogue value of airplane]. My assumption here is that the maintenance costs of an airplane wouid rise over time (as the airplane parts start to wear off), but on average they would represent an annual cost of 1% of the catalogue price of an airplane. (Not sure if this estimation is realistic)

By using this structure, it becomes a more straightforward exercise of estimating figures like:

  • Total amount of airplanes in service (Worldwide)
  • Average catalogue value of an airplane (100M $?)

I hope that this might have given you some inspiration on how to tackle such cases. Curious to hear other people's approach on how to estimate this. :)

Regards,

-M

Related case(s)

Oliver Wyman case: Full Electrons Ahead

Solved 100.0k times
Oliver Wyman case: Full Electrons Ahead Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise them on how to adjust the product offering.
4.6 5 6494
| Rating: (4.6 / 5.0)

Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise ... Open whole case

Bain Case: Old Winery

Solved 68.8k times
Bain Case: Old Winery You have inherited the “Old Winery” from your grandfather, a winery which has been family owned for five generations and can be dated back to the 16th century. Half of the eleven hectares are used to grow white grapes, the other half to grow red grapes. They are grown in the conventional way, i.e. they are not organically farmed and certified. The vine stocks are in a good condition regarding age and care. Overall, only ¼ of the harvest is made into wine by the winery itself; the rest is sold. Your grandfather never wanted to change the image of the winery and left the managerial and administrative task to a young and energetic wine-maker. Due to the not so well-known brand , the demand for the “Old Winery” wine is currently rather low. You do not intent to run the winery operatively, given your limited knowledge of wine making, but find the idea of owning a winery exciting. Your plan is to give the winery some fresh impetus.
4.4 5 1882
| Rating: (4.4 / 5.0)

You have inherited the “Old Winery” from your grandfather, a winery which has been family owned for five generations and can be dated back to the 16th century. Half of the eleven hectares are used to grow white grapes, the other half to grow red grapes. They are grown in the conventional way, i.e. ... Open whole case

Roland Berger Case: Onlinestar

Solved 48.7k times
Roland Berger Case: Onlinestar Onlinestar, an online retailer of furniture and garden products (core business), has grown significantly in recent years as a result of an expansion of its product portfolio. The company mainly imports goods from Chinese manufacturers but also operates its own production of cat lavatories (special business) in Eastern Europe. The company sells its goods via Amazon and ebay, and recently via an online shop on its website. Despite this development, the financial ratios have deteriorated in recent years. In particular, gross profit margin decreased significantly. Combined with a significant increase in shipping costs, this led to a negative result for the first time in the recently ended fiscal year and a resulting strained financial situation. Against the background of expected stagnating sales for the current financial year, short-term action is required. The board of Onlinestar asks you for an analysis of the reasons for the negative result as well as a derived recommendation for action. As a consultant, you should bring in your knowledge in online trading and develop solutions. In addition, the management board would like to receive a sales and gross profit plan from you for the current financial year.
4.3 5 1024
| Rating: (4.3 / 5.0)

Onlinestar, an online retailer of furniture and garden products (core business), has grown significantly in recent years as a result of an expansion of its product portfolio. The company mainly imports goods from Chinese manufacturers but also operates its own production of cat lavatories (special b ... Open whole case

Nutripremium

Solved 69.8k times
Nutripremium Nutripremium is a very well-known premium nutrition food company in Europe (€1 billion revenue last year). It is based in Spain and has an excellent market share not only in its home country but also in Portugal, France, Italy and Germany.  Nutripremium has two main lines of products: Vitamin-supplements for pregnant women Concentrated dehydrated aliments and vitamin pills for sick patients (with Diabetes or Cancer). The CEO of Nutripremium thinks that the market in Europe is starting to get saturated and wants you to analyze the Chinese market. What are the key areas you would explore to determine whether this is a good idea?
4.5 5 2244
| Rating: (4.5 / 5.0) |

Nutripremium is a very well-known premium nutrition food company in Europe (€1 billion revenue last year). It is based in Spain and has an excellent market share not only in its home country but also in Portugal, France, Italy and Germany. Nutripremium has two main lines of products: Vitamin-su ... Open whole case

Children vaccine

Solved 61.9k times
Children vaccine Beyer, one of the biggest pharmaceutical companies in the world, just invented a very reliable vaccine against Chickenpox, a disease that affects children in the age from 2 to 16 years. Beyer came to you wondering what their potential sales in Europe in the first year would be if they launched this product next year. They are only interested in the overall sales revenue as they already know that the vaccine can be sold for a profit. This is more meant to show them how big the volume they have to supply is and what the revenue would be.
4.4 5 2239
| Rating: (4.4 / 5.0) |

Beyer, one of the biggest pharmaceutical companies in the world, just invented a very reliable vaccine against Chickenpox, a disease that affects children in the age from 2 to 16 years. Beyer came to you wondering what their potential sales in Europe in the first year would be if they launched this ... Open whole case