Aircraft Direct Operating Cost

Each airline generates its own in-house DOC computations, with variances in man­hour rates and schedules. Although the ground rules for DOC vary among compa­nies, the AEA standardization (1989; short-medium range) has been accepted as the basis for comparison. ATA rules are used in the United States.

The NASA report [4] provides American Airlines-generated economics. The NASA document proposed in 1978 is an analytical model associated with advanced technologies in aircraft design; however, it has yet to be accepted as a standard method for comparison. The AEA and ATA ground rules appear to have consid­ered all pertinent points and have become the benchmarking and comparison stan­dard for the operational and manufacturing industries. This book deals with AEAL ground rules.

Table 16.13 lists the breakdown of DOC components under two basic headings. The ownership cost elements depend on the aircraft acquisition cost.

The NRCs (i. e., design and development) of a project and the costs of air­craft manufacture contribute to the ownership-cost elements, whereas the cost of fuel, landing fees, and maintenance contribute to trip-cost elements. Once the air­craft has been purchased, ownership costs are incurred even when crews have been

DOC Breakdown

hired but flight operations are not carried out. The crew cost added to the own­ership cost results in the fixed-cost elements. The crew cost added to the trip cost is the running cost of the trip (i. e., mission sortie). Aircraft-price-dependent DOC contributions include depreciation, interest, insurance, and maintenance (airframe plus engine), with a total nearly three to four times higher than the fuel cost (year 2000 level); with increased fuel cost (year 2008 level) it has come to about two to three times. Crew salary and cost and navigational and landing charges are aircraft – weight-dependent, which is second-order aircraft-price dependent, but is based on manhour rates herein.

For the reason of high ownership cost contribution to DOC, the industry was driven to reduce manufacturing costs and the demand was as high as a 25% cost reduction. Clearly, the design philosophy is significant in facilitating manufacturing cost reductions. One consideration was to relax certain quality issues (see [2] and Chapter 17), sacrificing aerodynamic and structural considerations without sacrific­ing safety. However, when the price of fuel rises, consideration for such a driver would be affected. Fuel price already increased siginficantly in 2008; any further increase would require drastic measures because the return from pure aerodynamic cleanliness at a high investment level may not be sufficient. These are important considerations during the conceptual design stage. RD&D efforts sometimes seem to look to the future through a crystal ball. There are diminishing returns on invest­ment for aerodynamic gains. Fuel prices fluctuate severely and efforts to invest in reduced drag could move slowly until the situation stabilizes. A parallel effort to use less expensive alternative biofuels is underway, and the demand for a turboprop operation is a reality.

Figure 16.6 shows the DOC components of a midsize-class aircraft. For an aver­age midrange sector, the midsize aircraft cost contribution to the aircraft DOC is three to four times higher than the contribution of the cost of fuel (2000 prices).

The passenger load factor (LF) is defined as the ratio of occupied seats to the total number of seats available. Typically, an airline prefers the sector DOC to break even at approximately one third full (i. e., a LF of 0.33, or 33%); due to recent fuel price increases, the figure has increased to about half full. Revenue earned from pas­sengers carried above the break-even LF is profit. Although some flights can operate at 100% LF, the yearly average for a high-demand route may be much lower. Pas­senger accommodations can be either in different classes with fare-structure tiers or
in one class, decided by the airline. Even in the same class, airfare can vary depend­ing on different promotions. Among airlines, the break-even LF varies: with dereg­ulated airfares, ticket prices can vary by the hour depending on passenger demand. The standard fare is the ceiling fare of the class and it offers better privileges.

Cost Formulas and Results

This section provides the semi-empirical cost formulas for establishing Nacelle B costs, as well as for any aircraft component. The input required is relatively simple: (1) geometry with dimensions; (2) materials used; (3) weight breakdown; and (4) the array of manhours required to design, fabricate, and assemble an aircraft to completion. The factors and indices involved in the design and manufacture are listed in Tables 16.8 through 16.12 and obtained through DFM/A studies. The total manufacturing cost of a nacelle is the sum of individual costs of each of the four components, as follows:


nacelle cost: Cn = ^ C = Cnc + Cfc + Ctr + Ctc + Cebu (16.5)

where CNC = cost of nose cowl CFC = cost of fan cowl CTR = cost of thrust reverser CTC = cost of tail-cone assembly CEBU = cost of EBU (e. g., anti-icing)

The nose cowl is the only component studied herein; methodologies for the other components follow the same procedure. The cost of each nacelle component is indi­vidually estimated for the six headings in Table 16.7. The nose-cowl cost, CNoseCowl, is the sum of the following six items:


CNoseCowl — C i — C Mat + C Fab + C Asm + C Sup + C Amr + C Misc

where C Mat = cost of material C Fab = cost of fabrication C Asm = cost of assembly C Sup = cost of support CAmr = cost of amortization CMisc = miscellaneous cost

1. Nose-Cowl Material Cost, CMat.

n n

CMat = cost of material = ^ C’^raw + ^ C’^finish


where n is the number of different types of materials. In general,

where Wi = weight of the material

ui = standard cost of raw material per unit weight Pi = procurement factor (for nose cowl = 1)

Table 16.9 lists seven types of raw materials. The parts weight captures the effects of size; therefore, the size factor need not be applied here.

YTi C’i_finish is the actual cost and is obtained from the bill for subcontracted materials. Therefore, the cost of material C’Mat for the nose cowl in this study is as follows (subscripts “al” and “ti” stand for aluminum and titanium alloys, respec­tively):

C Mat — ^ ^ C i_raw ‘ ^ C i.

— (Wal X ual X Pal)sheet + (Wal X ual X Pa1)forge + (Wal X ual X Pal)honeycomb

+ Wti X Uti X Pti + W’comp X Ucomp X Pcomp + (WAGS X uAGS x P4GS)fastener

+ (Wags x Uags x Pags)rivet + C’ifintsk (16.8)

Using Table 16.9, the following relationship can be worked out:

Nacelle B cost of raw material Nacelle A cost of raw material

= [(0.4778 x 1)sheet + (0.3868 x 2.25)honeycomb + (0.34254 x 3.5)ti + (0.005 x 18.44)fasteners + (0.0139 x 0.63)nvet]nacellem/[(0.2288 x 1)^

+ (0.1213 x 4.19)forge + (0.3104 x 2.25)honeycomb + (0.2752 x 3.5)ti + (0.175 X 3.62)comp + (0.0366 X 18.44)fasteners + (0.0101 X 0.63)nvert]nacelle_A = 2.6/3.14 = 0.828

The finished materials comprise a variety of items that go straight to the assem­bly line without in-house work involved. Their acquisition policies vary during each negotiation (see Table 16.6).

