Question 4 (4 points)

Read attachment 4.

a] (1 point) How would you recommend that Qantas should have decided whether to invest in development of the new program for directing flight patterns?

b] (1 point) Would you classify as a fixed or variable input: (i) Qantas' new program for directing flight patterns; and (ii) fuel?

c] (1 point) Once Qantas has made its investment in the new program, what do you think will be the main effect on its costs of operation? What factors are likely to determine the size of effect on costs?

d] (1 point) In what way does the article suggest that the changed production method may also impact on the outputs that Qantas is able to supply?

Qantas expects to cut its fuel bill by as much as $40 million a year thanks to a radical overhaul to how it plots its flights across the globe.

The airline has spent five years and millions of dollars building a new flight planning program - which it says will materially cut its fuel bill and bring its ultra-haul ambitions closer to reality.

Qantas' team of dispatchers have used the same computer program for 30 years to plan the route of each flight, assessing weather, airspace traffic, safety and legal constraints on three of four possible routes.

The new system uses cloud computing to crunch data on thousands of possible flight paths, using millions of data points - including the latest wind patterns, and varying altitudes and wind speeds - to build a cost map that presents the most efficient route...

A flight to Johannesburg, for example, was directed to fly 160 nautical miles further than it would normally, but in doing so cut the headwinds it experienced by two-thirds. The 747 arrived only three minutes later than scheduled and saved more than a tonne of fuel.

The new system comes as Qantas assesses the viability of launching ultra-long, non-stop flights from Melbourne and Sydney to London and New York. In these cases, fuel burn would be a key consideration...

In the project's business case, it [was estimated] Constellation would cut Qantas' annual fuel bill by about 0.6 per cent. The airline now believes it will be closer to 1 per cent. That would translate to $40 million saving, based on this year's expected fuel bill of $40 billion.

'Flight path changes will boost Qantas' by Patrick Hatch (The Age, December 10, 2018, p.20).