BACHELOR Fordham Supervisor Mr Felix Zhu Date 29th

BACHELOR OF SCIENCE
DEGREE WITH HONOURS IN AEROSPACE TECHNOLOGY WITH PILOT STUDIES

 

BSc Final Year Project
Report

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School of Engineering
and Technology

University of Hertfordshire

 

 

 

The
improvement on profitability for Boeing 777’s and Airbus A330’s from seating
configurations.

 

 

 

Report by

Mr
Toby Philip Fordham

 

Supervisor

Mr Felix Zhu

 

Date

29th March
2018

 

DECLARATION
STATEMENT

 

 

 

 

 

 

 

 

 

I
certify that the work submitted is my own and that any material derived or
quoted from the published or unpublished work of other persons has been duly
acknowledged (ref. UPR AS/C/6.1, Appendix I, Section 2 – Section on cheating
and plagiarism)

 

Student
Full Name: Toby Philip Fordham

 

Student
Registration Number: 15004311

 

 

 

 

 

Signed:
…………………………………………………

Date:
29th March 2018

 

ABSTRACT

 

 

 

 

ENTER
YOUR ABSTRACT HERE – The abstract should not be longer than 120 words and is a
short summary describing the contents of the report, rather than being a
summary of the project. The purpose of the abstract is to enable a reader to
decide whether the report might worth reading in detail. They would probably
then read the conclusions to determine the outcomes of the work. The abstract
is not intended to replace any other part of the report e.g. the introduction.
It merely provides a taste for what is to come.

 

ACKNOWLEDGEMENTS

 

 

 

 

 

 

 

 

This
project wishes to express sincere gratitude to Mr Felix Zhu, whom has been the
supervisor of this Project. He has given opportunities to explore many avenues
of research and new thought processes throughout this project for ways to
enhance profitability for different aircraft types. His assistance has been
invaluable in terms of his ability for constant meetings which has allowed the
project to remain on a strict time scale.

 

Gratitude
to the University of Hertfordshire must be given too as it has provided great
environment, resources and facilities which has enabled this project to be a
success.

 

Lastly
appreciation must be given to the school of Engineering and Technology and more
specifically to Ms Joanna Rawska for offering this subject title, as it has
been both challenging yet enjoyable. Learning about a specific topic which incorporates
knowledge from the previous three years of University whilst utilising skills
from all educational areas from the past sixteen years.

 

 

 

TABLE
OF CONTENTS

DECLARATION STATEMENT. ii

ABSTRACT. iii

ACKNOWLEDGEMENTS. iv

TABLE OF CONTENTS. v

LIST OF FIGURES. vii

GLOSSARY. viii

1.    INTRODUCTION. 1

1.1      MARKET TREND. 1

1.2      COMPETITION. 2

1.3      BUSINESS CONDITION. 3

1.3.1   PASSENGER FACTOR. 3

1.3.2   FUEL FACTOR. 4

1.3.3   LABOUR FACTOR. 5

1.3.4   AICRAFT FACTOR. 6

1.3.5   MINI CONCLUSION. 6

1.4      METHODOLOGY. 6

2     AIMS AND
OBJECTIVES. 7

3     AIRCRAFT
SELECTION. 8

3.1      Best-selling
Aircraft 8

3.2      Features and
benefits of Airbus A330. 8

3.3      Features and
benefits of Boeing 777. 8

3.4      Main usage of
the aircraft 8

4     CABIN SIZES. 9

4.1      AIRBUS A330-200. 9

4.2      AIRBUS A330-300. 9

4.3      BOEING B777-200. 9

4.4      BOEING B777-300. 9

5     SEATING CONFIGURATIONS. 10

4.5      AIRBUS A330-300. 10

4.6      AIRBUS A330-200. 10

4.7      BOEING 777-200. 10

4.8      BOEING 777-300. 10

5     TRAVEL ROUTES
FOR BOTH AIRCRAFT. 11

5.1      LHR (LONDON
HEATHROW) – PEK (BEIJING) 11

5.2      LHR (LONDON
HEATHROW) – JFK (NEW YORK) 11

5.3      LHR (LONDON
HEATHROW) – PVG (SHANGHAI) 11

6     PROFIT
CALCULATIONS AND ENHANCEMENTS. 12

7     CONCLUSIONS
& RECCOMENDATIONS. 13

BIBLIOGRAPHY. 14

 

LIST
OF FIGURES

 

Figure 1 – Market share
and orders of aircraft 3

Figure 2  – Prices of Crude oil 4

Figure 4 – Graph showing
rate of change of oil prices 5

 

 

