Engine option in aircraft purchase: Company strategies and policy implications

Ruotian Chen, Changmin Jiang, Kun Wang and Hangjun Yang

Transport Policy, 2024, vol. 159, issue C, 266-283

Abstract: Airlines select an aircraft's engine simultaneously while purchasing the aircraft. Usually, an aircraft model has multiple engine options, but recently the number of engine options has been decreasing. We develop a three-echelon supply chain model including engine manufacturers, aircraft manufacturers, and airlines to analyze the engine options in airlines' new aircraft purchases. We show that given an airline's existing fleet composition, larger fleet size and higher aircraft production efficiency would make it more likely to choose multiple engine options. In contrast, higher production costs and engine substitutability would lead to a shift to a single engine or hinder the airline's fleet expansion. In the model, we highlight the impact of MRO (Maintenance, Repair, Overhaul) costs with economies of scale on airline engine option decisions as well. In particular, our theoretical findings suggest that the airline would buy more aircraft that are the majority types in their existing fleets, thus crowding out the minority ones. Our findings provide a reasonable explanation for the homogeneity of engine options and provide policy implications regarding airline expansion and aviation supply chain development.

Keywords: Supply chain; Three-echelon; Aircraft engine; Economies of scale; Fleet composition (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0967070X24002853
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:trapol:v:159:y:2024:i:c:p:266-283

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

DOI: 10.1016/j.tranpol.2024.10.011

Access Statistics for this article

Transport Policy is currently edited by Y. Hayashi

More articles in Transport Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().