Flying Economy – The Economic Impact of New Propulsion Technology: A Cost-Benefit Analysis of the Geared Turbo Fan Engine on the London Heathrow and Frankfurt Route
ISBN: 978-1-78973-282-5, eISBN: 978-1-78973-281-8
Publication date: 21 October 2019
Abstract
This chapter assesses the economic impact of geared turbofan (GTF) engines on the London Heathrow Airport (LHR)–Frankfurt Airport (FRA) route using cost–benefit analysis (CBA). An aircraft appraisal model is created to answer the two key questions of whether the A320neos aircraft with GTF engines could replace the conventional A320 aircraft through an operating lease (acquisition) or whether it would be better for society if the LHR–FRA sector is operated with a leased 737-800 aircraft. The scope of the CBA analysis is from 2015 until 2027.
The outcomes of the aircraft appraisal model indicate that switching to A320neos on lease (Option 2) might be beneficial. The fuel consumption of the A320neo aircraft is lower than that of the current A320-200 aircraft (2,234 kg vs 2,988 kg per sector). As a result, this option could offer a large benefit (NPV of USD 31 million) through lower fuel consumption and thus lower fuel costs. At the same time, a fuel reduction means a lower emissions impact (about USD 2 million benefit). It can be concluded that keeping the current A320-200 (NPV of USD 8.9 million) is less profitable than replacing it with a leased A320neo (NPV of USD 31 million) for Airline A, but better than a B737-800 (NPV USD 4.3 million). The option to lease the A320neos appears to be preferred in most cases, considering the impact of noise and NOx cost, due to the large benefit of NPV USD 25 million compared to the A320 and an approximately 29 million difference compared with the B737-800.
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Acknowledgements
Acknowledgments
The authors would like to express our gratitude to Mr Larry Gary, Mr Mads Neumann, Mr James MacFarlane, and all Maitland members for their valuable suggestions and support to our research. In addition, we are appreciative of our colleagues and friends, Mr Berkcan Uyan, Mr Hao Cai, Mr Martin Stramszki, and Mr Miquel Barbany, for their support to our work. The authors are solely responsible for any remaining omissions and errors.
Citation
Miyoshi, C. and Torrell, P.P. (2019), "Flying Economy – The Economic Impact of New Propulsion Technology: A Cost-Benefit Analysis of the Geared Turbo Fan Engine on the London Heathrow and Frankfurt Route", Airline Economics in Europe (Advances in Airline Economics, Vol. 8), Emerald Publishing Limited, Leeds, pp. 201-228. https://doi.org/10.1108/S2212-160920190000008009
Publisher
:Emerald Publishing Limited
Copyright © 2019 Emerald Publishing Limited