GLOSSARY

AVIATION – the
flying or operation of aircraft

PAX
– passengers when on an aircraft

GMT
– Greenwich Mean Time

CONFIGURATION
– an arrangement or order of parts in a
particular form

 

 

 

1.  INTRODUCTION

One of the
main focuses of a business in this century is the maintenance and increase of
profitability which will help the overall performance of the Business and so
will help propel them forward in the business sector that they are in. This
works for any business in any area of business. This report focuses on the
profitability of airlines in terms of aircraft seating from two specific
aircraft which have two variants in the subside of them. These aircraft will
be: Boeing 777’s and Airbus A330’s. However, the information contained within
the report will be transferrable to other aircraft in terms of the ways to
increase the profit levels. A detailed investigation into the aircraft and the
seating configurations of the previously mentioned aircraft will be carried
out. The websites which will be looked at for the seating plans are firstly the
airlines websites themselves as this is where the most accurate information
will be kept and it will be the most up to date version of this. When looking
at the Airbus A330 and what ones they have in their fleet there are different
configurations as well as there being an Airbus A330-200 and Airbus A330-300.
This is the same as the Boeing 777, this jet is also split into the Boeing
B777-200 series and Boeing B777-300 series. This means that if each of the
variants of the aircraft have a minimum of 2 seating configurations there will
be a minimum of 8 configurations which this report will try to improve which
means that the overall aim of this project which is make improvements to the
current layouts to increase the profitability of the airlines. However, there
can and will be more seating layouts in some of the aircraft variants mentioned
so that number will increase. This way an accurate and wide range of aircraft
configurations will be looked at thus giving a better knowledge and
understanding of what optimisations can be carried out in order to better
improve the profitability of the airlines that this report will look at.

1.1       MARKET TREND

No
matter what business is being looked at their financial departments are all
looking for ways to improve the profitability of the business and to increase
this whilst minimising how much the expenditure is. From an airlines point of
view this can be done in various way such as:

·       Increasing the number of routes they operate. This
increases profit as they will have more passengers on a yearly basis. Whilst
this increases the cost of sales as more passenger aircraft will be needed as
well as the increased number of staff required the airline will generate profit
once the aircraft has been ‘paid off.’ This means once that the expenditure of
an average of $233.8 million for an Airbus A330-300 has been paid for the
airlines will be generating profit in a more linear style as the only costs
will be staff and aircrew and fuel and maintenance costs. Revenue will be made
from the cost of sales of ticket prices.

·       Increasing the number of times a route is carried
out. This increases profit of the routes which are replicated and carried more
as the most popular ones will mean that all of the traffic (passengers) that
require the seats will be able to go on their flights more often meaning more
ticket/seat sales for the airlines and with the increase in revenue this aids
and allows more profit to be mad. For example, the Independent newspaper found
that in the month of July 2017, 451,801 passengers flew the route of Hong Kong
to Taipei. This was worked out that 10 passengers a minute flew on this route. There
may well be many factors which affect this such as time of year, reasons for
travelling (assumed to be majorly business orientated).

·       Increased flight ticket costs – this means that with
an increase in ticket prices the revenue generated from a flight would have
increased. For an example; a flight which has 200 seats at £200 each that would
mean £40,000 would be generated but if the same flight had 200 seats at £400
that would be double the revenue at £80,000.

·       One of the main ways that airlines increase their
revenues and in turn their profits would be by altering their seating
configurations with dominance to those seats that the majority of passengers on
certain routes fly in. For example; a flight which is predominantly business
advocates travelling to and from business trips would mean an airline would
most likely have more business class seats on that aircraft, and due to the
fact that business class tickets are more expensive more revenue will be
generated and thus more profit.

1.2       COMPETITION

Within
aviation there are five major aircraft manufacturers. The top five are: Airbus,
Boeing, Bombardier, Embraer and Tupolev. From this short list, there are two
companies which stick out and have a level of rivalry that could be compared to
BMW vs Mercedes from the Motorsport industry and they are Airbus and Boeing.
With Boeing being founded in 1916 and Airbus coming 54 years later in 1970,
Boeing have had that much time in order to implement their stance in the
aviation world. However, the two are closely linked and are rivals in the
aviation industry. These two companies are equal sides of the duopoly of
commercial jet liners since the 1990’s and this has resulted in smaller
companies being absorbed by Airbus and Boeing depending on the region they find
themselves in. For example, McDonnell Douglas of America was absorbed by Boeing
in a 1997 $13.3 billion merger. In the financial year of 2016 Airbus received
731 orders for new aircraft whilst Boeing saw a request list of 8.62% less at 668 aircraft. These
order numbers are low for both companies when compared to other years including
the 2009/2010 year.