Table 16.9 lists 0.77 of Nacelle B as composed of raw materials and 0.23 of fin­ished materials. Using these proportions:

Nacelle B cost of material Nacelle A cost of material

2. Nose Cowl Part Fabrication Cost, C’Fab. Table 16.7 lists the number of parts fabricated in each of the six stages of both nacelles. The manhours required to fab­ricate each part are a combination of operations (e. g., machining, forming, and fit­ting). The nose-cowl part fabrication cost is expressed as follows:

manufacturing cost (C’Fab) = rates x manhours

x learning-curve factor

x size factor x manufacturing philosophy (16.9)

Table 16.7 shows that both nacelles have six stages (m = 6). Each stage has four classes of parts: structure, minor parts, AGS, and EBU. The EBU is separated from the other classes, which are classified as one (n = 1).

Although geometrically similar, in the DFM/A study, Nacelle B has fewer parts to reduce the assembly time. Although there are few parts for Nacelle B, the parts fabrication needs about the same amount of time for both nacelles. Therefore, the various factors are as follows:

• size factor Ksize = 1.133 from Equation 16.1

• geometry factor Fi = 1 (geometrically similar)

• complexity factor, F2 = 1 (functionality issues, same for both nacelles)

• parts-manufacturing philosophy factor (methods factor), F3 = 1.0

• learning-curve factor = 1.022 (slightly higher)

Engineering process sheets provide all the information for Nacelle A to compute cost; for nondimensionalizing, all the factors use 1 as the baseline value.

Therefore, using Equation 16.7, the parts-manufacturing cost of

Nacelle B = (1.133)0’5 x 1.022 = 1.0878 x Nacelle A

3. Nose-Cowl Assembly Cost, C’Asm. The manhours required for assembly at each stage are listed in Table 16.10 in nondimensional form. The nose-cowl assembly is expressed as:

assembly cost (CFab) = rates x manhours x learning-curve factor x size factor

x manufacturing philosophy (16.10)

The rate and factor for Nacelle A are 1; Table 16.2 lists them for Nacelle B:


In this case, m = 6 stages and n = consists of the following cost-driver factors:

• Fi = 0.735 for the tooling concept (assembly methods – Nacelle B takes less time)

• F2 = 1.0, the complexity factor (functionality – same for both nacelles)

• F3 = 1.0, aerodynamic smoothness requirements (surface tolerance is the same)

Then, Equation 16.7 reduces to:

6 Г 3 і

x (manhours x rates x learning-curve factor)

i i

To simplify, all stages are combined to obtain the Nacelle B cost. Using 1 as the baseline Nacelle A factors and indices, the Nacelle B assembly cost is expressed as follows:

assembly cost of Nacelle B = (1.133)0 25 x 0.735 = 0.759 x Nacelle A

It is interesting that considerable assembly costs can be reduced at the expense of a slightly increased parts-fabrication cost and, of course, with some increase in
the tooling cost (i. e., NRC). Establishing these factors is the main purpose of the DFM/A trade-off studies. Basically, they summarize the manhours required com­pared to the baseline manhours.

4. Nose-Cowl Support Cost, C Sup. Separate support costs are taken as a percent­age of material, fabrication, and assembly costs. Support costs arise from reworking and concessions when the build quality is not met (e. g., tolerances). In this book, the support cost is flat-rated as follows:

CSup = 0.05 x (material cost + parts-fabrication cost + assembly cost) (16.12)

5. Nose-Cowl Amortization Cost, C’Amr. Cost is amortized for 400 finished prod­ucts. It is a variant design and therefore has low amortization costs; it can be included in the manhour rates at all stages or separately at the end. In this book, the cost is accounted for in the manhour rates and is not computed separately. Typi­cally, because it is produced in twice more in number, the amortization cost is taken as 2% of material costs plus parts-fabrication costs plus assembly cost:

C Amr = cost of amortization = (design + methods + tool) cost/N (16.13)

where N = 400, or

CAmr = 0.02 x (material costs + parts-fabrication costs + assembly costs

6. Nose-Cowl Miscellaneous Costs, C’Misc Miscellaneous costs are unavoidable, as follows (taken as 3%):

CMiscp = 0.03 x (material costs + parts-fabrication costs + assembly costs)


Total Costs of the Nacelle B Nose Cowl. The final costs of the Nacelle B nose cowl can now be computed, in nondimensional form – that is, relative to the Nacelle A costs. Using Equation 16.4, the following is estimated (i. e., costs of amortization embedded in manhour rates and costs of support and miscellaneous cost estimated as 10% of other costs):


where (CSup + CMisc) = 0.1 x (CMat + CFab + C’Asm) (16.15)

Nacelle B nose-cowl cost:

CNoseCowl-B °.8302CMat^acA + l-0878 CFab-NacA + °.759 Casm-NacA

+ °Л x (°.8302 CMat_NacA + ^°878 CFab_NacA + °.759 CAsm^acA = °.9132CMat_NacA + 11966CFab_NacA + °.8349CA smNacA

From company records, the Nacelle A cost fractions are as follows:

CMat-NacA/ CNoseCowl-A = °.408 CFab_NacA/ CNoseCowl_A = °.349 CA sm^NacA /‘ CNoseCowl _A °.149

Table 16.13. DOC components

Fixed-cost elements

Trip-cost elements

1. Ownership cost

3. Fuel charges

(a) Depreciation

4. Maintenance (airframe and engine)

(b) Interest on loan

5. Navigational and landing charges

(c) Insurance premium

2. Crew salary and cost

Dividing Equation 16.15 by CNoseCowlA, the relative cost of Nacelle B is as follows:

CNoseCowi-blCNoseCowiA = 0.9132 x 0.408 + 1.1966 x 0.349

+ 0.8349 x 0.149 = 0.9146

The results show that although the two nacelles are geometrically similar, Nacelle B – with a 13.5% higher-thrust engine – could be produced at an 8.5% lower cost through DFM considerations in an IPPD environment. Changes in mate­rial, structural, tooling, procurement, and subcontracting policies contribute to cost reduction. A preliminary weight of a new design and the procurement policy for the raw materials can be established at the conceptual design stage (i. e., DFM/A studies). Accuracy improves as a project progresses. In the absence of the actual weight, approximations can be made from the geometry. If it had been costed with prevailing empirical relations using weight, size, performance, and manufacturing considerations, the cost of Nacelle B would be higher than Nacelle A. The prevail­ing equations do not capture the subtlety of DFM/A considerations. Chapter 17 describes the myriad changes that have occurred in the manufacturing technology; these benefits must be reflected in a new approach to formulation.

