Biography for William SwanChief Economist Seabury-Airline Planning Group Visiting Professor Cranfield University Retired Chief Economist for Boeing Commercial Aircraft 1996-2005 Previous to Boeing worked at American Airlines in Operations Research and Strategic Planning and United Airlines in Research and Development Areas of work included Yield Management Fleet Planning Aircraft Routing and Crew Scheduling Also worked for Hull Trading a major market maker in stock index options and on the staff at MITrsquos Flight Transportation Lab Education Masterrsquos Engineerrsquos Degree and Ph D at MIT Bachelor of Science in Aeronautical Engineering at Princeton Likes dogs and dark beer (billswancyberswanscom)

copy Scott Adams

Cost Reductions Keep Coming

000

002

004

006

008

010

012

014

016

1970 1980 1990 2000 2010 2020 2030

Inte

rnat

ional

Yie

ld 20

03$

Mi

Estimated Fares -1yr

Yield trend -

24year

reported yields

Better Airplanes Higher Bypass Hotter Turbines

Jets for Props

Revenue Management Higher Load

Facors

Distributiion costs Lower commissions

LCCsnonunion pilots

faster turns

Lower Airport Costs

Lower ATC costs

Future Cost Improvements

Product DifferentiationMay be about Airports

bull Cruise time is only half of total activity per tripndash For short-haul stage lengths

bull Airline ldquofrustrationsrdquo are at airportndash Hub focus on connect processesndash Low Cost focus on turn processes

bull If airline prices mirror airline costsndash Ticket prices are $151 plus $003mindash Only 17 of prices are distance dependent at 1000 mi

Turn Times Are 30 of Total at 1500 km

0

10

20

30

40

50

60

70

80

90

100

Average Stage Length (km)

Sh

are

of

Wo

rkin

g D

ay

Cruise Hours

Turn Hours

1665 1146 874 706 593 Trips per Year

Taxi Climb

Maneuver

Boeing Cost Thinking Misses Airport Costs

bull Ownership is 30 of airplane costsndash At 1500 km turn is 30 of ownership timendash Ownership alone makes turns = 9 of costsndash But this is not the way we present it

bull Same turn times and work rates for all airplanesbull Same gate and servicing costs for same size airplanesbull Transformation of tripsyear needed to break out turn times

bull For comparisonndash Fuel is 10 of airplane costsndash A 3 frac12 minute reduction in turn time gt

A 5 reduction in fuel burn

Turn-Time Ownership Costs are 9 at 1500 km

Insurance

ATC fees

Airport

Maintenance

Cabin Crew

Pilots

Fuel

Block Hiours

Turn Hours

Airport Time Savings are Big

bull A 2-minute reduction in block timendash Is a 1 cost savings at 1500 km stage lengthndash Roughly a 20 increase in taxi speedndash Compare to an 10 reduction in fuel burn

bull A 7-minute reduction in turn time ndash Is a 1 cost savings from ownership alonendash Ignores ground laborgate savings

bull Turn times go up 7 minutes per 61 seatsndash Bigger planes take more time to turn

The Plan Make a Turn-Friendly Airplane

bull Differentiate product

bull Create Value

bull Obsolete current designs

bull Deal with customer ldquoitchesrdquo

bull Package of design improvements

bull Hope to find patentable part

Homework Firstbull Get Marketing agreement on cost methods

ndash What is truly a saving gates people capitalndash What can be documented and soldndash Design trade-offs against cost

bull Gather existing knowledgendash Boeing Majors Southwest LCCs Airports

bull Explore cross-functional cost savingsndash Airports Airlines ATCndash Within Airlines schedule gate fleet crew ground

bull Do industrial engineering operations researchndash On processes

Research Involves Several Disciplines

bull Research involves observing at airportsbull Research involves working with airlines

ndash Airport managersndash Operations controllersndash Schedule planners

bull Research involves prototype modeling amp testingbull Backgrounds needed

1 Industrial Engineering (system process design)2 Airline Operations Research (schedules reliability)3 Math modeling including simulations (programming)4 Administration and Customer relations skills

Project in not a Slam-Dunk

bull Estimated 50 chance of a good answerndash Low-hanging fruit airport time as a system has been

neglectedndash Airport has been everybodysrsquo interface nobodyrsquos

problembull Estimated 50 chance of us finding it

ndash We will focus on airplane-related stuff mainlyndash Boeing is not experienced in this kind of work

bull Cost is significantndash Requires dedicated team of 4-5 headcountndash Requires time (a year)ndash Few obvious benchmarks for early termination