The
image to the left represents the amount of aircraft delivered to airlines from
the two manufacturers that are being reviewed and

looked
at. Alongside this information is the 2016 market share as the graphs were
plotted in January 2017 as per the graph says. It is clear to see that since
the year of 2000 Airbus has had monumental growth in its market share which is
clear to see with the overtaking of Boeing in terms of market share where in
2010 (where the graphs plotting ends) Airbus is around 5% above Boeing.

 

Singapore
Airlines have recently unveiled its new First-Class suites in both some of
their Airbus and Boeing fleet. According to Skyscanner.net and for a flight
from London to Sydney which has a stopover in Singapore on the 1st
of March for one week and one adult has an average price of £7700, this is on
the aircraft of an Airbus A380.

1.3       BUSINESS CONDITION

1.3.1
PASSENGER FACTOR

According
to the IATA’s (international air transport association) figures from 2017 and
the past two years (2015-2017) there has been a rise in the amount of
passengers that have travelled in the aviation sector with 3.561 billion
passengers flying in 2015 compared with 4.085 billion flying in 2017 (as of the
2017 mid-year report written by IATA) which is a 14.7% increase from 2015  This shows a
clear increase in the amount of passengers travelling in a year by year effect
and so, points can be made that as stated in the financial sheet by IATA that
begins from 2015 which had an increase of 7.0% from the amount of passengers
flying of 2014 with 4 consecutive years of passenger growth that it doesn’t
seem to be slowing down. This means there is a continuous need development in
the airline sector and this includes the need for more aircraft which can
accommodate the current, potential and obvious increase in the amount of PAX. In
addition, with the added need for extra aircraft the types of passengers that
will be and are travelling whether it is for leisure or for business purposes
will have an impact on the seating configurations that are required for the
aircraft.

1.3.2
 FUEL FACTOR

The
aviation industry in line with most of the industries that use fuel have had
to, recently, keeping in mind the rising fuel prices due to the fact that the
crude oil prices which aviation fuel is extracted have risen. Below is a table
containing the prices for crude oil per barrel from each January since 2010:

Year

Price ($) (from each January of each
year)

2010

82.90

2011

101.91

2012

107.12

2013

104.58

2014

108.13

2015

50.42

2016

29.64

2017

53.65

Figure
2  – Prices of Crude oil

From
the above it is clear to see that between the years of 2014 the price of a
barrel of crude oil went down from $108.13 by 53.4% () to $50.42 and continued to fall to $29.64 in 2016.
This is where it ends however, as the prices are starting to rise from 2016 to
2017. There have been many reports trying to explain why the price of crude oil
peaked at such a high price and hence, why it fell by so much as well. What can
be taken away from all of the reports and what makes the most justifiable sense
is the fact that demand for oil for everyday activities whether its lighting
fires, heating a family home, or flying a plane or generating fuel for the
cars. With a global recession, the demand for fuel for all services fell below
the level of supply which was much greater. Other factors both economic and
environmental had a large impact on the demand for oil and an example of this
is the rapid expansion of Chinas economy. The demand for oil rose and so prices
for oil decrease with the effect of supply and demand. Within the aviation
sector it can be understood that with each countries expansion in their
populations the travelling between countries or simply boarding an aircraft and
travelling whether pleasure or business can be
assumed to rise at a similar rate. Fuel for aircraft is extracted from crude
oil by blending and refining various petroleum’s which include Gasoline,
Kerosene and Naphtha and the different types of jet fuel have to meet certain
standards and requirements and see whether its fit for purpose. Countries such
as the USA and Canada began different processes to increase the production of
oil and by doing so were able to reduce drastically the amount of oil that they
were importing and thus making the prices of oil drop even further.

1.3.3
 LABOUR FACTOR

From the aforementioned topics regarding the current
business condition of the aviation industry (increase in passenger) it can be
understood that there will need to be an increase in labour to manage all of
the services and such alike from day to day running of airports to aircraft
cabin crew and to pilots flying the bought in aircraft.

 

In
the year of 2016 there were 2.65 million employees that were employed by all of
the airlines according to sources including the IATA document which states that
by the end of 2017 there will have been a rise of 4.8% with regard to the number
of employees meaning that by the end of 2017 there will be 2.78 million employees.
This justifies the view that with the increasing number of passengers flying
with the airlines there will be a concurrent increase in the amount of labour
required to run such operations.

1.3.4
 AICRAFT FACTOR

 

1.3.5
 MINI CONCLUSION

 

1.4       METHODOLOGY

 

2       AIMS AND OBJECTIVES

This project aims
to determine the profitability of the airlines seating configurations through
the different types of seats that passenger jets have, and so the aim is to
then show how the current configurations can be altered and optimised to create
a more profitable stance for the airlines.

