1991-02 Spring 1991

• Southwest Airlines: "MOD" Program Analysis

Flint Craig

SOUTHWEST AIRLINES

"MOD" PROGRAM ANALYSIS

.

SENIOR DESIGN

CSE 4395

SOUTHWEST AIRLINES

"MOD" PROGRAM ANALYSIS

FLINT CRAIG

SPRING, 1991

SUMMARY

Southwest Airlines (SWA) is required by the FAA to maintenance

their fleets based on flight hours. There are five levels of

checks that constitute the maintenance program; the service check,

"A" check, "B" check, "C" check, and structural sampling (See

Appendix A).

Currently, there are problems with variability in the time it

takes to perform a "C" check because of structural corrosion or

cracks often found in this check. These findings lead to excess

work time and delays or cancellations of flights in the SWA routing

schedule - a major economic drain.

It has been proposed that a new "MOD" check be introduced to

relieve the variability in the "C" check. A "MOD" check would

constitute stripping the plane down and checking for structural

faults such as corrosion, cracks, and other major problems.

The proposal analysis first took the form of a simulation.

The "C" check was simulated to determine delays in terms of minutes

per day. After further consultation with SWA, it was decided that

there is too much delay in the "C" check and that economic options

on the "MOD" check were to be considered. These options are to

either hire out for the "MOD" or perform the work in-house.

This analysis was done on a spreadsheet because of the

uncertainty involved in the "MOD" related variables. As "MOD"

check data becomes available, the model can be updated with

relative ease.

Based on "ballpark" estimations by SWA Maintenance management,

the least expensive of the two options is to perform the "MOD"

check in-house.

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BACKGROUND AND DESCRIPTION

P,SWA Maintenance Operations Center has three feasible

alternatives to consider. First, they can continue to perform

structural work ("MODs") as needed during the "C" check. Second,

they can separate the "MOD" from the "C" check and hire out for the

"MOD" work. Or third, they can separate the "MOD" from the "C"

check and perform the work in-house.

The first option involves no analysis, but costs associated

with the variability in the "C" check are high. If no structural

faults are found in the "C" check, the plane stays on schedule.

If a structural fault is found which usually requires more labor

than the allotted maintenance time provides, not only does the

plane disrupt flight scheduling but it also takes up hangar space

which disrupts the flow of scheduled "C" checks.

The second option is considered to alleviate this problem.

By separating the "MOD", the variability costs from the "C" checks

will be greatly reduced. However, there are major costs associated

with hiring out for "MODs". For example, the usual plane requires

1000 manhours to "MOD", and outside labor charges $40 per manhour.

Also there are fairing costs associated with transporting the plane

from the maintenance base in Dallas to 1 of 11 contracting sites

across the United States.

The third option also alleviates variability in the current

"C" check, but it too has major costs associated with it. For

example, the work must be done in Dallas or Houston, and both will

have start-up costs associated with purchasing new equipment and

retooling current machinery. Dallas is better suited for handling

the new "MOD" check because it has better access to parts and

support from Boeing in Seattle (ie. Boeing will fly parts into DFW,

but SWA must pick up and deliver to Dallas Lovefield or Houston

• Hob(. Also there is a Boeing technical advisory representative

stationed in Dallas, but not in Houston. However, the Dallas

maintenance hub only has two work hangars and would have to rent

• spr a third to handle the "MOD" check. Houston is less suited

because the workers do not have the training to perform "MODs" and

are unionized meaning they can transfer jobs after a certain time

period. However, Houston has plenty of hangar space. There are

also costs for both Dallas and Houston associated with parts delays

and work that is over and above what is expected.

The final decision lies with SWA Vice President of Maintenance

and Engineering, Jack Vidal. There are no cost constraints other

than to minimize total cost for the "MOD" check program once it is

•implemented.

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ANALYSIS OF THE SITUATION

Upon investigation, it seemed as though the real problem was

with the "C" check and that a simulation model analyzing the before

and after effects of "MODs" would be useful to determine the net

gain of implementing a "MOD" check program. However, after

consulting with SWA Maintenance management, it was decided to

assume that the "MOD" check program would be introduced and to run

an economic analysis on the options of where the work should be

done. Unfortunately, SWA did not have much data on the true costs

of implementing a "MOD" check program.