Success Could Be High Value

bull Specify Trade-off Values for Designs

bull Differentiated Boeing Short-haul product

bull Might make airports ldquoBoeing advantagedrdquo

bull Could motivate earlier fleet retirements

bull Might have patent protection

High Value Research

bull Add ground system costs to OpCostndash OpCost history focuses on airplane cashndash All airplanes have same turn time and cost

bull Preliminary data increases large plane costsndash Slower turn timesndash More ownership time and cost per tripndash Higher gate times and costsseat

bull Suggests maximum efficient airplane sizebull Gets value for designs that reduce ground timebull May establish brand preference for Y1Y0 designs

Ground Costs Hit over 200 Seats

$35

$40

$45

$50

$55

$60

$65

$70

$75

50 100 150 200 250 300 350 400 450 500 550

Seats

Cost

per

Sea

t Tri

p

OpCost TrendsTurn Time Revised

Minimum

800 mi trip

Turn Time Rises With Distance

0

10

20

30

40

50

60

70

80

90

0 500 1000 1500 2000

Inbound Leg Distance

Turn

Tim

e

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

Product DifferentiationMay be about Airports

bull Cruise time is only half of total activity per tripndash For short-haul stage lengths

bull Airline ldquofrustrationsrdquo are at airportndash Hub focus on connect processesndash Low Cost focus on turn processes

bull If airline prices mirror airline costsndash Ticket prices are $151 plus $003mindash Only 17 of prices are distance dependent at 1000 mi

Turn Times Are 30 of Total at 1500 km

0

10

20

30

40

50

60

70

80

90

100

Average Stage Length (km)

Sh

are

of

Wo

rkin

g D

ay

Cruise Hours

Turn Hours

1665 1146 874 706 593 Trips per Year

Taxi Climb

Maneuver

Boeing Cost Thinking Misses Airport Costs

bull Ownership is 30 of airplane costsndash At 1500 km turn is 30 of ownership timendash Ownership alone makes turns = 9 of costsndash But this is not the way we present it

bull Same turn times and work rates for all airplanesbull Same gate and servicing costs for same size airplanesbull Transformation of tripsyear needed to break out turn times

bull For comparisonndash Fuel is 10 of airplane costsndash A 3 frac12 minute reduction in turn time gt

A 5 reduction in fuel burn

Turn-Time Ownership Costs are 9 at 1500 km

Insurance

ATC fees

Airport

Maintenance

Cabin Crew

Pilots

Fuel

Block Hiours

Turn Hours

Airport Time Savings are Big

bull A 2-minute reduction in block timendash Is a 1 cost savings at 1500 km stage lengthndash Roughly a 20 increase in taxi speedndash Compare to an 10 reduction in fuel burn

bull A 7-minute reduction in turn time ndash Is a 1 cost savings from ownership alonendash Ignores ground laborgate savings

bull Turn times go up 7 minutes per 61 seatsndash Bigger planes take more time to turn

The Plan Make a Turn-Friendly Airplane

bull Differentiate product

bull Create Value

bull Obsolete current designs

bull Deal with customer ldquoitchesrdquo

bull Package of design improvements

bull Hope to find patentable part

Homework Firstbull Get Marketing agreement on cost methods

ndash What is truly a saving gates people capitalndash What can be documented and soldndash Design trade-offs against cost

bull Gather existing knowledgendash Boeing Majors Southwest LCCs Airports

bull Explore cross-functional cost savingsndash Airports Airlines ATCndash Within Airlines schedule gate fleet crew ground

bull Do industrial engineering operations researchndash On processes

Research Involves Several Disciplines

bull Research involves observing at airportsbull Research involves working with airlines

ndash Airport managersndash Operations controllersndash Schedule planners

bull Research involves prototype modeling amp testingbull Backgrounds needed

1 Industrial Engineering (system process design)2 Airline Operations Research (schedules reliability)3 Math modeling including simulations (programming)4 Administration and Customer relations skills

Project in not a Slam-Dunk

bull Estimated 50 chance of a good answerndash Low-hanging fruit airport time as a system has been

neglectedndash Airport has been everybodysrsquo interface nobodyrsquos

problembull Estimated 50 chance of us finding it

ndash We will focus on airplane-related stuff mainlyndash Boeing is not experienced in this kind of work

bull Cost is significantndash Requires dedicated team of 4-5 headcountndash Requires time (a year)ndash Few obvious benchmarks for early termination