Cost of Parts Fabrication

Table 16.10 lists the cost of parts fabrication in a nondimensional form from the manhours involved. Actual manhours needed to manufacture parts for each of the six Nacelle A stages can be obtained from the shop-floor engineering process sheets. Factored indices for Nacelle B can be established through DFM/A studies at the conceptual design stage.

At each stage of parts manufacture, manhours are given in fractions of the total manhours for all parts; manhour rates are invariant. The Nacelle B learning-curve factor for parts fabrication is about the same as for Nacelle A but not for the assem­bly. Nacelle B has fewer parts, thereby saving on costs.

manufacturing cost = rates x manhours x learning-curve factor

x size factor x manufacturing philosophy (16.3)

Table 16.10. Manhours fraction required to fabricate parts

Nacelle A

Nacelle B

Total manhours cost for all parts



Learning-curve factor



Parts in the forward-bulkhead assembly – Stage 1 (start):



Parts in primary assembly – Stage 2:



Parts in aft-bulkhead assembly – Stage 3:



Parts in first subassembly – Stage 4:



Parts in second subassembly – Stage 5:



Parts in third subassembly – Stage 6 (final):



Table 16.11. Manhour fractions required to assemble

Nacelle A

Nacelle B

Total manhours required to assemble



Learning-curve factor



Stage 1 (start): Forward-bulkhead assembly



Stage 2: Primary assembly



Stage 3: Aft-bulkhead assembly



Stage 4: First subassembly



Stage 5: Second subassembly



Stage 6: Third subassembly (final)



The rate and factor for Nacelle A are 1; details for Nacelle B are in Table 16.7. Subassemblies

Table 16.7 lists details for the Nacelles A and B nose cowl subassembly in six stages of processing. Table 16.10 lists subassembly costs in a nondimensional form in frac­tions of the total assembly manhours for all stages. Costs of the pure structure of the nacelle mould lines are separated from those of all other nonstructural compo­nents (e. g., anti-icing ducting, linkages, cables, and accessories) that are part of the complete EBU fitment for a nacelle that is ready for a turbofan engine. The costs of installing EBUs in the assembly process are considered but not the actual EBU cost. The assembly cost is expressed as follows:

assembly cost = rates x manhours x learning-curve factor

x size factor x manufacturing philosophy (16.4)

The rate and factor for Nacelle A are 1; details for Nacelle B are shown in Table 16.11. Savings are realized through the DFM/A study.

4. Cost of Support: Certain additional costs are incurred when a product fails to adhere to the desired quality during inspection. In that case, reworking and/or design concessions are required to salvage the product from rejection as scrap. These are the support costs – generally minor but difficult to determine. A flat – rate of 5% of the cost of material plus parts manufacture plus assembly is added as the support cost. DFM/A studies attempt to ensure design and manufacturing considerations that minimize support costs by making the product right the first time (i. e., the Six Sigma concept).

Cost of Amortization of the NRCs

Table 16.12 shows the two types of NRCs in nondimensional form. Amortization is performed for more than 200 aircraft – that is, distributed over 400 nacelle units.

Table 16.12. Nonrecurring costs

Nacelle A

Nacelle B

Product design cost



Methods/tool design cost



5. Miscellaneous Costs: These are unavoidable (e. g., insurance and packaging) and unforeseen costs of contingencies involved in the supply chain and necessar­ily charged as a manufacturing cost. Normally, these costs are minimal; in this study, 3 to 5% of the costs of material plus parts manufacture plus assembly is used. In the industry, the exact costs are available.

Nose Cowl Parts and Subassemblies

The build-work breakdown of the two nacelles from start to finish is grouped in six stages, as shown in Table 16.7; however, the cost of their parts is different. Nacelle A is an existing design and its cost is known. Nacelle B is a later design with a lower parts count and assembly time, achieved by superior structural and manufacturing considerations through DFM/A studies. The nose cowl consists of pure structures (STRs), minor parts (MPs) (e. g., brackets and splices), engine-built units (EBUs) (e. g., anti-icing units and valves), and aircraft general supply (AGS) (e. g., fasteners, rivets, nuts, and bolts). EBU costs are studied separately and not herein.

The expensive components are the STR and the installation of EBU parts. Clearly, these costs are reduced to almost half, thereby saving the cost of the Nacelle B nose cowl even with a larger engine. Assembly hours are also reduced to nearly half. AGS is not expensive but there are numerous rivets, nuts, bolts, and so forth.

16.4.1 Methodology (Nose Cowl Only)

The author points out that this seemingly simple algebraic procedure with elemen­tary mathematics becomes a complex workout. Newly initiated readers may find it difficult to follow. It will require the instructor’s help and industrial data to under­stand the coursework for their project.

The methodology generates the factors and indices from existing Nacelle A, the cost data for which are known. Based on the similar geometry, these factors and indices are then adjusted using the DFM/A considerations and applied to Nacelle B. The conceptual design phase outlines the basis of the manufacturing philosophy under the DFM/A, relying heavily on the Nacelle A experience. Table 16.8 lists the necessary factors and indices for the eight cost drivers (i. e., the data from the industry). The table is followed by expanding the eight cost drivers.