Because this analysis involved variables that must be updated

as information becomes available, a spreadsheet model seemed to be

the most practical given the ease of spreadsheet recalculations.

The model prompts the user to input values for the variables

in consideration. It then revels costs associated with in-house

vs contracting options in terms of start-up costs, yearly costs,

and net present worth at SWA discount rate.

The use of statistical expected value is implemented to better

define highly stochastic variables such as "manhours of 'MOD' work

per plane", "parts delays", and "work over and above expected".

For example, manhours of "MOD" work per plane is calculated by

(1/6) * (low manhours per plane)

(2/3) * (average manhours per plane)

(1/6) * (high manhours per plane)

+

= manhours per plane

Then "manhours per plane" is multiplied by "planes per year",

"rate per hour", and other factors to calculate an average yearly

cost for in-house and contracting out. These figures are moved

back in time from a 10-year study period at the inputed SWA

discount rate to form a net present value for each alternative.

Also, a rate of return and payback period are given for the in-

house minus contract costs.

These figures allow management to condense many variables into

an easy decision making criteria.

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TECHNICAL DESCRIPTION OF MODEL

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Before it was known that SWA planned to implement the "MOD"

check program, a simulation model was run. The software used was

Microcomputer Support for Operations Research from Discrete

Simulation (MOR/DS).

The parameters included 4 "C" check planes late per month,

average delay when late of 1 hour (low of 10 mm, high of 24

hours), and "C" check arrival rate of 1 plane every 6 hours.

The model had planes coming in at a normal distribution with

mean of 1/4 day (6 hours) and standard deviation of 1/96 day (15

minutes). It then "waits" them according to the late planes per

week and time of delay when late (sampled from a triangular

distribution) to calculate the average delay per week. Results

supported SWA's decision to implement a "MOD" check program.

The economic model can best be described by the spreadsheet

itself. Calculations are displayed in a manner easy to follow (See

Appendix B). All variables are based on SWA Maintenance management

estimations of the true values (listed under "UNITS"). All work

was done on VP-Planner spreadsheet software.

It is difficult to quantify the effects of parts delay. There

is the obvious cost of idle manhours, but there are also costs

associated with the possible rescheduling and/or cancelation of

flights (SWA was unable to obtain a "ballpark" estimate for this

probability). The best procedure is to weight the variable "number

of employees left idle" accordingly to reflect actual events as

data is incurred.

Notes :

- Expected values were calculated for the variables

"manhours per plane", "parts delay", and "over and

above" to better reflect their stochastic nature.

- Rate per manhour is in terms of overhead, machinery, and

employee wages.

- Rate of Return is calculated with the intrinsic VP-Planner

function @IRR on a 10-year period of in-house costs

minus contracting costs. An error message "ERR" is

displayed if the ROR is less than -30%.

- Payback Period is calculated using intrinsic VP-

Planner functions @IF and @SUN to find the first year

that the sum of money saved is >= to start-up costs (ie.

if first year costs in-house minus first year costs out-

of-house >= start-up costs in-house, Payback Period = 1

year). An error message 11999" is displayed if the

payback period is longer than 10 years.

- Net Present Worth is calculated using intrinsic VP-Planner

function @NPV with an interest rate of "discount rate".

The initial and yearly costs during a 10-year study

period are the cash flows analyzed.

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ANALYSIS AND INTERPRETATION

Based on preliminary variable estimations by SWA Maintenance

management, the study discovered that it is less expensive to

• perform "MOD" checks in-house. The start-up costs are $362,500 in-

house vs $0 out-of-house, but the yearly costs of operations are

$1,089,239 in-house compared to $1,445,325 out-of-house. The rate

of return on money invested for in-house start-up costs compared

to money saved on a yearly basis (for 10-year study period) by

working in-house is 98.13%, which is well above SWA MARR of 15%.

The payback period for initial investments is 2 years. In a

clearer light, the net present value at a discount rate of 15% for

10 years is -$5,829,139 in-house vs -$7,253,752 for contracted

work.

