Chinese Journal of Aeronautics, (2019), 32(8): 1828–1846

Chinese Society of Aeronautics and Astronautics

& Beihang University
Chinese Journal of Aeronautics
cja@buaa.edu.cn
www.sciencedirect.com

Exploration and implementation of commonality

valuation method in commercial aircraft family
design
Yongjie ZHANG a,*, Zheng YANG a, Xianchao MA b, Wenjun DONG b,
Dayong DONG b, Zhaoguang TAN b, Shuai ZHANG c

a
School of Aeronautics, Northwestern Polytechnical University, Xi’an 710072, China
b
Shanghai Aircraft Design and Research Institute, Shanghai 200232, China
c
Beijing Aeronautical Science & Technology Research Institute, Beijing 102211, China

Received 26 February 2019; revised 30 March 2019; accepted 8 April 2019

Available online 31 May 2019

KEYWORDS Abstract Commercial aircraft family design can reduce development costs, shorten development
Aircraft cost; cycles, and expand the market coverage of aircraft. Commercial aircraft family development has
Aircraft family; become one of the most important features of modern aircraft design. This paper explores the
Aircraft program value; effects of commonality on different aircraft models in a commercial aircraft family. The existing
Commonality index; product commonality indexes are summarized and their limitations in the application to aircraft
Real option method design are discussed. Then a new component commonality index is proposed based on the compo-
nent decomposition structure. A model for calculating the aircraft program value is established,
which considers development costs, manufacturing costs, sale price, operation costs and residual
costs. The effects of aircraft commonality on time and economic costs of both development and
manufacturing, and on sale price, are analyzed and quantified. The commonality evaluation strat-
egy is obtained, which features comprehensive consideration of the aircraft program value and time
costs. The break-even analysis of aircraft is proceeded on the basis of costs and price data. By using
a real option method, the strategy considers the uncertainty of the aircraft program and the flexi-
bility of the manufacturer. This strategy proves to be rational and applicable to aircraft design
based on the calculation of three examples and the analysis of parameter sensitivity.
Ó 2019 Production and hosting by Elsevier Ltd. on behalf of Chinese Society of Aeronautics and
Astronautics. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/
licenses/by-nc-nd/4.0/).

* Corresponding author. 1. Introduction

E-mail address: zyj19191@163.com (Y. ZHANG).
Peer review under responsibility of Editorial Committee of CJA.
Production and hosting by Elsevier
A product family, an advanced form of standardization, is a
set of related products that share common attributes such as
features, components, modules, or subsystems. Based on
the relationship between products within a product family,

https://doi.org/10.1016/j.cja.2019.05.005
1000-9361 Ó 2019 Production and hosting by Elsevier Ltd. on behalf of Chinese Society of Aeronautics and Astronautics.
This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).
Exploration and implementation of commonality valuation method
designers can create reasonable plans about the main parame-
ters, types and sizes of products, analyzing the development
rule of similar products, predicting the market demand trend,
and making technical/economical comparisons.1–9
The development of an aircraft family is an important char-
acteristic of modern commercial aircraft design. The aircraft
family usually consists of baseline aircraft and its derivatives
or variants.10 It is a common practice to derive fuselage-
lengthened or fuselage-shortened type from baseline aircraft
so as to reduce Research and Development (R&D) costs,
shorten R&D cycles, improve the adaptability of aircraft
routes and airports, and expand the market coverage of air-
craft products.11–14
Commonality, an important concept in the product family,
refers to the reuse and sharing of assets (components, manu-
facturing processes, architectures, interfaces and infrastruc-
ture) across members in a product family, representing a
potential strategy for improving the company’s profitability.15
The challenge of designing a product family is to resolve the
trade-off between commonality and distinctiveness: if com-
monality is too high, products will lack distinctiveness, and
their individual performance will not be optimal; in contrast,
if commonality is too low, manufacturing costs will increase.
It is better to obtain commonality by minimizing the non-
value added variations across the products within a family
without limiting the choices of customers in each market seg-
ment; that is, each product within a product family should
be distinct in ways that customers can notice, and identical
in ways that customers cannot see.16
To help evaluating the trade-off mentioned above, many
commonality indexes have been proposed. A commonality
index is a metric that assesses the degree of commonality
within a product family based on different parameters (e.g.,
the number of common components, component costs, and
manufacturing process). These indexes can be used to estimate
the cost saving of products within a family, and are usually
considered at the beginning of the design of a new product
family or the analysis of an existing family. After analyzing
and comparing with the existing commonality indexes, this
study proposes a new metric, and establishes an model for
evaluating commonality effects based on aircraft program val-
ues and time reduction. The effects of aircraft commonality on
R&D time and economic costs, manufacturing time and eco-
nomic costs, sale price, and pilot training time are then
quantified.
2. Commonality index
This section briefly introduces the existing commonality
indexes and their limitations in the implementation in commer-
cial aircraft family design, and then presents a new commonal-
ity index applicable to commercial aircraft family design.
2.1. Overview
Table 1 lists the existing commonality indexes based on differ-
ent parameters (number of identical components, connection
method, costs, etc.). These indexes have all been used to guide
the design or redesign of a product family.
1829
2.1.1. Degree of commonality index
The Degree of Commonality Index (DCI)17 is the most tradi-
tional measurement method for component standardization
based on the average number of common parent items per
average distinct component part:
Piþd
j¼iþ1 Uj
DCI ¼ ð1Þ
d
where Uj is the number of immediate parent components and j
has over a set of end items or product structure level(s); d is the
total number of distinct components in the set of end items or
product structure level(s); i is the total number of end items or
the total number of highest level parent items for product
structure level(s).
The main advantage of the DCI lies in its easy calculation.
However, it is difficult for the DCI to estimate the increase in
commonality when a series of products are redesigned or dif-
ferent series of products are compared, because the DCI does
P
not have a fixed boundary (with a range from 1 to iþd j¼iþ1 Uj ).
2.1.2. Total constant commonality index
The Total Constant Commonality Index (TCCI)18 is a modi-
fied version of the DCI. Contrary to the DCI, the TCCI is a
relative index with absolute boundaries ranging from 0 to 1:
d1
TCCI ¼ 1  Pd ð2Þ
j¼1 Uj  1
The absolute boundaries of the TCCI facilitate compar-
isons of products between different families or within a same
family during redesign.
2.1.3. Commonality index
The Commonality Index (CI)19,20 is also a modified version of
the DCI, which measures the unique parts in a product
famility:
u  max pj
CI ¼ 1  Pvn ð3Þ
j¼1 pj  max pj
where u is the number of unique parts; pj is the number of the
parts in the model j; vn is the final number of varieties offered.
The CI ranges from 0 to 1, and can be interpreted as the
ratio between the number of unique components and the total
number of the parts in the product family.
2.1.4. Percent commonality index
The Percent Commonality Index (%C)21 is based on three
main viewpoints: component viewpoint, viewpoint of
component-component connections, and assembly viewpoint.
Each viewpoint produces a percentage of commonality, and
can be combined with other viewpoints to determine an overall
measurement of commonality by weighting each percentage
value. The component viewpoint measures the percentage of
platform components that are common among different mod-
els, and the percent commonality of components, Cc, is given
by
100  common components
Cc ¼ ð4Þ
common components þ unique components
1830 Y. ZHANG et al.

