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    Calculating Options for a Small Airline Responding to FAA Changes

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    Can someone, please help me with this question. I am so confused.

    Vineyard Air, a small business with one twin engine airplane that shuttles people from Boston to Martha's Vineyard, learns from reading in the industry trade magazine that the Federal Aviation Administration (FAA) has proposed a regulation change. Instead of requiring planes to undergo major 48 hour maintenance and inspection process after 1000 hours of flight time, the proposed regulation will require airplanes to undergo this process after either 1000 hours of flight time or 500 flights - whichever occurs first. As Vineyard Air's typical flight is 25 minutes, the change will require them to triple their major plane overhauls. As Vineyard Air has only one plane and services a small niche market, this change could bankrupt them.
    What should Vineyard Air do regarding the proposed change?

    Thank you,

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    Solution Preview

    There is nothing they can do about the new FAA regulations, as they are too small to lobby against the change in the law. Let's say they make 10 flights a day, once an hour in a 10 hour flying day (that would ...

    Solution Summary

    A small market niche airline is faced with new FAA regulations that greatly increases their down time for required maintenance. What can the single plane airline do about it?