There is an active, competitive leasing (i.e., rental) market for most standard types of commercial jets. Many of the planes flown by the major domestic and international airlines are not owned by them but leased for periods ranging from a few months to, several years.
Gamma Airlines, however, owns two long-range DC-11s just withdrawn from Latin American service. Gamma is considering using these planes to develop the potentially lucrative new route from Akron tp Yellowknife. A considerable investment in terminal facilities, training, and advertising will be required. Once committed, Gamma will have to operate the route for at least three years. One further complication: The manager of Gamma's international division is opposing commitment of the planes to the Akron- Yellowknife route because of anticipated future growth in traffic through Gamma's new hub in Ulan Bator.
How would you evaluate the proposed Akron-Yellowknife project? Give a detailed list of the necessary steps in your analysis. Explain how the airplane leasing market would be taken into account. It the project is attractive, how would you respond to the manager of the international division?
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