Table 1 Summary of product commonality indexes.

Metric Developer Applied range Lowest value Highest value
Piþd
Collier (1981)17
j¼iþ1 Uj
DCI The whole family 1
TCCI Wacker and Trelevan (1986)18 The whole family 0 1
CI Martin and Ishii (1996,1997)19,20 The whole family 0 1
%C Siddique et al. (1998)21 Individual product 0 100
PCI Kota et al. (2000)22 The whole family 0 100
Pd Pm
CI(C) Jiao and Tseng (2000)23
i¼1 Uij
The whole family 1
j¼1
CMC Thevenot and Simpson (2007)24 The whole family 0 1

The component-component connection viewpoint measures
the percentage of common connections between components,
Cn:
100  common connections
Cn ¼ ð5Þ
common connections þ unique connections
Similarly, the assembly viewpoint measures the percentage
of common assembly sequences, using two indexes: Cl, which
measures the percentage of common assembly sequences, and
Ca, which measures the percentage of common assembly
workstations:
100  common assembly loading
Cl ¼
common assembly loading þ unique assembly loading
ð6Þ
100  commonassemblyworkstation
Ca ¼
commonassemblyworkstation þ uniqueassemblyworkstation
ð7Þ
The four values mentioned above can then be combined
into an overall platform commonality measure and the
weighted-sum formulation is given by:
X
4 all the product structures of a product family; j is the index of
%C ¼ Ii Ci ¼ Ic Cc þ In Cn þ Il Cl þ Ia Ca ð8Þ
i¼1
P
where Ii is the importance of weighting factors and Ii ¼ 1;
Ci is the percent commonality described previously.
The resulting %C ranges from 0 to 100, takes manufactur-
ing and assembly into consideration, and can be adapted to
different strategies with weighting factors. The disadvantage
of this index is that the measure can be applied to each plat-
form but not to the whole product family.
2.1.5. Product line commonality index
Contrary to the indexes that simply measure the percentage of
components that are common across a product family (and
hence penalizing families with a broader feature mix), the Pro-
duct line Commonality Index (PCI)22 measures and penalizes
the differences that should ideally be common, given the pro-
duct mix. The PCI is given by
PP P of components can be complex when calculating CI(C).
ni f f f3i  Pi¼1 1=n2i
PCI ¼ i¼1 1i 2i P  100 ð9Þ
PN  Pi¼1 1=n2i
where P is the total number of non-differentiating components
that can potentially be standardized across models; N is the
number of products in the product family; ni is the number
of products in the product family with component i; f1i is the
size and shape factor for component i; f2i is the factor of mate-
rials and manufacturing processes for component i; and f3i is
the factor of assembly and fastening schemes for component i.
f1i is the ratio of the largest number of models that share
component i with the identical size and shape to the largest
possible number of models that could have shared component
i with the identical size and shape (ni). The PCI has fixed
boundaries that range from 0 to 100, focusing on the common-
ality that should exist between products with common or vari-
ant components rather than on the unique components. The
PCI provides a single measure for the entire product family,
but it does not offer insight into the commonality of the indi-
vidual product within the family.
2.1.6. Component part commonality index
The Component Part Commonality Index, CI(C),23 is an
extended version of the DCI that considers product volume,
quantity per operation, and the cost of component parts, given
by
Pd  Pm Pm  
ð CÞ j¼1 Pj i¼1 Uij i¼1 Vi Qij
CI ¼ Pd  Pm   ð10Þ
j¼1 Pj i¼1 Vi Qij
where d is the total number of distinct component parts used in
each distinct component part; Pj is the price of each type of
purchased parts or the estimated cost of each internally made
component part; m is the total number of the end products in a
product family; i is the index of each member product of a pro-
duct family; and Vi is the volume of end product i in the fam-
ily; Uij is the number of immediate parents for each distinct
component part dj over all the product levels of product i in
P
the family; m i¼1 Uij is the total number of applications (repeti-
tions) of a distinct component part dj across all the member
products in the family; Qij is the quantity of distinct compo-
nent parts, dj, required by the product i.
The CI(C) has variable boundaries that range from 1 to
Pd Pm
j¼1 i¼1 Uij , and can provide useful information due to its
consideration of the cost of each component. The influence
of a rather expensive part common in a family is larger than
that of a cheap part and different from one product to another.
However, the estimating requirement of the quantity and cost
2.1.7. Common commonality metric
The Common Commonality Metric (CMC)24 evaluates the
design of a product family at a ratio of 0 to 1 based on the
component, size, shape, material, manufacturing process,
assembly, cost, and diversity allowed for each product in the
product family. The CMC is given as follows:
Exploration and implementation of commonality valuation method
PP  Q4
Cmax  Ci x¼1 fxi
i¼1 ni
CMC ¼ PP  maxi Q4 max ð11Þ
i¼1 ni Ci  Cmin
i x¼1 fxi
where P is the total number of components; ni is the number of
products in the product family with component i; fxi is the
ratio of the largest number of products that share component
i with the identical factor (the factor is size and shape for
x = 1, materials for x = 2, manufacturing processes for
x = 3, assembly and fastening schemes for x = 4) to the num-
ber of products with component i (ni); fximax is the ratio of the
largest number of products that share component i with an
identical factor (the factor is size and shape for x = 1, materi-
als for x = 2, manufacturing processes for x = 3, assembly
and fastening schemes for x = 4) to the largest possible num-
ber of products that could have shared component i with iden-
tical factor; Ci is the current total cost of component i; Cimin is
the minimum total cost of component i (obtained when the
component is common among all the products with compo-
nent i); Cimax is the maximum total component costs (obtained
when the component is variant in each of the products with
component i).
The CMC is comprehensive; however, it requires analysis of
a large number of cost data which may not be available in the
early stage of aircraft design.
2.1.8. Index analysis
There are some limitations or deficiencies in the existing com-
monality indexes when they are used in aircraft design. Table 2
shows the comparison of commonality indexes based on the
considered information in each index. As shown in the table,
the DCI and CI(C) do not have fixed boundaries; the DCI,
TCCI, CI and %C do not take size, geometry and manufactur-
ing process into consideration; the PCI fails to consider the
information of component costs.
Although the PCI and CI(C) consider much information of
components, they still suffer from many limitations. First, the
assumption that all the factors considered in the index have the
same weight is not comprehensive, because different factors
may influence the index by varying degrees. Second, calculat-
ing these two indexes involves the quantity of each product.
This means that the analysis of aircraft family design concerns
all the products in the entire market, so neither of the two
indexes can easily measure commonality of individual product
models. In other words, considering the production quantity
will complicate the determination of the index for aircraft com-
monality measurement, in addition to the uncertain sale vol-
ume of an aircraft model at the beginning of the analysis.
The focus of this research is to compare the commonality
1831
implementation among different aircraft models within a fam-
ily; therefore, the commonality index should be a definite
parameter for a certain aircraft model rather than a parameter
changing with the production quantity.
The CMC captures comprehensive information for each
component by integrating various aspects of different indices
into a single measurement formula, it also considers penalty
of the non-differentiating components by using the parameter
fximax. As introduced in the Ref. 24, the author used the CMC
to carry out calculations for the product family redesign of a
stapler family. The calculations involved a lot of data and
information even though the stapler only consists of a dozen
parts. However, the collection of information and the estima-
tion of data for an aircraft analysis would be too complex. As
a result, using the CMC to calculate the commonality degree
of the aircraft suffers an insufficient feasibility.
2.2. New commonality index based on component decomposition
Based on the existing commonality indexes, we propose a new
commonality index for aircraft design based on component
decomposition levels. Compared with the indexes listed above,
the index we create is more suitable for the analysis of aircraft
family design that considers sufficient factors related to aircraft
and ensures the simplicity of data collection and calculation.
The component commonality index proposed mainly eval-
uates the extent of commonality of aircraft components and
the entire aircraft within the aircraft family. It is used for the
analysis in R&D and manufacturing process. Before proposing
the component commonality index, this study introduces two
types of aircraft component decomposition structures. It is
necessary to define a decomposition structure that the index
analysis can follow because the index should be able to mea-
sure the commonality of parts and components in different
levels.
2.2.1. Component decomposition structure
To analyze component commonality factors, three levels of
aircraft component decomposition, including the product,
component, and sub-component levels, correspond to the cal-
culation and analysis accuracy. For example, when obtaining
the commonality index, the index value of the commercial air-
craft system can be gained directly at the system level; or it can
be obtained at the element level corresponding to the system,
and the index values of different elements can be weighted
and summed up. Although the planning of the commonality
concept can start from a top-down perspective, the implemen-