Table 16.8. Normalized indices for the eight cost drivers in Group 1

Nacelle A

Cost drivers



Nacelle B (to predict)


1. Ksize



2. Material (weight ratio)



(a) Raw material


(See Tables 16.9 and 16.10)

Nacelle B better

(b) Finished material (subcontracted)


(See Table 16.9)

3. Geometry




4. Technical specifications




5. Structural design*




6. Manufacturing philosophy*

(a) Nonrecurring (tool and jig design)




(b) Recurring (manufacture and assembly)



Nacelle B better

7. Functionality




8. Manhour rates





* Primary cost driver.

The shop-floor learning characteristics are an important factor in cost consider­ation. Initially, parts fabrication and their assembly take longer (actual manhours) than when it is a routine task with a stabilized time frame of standard manhours, which initially is the target time. If actual manhours do not reach standard man­hours, the investigation is required to change the standard manhours. The faster people learn, the greater is the savings for taking fewer manhours to manufacture. The number of attempts required to reach the standard manhours varies, and the DFM/A study must consider this aspect. In this case, Nacelle B has a faster learning – curve factor, with fewer parts.

1. Ksize: Geometric details of the nacelles and engine parameters are listed in Table 16.5 to estimate Ksize.

2. Material Cost: Material is classified in two categories: (1) raw materials (e. g., sheet metal, bar stock, and forging), and (2) finished materials (e. g., lipskin, engine ring, and some welded and cast parts acquired as subcontracted items). The weight fractions of both nacelles are listed in Table 16.9. The unit cost for each type varies, depending on the procurement policy (see notes in the table). The next part of the table lists details of the raw-material weight fractions. The last column provides various material costs per unit weight, normalized relative to the aluminum sheet-metal cost. The AGS consists of various types of fasten­ers including blind rivets (more expensive) and solid rivets; they are classified as raw materials because it is impractical to cost each type separately.

3. Cost of Manufacture: The core of the manufacturing cost buildup considers the cost drivers of geometry, technical specifications, manufacturing philos­ophy, functionality, and manhour rates. For this study, only the evaluation of the manufacturing philosophy is required, as discussed in the next two subsections.

Table 16.9. Material weight fraction

Nacelle A

Nacelle B

Cost of material per unit weight

weight (Wa/Wat )

weight weight (Wb/Wat ) (Wb/Wbt )

Nacelle A Nacelle B

Material weight fraction

All material




Raw material




see below

Finished material






Raw material weight fraction (finished material not included)

Total weight fraction




Aluminum alloy sheet






Aluminum alloy forging






Aluminum alloy honeycomb






Titanium alloy












Mechanical fasteners (e. g., nuts)






Solid rivets







* There is no composite in the nose cowl of Nacelle B, but it is used in the core cowls of both nacelles. The subscript “T” stands for total weight of nose cowl;A and B stand for each nacelle.

Nacelle Cost Drivers

Given herein are the eleven specific parameters, in two groups, identified as the design – and manufacture-sensitive cost drivers for generic nacelles. These cost drivers are applicable to all four nacelle subassembly components shown in Fig­ure 16.3. Group 1 consists of eight cost drivers, which relate to in-house data within an organization. Group 2 cost drivers are not concerned with in-house capability issues; therefore, they are not within the scope of this discussion. Indices and coeffi­cients obtained during the DFM/A study are used.

Group 1

1. Size: Nacelle size is the main parameter in establishing the base cost. Size and weight are correlated. The nacelle cowl size depends on the engine size – that is, primarily the fan diameter (DF) of the engine – which in turn depends on the thrust (TSLS) ratings as a function of BPR and the thermodynamic cycle. The relationship between the TSLS and the Dfan can be expressed as follows:

(Tsls) = (KDjan) (16.1)

where K = constant of proportionality.

The variants in the family of turbofans are the result of tweaking the base­line design, keeping the core gas generator nearly unchanged. This improves cost effectiveness by maintaining component commonality. Hence, the variant fan diameter is marginally affected, with the growth variant having a better

Figure 16.4. Cost versus tolerance

thrust-to-dry-weight ratio (T/W) and vice versa. As a consequence, the nacelle maximum diameter (Dmax) and length (L) change minimally. The size factor for the nacelle, Ksize, that affects cost is given in semi-empirical form, as follows:

The effect of size on parts-fabrication and assembly costs is less pronounced than material cost unless a large size calls for drastically different fabrication and assembly philosophies.

2. Materials: Parts weight data provide a more accurate material cost than apply­ing the size factor; Ksize may be used when weight details are not available. Two types of material are considered based on industrial terminology: raw and finished; the latter consists of the subcontracted items.

3. Geometry: The double curvature at the nacelle surface requires stretch-formed sheet metal or a complex mould for composites in shaping the mould lines. Both nacelles are symmetrical to the vertical plane. The nacelle-lip cross-section is necessarily of the aerofoil section with the crown cut, thinner than the keel cut, where engine accessories are housed (Figure 16.4). This does not make the outer and inner surfaces concentric. Straight longitudinal and circumferential joints facilitate the auto-riveting. In brief, there are four “Cs” associated with geometric cost drivers: circularity, concentricity, cylindricity, and commonality. Nacelles A and B are geometrically similar and therefore do not show any dif­ference made by the four C considerations. A geometric cost-driver index of 1 is used for both nacelles as a result of their similarity.

4. Technical Specifications: These standards form the finishing and maintainability of the nacelle including the surface-smoothness requirements (i. e., manufactur­ing tolerance at the surface), safety issues (e. g., fire detection), interchangeabil­ity criteria, and pollution standards. Figure 16.4 shows the cost-versus-tolerance relationship from [2].

At the wetted surface, Zone 1 (Figure 16.5) is in an adverse pressure gradi­ent that requires tighter tolerances compared to Zone 2 in a favorable pressure

Figure 16.5. Typical nacelle section

gradient. The tighter the tolerance at the wetted surface, the higher is the cost of production due to the increased reworking and concessions involved. Because the technical specifications are similar, both have an index of 1.

5. Structural Design Concept: Component-design concepts contribute to the cost drivers and is a NRC amortized over the production run (typically, four hun­dred units). The aim is to have a structure with a low parts count involving low production manhours. Compared to the baseline design of Nacelle A, an index factor is associated with the derivative new design. Nacelle B has a more involved design with an index greater than 1. Manufacturing considerations are integral to structural design as a part of the DFM/A requirements.