Success Could Be High Value

bull Specify Trade-off Values for Designs

bull Differentiated Boeing Short-haul product

bull Might make airports ldquoBoeing advantagedrdquo

bull Could motivate earlier fleet retirements

bull Might have patent protection

High Value Research

bull Add ground system costs to OpCostndash OpCost history focuses on airplane cashndash All airplanes have same turn time and cost

bull Preliminary data increases large plane costsndash Slower turn timesndash More ownership time and cost per tripndash Higher gate times and costsseat

bull Suggests maximum efficient airplane sizebull Gets value for designs that reduce ground timebull May establish brand preference for Y1Y0 designs

Ground Costs Hit over 200 Seats

$35

$40

$45

$50

$55

$60

$65

$70

$75

50 100 150 200 250 300 350 400 450 500 550

Seats

Cost

per

Sea

t Tri

p

OpCost TrendsTurn Time Revised

Minimum

800 mi trip

Turn Time Rises With Distance

0

10

20

30

40

50

60

70

80

90

0 500 1000 1500 2000

Inbound Leg Distance

Turn

Tim

e

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

Turn Times Are 30 of Total at 1500 km

0

10

20

30

40

50

60

70

80

90

100

Average Stage Length (km)

Sh

are

of

Wo

rkin

g D

ay

Cruise Hours

Turn Hours

1665 1146 874 706 593 Trips per Year

Taxi Climb

Maneuver

Boeing Cost Thinking Misses Airport Costs

bull Ownership is 30 of airplane costsndash At 1500 km turn is 30 of ownership timendash Ownership alone makes turns = 9 of costsndash But this is not the way we present it

bull Same turn times and work rates for all airplanesbull Same gate and servicing costs for same size airplanesbull Transformation of tripsyear needed to break out turn times

bull For comparisonndash Fuel is 10 of airplane costsndash A 3 frac12 minute reduction in turn time gt

A 5 reduction in fuel burn

Turn-Time Ownership Costs are 9 at 1500 km

Insurance

ATC fees

Airport

Maintenance

Cabin Crew

Pilots

Fuel

Block Hiours

Turn Hours

Airport Time Savings are Big

bull A 2-minute reduction in block timendash Is a 1 cost savings at 1500 km stage lengthndash Roughly a 20 increase in taxi speedndash Compare to an 10 reduction in fuel burn

bull A 7-minute reduction in turn time ndash Is a 1 cost savings from ownership alonendash Ignores ground laborgate savings

bull Turn times go up 7 minutes per 61 seatsndash Bigger planes take more time to turn

The Plan Make a Turn-Friendly Airplane

bull Differentiate product

bull Create Value

bull Obsolete current designs

bull Deal with customer ldquoitchesrdquo

bull Package of design improvements

bull Hope to find patentable part

Homework Firstbull Get Marketing agreement on cost methods

ndash What is truly a saving gates people capitalndash What can be documented and soldndash Design trade-offs against cost

bull Gather existing knowledgendash Boeing Majors Southwest LCCs Airports

bull Explore cross-functional cost savingsndash Airports Airlines ATCndash Within Airlines schedule gate fleet crew ground

bull Do industrial engineering operations researchndash On processes

Research Involves Several Disciplines

bull Research involves observing at airportsbull Research involves working with airlines

ndash Airport managersndash Operations controllersndash Schedule planners

bull Research involves prototype modeling amp testingbull Backgrounds needed

1 Industrial Engineering (system process design)2 Airline Operations Research (schedules reliability)3 Math modeling including simulations (programming)4 Administration and Customer relations skills

Project in not a Slam-Dunk

bull Estimated 50 chance of a good answerndash Low-hanging fruit airport time as a system has been

neglectedndash Airport has been everybodysrsquo interface nobodyrsquos

problembull Estimated 50 chance of us finding it

ndash We will focus on airplane-related stuff mainlyndash Boeing is not experienced in this kind of work

bull Cost is significantndash Requires dedicated team of 4-5 headcountndash Requires time (a year)ndash Few obvious benchmarks for early termination

Success Could Be High Value

bull Specify Trade-off Values for Designs

bull Differentiated Boeing Short-haul product

bull Might make airports ldquoBoeing advantagedrdquo

bull Could motivate earlier fleet retirements

bull Might have patent protection

High Value Research

bull Add ground system costs to OpCostndash OpCost history focuses on airplane cashndash All airplanes have same turn time and cost

bull Preliminary data increases large plane costsndash Slower turn timesndash More ownership time and cost per tripndash Higher gate times and costsseat

bull Suggests maximum efficient airplane sizebull Gets value for designs that reduce ground timebull May establish brand preference for Y1Y0 designs