Table 2 Comparison of commonality indexes based on considered information.

Metric Fixed Components in Size and Materials Manufacturing Assembly Component Component
boundary product geometry process schemes connections cost
DCI Yes
TCCI Yes Yes
CI Yes Yes
%C Yes Yes Yes Yes
PCI Yes Yes Yes Yes Yes Yes
CI(C) Yes Yes
CMC Yes Yes Yes Yes Yes Yes Yes Yes
1832 Y. ZHANG et al.

tation of the commonality concept and the calculation of the
commonality index should follow a bottom-up approach.
There are two types of commonly-used structural decompo-
sition of aircraft components: Product Breakdown Structure
(PBS) and aircraft manufacturing specification published by
Air Transport association of America (ATA). The selection
of the structural decomposition is decided by the requirements
for computing the commonality of commercial aircraft compo-
nents. Note that the PBS and ATA are merely two examples of
the decomposition structure, the aircraft designers could also
use different frameworks to calculate the commonality index
if the manufacturer could offer sufficient data.
PBS reflects the various components of the product through
a tree structure, with each type of components appearing only
once in the structure. PBS has been widely used to develop
products and components. The first three levels of the aircraft
PBS are shown in Table 3.
Table 3 PBS decomposition.
Level-1 Level-2 Level-3
Airplane Airframe PBS010101 Fuselage
ATA refers specifically to a classification structure given in
the ATA100 specification, which rationally divides aircraft
manufacturing and routine maintenance into different chap-
ters. The ATA100 specification and technical data adopt the
‘‘system-subsystem-single item” numbering method. The first
three levels of the ATA structure are shown in Table 4.
2.2.2. Aircraft component commonality index
This section presents the formulation of the aircraft compo-
nent commonality index which considers the influences of fac-
tors such as component costs, size and shape, material
selection, manufacturing process, assembly and fastening
scheme. The calculation target can be a component (at
Level-2), a sub-component (at Level-3), or a part level (at
Level-4, which is not shown in Table 3 or Table 4). All compo-
nents, sub-components and parts are referred to as the module
in this paper. The module can be divided into the homemade
module and outsourced module. The commonality index for
the homemade module is given as
P4
Ci x¼1 ðxx;i fx;i Þ
CIi ¼ P n ð12Þ
i¼1 Ci

PBS01 PBS0101 PBS010102 Wing

PBS010103 Empennage where CIi is the commonality index of module; Ci is the cost of
PBS010104 Hatch module i, for homemade module it is the material and process-
PBS010105 Hanger ing cost of the mudule i, together with the average set-up cost;
PBS010106 Equipment/ x1;i , x2;i , x3;i , and x4;i are the weight factors of the size and
decoration shape, material, manufacturing process, and assembly and fas-
PBS010107 Sign tening scheme of module I, respectively; f1,i , f2,i, f3,i and f4,i are
Propulsion system PBS010201 Power plant the factors of size and shape, material, manufacturing process,
PBS0102 PBS010202 Fuel system
and assembly and fastening scheme of module i, respectively.
PBS010203 APU
PBS010204Inerting system
xx;i ranges from 0 to 1, and x1;i þ x2;i þ x3;i þ x4;i ¼ 1.
PBS010205 Fire protection Each weight factor is to be defined by professional designers
PBS010206 Nacelle according to the actual R&D and manufacturing process of
Avionics system PBS010301 Communication each module. f1,i means the commonality relationship of the
PBS0103 system size and shape of module i between the target aircraft and
PBS010302 Instructions and the baseline aircraft. If the size and shape of module i are
records the same for these two aircraft models, the value of f1,i is 1;
PBS010303 Navigation system if different, the value is 0. The meaning of other fx,i is similar
PBS010304 Core processor to that of f1,i.
system
For the outsourced module, the factor of manufacturing
PBS010305 Maintenance system
PBS010306 Information system
process can be neglected, so the corresponding commonality
PBS010306 Cabin system index is given as
Mechanical system PBS010401 Hydraulic system
PBS0104 PBS010402 Landing gear Ci ðx1;i f1;i þ x2;i f2;i þ x3;i f3;i Þ
CIi ¼ Pn ð13Þ
system i¼1 Ci
Flight control PBS010501 FCS
system PBS010502 Autoflight where Ci is simply the purchasing cost of the module i.
PBS0105
Based on the component decomposition structure, the com-
Environmental PBS010601 Air conditioning
monality index for different product levels can be calculated
control system system
PBS0106 PBS010602 Ice/rain prevention from bottom to top:
system X
numI;j
PBS010603 Oxygen system CIsubcomponent
j ¼ apart part
j;i CIj;i ð14Þ
PBS010604 Pneumatic system i¼1
PBS010605 Water
Electrical system PBS010701 Power supply X
numJ;k

