Development of an Airline Revenue Capability Model for Aircraft Design

Typically value based approaches to the design of civil and commercial aircraft, be they net present value, surplus value, or any other utility based approach focus solely on the difference in cost between the alternatives, neglecting changes in revenue which might occur between the two concepts. Alternatively, if they do have a revenue focus, it is based upon simple relationships between payload capacity and revenue, assuming a either a fixed profit margin or fixed yield. This approach works well when comparing two similar or closely related concepts, but falls apart when investigating more radically different systems, e.g. a cruise efficient short take-off and landing concept. By using a value based approach it is relatively simple to structure a decision model to incorporate changing revenue capability. However, the ability to investigate differences in design is very much dependent upon the revenue model and assumptions that are made. If the revenue elasticity is the same for the two concepts then there is no benefit in using a variable revenue approach. However, in the cases where the elasticity is different, the revenue approach offers the potential to more properly investigate some fundamentally different alternative concepts.