6. Manufacturing Philosophy: This is closely linked to the structural-design con­cept, as described previously. There are two components of the cost drivers: (1) the NRC of the tool and jig design, and (2) the recurring cost during pro­duction (i. e., parts manufacture and assembly). An expensive tool setup for the rapid-learning process and a faster assembly time with lower rejection rates (i. e., concessions and reworking) results in a front-loaded budgetary provision, but considerable savings can be realized. Nacelle B has a NRC index >1 and a RC index <1. Nacelle B is an improvement compared to Nacelle A.

7. Functionality: This is concerned with the enhancements required compared to the baseline nacelle design, including anti-icing, thrust reversing, treatment of environmental pollution (e. g., noise and emissions), position of engine acces­sories, and bypass-duct type. A “complexity factor” is used to describe the level of sophistication incorporated in the functionality. Being in the same family, the nose cowl of both nacelles has the same functionality – hence, a factor of 1 – otherwise, it must be revised. Other nacelle components could differ in functionality.

8. Manhour Rates and Overhead: Manhour rates and overhead are constant for both nacelles; therefore, the scope of applicability is redundant in this study.

Group 2 (These do not relate to in-house issues; therefore, it is not considered in this


9. Role: Basically, this describes the difference between military and civil aircraft design.

10. Scope and Condition of Supply: This is concerned with the packaging quality of a nacelle supplied to a customer; it is not a design or manufacturing issue.

11. Program Schedule: This is an external cost driver that is not discussed herein.

Table 16.7. Nose cowl build-work breakdown

Nacelle A Nacelle A









Forward-bulkhead assembly









Aft-bulkhead assembly









Primary assembly









First-stage assembly









Second-stage assembly









Third-stage assembly


















In summary, only four cost drivers in Group 1 – size, material, structural-design concept, and manufacturing philosophy – are required to establish the cost of com­ponent manufacture and assembly. The other four cost drivers in Group 1 can be evaluated similarly for nacelles that differ in geometry, technical specifications, functionality, and manhour rates.

Aircraft Costing Methodology: Rapid-Cost Model

This section presents a rapid-cost modeling methodology [2] specifically aimed to the coursework needs of DFM/A considerations during the conceptual design phase of commercial transport aircraft. This is why Chapter 15 suggests the layout of the structural concept and the use of CAD. The basic structural philosophy is to address

Table 16.4. Life cycle cost (military aircraft)

Production In-service Disposal

A (Baseline: existing design)

B (New Design: to estimate)

Tsls lb



Engine dry weight (lb)



Engine-face diameter (inches)



Nacelle weight (lb)



Nacelle maximum diameter (inches)



Nose-cowl length (inches)



DFM/A considerations as early as possible to provide a sense of manufacturing cost reductions through trade-off studies. Many publications suggest empirical relations to predict aircraft cost based on various types of aircraft weights, performance capa­bilities, and other details. Empirical relations use coefficients and indices with some degree of success; however, without the actual industrial-cost details, it is difficult to fine-tune the DFM/A gains. A methodology must have input based on real data in order for gains to be obtained through the application of the fundamentals of modern manufacturing philosophy.

The rapid-cost model is based on parametric methods in which cost drivers are identified. In the nacelle example, eleven drivers are involved. From a known base­line cost, the rapid-cost model demonstrates a fast and relatively accurate predic­tion and identifies areas that contribute to cost. A normal market situation with­out any unpredictable trends (i. e., global issues) is assumed for the methodology. The methodology is based on a generic turbofan nacelle, which typically represents the investigative areas associated with other aircraft components and makes use of industrial data. Figure 16.3 shows the generic nacelle components: (1) nose cowl, (2) fan cowl, (3) core cowl with thrust reverser, and (4) aft cowl. The method does not reflect practices by any organization and does not guarantee accuracy; it is intended only to provide exposure to the complexities involved in costing.

The example of the rapid-cost methodology concentrates cost modeling of the nose cowl structural elements of two generic nacelles – Nacelle A and Nacelle B – in the same aircraft and engine family. The methodology uses indices and factors, which is why two nacelles are used. Nacelle A is an existing product and is used for the baseline design. All cost data for Nacelle A are known, from which the indices are generated. Nacelle B has a higher standard of specification and a new design, in which the indices are adjusted and then used to predict cost. The two nacelles are compared in Table 16.5. All figures are in FPS, as obtained from the industry.

Table 16.6. Manufacturing cost components

Cost of materials (raw and finished product)

Cost of parts manufacture

Cost of parts assembly to finish the product

Cost of support (e. g., rework/concessions/quality)

Amortization of nonrecurring costs

Miscellaneous costs (other direct costs, contingencies)

For dissimilar components, a similar methodology can still be applied with extensive data analyses to establish the appropriate indices.

Although the aerodynamic mould lines of both nacelles are similar, their struc­tural design philosophy – hence, the subassembly (i. e., tooling concept) – differs. With commonality in the design family, the study presents a focused comparative study of the two geometrically similar nose cowls in a complex multidisciplinary interaction that affects cost. The total manufacturing cost of the finished product is the sum of the items listed in Table 16.6; the cost of manufacture is not the selling price.

Generic nacelles typically represent the investigative areas associated with the design and manufacture of other aircraft components (e. g., the wing and fuselage). The rapid-cost-model methodology presented herein can be applied to all other air­craft components, with their appropriate cost drivers, to establish the cost of a com­plete aircraft. Industrial shop-floor data are required to estimate the cost in dollars. All data are normalized to keep proprietary information commercial in confidence.

Aircraft Cost and Operational Cost

Figure 16.2 shows a typical high-subsonic civil aircraft cost at the 2000 price level in millions of dollars, reflecting the basic (i. e., lowest) aircraft cost. This graph is gen­erated from a few accurate industrial data that are kept commercial in confidence.

In general, exact aircraft cost data are not readily available and the overall accu­racy of the graph is not substantiated. The aircraft price varies for each sale depend­ing on the terms, conditions, and support involved. The values in the figure are crude but offer a sense for newly initiated readers of the expected cost of the aircraft class. Figure 4.5 can be used to obtain the relationship between the MTOW and the num­ber of passengers. The basic price of a midrange, 150-passenger class, high-subsonic turbofan aircraft is $47 million (2000 price level).