 

The objectives
which are to be closely monitored in order to maintain a good structure and
focus for this project are:

·      
Compare pitch, width, floor space, cabin:
width/length of aircraft.

·      
Analysis of routes which are most popular
between the aircraft which are selected and which reasons routes are as in
demand as they are.

·      
Analysis of Airbus and Boeing information
of seating configurations.

·      
Data recorded to be synthesised to
establish correlation and links with:

o  
Profitability

o  
Layout

o  
Total seat count

·      
Seating configurations will be recorded
as different airlines who use the same jets use different configurations so
seat types and values will be recorded and means worked out.

·      
Comparing the two types of aircraft (Boeing
777 vs Airbus A330) in terms of cabin width, length, floor space and seat
class. Within the seat classifications their pitch and width.

·      
Current Profit margins worked out to see
before any changes and optimisations are carried out.

·      
To suggest alternative configurations to
better the financial performance of the airline.

·      
After optimisation, the new and potential
profit margins will be analysed and calculated to determine if there can be any
further optimisations and so this part is a cycle and can be returned to.

·      
Potential creation of new seating
configuration for maximum profitability as a general layout, whilst considering
different “Class” options.

 

 

3       AIRCRAFT SELECTION

3.1       Best-selling Aircraft

3.2       Features and benefits of Airbus
A330

3.3       Features and benefits of Boeing
777

3.4       Main usage of the aircraft

 

4       CABIN SIZES

4.1       AIRBUS A330-200

4.2       AIRBUS A330-300

4.3       BOEING B777-200

4.4       BOEING B777-300

 

 

 

5       SEATING CONFIGURATIONS

4.5       AIRBUS A330-300

4.6       AIRBUS A330-200

4.7       BOEING 777-200

4.8       BOEING 777-300

 

 

5       TRAVEL ROUTES FOR BOTH AIRCRAFT

5.1       LHR (LONDON HEATHROW) – PEK
(BEIJING)

5.2       LHR (LONDON HEATHROW) – JFK (NEW
YORK)

5.3       LHR (LONDON HEATHROW) – PVG
(SHANGHAI)

 

 

 

 

6       PROFIT CALCULATIONS AND
ENHANCEMENTS

7       CONCLUSIONS & RECCOMENDATIONS

BIBLIOGRAPHY

Airbus.com. (2017). Aircraft Costs. online Available
at: http://www.airbus.com/content/dam/corporate-topics/publications/backgrounders/Backgrounder-Airbus-Commercial-Aircraf-price-list-EN.pdf
Accessed 11 Dec. 2017.

Calder, S. (2017). These are the world’s busiest international air routes. online The Independent. Available at:
http://www.independent.co.uk/travel/news-and-advice/world-top-20-international-air-routes-asia-europe-hong-kong-taipei-bangkok-singapore-a7963976.html
Accessed 11 Dec. 2017.

Image of Airbus vs.
Boeing. (2017). image Available at: https://blogs.thomsonreuters.com/answerson/wp-content/uploads/sites/3/2016/05/airbus-boeing-graphic.png
Accessed 14 Dec. 2017.

Tribune, B. (1996). Boeing to Buy McDonnell Douglas. online Nytimes.com. Available at:

Accessed 14 Dec. 2017.

YouTube. (2017). Microsoft Project
Professional Quick Basic Gantt Chart Tutorial.
online Available at: https://www.youtube.com/watch?v=UPM-ArCusB8  Accessed 21 Oct.
2017.

 

Iata.org.
(2017). Cite
a Website – Cite This For Me. online Available at:
https://www.iata.org/whatwedo/Documents/economics/IATA-Economic-Performance-of-the-Industry-mid-year-2017-report.pdf
Accessed 20 Dec. 2017.

 

Thomson
Reuters. (2017). Airbus
market share pitted against Boeing | Thomson Reuters.
online Available at:
https://blogs.thomsonreuters.com/answerson/airbus-market-share-comparison-boeing/
Accessed 15 Dec. 2017.

 

DePersio, G. (2017). Why did oil prices drop so much in 2014?.
online Investopedia. Available at:
https://www.investopedia.com/ask/answers/030315/why-did-oil-prices-drop-so-much-2014.asp
Accessed 20 Dec. 2017.

Macrotrends.net. (2017). Crude Oil Prices – 70 Year Historical
Chart. online Available at:
http://www.macrotrends.net/1369/crude-oil-price-history-chart Accessed 20 Dec.
2017.

 

 

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