However, these results are contingent upon the accuracy of the

variable estimations. Quantitative graphing analysis holding non-

pertinent variables fixed at initial estimates yields some

resourceful information. For example, if the number of planes to

"MOD" per year were to fall below 12, it would be less expensive

to do "MOD" checks out-of-house (See Appendix C). If the average

number of manhours labor per plane was actually less than 225, out-

of-house would be less expensive (See Appendix D). If the rate per

manhour labor in-house was to shoot up past $36 per hour, out-of -

house would be less expensive (See Appendix E). If the rate per

manhour out-of-house were to drop below $31.50, out-of-house would

be less expensive (See Appendix F). If the monthly cost of renting

a hangar in Dallas were to increase 6-fold, out-of-house would be

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less expensive (See Appendix G).

Through initial variable estimates, it seems as though doing

"MOD" checks in-house is best. However, there are still some

considerations as to the number of planes to "MOD" in Houston or

Dallas. The graph of Net Present Worth (In-house) VS Percentage

of Planes to "MOD" in Houston indicates that the best choice is to

do 100% of the planes in Houston (saves start-up in Dallas). Next

best is to "MOD" 100% percent of the planes in Dallas (saves start-

up in Houston). However, if neither option is feasible, the study

indicates that a higher percentage of planes to "MOD" in Dallas

yields a better net present worth (See Appendix H).

Sensitivity analysis on major variables such as "number of

planes to 'MOD' per year", "average number of manhours per plane",

"% of planes to 'MOD' in Houston", and "rate per manhour out-of-

house" indicated that variables have at most a straight-line effect

on program costs (ie. a 5% increase in average manhours per plane

yields at most a 4.8% increase in net present worth) (See Appendix

I).

CONCLUSIONS

The spreadsheet model provides an efficient means of analyzing

a multitude of different economic scenarios. However, its results

are only as accurate as the values inputed. As actual data becomes

available through further research of the "MOD" check program, the

model will become more accurate as a decision tool.

Based on initial estimates, it is of better economic interest

for Southwest Airlines to implement "MOD" checks as an in-house

program.

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APPENDIX A

(S

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1. SERVICE CHECK 2. "All CliECK 3. 1'1/2 B" CHECK 4. "Bi" AND "B2" QCK 5. "C" QCK 6. SThD "C" OECK 7. S'I'F3CIURA.L S1IMPLD 8. SPECIAL ITS (GENERAL, SERVICE JLT.ErINS, A.D. 'S) 9. SPECIAL VISI'IS (GENERAL, SERVICE JLrEriNS,P URBISHMET, PAflTI!,

SPECIAL PROJECTS)

1. SERVICE GIECK

Walk Around Check for safety and security - assuring integrity for flight - performed on all RON aircraft at DAIr-13XJ-PHX not receiving an "A" Check. Also, performed on aircraft in "B-C" Check visits not receiving an "A" theck. Service Check limits are not to exceed seven (7) calendar days. May be performed at any station by or under the supervision of a qualified A&P Medanic. Sign off required

2. "All CHECK

Lightest basic inspection done primarily on walk-around basis to assure condition, safety, security and servicing prior to flight. Performed at not to • I exceed intervals of fourteen (14) calendar days. Use SA-+! 166 form to be aoxuplished by A&P Mechanic (or under his supervision). Sign off required.

3. 11 112 B" CHECK

Special inspectiorVservicir3 items done at approximately mid-point between "B"

• Check not to exceed 525 hc*.irs from last "B" theck. Each visit will also incline a Service C1ieck unless an "A" Check is done. Only one 11 1/2 B" Check is required between "B" Checks.

4. "B" & lt) CHECK

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A "Bl" and "B2" Check constitutes a cxzxplete "B" theck. Basic inspection done at not to exceed 850 flight hours. May be done in one, or to planned visits. Each visit will also include a Service Check unless an "A" Check is done. Will also include a 111/2B" check.