Ground Costs Hit over 200 Seats

$35

$40

$45

$50

$55

$60

$65

$70

$75

50 100 150 200 250 300 350 400 450 500 550

Seats

Cost

per

Sea

t Tri

p

OpCost TrendsTurn Time Revised

Minimum

800 mi trip

Turn Time Rises With Distance

0

10

20

30

40

50

60

70

80

90

0 500 1000 1500 2000

Inbound Leg Distance

Turn

Tim

e

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

Boeing Cost Thinking Misses Airport Costs

bull Ownership is 30 of airplane costsndash At 1500 km turn is 30 of ownership timendash Ownership alone makes turns = 9 of costsndash But this is not the way we present it

bull Same turn times and work rates for all airplanesbull Same gate and servicing costs for same size airplanesbull Transformation of tripsyear needed to break out turn times

bull For comparisonndash Fuel is 10 of airplane costsndash A 3 frac12 minute reduction in turn time gt

A 5 reduction in fuel burn

Turn-Time Ownership Costs are 9 at 1500 km

Insurance

ATC fees

Airport

Maintenance

Cabin Crew

Pilots

Fuel

Block Hiours

Turn Hours

Airport Time Savings are Big

bull A 2-minute reduction in block timendash Is a 1 cost savings at 1500 km stage lengthndash Roughly a 20 increase in taxi speedndash Compare to an 10 reduction in fuel burn

bull A 7-minute reduction in turn time ndash Is a 1 cost savings from ownership alonendash Ignores ground laborgate savings

bull Turn times go up 7 minutes per 61 seatsndash Bigger planes take more time to turn

The Plan Make a Turn-Friendly Airplane

bull Differentiate product

bull Create Value

bull Obsolete current designs

bull Deal with customer ldquoitchesrdquo

bull Package of design improvements

bull Hope to find patentable part

Homework Firstbull Get Marketing agreement on cost methods

ndash What is truly a saving gates people capitalndash What can be documented and soldndash Design trade-offs against cost

bull Gather existing knowledgendash Boeing Majors Southwest LCCs Airports

bull Explore cross-functional cost savingsndash Airports Airlines ATCndash Within Airlines schedule gate fleet crew ground

bull Do industrial engineering operations researchndash On processes

Research Involves Several Disciplines

bull Research involves observing at airportsbull Research involves working with airlines

ndash Airport managersndash Operations controllersndash Schedule planners

bull Research involves prototype modeling amp testingbull Backgrounds needed

1 Industrial Engineering (system process design)2 Airline Operations Research (schedules reliability)3 Math modeling including simulations (programming)4 Administration and Customer relations skills

Project in not a Slam-Dunk

bull Estimated 50 chance of a good answerndash Low-hanging fruit airport time as a system has been

neglectedndash Airport has been everybodysrsquo interface nobodyrsquos

problembull Estimated 50 chance of us finding it

ndash We will focus on airplane-related stuff mainlyndash Boeing is not experienced in this kind of work

bull Cost is significantndash Requires dedicated team of 4-5 headcountndash Requires time (a year)ndash Few obvious benchmarks for early termination

Success Could Be High Value

bull Specify Trade-off Values for Designs

bull Differentiated Boeing Short-haul product

bull Might make airports ldquoBoeing advantagedrdquo

bull Could motivate earlier fleet retirements

bull Might have patent protection

High Value Research

bull Add ground system costs to OpCostndash OpCost history focuses on airplane cashndash All airplanes have same turn time and cost

bull Preliminary data increases large plane costsndash Slower turn timesndash More ownership time and cost per tripndash Higher gate times and costsseat

bull Suggests maximum efficient airplane sizebull Gets value for designs that reduce ground timebull May establish brand preference for Y1Y0 designs

Ground Costs Hit over 200 Seats

$35

$40

$45

$50

$55

$60

$65

$70

$75

50 100 150 200 250 300 350 400 450 500 550

Seats

Cost

per

Sea

t Tri

p

OpCost TrendsTurn Time Revised

Minimum

800 mi trip

Turn Time Rises With Distance

0

10

20

30

40

50

60

70

80

90

0 500 1000 1500 2000

Inbound Leg Distance

Turn

Tim

e

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

Turn-Time Ownership Costs are 9 at 1500 km

Insurance

ATC fees

Airport

Maintenance

Cabin Crew

Pilots

Fuel

Block Hiours

Turn Hours

Airport Time Savings are Big

bull A 2-minute reduction in block timendash Is a 1 cost savings at 1500 km stage lengthndash Roughly a 20 increase in taxi speedndash Compare to an 10 reduction in fuel burn

bull A 7-minute reduction in turn time ndash Is a 1 cost savings from ownership alonendash Ignores ground laborgate savings

bull Turn times go up 7 minutes per 61 seatsndash Bigger planes take more time to turn