The aircraft MTOW reflects the range capability, which varies among types. Therefore, strictly speaking, cost factors should be based on the MEW. Readers should be able to compute the MEW from the data provided in Chapter 8. In gen­eral, larger aircraft have a longer range (see Figure 4.4b). The exception is when an aircraft with a low passenger load has a long-range mission (e. g., the Bombardier Global Express).

Typical cost fractions (related to aircraft cost) of various groups of civil aircraft components are listed in Table 16.1, providing preliminary information for




Cost fraction

Cost fraction


Aircraft empty-shell structures* Wing-shell structure

6 to 7%

Fuselage-shell structure

4 to 6%

Empennage-shell structure


Two-nacelle-shell structure**

part of the fuselage

Miscellaneous structures

0 to 1%


12 to 15%


Bought-out vendor items Two turbofan dry, bare engines**

25 to 30%

Mechanical systems***

5 to 8%


1 to 2%


30 to 40%


Avionics and electrical system

30 to 35%

30 to 35%


Final assembly to finish (labor-intensive)

12 to 15%

12 to 15%

(component subassembling, final assembling, equipping/installing, wiring,

plumbing, furnishing, finishing, testing)

* Individual component subassembly costs fraction.

** Single engine at lower cost fraction.

*** Includes control linkages, servos, and undercarriage. **** Cables, tubing, furnishing.

onsite at the manufacturing plant to provide general support and dialogue for all aspects of the product line. Civil aircraft OC includes two types, as follows:

1. DOC: These are the operational costs directly involved with a mission flown. Each operator has its own ground rules depending on criteria such as the coun­try, pay scales, management policies, and fuel prices. Standard ground rules are used for comparison of a similar class of product manufactured by differ­ent companies. In Europe, the AEA ground rules are accepted as the basis for comparison and provide a good indication of aircraft capability. A less expen­sive aircraft may not prove profitable in the long run if its OC is high.

2. IOC: The IOC breakdown in the United States is slightly different from Euro­pean standards. Airline operators have “other costs” that involve training, eval­uation, logistics support, special equipment, and ground-based resource man­agement, which are not directly related to the aircraft design and mission-sector operation; they are independent of the aircraft type. These are the total costs of the operator, termed life cycle cost (LCC). Unlike the DOC, there is no stan­dard for the LCC proposed by any established commercial-aircraft associations; each organization has its own ground rules to compute the LCC. Together with the DOC, they result in the total operating cost (TOC). Unlike military aircraft, the impact of other costs on the LCC in a commercial aircraft design appli­cation may be considered separately and then totaled to LCC – the DOC covers most of the design dependent costs. This book is concerned only with the DOC. The breakdown of LCC components is listed in Table 16.3. Most commercial aircraft operate beyond the design life span; hence disposal cost is considered as applicable.

The military uses the LCC rather than the DOC for the ownership of an aircraft in service. In general terms, it is the costs involved for the entire fleet from “cra­dle to grave,” including disposal. Military operations have no cash flowing back – there are no paying customers such as passengers and cargo handlers. Taxpayers bear the full costs of military design and operations. There was a need for LCC of military operations, which differ significantly from civil operations. Military air­craft OC ground rules are based on total support by the manufacturer for the entire operating lifespan, which can be extended by renewed contracts. A design to life­cycle cost (DTLCC) concept has been suggested but not yet standardized, which poses problems in providing a credible LCC comparison. Therfore, military aircraft operations deal with the LCC, although it has various levels of cost breakdowns, including aircraft – and sortie-related costs. Table 16.4 is an outline that categorizes the elements that affect the military aircraft LCC model.

Recently, the customer-driven civil aircraft market prefers the LCC estimation. Academics and researchers have suggested various types of LCC models, the prin­ciples of which are directed to cost management and cost control, providing advice on assigning responsibilities, effectiveness, and other administrative measures at the conceptual design stages in an IPPD environment.

What Is to Be Learned?

This chapter covers the following topics:

Important aspects of costing Aircraft and operational costs A rapid-cost method for manufacture (see [1]) DOC details and computation methods

16.1.1 Coursework Content

Readers are to estimate the Bizjet DOC. All relevant information to estimate the aircraft’s DOC is provided. However, the estimation of aircraft costs can be omitted if it has been covered in another course by specialists. In this book, cost studies do not alter the finalized and substantiated configuration obtained thus far through the worked-out examples. It is beneficial to be aware of the cost implications in aircraft design and operation.

16.2 Introduction

Typically, at the conceptual design phase of a new aircraft program, insufficient information about design details is available to estimate costs. In-house previous experience on cost becomes crucial in the trade-off studies of cost versus per­formance of various design parameters. A preliminary and fast but realistic cost­estimating methodology (e. g., an accuracy of less than ±15%, set at a high-level data structure) (Figure 16.1) is needed to help designers investigate and adopt new proven technologies in order to advance a product to a competitive edge.

The post-conceptual design study phase leads to the project-definition phase, followed by the detailed-design phase when manufacturing activities produce a fin­ished aircraft. At later stages of a project, when more accurate cost data are avail­able, the use of an analytical cost method at a lower level of data structure fine – tunes the cost estimates obtained in the earlier conceptual stages. Figure 16.1 shows the levels of cost-model architecture to serve various groups at different stages of the program milestones. The deeper the breakdown of a parametric method, the more it converges to an analytical method. The proposed rapid-cost model based on parametric method is quite different from the analytical-cost method. The latter
procedure is time-consuming and may omit some of the myriad details involved. The parametric method is generally intended for designers, whereas the analytical method is intended for corporate use to establish aircraft pricing and gain a bet­ter understanding of a customer’s cost goals, constraints, and competitive market requirements; it also is useful at the bidding stage and for other budgetary purposes. The state of the art of cost modeling predictions is close to the actual cost after production has been stabilized.

Less accurate cost considerations at the conceptual design stage, specifically intended for designers, are no less meaningful than what accountants and estimators provide to management for assessing profitability and running a lean organization. Extending the frontiers of cost-saving through IPPD rather than merely running lean on manpower adds a new dimension to harnessing human resources by orga­nizations investing in people, which is where it counts. In fact, the preliminary cost estimates at higher levels of architecture flow to the lower level when more data are generated as a project advances through the milestones. Cost estimations made by different methods should converge within close tolerance, benefiting from in­house experience. Other cost-estimation models are not pertinent to the scope of this book.