PBS0107 system CIcomponent

k ¼ asubcomponent
k;j CIsubcomponent
k;j ð15Þ
PBS010702 Lighting system m¼1

PBS010703 EWIS
PBS010704 Mechanical and X
numK

electrical CIairplane ¼ acomponent

k CIcomponent
k ð16Þ
k¼1
Exploration and implementation of commonality valuation method 1833

weight factor of component k for the entire aircraft; numI,j

Table 4 ATA decomposition.
is the count of parts in subcomponent j; numJ,k is the count
Level-1 Level-2 Level-3 of subcomponents in component k; numK is the count of com-
Airplane Wings ATA5710 Main frame ponents in the entire aircraft.
ATA57 ATA5740 Attach fittings
ATA5720 Auxiliary 3. Model for calculating aircraft program value
ATA5750 Flight surfaces
ATA5730 Plate/skin
Stabilizers ATA5510 Horizontal This section introduces a model for calculating the aircraft
ATA55 ATA5540 Rudder program value, the basis of subsequent commonality effect
ATA5520 Elevator evaluation. The overall framework and modules of this model
ATA5550 Attach fittings are introduced in detail.
ATA5530 Vertical
Fuselage ATA5310 Main frame 3.1. Framework of model
ATA5340 Attach fittings
ATA52 Doors
ATA5320 Auxiliary Aircraft design is regarded as a general engineering issue, with
ATA5350 Cones & fllets/fairings different objective functions for each stakeholder in the pro-
ATA56 Windows gram. For example, aerodynamic experts regard the maximum
ATA5330 Plate/skin lift-drag ratio as the objective function; load engineers believe
Landing gear ATA3210 Main & doors that the maximum payload capacity (or passenger seats) is of
ATA32 ATA3240 Wheels/brakes great importance; and for commercial aircraft production
ATA3270 Supplementary gear companies which participate in the global market competition,
ATA3220 Nose & doors the objective function is the maximum benefits of aircraft pro-
ATA3250 Steering
grams, since profitability is their primary purpose.
ATA3230 Extension/retraction
ATA3260 Position/warning
We study the benefits of commonality for the aircraft fam-
Equip/furnishings ATA2510 Flight compartment ily design from the perspective of aircraft manufacturers, and
ATA25 ATA2530 Buffet/gallery thus select the aircraft program value as the objective function
ATA2560 Emergency to model the entire aircraft design issue. The program value is
ATA2520 Passenger compartment defined as the maximum production profit that a program
ATA2540 Lavatory brings to aircraft manufacturers. The structural overview of
ATA2570 Accessory compartment the model is shown in Fig. 1.
ATA2550 Cargo compartment
Nacelles/pylons ATA5410 Main frame 3.2. Module introduction
ATA54 ATA5440 Attach fittings
ATA5420 Auxiliary
ATA5450 Cones & fillets/fairings The calculation model for the aircraft program value is created
ATA5430 Plate/skin under the framework of the Aircraft Life Cycle Cost (ALCC).
System ATA21 Air conditioning According to ALCC, no matter how many airplanes are ulti-
ATA24 Electrical power
ATA28 Fuel
ATA31 Instruments
ATA35 Oxygen
ATA38 Water/waste
ATA22 Auto pilot
ATA26 Fire protection
ATA29 Hydraulic power
ATA33 Lights
ATA36 Pneumatic
ATA45 CMS
ATA23 Communications
ATA27 Flight control
ATA30 Ice/rain protection
ATA34 Navigation
ATA37 Vaccum
ATA49 Airborne aux. power

subcomponent
where CIpart subcomponent
j;i , CIj , CIk;j , CIcomponent
k , and
CIairplane are the commonality indexes of part i in subcompo-
nent j, subcomponent j, subcomponent j in component k, com-
ponent k, and the entire aircraft respectively. apart
j;i is the weight
factor of part i in subcomponent j; asubcomponent
k;j is the weight Fig. 1 Structural overview of the calculation model of aircraft
factor of subcomponent j in component k; ak component
is the program value.
1834 Y. ZHANG et al.

mately produced, research, development, test and evaluation
costs will remain basically unchanged and non-repetitive.
Therefore, R&D costs are also called non-recurring cost. How-
ever, unlike R&D costs, manufacturing costs are recurring,
meaning that the costs will be incurred repeatedly for each
plane. The more airplanes produced, the lower manufacturing
costs per unit.
The calculation model designed is divided into four mod-
ules: R&D costs, manufacturing costs, sale price and sale
quantity, which are introduced as follows.
3.2.1. R&D costs
The development of a new commercial aircraft typically lasts
for about 5 years. R&D costs can be divided into five cate-
gories: engineering; manufacturing engineering (materials and
equipment); tool design; tool fabrication; and support (quality
inspection and testing). Note that R&D costs will be spent
only once during the aircraft program, so they are non-
recurring.
Based on the data from Ref. 25, the R&D costs per pound
of each component is shown in Table 5. Since the information
obtained from the public literature is very limited, the data in
Table 5 are only used as reference in the preliminary calcula-
tion of the commonality valuation model. Note that research-
ers can use other component classification and cost data if
more authoritative information could be obtained.
The R&D costs of the whole aircraft are given as:
!
X 7 X5
CR&D ¼ mi CR&Dij ð17Þ
i¼1 j¼1
where CR&D stands for the R&D costs of the whole aircraft; mi
is the weight of component i; CR&Dij is the R&D costs per
pound of component i and process j.
Based on the typical value of s given in Ref. 26, 0.9 is taken
for manufacturing, 0.75 for assembly and 0.98 for material.
Fig. 2 shows the effects of the learning curves.
The manufacturing costs per pound of each component is
shown in Table 6. Note that ‘‘Final assembly” in the manufac-
turing cost breakdown does not appear in the R&D cost
model. It is not technically a component of aircraft, but is
assigned with a value of distinct cost per pound. Its corre-
sponding weight in calculation is the aircraft’s empty weight.
The manufacturing costs of the nth aircraft are given as
P
3
Cmn ¼ TFUj  nlnsj =ln2
j¼1
  ð19Þ
P
3 P
8
¼ mi  TFUij  nlnsj =ln2
j¼1 i¼1
where Cmn represents the manufacturing costs of the nth air-
craft; TFUj is the manufacturing costs of process j for the first
unit; sj is the learning curve factor of process j; is the weight of
component i; TFUij is the manufacturing cost of component i
and process j for the first unit.
3.2.3. Operating cost
The Total Operating Cost (TOC) of aircraft can be divided
into two categories: the Direct Operating Cost (DOC) and
the Indirect Operating Cost (IOC). The DOC27 is an important
index to determine the economy of aircraft operation, which
accounts for more than 50% of the TOC. The DOC can be
regarded as a technical criterion for comprehensive assessment
of the aircraft’s market environment, overall parameters,
maintenance requirements and flight performance. Therefore,
the research on aircraft operating cost mainly focuses on the
analysis of the DOC.