The Plan Make a Turn-Friendly Airplane

bull Differentiate product

bull Create Value

bull Obsolete current designs

bull Deal with customer ldquoitchesrdquo

bull Package of design improvements

bull Hope to find patentable part

Homework Firstbull Get Marketing agreement on cost methods

ndash What is truly a saving gates people capitalndash What can be documented and soldndash Design trade-offs against cost

bull Gather existing knowledgendash Boeing Majors Southwest LCCs Airports

bull Explore cross-functional cost savingsndash Airports Airlines ATCndash Within Airlines schedule gate fleet crew ground

bull Do industrial engineering operations researchndash On processes

Research Involves Several Disciplines

bull Research involves observing at airportsbull Research involves working with airlines

ndash Airport managersndash Operations controllersndash Schedule planners

bull Research involves prototype modeling amp testingbull Backgrounds needed

1 Industrial Engineering (system process design)2 Airline Operations Research (schedules reliability)3 Math modeling including simulations (programming)4 Administration and Customer relations skills

Project in not a Slam-Dunk

bull Estimated 50 chance of a good answerndash Low-hanging fruit airport time as a system has been

neglectedndash Airport has been everybodysrsquo interface nobodyrsquos

problembull Estimated 50 chance of us finding it

ndash We will focus on airplane-related stuff mainlyndash Boeing is not experienced in this kind of work

bull Cost is significantndash Requires dedicated team of 4-5 headcountndash Requires time (a year)ndash Few obvious benchmarks for early termination

Success Could Be High Value

bull Specify Trade-off Values for Designs

bull Differentiated Boeing Short-haul product

bull Might make airports ldquoBoeing advantagedrdquo

bull Could motivate earlier fleet retirements

bull Might have patent protection

High Value Research

bull Add ground system costs to OpCostndash OpCost history focuses on airplane cashndash All airplanes have same turn time and cost

bull Preliminary data increases large plane costsndash Slower turn timesndash More ownership time and cost per tripndash Higher gate times and costsseat

bull Suggests maximum efficient airplane sizebull Gets value for designs that reduce ground timebull May establish brand preference for Y1Y0 designs

Ground Costs Hit over 200 Seats

$35

$40

$45

$50

$55

$60

$65

$70

$75

50 100 150 200 250 300 350 400 450 500 550

Seats

Cost

per

Sea

t Tri

p

OpCost TrendsTurn Time Revised

Minimum

800 mi trip

Turn Time Rises With Distance

0

10

20

30

40

50

60

70

80

90

0 500 1000 1500 2000

Inbound Leg Distance

Turn

Tim

e

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

Airport Time Savings are Big

bull A 2-minute reduction in block timendash Is a 1 cost savings at 1500 km stage lengthndash Roughly a 20 increase in taxi speedndash Compare to an 10 reduction in fuel burn

bull A 7-minute reduction in turn time ndash Is a 1 cost savings from ownership alonendash Ignores ground laborgate savings

bull Turn times go up 7 minutes per 61 seatsndash Bigger planes take more time to turn

The Plan Make a Turn-Friendly Airplane

bull Differentiate product

bull Create Value

bull Obsolete current designs

bull Deal with customer ldquoitchesrdquo

bull Package of design improvements

bull Hope to find patentable part

Homework Firstbull Get Marketing agreement on cost methods

ndash What is truly a saving gates people capitalndash What can be documented and soldndash Design trade-offs against cost

bull Gather existing knowledgendash Boeing Majors Southwest LCCs Airports

bull Explore cross-functional cost savingsndash Airports Airlines ATCndash Within Airlines schedule gate fleet crew ground

bull Do industrial engineering operations researchndash On processes

Research Involves Several Disciplines

bull Research involves observing at airportsbull Research involves working with airlines

ndash Airport managersndash Operations controllersndash Schedule planners

bull Research involves prototype modeling amp testingbull Backgrounds needed

1 Industrial Engineering (system process design)2 Airline Operations Research (schedules reliability)3 Math modeling including simulations (programming)4 Administration and Customer relations skills

