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A Structural Model of Aircraft Engine Maintenance

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  • Kennet, D Mark

Abstract

We develop and estimate a simple regenerative optimal stopping model of aircraft engine maintenance that attempts to describe the behaviour of airline maintenance personnel. The model assumes that the decision to send an engine to the shop for overhaul is the solution to a stochastic dynamic programming problem that trades off the expected cost of continuing operation with the attendant risk of engine failure with the cost of performing the overhaul. We estimate the model using 42 engine histories from Pratt & Whitney, Inc. Estimation results indicate that such a model does not explain observed engine histories before deregulation, but does fit the data in the era since deregulation. The model also provides insight into the perceived relative costs of engine maintenance, in-flight shutdown, and ordinary operation. Copyright 1994 by John Wiley & Sons, Ltd.

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  • Kennet, D Mark, 1994. "A Structural Model of Aircraft Engine Maintenance," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 9(4), pages 351-368, Oct.-Dec..
    • Handle: RePEc:jae:japmet:v:9:y:1994:i:4:p:351-68
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    Cited by:

    1. Victor Aguirregabiria & Margaret Slade, 2017. "Empirical models of firms and industries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1445-1488, December.
    2. VanderHart, Peter G., 1998. "The Housing Decisions of Older Households: A Dynamic Analysis," Journal of Housing Economics, Elsevier, vol. 7(1), pages 21-48, March.
    3. Victor Aguirregabiria, 2006. "Another Look at the Identification of Dynamic Discrete Decision Processes: With an Application to Retirement Behavior," 2006 Meeting Papers 169, Society for Economic Dynamics.
    4. Aguirregabiria, Victor & Mira, Pedro, 2010. "Dynamic discrete choice structural models: A survey," Journal of Econometrics, Elsevier, vol. 156(1), pages 38-67, May.
    5. Victor Aguirregabiria & Arvind Magesan, 2013. "Euler Equations for the Estimation of Dynamic Discrete Choice Structural Models," Advances in Econometrics, in: Structural Econometric Models, volume 31, pages 3-44, Emerald Group Publishing Limited.
    6. Aguirregabiria, Victor & Magesan, Arvind, 2013. "Euler Equations for the Estimation of Dynamic Discrete Choice Structural," MPRA Paper 46056, University Library of Munich, Germany.
    7. Victor Aguirregabiria, 2005. "Another Look at the Identification of Dynamic Discrete Decision Processes," Econometrics 0504006, University Library of Munich, Germany.
    8. Kasahara, Hiroyuki & Shimotsu, Katsumi, 2008. "Pseudo-likelihood estimation and bootstrap inference for structural discrete Markov decision models," Journal of Econometrics, Elsevier, vol. 146(1), pages 92-106, September.

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