3.2.2. Manufacturing costs

Manufacturing costs are subject to a learning curve effect. As
workers become more skillful in the process of production, the
unit manufacturing costs can gradually decrease, eventually to
a negligible level when the unit costs remains roughly constant.
The learning curve effect is quantified as

MC ¼ TFU  Qlns=ln2 ð18Þ

where MC is the marginal unit cost; TFU is the theoretical first

unit cost; Q is the quantity built to date; s is the slope coeffi-
cient of the learning curve. The implication of this formula is
that when the number of the units doubles, the production
time (or cost) is reduced by s percent of its original value. Fig. 2 Typical learning curves for different factors.

Table 5 R&D costs per pound of each component.

Component Engineering ME Tool design Tool fab Support Total
Cost percentage 40.0 10.0 10.5 34.8 4.7 100.0
Wing ($) 7093 1773 1862 6171 833 17,731
Empennage ($) 20,862 5216 5476 18,150 2451 52,156
Fuselage ($) 12,837 3209 3370 11,169 1508 32,093
Landing gear ($) 999 250 262 869 117 2499
Installed engines ($) 3477 869 913 3025 408 8691
Systems ($) 13,723 3431 3602 11,939 1612 34,307
Payloads ($) 4305 1076 1130 3746 506 10,763
Exploration and implementation of commonality valuation method 1835

Price ¼ PriceCAROC - neutral  DðLCÞ

Table 6 Manufacturing cost per pound for each component. h a i ð23Þ
¼ Seats
k1 Seats þ k 2
Range
Range
Priceref  DðLCÞ
Component Labor Material Others Total ref ref