Project in not a Slam-Dunk

bull Estimated 50 chance of a good answerndash Low-hanging fruit airport time as a system has been

neglectedndash Airport has been everybodysrsquo interface nobodyrsquos

problembull Estimated 50 chance of us finding it

ndash We will focus on airplane-related stuff mainlyndash Boeing is not experienced in this kind of work

bull Cost is significantndash Requires dedicated team of 4-5 headcountndash Requires time (a year)ndash Few obvious benchmarks for early termination

Success Could Be High Value

bull Specify Trade-off Values for Designs

bull Differentiated Boeing Short-haul product

bull Might make airports ldquoBoeing advantagedrdquo

bull Could motivate earlier fleet retirements

bull Might have patent protection

High Value Research

bull Add ground system costs to OpCostndash OpCost history focuses on airplane cashndash All airplanes have same turn time and cost

bull Preliminary data increases large plane costsndash Slower turn timesndash More ownership time and cost per tripndash Higher gate times and costsseat

bull Suggests maximum efficient airplane sizebull Gets value for designs that reduce ground timebull May establish brand preference for Y1Y0 designs

Ground Costs Hit over 200 Seats

$35

$40

$45

$50

$55

$60

$65

$70

$75

50 100 150 200 250 300 350 400 450 500 550

Seats

Cost

per

Sea

t Tri

p

OpCost TrendsTurn Time Revised

Minimum

800 mi trip

Turn Time Rises With Distance

0

10

20

30

40

50

60

70

80

90

0 500 1000 1500 2000

Inbound Leg Distance

Turn

Tim

e

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

The Plan Make a Turn-Friendly Airplane

bull Differentiate product

bull Create Value

bull Obsolete current designs

bull Deal with customer ldquoitchesrdquo

bull Package of design improvements

bull Hope to find patentable part

Homework Firstbull Get Marketing agreement on cost methods

ndash What is truly a saving gates people capitalndash What can be documented and soldndash Design trade-offs against cost

bull Gather existing knowledgendash Boeing Majors Southwest LCCs Airports

bull Explore cross-functional cost savingsndash Airports Airlines ATCndash Within Airlines schedule gate fleet crew ground

bull Do industrial engineering operations researchndash On processes

Research Involves Several Disciplines

bull Research involves observing at airportsbull Research involves working with airlines

ndash Airport managersndash Operations controllersndash Schedule planners

bull Research involves prototype modeling amp testingbull Backgrounds needed

1 Industrial Engineering (system process design)2 Airline Operations Research (schedules reliability)3 Math modeling including simulations (programming)4 Administration and Customer relations skills

Project in not a Slam-Dunk

bull Estimated 50 chance of a good answerndash Low-hanging fruit airport time as a system has been

neglectedndash Airport has been everybodysrsquo interface nobodyrsquos

problembull Estimated 50 chance of us finding it

ndash We will focus on airplane-related stuff mainlyndash Boeing is not experienced in this kind of work

bull Cost is significantndash Requires dedicated team of 4-5 headcountndash Requires time (a year)ndash Few obvious benchmarks for early termination

Success Could Be High Value

bull Specify Trade-off Values for Designs

bull Differentiated Boeing Short-haul product

bull Might make airports ldquoBoeing advantagedrdquo

bull Could motivate earlier fleet retirements

bull Might have patent protection

High Value Research

bull Add ground system costs to OpCostndash OpCost history focuses on airplane cashndash All airplanes have same turn time and cost

bull Preliminary data increases large plane costsndash Slower turn timesndash More ownership time and cost per tripndash Higher gate times and costsseat

bull Suggests maximum efficient airplane sizebull Gets value for designs that reduce ground timebull May establish brand preference for Y1Y0 designs

Ground Costs Hit over 200 Seats

$35

$40

$45

$50

$55

$60

$65

$70

$75

50 100 150 200 250 300 350 400 450 500 550

Seats

Cost

per

Sea

t Tri

p

OpCost TrendsTurn Time Revised

Minimum

800 mi trip

Turn Time Rises With Distance

0

10

20

30

40

50

60

70

80

90

0 500 1000 1500 2000

Inbound Leg Distance

Turn

Tim

e

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

Homework Firstbull Get Marketing agreement on cost methods

ndash What is truly a saving gates people capitalndash What can be documented and soldndash Design trade-offs against cost

bull Gather existing knowledgendash Boeing Majors Southwest LCCs Airports

bull Explore cross-functional cost savingsndash Airports Airlines ATCndash Within Airlines schedule gate fleet crew ground

bull Do industrial engineering operations researchndash On processes

Research Involves Several Disciplines

bull Research involves observing at airportsbull Research involves working with airlines

ndash Airport managersndash Operations controllersndash Schedule planners

bull Research involves prototype modeling amp testingbull Backgrounds needed

1 Industrial Engineering (system process design)2 Airline Operations Research (schedules reliability)3 Math modeling including simulations (programming)4 Administration and Customer relations skills