ISSUED: 10/10/88 REVISED: 12/07/89 2697 615 PACE 1 RCB REV

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IsJi!MEr AmLIN B-737-200 1K 03RrWM IW&ThL

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• 5. "C"QE(

Inspection done at not to exceed 3400 flight hours. May be done in "1/2 C" increments corLsisting of one or two planned visits. Each visit will also include a Service check unless an "A" Check is done.

•6. SBJE4 "C" GE(

maintenance tasks that are not required every "C" Check, but are scheduled with regular "C" Checks at planned intervals; i.e. a sequenced "C" Check identified as 112C", indicates a task scheduled every second "C" Check. A 113C" • indicates a task scheduled every third "C" Check.

7. ST1JCIURAL SAMPLING

The progressive maintenance system which saitples specified areas of aircraft. •

In sate cases, 100% of aircraft in fleet, others at 50% of aircraft in fleet, while others area at 25% of the fleet. Time limit on the items are per Operations Specifications at basic 21,000 and 14,500 flight hour intervals.

8. SPECIAL ITEMS

special work requirements that do not fit any of the established work phases will be tertr1 "Special Items or S.I." and will be identified by the letters S. I. followed by a control number assigned by Planning. An item originating from a Service Bulletin will be identified by the letters S.I.S.B. followed by the caiplete Service Bulletin number. An item originating from an A. D. will be identified by the letters S.I.A.D. followed by the coitplete A.D. number.

•Special inspections, repairs, limits, services not specifically called out in the applicable manufacturers manual or other technical publication may upon the manufacturers approval be made a part of SWA Manual by being written on a Special Item Form and included in the official Special Item Record. The card should include the substantiating data, and be processed through Quality

• control.

9. SPECIAL VISITS

Elective acoatplishment of major or minor airframe/engine service bulletins, repairs, cabin interior refurbish exterior refinishing and other special work

• requiring extended down-times. Special Visits are sometimes referred to as Mini-Overhauls.

•

ISSUED: 10/10/88 REVISED: 09/01/89 - 2640 610 PAGE 2 RCB REV

SOUTHWEST AIRLINES B-737 WORK CONTENTS MANUAL

C9. SPECIAL ITEMS

Special work requirements that do not fit any of the established work phases will be termed "Special Item or S.I.", and will be identified by the letters S.I. followed by a control number assigned by Plannig. An item originating from a Service Bulletin will be identified by the letters S.I.S.B. followed by the complete Service Bulletin number. An item originating from an A.D. will be identified by the letters S.I.A.D. followed by the complete A. D. number.

Special inspections, repairs, limits, services not specifically called out in the applicable manufacturers manual or other technical publication may upon the manufacturers approval be made a part of SWAX Manual by being written on a Special Item Form and included in the official Special Item Record. The card should include the substantiating data, and be processed by Quality Control.

ISSUED 1.2/15/76 REVISED 9/24/81 817 286 . PAGE 3 Date RCB Rev.ff -

in qFr AIRLINE B-737-200 1K Cimrs I&iAL

111/2 B". "B". "C" AND SEQUENCED "C" Q{ECFS

These inspection/Checks; are acccuplished by a Continuous Maintenance Program which satisfies the requirements of Operations Specifications, Parts D, Aircraft Maintenance and the SWA Tim Limit index.

CONITNUOUS MAflEThNPROGRAM

Routinely, Southwest Airlines will acxxt1ish "C" Checks in one half increments, consisting of two one-quarter "C" Check visits. Each visit consisting of specific work cards as numbered and listed in the "C" Check index of the Work Contents Manual as "Cl", "C2 11 11 110" and 11C4" Checks. Southwest Airlines may elect to schedule either quarter of the one-half "C" on the first visit of the check. All cards issued will be ccupleted with the exception of the deviations as outlined later in this section.

A "Cl", "C2 11 1 11C3" and 11C4" and applicable sequenced "C" Check cards constitute a complete "C" Check.

Southwest Airlines may elect to acccatplish "B" Checks apart fran the "C" Checks in one or two planned visits consisting of specific work cards as mzbered and listed in the "B" check index of the Work Contents Manual as "Bl" and 11B2 11 . All cards issued will be ompleted, with the exception of the deviations as outlined later in this section.

