The sky is the limit: Assessing aircraft market diffusion with agent-based modeling

This paper presents an agent-based model for the diffusion of new aircraft models. Expanding on the classical economic decision framework, where investment decision-making is entirely based on profitability, our more holistic modeling approach takes into account profitability, flexibility, as well as the environmental impact of new aircraft models in the adoption decision process. Technical parameters, such as the range and passenger number per aircraft model considered, various types of pollutant emissions of the aircraft engine, as well as daily operational data, are used as covariates in the model. In validation for the most common mid-range passenger aircraft models of Airbus and Boeing, our agent-based model produces results that are comparable to observed real-world data on the market diffusion of existing mainstream aircraft models. This result shows the applicability and usefulness of our model, which can subsequently also be applied for studying the diffusion of aircraft models embodying new generations of components. Our simulation shows that a price reduction or a decrease in pollutant emissions of new aircraft models can be expected to lead to more adoption and faster diffusion. Furthermore, our modeling approach demonstrates that a holistic and systematic framework that includes not only profitability (in terms of payback time) but also flexibility (in terms of optimal range and amount of passengers) and environmental impact (in terms of deviation from regulatory standards) can be helpful for modeling the investment decision-making process of airlines.