Project in not a Slam-Dunk

bull Estimated 50 chance of a good answerndash Low-hanging fruit airport time as a system has been

neglectedndash Airport has been everybodysrsquo interface nobodyrsquos

problembull Estimated 50 chance of us finding it

ndash We will focus on airplane-related stuff mainlyndash Boeing is not experienced in this kind of work

bull Cost is significantndash Requires dedicated team of 4-5 headcountndash Requires time (a year)ndash Few obvious benchmarks for early termination

Success Could Be High Value

bull Specify Trade-off Values for Designs

bull Differentiated Boeing Short-haul product

bull Might make airports ldquoBoeing advantagedrdquo

bull Could motivate earlier fleet retirements

bull Might have patent protection

High Value Research

bull Add ground system costs to OpCostndash OpCost history focuses on airplane cashndash All airplanes have same turn time and cost

bull Preliminary data increases large plane costsndash Slower turn timesndash More ownership time and cost per tripndash Higher gate times and costsseat

bull Suggests maximum efficient airplane sizebull Gets value for designs that reduce ground timebull May establish brand preference for Y1Y0 designs

Ground Costs Hit over 200 Seats

$35

$40

$45

$50

$55

$60

$65

$70

$75

50 100 150 200 250 300 350 400 450 500 550

Seats

Cost

per

Sea

t Tri

p

OpCost TrendsTurn Time Revised

Minimum

800 mi trip

Turn Time Rises With Distance

0

10

20

30

40

50

60

70

80

90

0 500 1000 1500 2000

Inbound Leg Distance

Turn

Tim

e

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

Research Involves Several Disciplines

bull Research involves observing at airportsbull Research involves working with airlines

ndash Airport managersndash Operations controllersndash Schedule planners

bull Research involves prototype modeling amp testingbull Backgrounds needed

1 Industrial Engineering (system process design)2 Airline Operations Research (schedules reliability)3 Math modeling including simulations (programming)4 Administration and Customer relations skills

Project in not a Slam-Dunk

bull Estimated 50 chance of a good answerndash Low-hanging fruit airport time as a system has been

neglectedndash Airport has been everybodysrsquo interface nobodyrsquos

problembull Estimated 50 chance of us finding it

ndash We will focus on airplane-related stuff mainlyndash Boeing is not experienced in this kind of work

bull Cost is significantndash Requires dedicated team of 4-5 headcountndash Requires time (a year)ndash Few obvious benchmarks for early termination

Success Could Be High Value

bull Specify Trade-off Values for Designs

bull Differentiated Boeing Short-haul product

bull Might make airports ldquoBoeing advantagedrdquo

bull Could motivate earlier fleet retirements

bull Might have patent protection

High Value Research

bull Add ground system costs to OpCostndash OpCost history focuses on airplane cashndash All airplanes have same turn time and cost

bull Preliminary data increases large plane costsndash Slower turn timesndash More ownership time and cost per tripndash Higher gate times and costsseat

bull Suggests maximum efficient airplane sizebull Gets value for designs that reduce ground timebull May establish brand preference for Y1Y0 designs

Ground Costs Hit over 200 Seats

$35

$40

$45

$50

$55

$60

$65

$70

$75

50 100 150 200 250 300 350 400 450 500 550

Seats

Cost

per

Sea

t Tri

p

OpCost TrendsTurn Time Revised

Minimum

800 mi trip

Turn Time Rises With Distance

0

10

20

30

40

50

60

70

80

90

0 500 1000 1500 2000

Inbound Leg Distance

Turn

Tim

e

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

Project in not a Slam-Dunk

bull Estimated 50 chance of a good answerndash Low-hanging fruit airport time as a system has been

neglectedndash Airport has been everybodysrsquo interface nobodyrsquos

problembull Estimated 50 chance of us finding it

ndash We will focus on airplane-related stuff mainlyndash Boeing is not experienced in this kind of work

bull Cost is significantndash Requires dedicated team of 4-5 headcountndash Requires time (a year)ndash Few obvious benchmarks for early termination