Wing ($) 609 204 88 901 where Price refers to airplane price with multiple variables;
Empennage ($) 1614 484 233 2331 4(LC) is the increment of lifecycle costs due to the CAROC,
Fuselage ($) 679 190 98 967 which will be explained in the next paragragh; Seats and Range
Landing gear ($) 107 98 16 221
are the seat count and design range (nm) of the aircraft;
Installed engines ($) 248 91 36 375
Seatsref, Rangeref, and Priceref are reference values that nor-
Systems ($) 315 91 46 452
Payloads ($) 405 100 59 564 malize the number of seats, range, and price, respectively; k1,
Final assembly ($) 58 4 3 65 k2 and a are model parameters selected to minimize the mean
squared error of estimated price.
The increment of lifecycle costs, 4(LC), is explained as fol-
lows: if the CAROC of the aircraft is higher (or lower) than
In the composition of the DOC, the cost of cash is the expected due to the implementation of a series of design con-
biggest cost item for airlines. Its full name is the Cash cepts or due to design deficiencies, the airline and other buyers
Airplane-Related Operating Cost (CAROC), and its unit is would believe that they could get an extra loss (or benefit).
$/ASM (dollar per available seat n mile). In order to take This loss (or benefit) can be quantified as the expected present
the operating cost into the consideration of the aircraft pricing value of additional expenses (or savings) from operating the
process, the CAROC is divided into the nominal CAROC and aircraft over its lifetime. When the buyer and seller negotiate
the actual CAROC. the price, the buyer would want to give the manufacturer less
The Ref. 25 analyzed the linear regression of the CAROC money, or the manufacturer hopes to share this part of benefit,
data of some narrow-body and wide-body aircrafts. The fitting i.e., 4(LC).
equations are as follows: As discussed in the Section 3.2.3, the changes in CAROC
are also divided into two types: the changes related to the fuel
0:0001seat þ 0:0671 narrow body aircraft cost and the changes related to the other costs, including main-
CAROCnominal ¼ tenance, crew and ground costs. Correspondingly, 4(LC) is
0:00005seat þ 0:0542 wide body aircraft
also divided into two parts: the part related to the fuel cost
ð20Þ
in CAROC and the part related to the non-fuel cost in
CAROC. The equations of 4(LC) are given as:
where CAROCnominal is the CAROC of an aircraft in the nor-
mal condition, the value of it is based on the seat count of the DðLCfuel Þ ¼ DCfuel  S  AU  TL  Y ð24Þ
aircraft.
In addition, the actual CAROC is the estimation of the cash DðLCother Þ ¼ DCother  S  AU  TL  Y ð25Þ
cost of an aircraft in actual operation based on certain assump-
tions. The wages paid by airlines to pilots and crews are differ- DðLCÞ ¼ DðLCfuel Þ þ DðLCother Þ
ð26Þ
ent, the equipment maintenance also varies with companies, so ¼ CAROC  S  AU  TL  Y
the fuel cost is the most easily quantifiable and stable cost item
where DðLCfuel Þ is the lifecycle cost increment related to the
(the fuel cost generally account for about 20% of CAROC).
fuel cost; DðLCother Þ is the lifecycle cost increment related to
Therefore, the actual CAROC can be derived by calculating
the other costs; DðCAROCÞ is the difference between the nom-
the fuel cost.
inal CAROC and the actual CAROC for the same aircraft; S is
The Ref. 25 calculated the fuel burn and fuel cost of some
the seat count of the target aircraft; AU is the annual average
aircrafts, and the fitting equation of the ratio parameter ‘‘fuel
usage count of the target airplane; TL is the average trip length
cost/CAROC” is as follows:
of the target aircraft; Y is the count of years for which the tar-
rfuel=CAROC ¼ 0:0002seat þ 0:1339 ð21Þ get aircraft will be used.
The 4(CAROC) is defined as:
After obtaining the fuel cost ratio of an aircraft, its actual
CAROC can be calculated using the equation: DðCAROCÞ ¼ CAROCnominal  CAROCactual ð27Þ
The 4(LC) is the discounted value of the 4(CAROC)
Wfuel Pfuel
CAROCactual ¼ ð22Þ within the service years. The specific calculation of Eq. (26)
rfuel=CAROC
is given as follows:
where CAROCactual is the actual CAROC of the aircraft; Wfuel XY
DðCAROCÞ  S  AU  TL  Y
DðLCÞ ¼ ð28Þ
is the fuel burn for the reference range mission; Pfuel is the fuel ð1 þ rÞi
i¼1
cost.
where i is the number of the year; r is the operator discount
3.2.4. Sale price rate.
The default values of some parameters used in the aircraft
The price of aircraft is modeled as a function of several vari-
price calculation are shown in Table 7.
ables. By adjusting the function parameters, the mean squared
error of estimated price is minimized. The following formula is
3.2.5. Program value calculation based on real option method
the price definition function, which shows that the price has a
nonlinear relationship with seats and a linear relationship with The shareholder value of the aircraft manufacturer is selected
range. as the ultimate objective function of the aircraft design prob-
1836
Table 7 Default values of parameters for aircraft price
calculation.
Parameter Narrow body aircraft Wide body aircraft
k1 0.735 0.508
k2 0.427 0.697
a 1.910 2.760
AU 2120 590
TL 500 3000
N 27 27
lem in this study. The aircraft value should be defined as the
maximum profit that the entire aircraft program brings to
the aircraft manufacturer, and the goal pursued by the com-
pany should be the maximization of the total profit of the air-
craft program. Therefore, the shareholder value of the aircraft
manufacturer can also be called the aircraft program value,
and it is defined as:
Value ¼ PriceN  CR&D  Cm ð29Þ
where value is the aircraft program value (the sum of the net
profits of all N aircrafts produced); Price is the selling price
for each aircraft; Cm is the manufacturing costs of all N
aircrafts.
The most commonly used method for calculating the pro-
gram value is the Net Present Value (NPV) method, but the
traditional NPV method does not consider the uncertainty of
the aircraft design program nor the flexibility of the aircraft
manufacturer. Uncertainty is also known as risks, including
technical and market risks. The former can be resolved within
the company, while the latter mainly reflects the fluctuation of
aircraft demand. Flexibility includes various investment deci-
sions of manufacturers.
Therefore, this study uses the real option theory as the cal-
culation and decision tool to evaluate the program. This the-
ory involves many mathematic models. Among the most
commonly used models, the binary tree model is selected to
calculate the aircraft program value, and the specific operation
is shown in Fig. 3.
The model in Fig. 3 is explained as follows. First, according
to market forecasts, the aircraft’s baseline demand quantity is
obtained and used as the starting point data. Then, in order to
take uncertainty into consideration, we use the binary tree
model to quantify the aircraft annual demand. The market
of commercial aircraft is affected by many unpredictable fluc-
Fig. 3 Binary tree model for calculating aircraft program value.
Y. ZHANG et al.
tuations at demand levels. These fluctuations, represented by
aircraft orders (which will become deliveries), are caused by
various factors such as fuel price, public willingness to travel,
airline profitability, gross domestic products, interest rates,
and global economic conditions. All these factors show more
or less random fluctuation behaviors. Ref. 12 points out that
two kinds of parameters need to be calculated to simulate
the dynamics of sale quantity: growth rate and volatility.
The average growth rate is obtained from the total delivery
of narrow-body and wide-body aircraft; the volatility is con-
sidered as the average of individual aircraft volatilities,
weighted by the number of deliveries of each airplane.
Assuming that the baseline market demand quantity is N.
After a period of time Dt (here is 1 year), the demand quantity
may rise to uN by probability p, or decrease to dN by proba-
bility 1  p. The parameters mentioned in this sentence are cal-
culated as
pffiffiffiffi
u ¼ er Dt
ð30Þ
d ¼ 1=u ð31Þ
erf Dt  d
p¼ ð32Þ
ud
where u is the increase rate of aircraft annual demand; d is the
decrease rate of aircraft annual demand; r is the volatility of
aircraft annual demand; Dt is the unit time step; rf is the
risk-free rate.
To simulate the flexibility of the decision-maker, the air-
craft manufacturer can choose to invest or abandon invest-
ment at the end of the program decision period Td (here
T = 2), or choose to invest or defer investment at each time
node (T = 0, 1) within Td.
The demand at Td will have multiple possible values (here
are u2N, udN, and d2N). The corresponding aircraft program
values (S0u2, S0ud, and S0d2) are calculated, and then the pro-
gram value at the previous moment is reversely calculated to
determine whether it is worthwhile to continue investing at
each time node. The program value at T = 0 is finally
calculated.
The formula for calculating the aircraft program value at
the time of Td is given as
(" PNi # )
Tt TX
R&D Td
PriceðiÞNi  j¼SumNi1 Cm ðjÞ
S ¼ max i  CR&D ;0
i¼TR&D ð1 þ rÞ
ð33Þ
where Tt is the total duration of the program (generally
30 years); TR&D is the duration of the R&D process (usually
6 years); Price(i) is aircraft price in year i; Ni is the number
of aircraft produced in year i , and Ni = NTd(1 + u)i; SumN-
i-1 is the sum of the aircraft production count within the previ-
PNi
ous i-1 years; j¼SumNi1 Cm ðjÞ is the sum of the aircraft
manufacturing costs in year i; r is the discount rate.
The formula for calculating the aircraft program value
reversely at the previous moment T  1 is:
" #
pST u þ ð1  pÞST d
ST1 ¼ max ;0 ð34Þ
ð1 þ rÞDt
Exploration and implementation of commonality valuation method 1837

After calculating the program value reversely to the starting
point T = 0 by following the above formula, we finally obtain
the value of the aircraft program based on the real option
method that considers uncertainty and flexibility.
4. Impact of commonality on aircraft program value
This section presents a quantitative analysis of the impact of
commonality of airplanes at various stages of an aircraft fam-
ily design, and considers the commonality effects on the mod-
ules of the calculation model for the aircraft program value
introduced previously to obtain a complete evaluation model
receive certain benefits from commonality, but the related
costs of new equipment and tools are uncertain. Therefore, it
cannot be concluded that the TFU will be reduced due to com-
monality. The viewpoint that the TFU will be affected by com-
monality is then proposed, and the specific value of the TFU
will be determined by actual analysis.
Next, subjective factors such as the operators’ skill and
technical improvement cannot be quantified easily, but corre-
sponding data can be obtained through statistics. The com-
monality makes the learning curve factor reduce from s of
the previous aircraft model to s0 , formula (19) is amended as
P
3
TFUj  nlnðsj Þ=ln2
0

