Internal dynamics of the short-term commercial aircraft engine leasing market

Abstract

General trends in the commercial aircraft aftermarket indicate an increased reliance of leased engines in operators' spare engine strategies. A methodology for forecasting short-term engine lease demand is developed using Pratt & Whitney's existing simulation capability. This method demonstrates the ability to estimate demand mean and variance. This forecast is then used in a single SKU inventory model to set inventory levels. Using historical data this method demonstrates the ability to recommend inventory levels that minimize stock outs. A less computationally intensive system dynamics model is then constructed to replicate the lease demand forecasting model. Sensitivity analysis is performed using the system dynamic model and influential parameters are identified. The results of the sensitivity study are used to propose and test a new sales strategy for short-term engine lessors.