Success Could Be High Value

bull Specify Trade-off Values for Designs

bull Differentiated Boeing Short-haul product

bull Might make airports ldquoBoeing advantagedrdquo

bull Could motivate earlier fleet retirements

bull Might have patent protection

High Value Research

bull Add ground system costs to OpCostndash OpCost history focuses on airplane cashndash All airplanes have same turn time and cost

bull Preliminary data increases large plane costsndash Slower turn timesndash More ownership time and cost per tripndash Higher gate times and costsseat

bull Suggests maximum efficient airplane sizebull Gets value for designs that reduce ground timebull May establish brand preference for Y1Y0 designs

Ground Costs Hit over 200 Seats

$35

$40

$45

$50

$55

$60

$65

$70

$75

50 100 150 200 250 300 350 400 450 500 550

Seats

Cost

per

Sea

t Tri

p

OpCost TrendsTurn Time Revised

Minimum

800 mi trip

Turn Time Rises With Distance

0

10

20

30

40

50

60

70

80

90

0 500 1000 1500 2000

Inbound Leg Distance

Turn

Tim

e

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

Success Could Be High Value

bull Specify Trade-off Values for Designs

bull Differentiated Boeing Short-haul product

bull Might make airports ldquoBoeing advantagedrdquo

bull Could motivate earlier fleet retirements

bull Might have patent protection

High Value Research

bull Add ground system costs to OpCostndash OpCost history focuses on airplane cashndash All airplanes have same turn time and cost

bull Preliminary data increases large plane costsndash Slower turn timesndash More ownership time and cost per tripndash Higher gate times and costsseat

bull Suggests maximum efficient airplane sizebull Gets value for designs that reduce ground timebull May establish brand preference for Y1Y0 designs

Ground Costs Hit over 200 Seats

$35

$40

$45

$50

$55

$60

$65

$70

$75

50 100 150 200 250 300 350 400 450 500 550

Seats

Cost

per

Sea

t Tri

p

OpCost TrendsTurn Time Revised

Minimum

800 mi trip

Turn Time Rises With Distance

0

10

20

30

40

50

60

70

80

90

0 500 1000 1500 2000

Inbound Leg Distance

Turn

Tim

e

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

High Value Research

bull Add ground system costs to OpCostndash OpCost history focuses on airplane cashndash All airplanes have same turn time and cost

bull Preliminary data increases large plane costsndash Slower turn timesndash More ownership time and cost per tripndash Higher gate times and costsseat

bull Suggests maximum efficient airplane sizebull Gets value for designs that reduce ground timebull May establish brand preference for Y1Y0 designs

Ground Costs Hit over 200 Seats

$35

$40

$45

$50

$55

$60

$65

$70

$75

50 100 150 200 250 300 350 400 450 500 550

Seats

Cost

per

Sea

t Tri

p

OpCost TrendsTurn Time Revised

Minimum

800 mi trip

Turn Time Rises With Distance

0

10

20

30

40

50

60

70

80

90

0 500 1000 1500 2000

Inbound Leg Distance

Turn

Tim

e

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

Ground Costs Hit over 200 Seats

$35

$40

$45

$50

$55

$60

$65

$70

$75

50 100 150 200 250 300 350 400 450 500 550

Seats

Cost

per

Sea

t Tri

p

OpCost TrendsTurn Time Revised

Minimum

800 mi trip

Turn Time Rises With Distance

0

10

20

30

40

50

60

70

80

90

0 500 1000 1500 2000

Inbound Leg Distance

Turn

Tim

e

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

Turn Time Rises With Distance

0

10

20

30

40

50

60

70

80

90

0 500 1000 1500 2000

Inbound Leg Distance

Turn

Tim

e

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

Turn Time Rises with Seats

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300 400 500

Seats

Turn

Tim

e

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

Define S = airplane seat count

D = the distance in statute miles

of the flight segment preceding the turn

T = the turn time in minutes

Then

T = 24 + 0115 S + 00142 middot D

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18

William Swan

Data Troll

Story Teller

Economist

• Slide 1
• Cost Reductions Keep Coming
• Product Differentiation May be about Airports
• Slide 4
• Boeing Cost Thinking Misses Airport Costs
• Slide 6
• Airport Time Savings are Big
• The Plan Make a Turn-Friendly Airplane
• Homework First
• Research Involves Several Disciplines
• Project in not a Slam-Dunk
• Success Could Be High Value
• High Value Research
• Ground Costs Hit over 200 Seats
• Turn Time Rises With Distance
• Turn Time Rises with Seats
• Slide 17
• Slide 18