Green, Gerald G.||Novak, Ralph S.
M.S. (Master of Science)
Department of Management
The Boeing 747 which was completed in October, 1968, was the largest commercial airliner ever built. It was designed to carry up to three times the passengers of its 130-seat predecessor, the 707-3208. This first of the “Jumbo jets" was scheduled to start airline service in the 1970's, first on international routes and then within the United States. It was designed to carry the huge passenger volumes forecast for the future end the rapid growth of airline passenger traffic made its future success appear assured. St was the logical successor to the 707-size jetliner. The picture changed early in 1968 with the advent of the airbus. The airbus was sized between the 707 end the 747. It offered domestic airlines two major advantages over the 747; 1. It was more flexible because it could land and takeoff from short runways, yet fly transcontinentally nonstop from larger airports. 2. because it wee mailer, fewer passengers ware required on the airbus to make a profit. Major airlines operating within the Salted States quickly announced orders for two competitive airbuses, the Me Donald-Douglas DC-10 end the Lockheed 1011. The need for the 747 in domestic passenger service appeared limited. The investigation tested the hypothesis, “The Boeing 747 will not he needed to accommodate domestic passenger demand in the period 1972-75." The hypothesis wee tested by construction of a model of 1972-75 domestic airline activity. Passenger volumes for five of the most heavily traveled city pairs listed by the Civil Aeronautics Board ware projected to 1972 through 1975, using a Civil Aeronautics Board forecast, fee resulting figures were then divided among airlines serving each city pair on the heels of current market share. A range of departure frequencies was established for the airlines serving each city pair, this established a minimum and maximum number of frequencies which airlines serving the markets would need to remain competitive. A single frequency was selected as the "desired frequency." This represented the optimum number of departures necessary to serve that market effectively. Passenger volumes for each airline frequency were assigned to both the Boeing 747 and an airbus, the McDonald-Douglas DC-10. The ability of each airplane to produce a 10.5 per cent return on investment carrying the number of passengers assigned to it at the "desired frequency" determined acceptance or rejection of the hypothesis. Findings of the model refuted the hypothesis. The 747 was demonstrated to be necessary in three of the five city pairs tested, using the "desired frequency" assumption. The conclusion was qualified by the suggestion that the key to the need for an airplane of a specific size was the "desired frequency" assumption. It determined the desirability of few large airplanes or many smaller ones as the most efficient method of accommodating passenger volumes in a competitive environment. Investigation findings had further implications: 1. The need for the 747 in the period investigated will be limited to major markets. 2. Small or poorly competitive airlines may have problems using 747's profitably. 3. The airbus will reduce the need for the 747 in this period. 4. Limits on the number of movements at congested airports and a consequent reduction of frequencies may hasten the need for the 747 in additional markets.
Fitzmaurice, Victor E., "An investigation of the domestic need for the Boeing 747 in the period 1972-75" (1968). Graduate Research Theses & Dissertations. 1378.
vii, 83 pages
Northern Illinois University
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