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Fleet Management and Capital Budgeting

Airlines utilize exorbitantly expensive flight equipment, with costly support operations and commercial activities. This makes evaluating resource requirements particularly difficult. Slightest miscalculations result in huge cost penalties and long-lasting impacts. Yet, for airlines determined to succeed, understanding resource needs is a vital element in stepping towards future success.

Choosing the right investments to maximize the airline’s position in the ever-changing marketplace is not a trivial task. The risks associated with resource investments, coupled with market uncertainties, shift the actual project benefits away from the nominal values.

Strategy-based capital budgeting and fleet management is a rational methodology to optimize the portfolio of capital projects and investments. It addresses both organizational and analytical issues. Capital decisions are then tied to the airline’s long-range business direction. And, sensible economic analyses of opportunities provide realistic expectations for project benefits.

Well-designed capital budgeting processes incorporate the following key issues, missing from traditional approaches:

    »   Many interrelated projects
    »   Uncertain outcomes
    »   Multiple objectives

Whether your airline is considering adding a new hub or restructuring the current ones, planning to increase the fleet size and/or aircraft types, or entering new markets with the existing fleet, your airline can substantially enhance the quality of capital budgeting decisions by incorporating advanced analytical methodologies and leading-edge investment decision techniques. This can be done through a structured approach as illustrated below:

Please contact us for further information regarding our fleet management and capital budgeting services.

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Capital Budgeting seminar brochure

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