of commonality impact. Cmn ¼

j¼1
 8  ð36Þ
P
3 P lnf½1ð1cij ÞCIi sj g=ln2
4.1. R&D costs ¼ mi  TFUij n
j¼1 i¼1

Since the tools corresponding to the common components
already exist (unless new tools are needed), the cost savings
mainly occur in tool design and tool fabrication. For the rest
processes, such as manufacturing and support, the cost and
time can also be partly saved because of the previous equip-
ment and personnel experience from the last aircraft model.
Based on the reasonable first-order estimation, the R&D
cost reduction factors are shown in Table 8. The reduction fac-
tors indicate the cost saving proportion when two aircraft
models have one completely identical component, in such case
the value of the commonality index is 1.
Therefore, considering commonality, formula (17) is
amended as
( )
X7 X
5
   component 
CR&D ¼ mi 1  aij CIi CR&Dij ð35Þ
i¼1 j1
where aij is the R&D cost reduction factor of component i in
process j; CIcomponent is the commonality index of component i.
i
4.2. Manufacturing costs
Although the manufacturing costs for each aircraft are
unavoidable, the commonality can have a great impact on
the learning curve. Because workers can operate more skillfully
with experience from the previous aircraft model, the learning
curve can decease more quickly (i.e., the slope coefficient
increases), which reduces material waste and saves manufac-
turing costs in turn.
The impact of commonality on manufacturing costs can be
summarized as two main parts. First, due to the existence of
some production equipment, tools utilizing the production
equipment, and tools of the previous aircraft model, TFU will
where cij is the learning curve reduction factor of component i
in process j; sj is the learning curve factor of process j, it is dif-
ferent for various processes, ranging from 0 to 1, but according
to the NASA Cost Estimate Handbook, the general values are
between 0.75 and 0.95. The estimation values for both sj and cij
are to be obtained by accumulation within a certain period of
time.
4.3. Sale price
For airlines, commonality implementation can reduce aircraft
maintenance costs. The same components can use the same
repair tools, spare parts are sufficient, and workers do not need
additional training. For example, the cockpits with high com-
monality can increase fleet flexibility, and also reduce the time
and cost of pilot training by reducing the number of flight sim-
ulators and ground instructors. Therefore, the operating costs
can be significantly saved due to commonality. In the aspects
of aircraft maintenance and personnel training, the time and
cost savings of commonality implementation will come from
many software aspects, such as logic, operational processes,
interfaces and so on. Although the commonality index is more
related to the hardware aspects of the component, it can also
be used to analyze the operation of the aircraft. Because the
software commonality is actually reflected by the hardware
commonality, for example the same tools and processes can
be used for maintenance as a result of the same linking method
between parts. But the results can be more accurate if the com-
monality index takes the software aspects into consideration
by obtaining enough information and data support.
The residual value of commercial aircraft is the most
important indicator of measuring the real-time value of air-
craft. After entering the secondary market, the residual value

Table 8 R&D cost reduction factors.

Component Engineering ME Tool design Tool fab Support
Wing 20% 50% 5% 5% 50%
Empennage 20% 50% 5% 5% 50%
Fuselage 20% 50% 5% 5% 50%
Landing gear 20% 50% 5% 5% 50%
Installed engines 20% 50% 5% 5% 50%
Systems 20% 50% 5% 5% 50%
Payloads 20% 50% 5% 5% 50%
1838
of the aircraft becomes the focus of buyers and sellers. Due to
the aircraft family development, the characteristics of systems,
products and flights among different aircraft models have high
commonality and high market share; thus, the residual value
of the aircraft can be increased and the aircraft can have a
wider usage space even after reaching the operating age. The
retired aircraft can be converted to a cargo aircraft and sold
to a shipping company, or it can be dismantled so that the
common components or parts can be used for other aircraft
models within the family.
All the above reasons can be used as selling points of air-
craft. During the process of negotiating prices between manu-
facturers and airlines, the benefits can be used as an advantage
to increase price. However, the pricing of aircraft is not only
affected by commonality, for example the use of new technolo-
gies can also become an advantage to increase the price. There-
fore, some scale factors are proposed here to quantify the
impact of cost factors on aircraft pricing and the price can
be predicted by adjusting the parameter values. Considering
all the factors discussed above, the pricing formula of aircraft
can be given as:
h i
Seats a
Price ¼ k1 ðSeats Þ þ k2 Range
Range
Priceref
ref ref ð37Þ
b1 DðLCfuel Þ  b2 DðLCother Þ þ b3 Crv
where b1 is the scale factor of the impact of DðLCfuel Þ on
aircraft pricing; b2 is the scale factor of the impact of
DðLCother Þ on aircraft pricing; b3 is the scale factor of the resid-
ual value change in aircraft pricing; Crv is the aircraft residual
value.
4.4. Time
4.4.1. R&D time
Due to the tools, equipment and personnel experience of the
previous aircraft model, resources can be utilized when a
new aircraft model is developed. Therefore, in addition to con-
siderable saving on costs, R&D time can also be saved signif-
icantly due to commonality.
Different processes in the R&D of aircraft have different
starting time and total durations, so estimating the commonal-
ity of time saving for the R&D of the entire aircraft program
needs to weigh many factors, such as determining if time sav-
ing will occur in the early, middle or late stage of each process,
and considering the interaction between the time saving of dif-
ferent processes. Therefore, the entire program time saving is
not definitive data.
Similar to R&D cost saving calculation, R&D time saving
considers the time reduction factors and commonality index,
based on the R&D benchmark time. The reduction factor is
the ratio of the new R&D time to the original R&D time when
the target aircraft uses exactly the same components as the
baseline aircraft. It is currently assumed that the values of
the R&D cost reduction factor in Table 7 are used in time
reduction calculation.
The calculation formula for R&D time saving of the target
aircraft is given as
TSR&Dj ¼ ½1  ð1  aj ÞCIj TR&Dj ð38Þ
where TSR&Dj is the R&D time saving for process j; aj is the
time reduction factor for process j; CIj is the commonality
Y. ZHANG et al.
index for process j; TR&Dj is the R&D benchmark time for pro-
cess j.
4.4.2. Manufacturing time
Aircraft manufacturing can generally be divided into two cat-
egories: component manufacturing and assembly (including
component assembly and final assembly). However, certain
parts of the aircraft such as engines, instruments, airborne
equipments, hydraulic system and accessories are manufac-
tured by specialized factories, and are therefore not included
in the scope of aircraft manufacturing. The final assembly
work includes the installation of all parts as a finished product,
the coupling of the entire system, and the laying of cables and
conduits.
Fig. 4 shows the traditional working hour quota composi-
tion of aircraft manufacturing. Component manufacturing
time and assembly time can be subdivided according to this
figure.
Working time is the most important and meaningful part
for the program. Commonality mainly affects the working
time by the improvement of workers’ skill, production man-
agement techniques, continuous supply of materials, and
timely information feedback. Therefore, when calculating
the commonality of the manufacturing time saving, we only
consider the working time. Calculation formulas are given
as
TScmi ¼ ½1  ð1  acm ÞCIcomponent
i Tcm whi ð39Þ
TScai ¼ ½1  ð1  aca ÞCIcomponent
i Tca whi ð40Þ
TSga ¼ ½1  ð1  aga ÞCIplane Tga wh ð41Þ
where TScmi is the manufacturing time saving of component i;
TScai is the assembly time saving of component i; TSga is the
final assembly time saving; acm is the manufacturing time
reduction factor; aca is the assembly time reduction factor;
aga is the final assembly time reduction factor; CIcomponent
i is
the commonality index of component i; CIplane is the common-
ality index of the entire aircraft; Tcm whi is the manufacturing
working time of component i; Tca whi is the assembly working
time of component i; Tga wh is the final assembly working time.
4.5. Commonality evaluation strategy
The above sections analyze and quantify the impact of com-
monality implementation on R&D cost and time, manufactur-
ing costs and time, sale price under the ALCC framework, and
obtain the time saving formula as well as the calculation for-
mula for the aircraft program value considering commonality
impacts. Table 9 summarizes the commonality parameters
involved in each module of the model.
In applications, the commonality implementations of all the
components of the target aircraft are counted, and the com-
monality indexes of all components and the entire aircraft
are calculated. Then the index data are input into the program
value and time saving formula, obtaining the results with the
commonality implementation. This study also uses the default
data to calculate the target airplane program value without the
commonality implementation. Finally, based on the compar-
ison between the aircraft program values in both cases (with
and without the implementation of commonality), the value
Exploration and implementation of commonality valuation method 1839

