A mixed activity-based costing decision model for green airline fleet planning under the constraints of the European Union Emissions Trading Scheme

Wen Hsien Tsai, Kuen Chang Lee, Jau Yang Liu, Hsiu Ling Lin, Yu Wei Chou, Sin Jin Lin

Research output: Contribution to journalArticlepeer-review

52 Scopus citations

Abstract

This paper presents a mixed activity-based costing decision (MABCD) model for green airline fleet planning under the constraints of the European Union Emissions Trading Scheme (EU ETS), in which activity-based costing (ABC) model is incorporated with a modified product-mix decision model for total operating costs of individual flights under EU ETS constraints. A numerical example for comparing cost-effectiveness between the B747-400 airline and the A380 airline in one of the busiest route between Asia and Europe is demonstrated. It is shown that subject to different changes of revenue tone kilometers (RTK), the cost trends of carbon emissions and the changes in profits of different flight routes appear to be similar. Moreover, it is also shown that when the RTK are higher, a choice of a wider-bodied aircraft could lead to higher profits. Finally, it is shown that without the pre-assumptions of considering more complicated routes and financing methods, a self-purchased aircraft appears to contribute more profits.

Original languageEnglish
Pages (from-to)218-226
Number of pages9
JournalEnergy
Volume39
Issue number1
DOIs
StatePublished - Mar 2012

Keywords

  • Fleet planning
  • Green
  • Mixed activity-based costing decision (MABCD)
  • Revenue tone kilometers (RTK)
  • The European Union Emissions Trading Scheme (EU ETS)

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