A comparison of the airline benefits of European-style and American-style aircraft purchase options in periods of high demand

Commercial Aircraft are commonly acquired by an airline in a contract that specifies a fixed quantity of firm orders as well as options that allow the airline to obtain additional aircraft at a future time for an agreed price. This option purchasing process allows the customer to avoid taking delivery of aircraft if economic circumstances are not favorable. However, this model can have drawbacks in circumstances when the product in question is in very high demand. Exercising a rolling-style aircraft purchase option in such circumstances may result in a delivery lag of several years, during which profitable opportunities may be lost. Shortening the time between exercising an option and taking delivery of the aircraft would allow for better timing of the delivery and reduce the effect of a significant negative event such as an economic recession or a terrorist attack occurring between the exercise date and the delivery date.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Civil and Environmental Engineering.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2006

Author dc:creator

• Miller, Owen (Owen Charles)

Advisor dc:contributor.advisor

• John-Paul Clarke.

• Civil and Environmental Engineering.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/37971

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/37971