Profit as an Independent Variable: The Case of Business Aircraft

Abstract

Methodology This investigative method uses multiple log-linear regression, boundary condition analysis and analytic geometry to define market limits and financially optimized entry points into a marketplace. While portions of this approach have been applied successfully to a variety of products and industries (jet engines, automobiles and aircraft radios, to name a few), in order to create a point of detailed analytical departure, the business aircraft market was chosen for study here. Several data sources exist for this marketplace. Most aircraft manufacturers have no-fee websites in which they list the specifications of the various vehicles they offer for sale. They post their pricing and order books there as well. As a group, these sites formed the primary source of data used in this paper. A small number of companies provide a wide range of information about business aircraft. Included among these are Forecast International, Jane’s Information Group and The Teal Group. The finished dataset incorporated information from each of these services, which by and large agreed with one another. In those instances in which there were discrepancies, the figures from competing data sources were compared. In cases in which a source agreed with a number from the manufacturer, that figure went into the analysis. In instances in which the manufacturer did not provide a figure, but all three of the aforementioned services did, either a figure upon which the majority agreed was used, or failing such a majority, an average of the figures was used. The resulting database consisted of 46 aircraft models from 15 manufacturers, and considered 20 variables over the decade running from the beginning of 2002 to the end of 2011.