{"title":"Performance-based contracting in the airline industry from the standpoint of risk-averse maintenance providers","authors":"Canek Jackson, Rodrigo Pascual, F. Kristjanpoller","doi":"10.1177/1748006x231195398","DOIUrl":null,"url":null,"abstract":"Airline industry is a business characterized by its low profit and high operational risk. Sometimes contracting out aircraft maintenance is mandatory due to the lack of labor capacity or shortage of staff with specialized capabilities. It raises the challenge of negotiating an agreement through performance-based contracting (PBC) as an alternative to traditional on-call maintenance services, or time and material contracts (T &MC), where no risk is transferred to the service provider. Due to the importance of risk transfer to contractors under PBC, the authors propose a model to determine the optimal contract price and the number of customers to serve when aircraft maintenance is outsourced to a risk-averse service provider offering two PBC options. To the best of the author’s knowledge, no quantitative studies for pricing contracts optimally when taking into account maintenance provider’s risk-aversion have been presented in the existing literature. For that purpose, the authors combine queuing, game, and modern portfolio theories in the proposed formulation.","PeriodicalId":51266,"journal":{"name":"Proceedings of the Institution of Mechanical Engineers Part O-Journal of Risk and Reliability","volume":null,"pages":null},"PeriodicalIF":1.7000,"publicationDate":"2023-09-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Proceedings of the Institution of Mechanical Engineers Part O-Journal of Risk and Reliability","FirstCategoryId":"5","ListUrlMain":"https://doi.org/10.1177/1748006x231195398","RegionNum":4,"RegionCategory":"工程技术","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ENGINEERING, INDUSTRIAL","Score":null,"Total":0}
引用次数: 0
Abstract
Airline industry is a business characterized by its low profit and high operational risk. Sometimes contracting out aircraft maintenance is mandatory due to the lack of labor capacity or shortage of staff with specialized capabilities. It raises the challenge of negotiating an agreement through performance-based contracting (PBC) as an alternative to traditional on-call maintenance services, or time and material contracts (T &MC), where no risk is transferred to the service provider. Due to the importance of risk transfer to contractors under PBC, the authors propose a model to determine the optimal contract price and the number of customers to serve when aircraft maintenance is outsourced to a risk-averse service provider offering two PBC options. To the best of the author’s knowledge, no quantitative studies for pricing contracts optimally when taking into account maintenance provider’s risk-aversion have been presented in the existing literature. For that purpose, the authors combine queuing, game, and modern portfolio theories in the proposed formulation.
期刊介绍:
The Journal of Risk and Reliability is for researchers and practitioners who are involved in the field of risk analysis and reliability engineering. The remit of the Journal covers concepts, theories, principles, approaches, methods and models for the proper understanding, assessment, characterisation and management of the risk and reliability of engineering systems. The journal welcomes papers which are based on mathematical and probabilistic analysis, simulation and/or optimisation, as well as works highlighting conceptual and managerial issues. Papers that provide perspectives on current practices and methods, and how to improve these, are also welcome