The success or failure of cost estimation using a parametric method depends on identifying correct cost drivers and then establishing a good cost relationship with available in-house data to embed accuracy. Ensuring quality while making the product converge on cost (i. e., design for cost) rather than allowing cost to make the product (i. e., design to cost) is the essence of cost control. The core of cost modeling is to identify and define the cost drivers and functions of a product and to generate information, which are tools for DFM/A (see Chapter 17) in an IPPD environment. The DFM/A studies lead to design to cost and are part of the Six Sigma concept (see Chapter 17) to make a product right the first time, which reduces costs. Based on an awareness of the customer’s affordability and requirements, the designing and manufacturing target costs are established.

The industry needs to recover its investment with the sale of approximately 400 aircraft, preferably fewer. About 4 to 6% of the aircraft selling price is intended to recover the project cost (i. e., RDDMC), known as amortization of the investment made. For this reason, offering aircraft in a family concept covers a wider market at a considerably lower investment when the cost of amortization is closer to 2 to 4%. Smaller aircraft break even at approximately 200 sales. In current practice, civil aircraft manufacturers sell preproduction aircraft used for flight testing to recover costs. Military aircraft manufacturers incorporate new, unproven technologies and invest in technology-demonstrator aircraft (on a reduced scale) to prove the concept and subsequently substantiate the design by flight-testing on preproduction aircraft, some which could be retained for future testing.

The general definition of an aircraft price includes amortization of the RDDMC but not spare parts and support costs:

aircraft price = aircraft manufacturing cost + profit = aircraft acquisition cost

In this book, the aircraft price and cost are synonymous; the aircraft price is also known as the aircraft acquisition cost. The profit margin is a variable quantity and depends on what the market can bear. This book does not address the aircraft














Weight (kg)

pricing method. In general, the profit from a new aircraft sale is rather low. Most of the profits are from sales of spare parts and maintenance support. Operators depend on the manufacturer as long as an aircraft is in operation – that is, two to three decades. Manufacturers are in a healthy financial position for several decades if their products sell in large numbers.

Aircraft Cost Considerations

16.1 Overview

An aircraft design, construction, and operation is an expensive endeavor, and not all nations can afford it. Countries that can must be cost-conscious, whether in a totali­tarian or a free-market-economy society – the ground rules for accounting may dif­fer but all strive for the least expensive endeavor for the task envisaged. The success or failure of an aircraft project depends on its cost-effectiveness. Cost-consciousness starts in the conceptual design phase to ensure competitive success. In fact, cost estimation should start before the conceptual design phase in a topdown analysis. If funds cannot be managed through the end of the project, then starting it is not viable.

Visibility on costing forces long-range planning and provides a better under­standing of the design’s system architecture for trade-off studies to explore alternate designs and the scope for sustainability and eco-friendliness of the product line. The product passes through well-defined stages during its lifetime: conception, design, manufacture, certification, operation, maintenance and modification, and finally dis­posal at the end of the life cycle. Cost information for previous products should be sufficiently comprehensive and available during the conceptual stages of a new project. The differential evaluation of product cost and technology – offering reli­ability and maintainability – as well as risk analysis are important considerations in cost management. Cost details also assist preliminary planning for procurement and partnership sourcing through an efficient bidding process. The final outcome ensures acquisition of an aircraft and its components with the objective of balanc­ing the trade-off between cost and performance, which eventually leads to ensuring affordability and sustainability for operators over a product’s life cycle. Cost analy­sis stresses the importance of a more rigorous role, as an integrated tool embedded in the multidisciplinary systems architecture of an aircraft design that arrives at a “best value,” specifically for manufacturing and operational needs.

During the last two decades, the aerospace industry has increasingly addressed factors such as cost, performance, delivery schedule, and quality to satisfy the “customer-driven” requirements of affordability by reducing the aircraft acquisi­tion costs. The steps to address these factors include synchronizing and integrat­ing design with the manufacturing and process planning as a business strategy; this
lowers production costs while it ensures reliability and maintainability to lower operational costs. Therefore, more rigorous cost assessment at each design stage is needed to meet the objective of a more effective, value-added, customer-driven product. At this time, data from the emerging geopolitical scenario, national eco­nomic infrastructure, increasing fuel prices, and emerging technological considera­tions (e. g., sustainable development, anti-terrorism design features, and passenger health issues) are scarce and fluctuating.

The civil aviation industry expects a return on investment with cash flowing back for self-sustaining growth, with or without government assistance. The sustainability and growth of civil aviation depend on profitability. In a free-market economy, the industry and operators face severe competition for survival, forcing them to operate under considerable pressure to manage efficiently the manufacture and operation of aircraft. Although substantial detail about civil aircraft cost is available in the public domain, the cost of manufactured parts is not readily available.

Conversely, the military aircraft industry is driven by defense requirements with the primary objective of meeting the national defense needs. The export potential is a byproduct, which is restricted to friendly nations with the risk of disclosure of technical confidentiality. There are differences between the ground rules for costing the manufacture and operation of military and civil aircraft. Because by its nature it must stay ahead of adversaries’ capabilities, military aircraft designs must explore newer technologies, which are expensive and require laborious testing to ensure safety and effectiveness. Many military projects were abandoned even after proto­types had been flown (e. g., the TSR2 [U. K.] and the Northrop F20 [U. S.]); the rea­sons may be different but the common factor is always cost-effectiveness. A prod­uct must have the appeal for the best value. Readers are encouraged to review both types of aircraft project history. This chapter primarily addresses civil-aircraft cost considerations with a passing mention of military aircraft costing.

There are two types of costs to consider: (1) the research, development, design, and manufacturing costs (RDDMC), including testing and production launch costs; and (2) the operational cost (OC). An aircraft must be built before it can operate for a mission. OC depends on aircraft cost, which is known when it is purchased. For this reason, aircraft manufacturing costs are analyzed first in Section 16.4, followed by OC analysis in Section 16.5. Aircraft cost analysis, as discussed herein, is not possi­ble without the instructor’s help. The analysis depends on industrial data, which are not available due to confidentiality. An instructor must obtain these data or gener­ate equivalent data – it is difficult to obtain realistic data that can be substantiated – in order to progress with establishing the appropriate indices. However, the DOC estimation can be carried out easily if the aircraft price is known. Other methods are available to estimate aircraft costs, but their accuracy is debatable without industrial input. Aircraft cost estimation is included in this section to show readers that oth­erwise relatively simple mathematics involved in cost analysis actually are complex. This discussion provides some exposure to cost analysis.

