Value-Driven Design Framework for Competitive Aviation Markets

Abstract

Determining the “best” aircraft design for a given market segment is a challenging proposition. In this paper, a value-driven design framework is created to illustrate how economic theory can be used to assess business strategies and engineering solutions within the civil aviation industry. The framework addresses a number of assumptions inherent within the surplus value theory and compares them through a commercial aviation case study, for which the potential market size is highly uncertain. The case study demonstrated that, without addressing these assumptions, a potential 380% difference in program surplus value was calculated. More specifically, the manufacturer value of the aircraft program can be calculated incorrectly by up to 900%. This was determined by creating a multistage, noncooperative game to characterize the behavior of the commercial aviation industry to capture the effects of design parameters on the program value against different levels of competition from direct and adjacent markets.