North-South Airlines Case

Northern Airline -- Airframe maintenance cost:

Cost = 36.097 + 0.0026 x Airframe age. R2 = 0.769. Coefficient of correlation = 0.877.

Northern Airline -- Engine maintenance cost:

Cost = 20.571 + 0.0026 x Airframe age. R2 = 0.612. Coefficient of correlation = 0.783.

Southeast Airline -- Airframe maintenance cost:

Cost = 4.597 + 0.0032 x Airframe age. R2 = 0.390. Coefficient of correlation = 0.625.

Southeast Airline -- Engine maintenance cost:

Cost = 0.671 + 0.0041 x Airframe age. R2 = 0.460. Coefficient of correlation = 0.678.

Northern Airline: There seem to be modest correlations between maintenance costs and airframe age for Northern Airline. There is certainly reason to conclude, however, that airframe age is not the only important factor.

Southeast Airline: The relationships between maintenance costs and airframe age for Southeast Airline are much less well defined. It is even more obvious that airframe age is not the only important factor -- perhaps not even the most important factor.

Overall, it would seem that:

* Northern Airline has the smallest variance in maintenance costs, indicating that the day-to-day management of maintenance is working pretty well.

* Maintenance costs seem to be more a function of airline than of airframe age.

* The airframe and engine maintenance costs for Southeast Airline are not only lower but also more nearly similar than those for Northern Airline, but from the graphs at least, appear to be rising slightly more sharply with age.

* From an overall perspective, it appears that Southeast Airline may perform more efficiently on sporadic or emergency repairs, and Northern Airline may place more emphasis on preventive maintenance.

Ms. Young’s report should conclude that:

* There is evidence to suggest that maintenance costs could be made to be a function of airframe age by implementing more effective management practices.

* The difference between maintenance procedures of the two...