Research, design, development, and test (RDD&T) costs occur once and are termed nonrecurring cost (NRC); however, manufacturing costs continue into pro­duction and are termed recurring cost (RC). Typical RDDMC (i. e., the project cost) of a new civil aircraft project in the midrange class of high-subsonic aircraft can

be in billions of dollars with a 4-year wait until delivery, when the return on the investment begins to flow back. A new advanced combat aircraft costs several times more and taxpayers bear all costs. The cost of a large, high-subsonic-jet aircraft project (i. e., RDDMC) could approach $20 billion.

Without industry participation, it will not prove realistic for academics/ consultants to offer cost models; these will remain exploratory in nature. Indus­tries depend on their own cost models, which are constantly reviewed for improve­ments. This chapter outlines various levels of aircraft cost considerations practiced in a free-market economy. Based on in-house data, each industry generates spe­cific cost models (with or without external assistance) at different levels of accuracy suited to different departments at various phases of project activities. The estima­tion of project cost is a laborious task involving numerous parameters and a large database. Cost estimators and accountants devote considerable time to predicting project costs; they subsequently verify actual expenditures if their estimation is close to their prediction. Experience has taught costing teams to use company-generated factors to predict estimates; these are not available in the public domain. In a com­petitive market, cost details are sensitive information and are therefore kept in strict confidence.

Because access to actual cost data is not easy, a good method for the aircraft cost estimate is to first assess the manhours involved and then use the average manhour rates (they vary) at the time. Material and bought-out item costs can be obtained from suppliers. The scope of this book does not include accurate industrial-cost details; academic institutes must generate data as required. This chapter provides a generic, rapid methodology for predicting manufacturing costs, which is more suited to coursework, without ignoring what is considered in the industry. It is based on a parametric method, and a normal market situation without any unpredictable trends (i. e., global issues) is assumed.

The scope of a cost study allows those working with a highly complex system architecture of aircraft design to explore cost control beyond current practices and to understand through trade-off studies how a diverse range of systems works, allow­ing the transfer of best practices and risk-management experience throughout the operating life of ownership. This chapter stresses the need for cost analyses of dif­ferent disciplines at an early stage in order to exploit the advantages of advanced digital design and manufacturing processes (see Chapter 17). Cost trade-off stud­ies at the conceptual design stage lead to a “satisfying” robust design with the least expenditures. Strong multidisciplinary interaction is essential between vari­ous design departments to attain the overall, global goal of minimizing cost rather than individual (i. e., departmental) minimization. Initially, a proper cost optimiza­tion may not be easily amenable to industrial use.

Aircraft DOC is the most important parameter of concern to airline operators. The DOC depends on how many passengers the aircraft carries for what range; the unit is expressed in cents per seat nautical miles (seat-nm). There are stan­dard rules (e. g., the Association of European Airlines [AEA] method; see Sec­tion 16.4) for comparison when each industry or airline has its own DOC ground rules, which results in different values as compared to those obtained from standard methods.

Figure 16.1. Levels of cost-prediction methodologies at various project phases

Military Aircraft Survivability

This extended section of the book can be found on the Web site www. cambridge .org/Kundu and presents a typical military turbofan survivability consideration in the following subsections.

15.10.1 Military Emergency Escape

The subsection introduces a typical ejection seat and ejection sequences as a surviv­ability issue with the following figures.

Figure 15.42. Typical military aircraft ejection seat Figure 15.43. Typical ejection sequence

Figure 15.44. Typical ejection sequence showing separation of seat and para­chute deployment

15.10.2 Military Aircraft Stealth Consideration

The subsection introduces various military aircraft stealth considerations and strate­gies as survivability issues. It covers system integration of operational needs before, during, and after combat (e. g., audio-visual detection, radar signature, heat signa­ture, on-board passive system, use of defensive aids, secure communication, on­board stand-alone navigational system, and returning to home base).

15.10.3 Low Observable (LO) Aircraft Configuration

The subsection deals with military aircraft typical stealth considerations issues such as heat and radar signature suppression as survivability issues. Following are the figures in this subsection.

Figure 15.45. Typical comparisons of radar signatures (sphere versus stealth air­craft)

Figure 15.46. Three stealth aircraft configurations

15.10 Emerging Scenarios

There have been four emerging topics: two concerning terrorist activities, one con­cerning health issues, and one ongoing problem related to aircraft debris on the runway. This section familiarizes future designers with the types of problems they may face related to these topics.

Counterterrorism Design Implementation

Much thought is now applied to ways to counter onboard terrorism. These topi­cal considerations have yet to be determined for implementation. There is concern about the increased weight and cost of an aircraft. Some design-change ideas are as follows:

1. Install a bulletproof flight-deck barrier at the cockpit door. Compartmental­ize the cabin to isolate trouble. Whether these measures are effective must be debated, but aircraft designers must use foresight rather than hindsight.

2. Improve the structural integrity of the cargo compartment/bay against in-flight explosions. The space below the floorboards must be compartmentalized and have a shock-absorbing, impact-resisting shell structure to retain integrity in the event of an explosion.

3. The aircraft flight system must have an automated-recovery ability, homing to the nearest landing field (military aircraft already have this type of system).

Health Issues

The steady annual increase in the number of passengers crossing international boundaries results in health issues that must be addressed. Space must be allotted to treat and isolate patients (like on cruise ships). Until recently, this measure was on an ad-hoc basis; however, manufacturers can increase market appeal by providing health-care facilities, especially for larger aircraft with long flight durations. Cardio­vascular conditions, pregnancies, infections, and other emergency-health scenarios are increasing during international flights.

Damage from Runway Debris

The catastrophic crash of the Concorde was a result of runway debris hitting the fuel tank, which then burst into flames. Vulnerable areas must be protected with stronger impact-resistant materials. This is a relatively simple task but designers must examine the point in new designs, which does incur additional weight and cost considerations.