Routinely, when "B" Checks are scheduled apart frccrn the "C" Check, both the "Bi" and 1122" will be issued and cx1eted in one visit. However, Southwest Airlines may elect to only start one package i.e., "Bl" or 1122" and in this instance, would only cxlete the one started and the other would be issued and cxxxpleted at a later date. All cards issued will be cmpleted with the exception of deviations outlined later in this section.

• Routinely, when "B" Checks are scheduled in conjunction with the "C" Checks, the "B]." will be issued and cxztleted with the "Cl" and 11C3" and the 1122" with the 11C2" and "C4". However, Southwest Airlines may elect to issue and cxilete both the "B]." and 1122" Checks with either of the two one-half "C" Check visits. All card issued will be completed with the exception of the deviations outlined later in this section.

DEVIATIONS

Southwest Airlines may plan and schedule those "C" Check cards that require the fuel tanks to be open at a timeapart from the normal two one-quarter "C" visits. They are "SC" cards 21-510, 22-510 and 25-501.

Southwest Airlines may defer those cards which call for special equipment if said equipment is out for calibration, or it is found to be malfunctioning at the time the card is issued.

Southwest Airlines may defer those cards or portions of cards that call for parts • replacement should said parts not be available.

ISSUED: 10/10/88 REVISED: 10/10/88 2271 597 PAGE 7 RB REV

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Any item resulting from those deviations will be catlied with prior to the expiration of the appropriate check time, or a "short term escalation" will be • requested in accordance with Southwest Airlines manual procedures.

Any document scheduled with the "B" and/or "C" check which is not specifically listed in the "B" or "C" Check index will not be considered to be a part of the "B" or "C" Check.

• I The following is a definition of Southwest Airlines scheduled checks:

A SERVICE CHECK OR "A" CHECK - For General Aircraft Security after the completion of each visit of "B" or "C" Check.

11 1/2 B" - Those item accomplished mid-point between "B" Check. • ___

Those items which are accomplished on every "Bi" Check.

11B2" - Those items which are aTplished on every 1132" Check.

"Cl" - Those items which are acoatplished on every "Cl" Check

• plus sequenced Cl items as applicable.

"C2"- Those item which are accomplished on every 11C2" Check. plus sequenced C2 items as applicable.

"C3" - Those items which are accomplished on every "C3" Check.

• plus sequenced C3 items as applicable.

11C4" - Those items which 'are accomplished on every "C4" Check. plus sequenced C4 items as applicable.

SEXXJENCED C - Those items done on various C intervals as scheduled by planning.

•Every 2C, 3C, 4C, 5C, etc.

MAINrEANCE/INSPECrION CARDS

The MaintenaI/InSpection cards for 111/2B11 , "B" and "C" and sequenced C checks are

• number by area.

Special Inspection items that do not fit any of the above categories will be identified by the letters "S. I.", followed by a control number assigned by planning. A Special Item originating from a Service Bulletin will be identified by the Service Bulletin N.nter preceded by S.I.S.B. A Special Item originating from

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an A.D. will be identified by the A.D. Number preceded by the S.I.A.D. The master

records for structural sampling accomplishment will be maintained and available for inspection.

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ISSUED: 10/10/88 REVISED: 11/10/88 2313 598 PAGE 8

RB REV

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• APPENDIX B

SOUTHWEST AIRLINES 'MOD PROJECT'

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GENERAL INFORMATION

UNITS T,1f

• Manhours needed

500 manhours -low work ir, marflours

1000 manhours -average work in iarhours

1500 (iianhours -high work jr manhours

28 $/manhour Rate per manhour (in house)

40 $/manhour Rate per uar:hour (out of house)

• 35 planes/year Number of planes to"NOV per year

10 planes/year Number of planes cut of 100 MUDs that need 0/P

1500 $/plane - low cost for possible U/P (per plane)

2500 '5/plane - average cost for possibie DIP

5000 $/piane - high cost for possible 0/P

2 marinours Preowork anhours needed

• j( m a n no u r (ate per ciarW:ur prepworki

-j(j: \LHh

• U1T IERi4S

50 Per-cert22 of piaros to MOD' n Dallas

SOou 'i/month Lease on tniru Dallas large;' 1per aionthll

50.00 1 baT ?) Retooling

100000 ' (loan ? New uquipuert costs

• - S planes Nurimer of p lanes out of 100 "MUDs' that are deiaveo for carts

parts delay

S hours - low time of delay

24 hours - average tius of delay

36 hours - high time of delay

2 workers Number of workers left idle durin g delay

HOUSTON

UNITS TERMS ITEM

•50 % PRE-CALCULATED Percentage of planes to CD" in Houston

25 workers Number of workers to train

2500 s Cost of training one worker

Number of workers to retrain per year

10 workers - low

• 12 workers - average

id workers - high

100000 $ (loan ?) New equipment

50000 $ (loan 7) Retooling

10 planes Number of planes out of 100 "MUDs" that are delayed for parts

Parts delay

• 24 hours - low time of delay

48 hours - average time of delay

• 72 hours - high time of delay

2 workers Number of workers left idle while plane is delayed

OUT of HOUSE

•UNITS TERNS CRiTERIA

Fairng csts from Dallas to 1000 $ Seattle

10 % reYceritdge of planes going to Seattle

• 1000 $ - Tucson

10 % to Tucson

1000 $ - Phoenix

10 % to Phoenix

1000 - Greenville

10 % to Greenville

• 800 $ - Waco

20 to Waco

1000 - South Carolina

10 % to South Carolina

1000 $ - Miami

10 % to Miaui

• IDIJO - Tulsa

Tulsa

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1,- Ur'irdO

• In mouse Contract l OR PAYBACK

Start Up $ 362500 0 1 98. 13% 2 yrs I

Yearly l089239 $ 1445325 I

• DISCOUNT RTE (USER DEFINED) NET PRESENT WORTH @ DISCOUNT RTE

(IN) (OUT)

15.00% (2rTER 19 0.X X) -5829139 $ -7253752

• CALCULATIONS

NHS Needed

(1/6) (low mhs) 83.33333

(213) (avg mhs) 566.6667

+ (1/6) (high mhs) 250

•Manhours needed 1000

O/A Cost(# planes requiring O/A from MOD in 1 year)/100 P .1

(1/6iow cost) 250

• (4/6) (average cost) 1666.667

(1/6) (high cost) 833.3333

(Sum)

(Sum)(P)(planies/year)(%-D) YearlyO/ cost (Dallas) 4812.5

(Sum)(P)(planes/year)(%-H) = Yearly O/A cost (Houston) 4812.3

(Sum) (P) (planes/year) = Yearly O/A cost (Out of House) 9625

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IN HOUSE

DallasYEARLY STRT-UP

(mhs needed) ($ per mhr)(plares/year)(%-Di Yearly in house costs $490,000 (prep hours needed) ($ per prepwork) (planes/year) )%-D) Yearly prep costs $1, 050

•(Monthly' rate on third hangar)(12) Yearly arar costs 460,000

(retooling costs) Start-up $50, 000

(Equipment costs) Start-up *100,000 * (O/) Yearly OiA costs 54, 513

* (parts delay) Yearly parts costs $1,143

TOTAL } $557,006 $150,000

* Parts delay (* planes out of 100 delayed for parts)/100 P .05 (1/6) (low time) 1.333333 (213) (average time) 16

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1- (1/6) (high time) b

(Sum) (Sum) (N (piaries/year) (people idle) (rata/hr (%-D) Yearly parts delay costs

1143.333

Houston,SRLy 51ST-UP

(us eedeth I per flhr) ies/year %-H) eariy in house costs 4490, 000

(preo flours naedeU) $ per prupork) '.:aries/ y ear) (-( Yearly pre costs

(retooling costs) Start-up $30, vOO

• Equipment costs) Start-up $100,000

(Workers to train) (3 to train 1 crer) Start-up 562,500 * (01W) Yearly 01W costs $4,813

* (parts delay) Yearly parts costs $41704

* (retraining) Yearly retraining costs $631, 067

TOTAL s535,233 $212,500

TOTAL INHOUSE i '11,089239 $362,500 (DWLLWS & HOUSTON)

• * Parts delay (# planes out of 100 delayed for parts)1100 P .1

(1/6) (low time) 4

(2/3) (average time) 32

+ (1/6) (high time)

is = (Sum) (Sum) (P) (planes/year) (people idle) (rate/hr) (%-h) Yearly parts delay costs

* Retraining

• (1/6) (low * workers to retrain/year) ($ to train one worker) 4166.667 (2/3) (average # workers to retrain/year) ($ to train one worker) 20000

+ (1/6) (high # workers to retrain/year) ($ to train one worker) 7500

Yearly retraining cost 31666.67

El

OUT OF HOUSE

(rnh needed) (rate per inh-out of house) (planes/year)

(fairing cost to Seattle) (planes/year) (i-S)

•Tucson

Phoenix

Greenville

Waco

South Carolina %SC

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Tulsa %-Tu

Orlando

(prep flours) ($) (planes/year)

* oi';

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Yearly service costs $1,400, 000

Yearly fairing cost $3,500

Yearl y fairirq cost 500

Yearly fairng coat. U0

Yearly falrirQ cost $3, 500

Yearly fairing cost

Yearly fairing cost $3,500

Yearly fairing cost $3,500

Yearly fairing cost $3,500

Yearly fairing cost $3,-J00

Yearly prepwork costs $2, 100

Yearly O/A cost $13,6255

TOTL OUT OF HOUSE ) $1,445,325

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RETURN ON IN-HOUSE INVESIHEMIS VS PLANES TO MO' PER YEAR

Lu w 50

Lu

150

10 15 20 25 30 35 40 45 NUMBER OF PLANES PER YEAR

0 x 0 z w 0 0

. . . .

REILIRN ON IN-HOUSE INESIMENTS

VS AVG MANFiOIIRS PER FLUE

2

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Ii

LU nz

6

LU

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ri

4@111.0 600 Boo 1II logo 12M MANHOUR'S PER PLANE (i]1 I x

z uJ 0. 0

0 0 .

RETURN ON IN-HOUSE INVESTMENTS VS 1E/MMKOUR IN-HOUSE

da

LU

LU

-

I 30 32 34 36 38 R1E/P1NHOUR IN-HOUSE ($)

w x z w 0. IL 4

. . .

LU

LII

&

• I

RETURN ON IN-HOUSE INUESINENIS VS R1E/HNHOUR OUT-OF-HOUSE

IL.

x

0 z w CL 0.

31 32 33 34 35 36 3? 38 39 RA1E/MMOVR OUT-OF-HOUSE ($)

0 0 0 0 0 0

RETURN ON IN-HOUSE INVESTMENTS US MONTHLY COST OF RENTING HANGAR

i5 25 35 MONTHLY HANGAR RENTAL ($)

. . . .

0 x 0 z Ui Q. a-4

ILl

LU

0

=

-515 =555

1 65

( =5 g 75

I r 3EOJ

NE! PRESENT WORTH (IN-HOUSE) US x-H

20 40 60 80 108 120 PLHES 10 M0D IN HOUSTON

11

LU

LU z x 0 z w 0. 0. 4

0 0 I 0 0 0 I

APPENDIX I

SENSITIVITY ANALYSIS (FIX ALL NON-PERTINENT VARS)

VARIABLE VALUE % CHANGE NET PRESENT WORTH % CHANGE

IN OUT IN OUT

PLANES/YR 35 .00% -5835214 -7253752 .00% .00%

PLANES/YR 37 5.71% -6115229 -7668252 4.80% 5.71%

MANHOURS 1000 .00% -5835214 -7253752 .00% .00%

MANHOURS 1050 5.00% -6081134 -7605066 4.21% 4.84%

% HOUSTON 67 .00% -5835214 -7253752 .00% .00%

% HOUSTON 70 4.48% -5836287 -7253752 .02% • 00%

OUT RATE/HR 40 .00% -5835214 -7253752 .00% .00%

OUT RATE/HR 42 5.00% -5835214 -7605066 .00% 4.84%

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