of the commonality implementation on aircraft family design

Table 9 Summary of parameters of commonality.
can be obtained.
The basic data required for this commonality evaluation Category Subdivision Symbol Meaning of symbol
strategy (such as aircraft weight, range and other design Value R&D costs aij R&D cost reduction
parameters) is relatively easy to obtain, so with more accurate factor
cost and other economic parameters, the results can be calcu- CIcomponent
i
Commonality index of
lated efficiently. Based on the commonality evaluation strat- component i
egy, it is possible to compare the effects of the commonality Manufacturing cij Learning curve
index of different components on the aircraft value and time costs reduction factor
Sale price b2 Scale factor of
saving, thereby providing suggestion and guidance for the
DðLCother Þ’s impact on
design of the target aircraft. aircraft pricing
DðLCother Þ Lifecycle cost increment
4.6. Development of computing application related to other cost
b3 Scale factor of residual
The calculations are achieved through an application devel- value change on aircraft
oped in Visual Studio 2017 according to the aircraft program pricing
Crv Aircraft residual value
value calculation model. The programming language is C#.
The main interface of the application consists of a title bar, Time R&D time aj Time reduction factor
a menu bar and four tabpages. The application mainly for process j
includes four modules: baseline aircraft data input module, CIj Commonality index for
commonality index analysis module, target aircraft data input process j
Manufacturing acm Component
module, calculation and result viewing module. The operation
time manufacturing time
of data input and calculation between the four modules should reduction factor
follow the sequence. The application has concise interfaces and aca Component assembly
is easy to operate. time reduction factor
aga Final assembly time
5. Examples reduction factor
CIcomponent
i
Commonality index of
component i
This section presents three numerical examples of aircraft
CIplane Commonality index of
design with relevant input data. The results are calculated entire aircraft
out by the computing application.

5.1. Example of A320 and A319
Airbus single-aisle aircraft includes four types: A318, A319,
A320 and A321, of which A318, A319 and A321 are designed
on the basis of A320. These types achieve different passenger
capacities by lengthening or shortening the airframe, and have
the same cockpit and operating procedures that can reduce
pilot training costs and maintenance costs and can increase
operational flexibility.
The A319 model is a shortened version of the A320 model.
The A319 removes one emergency exit on the wing and the
bulk cargo compartment at the rear of the fuselage. However,
the nose, the middle and rear sections of the fuselage, the wing,
and the empennage structure of the A319 are all identical to
those of the A320. In order to adapt to the reduction of the
seats, the A319 fuselage has a shorter frame distance compared
to the A320 fuselage. The pictures and geometry data of the
two aircraft models are shown in Fig. 5.

Fig. 4 Work hour quota composition of aircraft manufacturing.

1840 Y. ZHANG et al.

Fig. 7 shows the results of the commonality analysis of

A319 in the form of binary tree model. The top line lists the
time period from 0 to Tt; the binary tree shows the possible
values of aircraft quantity (in black) and program value (in
grey) in a given year; the last column shows the sum of aircraft
quantity in the entire program.
Table 13 summarizes the results of the price and program
value of A319. The unit of the results has been converted to
CNY automatically in the application. Note that due to the
saving of cost and the increase of price, the commonality
implementation in the A319 model can considerably increase
the program value (74.90%).

5.2. Example of B737-700 and B737-800

The new generation of Boeing 737 includes four models: B737-

600/700/800/900. These four models have 98% commonality
Fig. 5 Pictures and geometry data of A320/A319.
of mechanical parts, 95%-100% commonality of ground sup-
port equipment, and 100% engine commonality, resulting in
satisfactory operating costs for airlines. The new generation
Table 10 Features of A320/A319. 737 and the conventional Boeing 737 have almost the same
Parameter A320 A319 cockpit so the crew’s driving qualifications are identical. Com-
Range (n mile) 3100 3700 monality also exists in spare parts, ground support equipment,
Seat 150 124 and ground operations between the new and conventional
Sale price ($) 41,000,000 To be calculated Boeing 737 models, saving enormous costs for airlines.
Empty weight (kg) 42,400 40,600 The B737-800, a lengthened version of the B737-700, is
Wing (kg) 9752 (23%) 9752 (24.02%) designed with advanced technology, increasing fuel load and
Empennage (kg) 1272 (3%) 1272 (3.13%) improving the operation efficiency. The cockpit dashboard fea-
Fuselage (kg) 9752 (23%) 7952 (19.59%) tures a new large-scale display screen. The example configura-
Landing gear (kg) 3392 (8%) 3392 (8.35%) tions are shown in Fig. 8.
Propulsion (kg) 7632 (18%) 7632 (18.80%)
This example takes B737-700 as the baseline aircraft and
Systems (kg) 5088 (12%) 5088 (12.53%)
Payloads (kg) 5512 (13%) 5512 (13.58%)
B737-800 as the target aircraft. The weight breakdown and
some other features of the two aircraft models are listed in
Table 14.
The data of each component are unavailable, so we assume
This example takes A320 as the baseline aircraft and A319
the values of the commonality index on the basis of the descrip-
as the target aircraft. The weight breakdown and some other
tive information above. The values are shown in Table 15.
features of the two aircraft models are listed in Table 10.
Default data are utilized for the R&D costs per pound,
The following data come from A320-200 and A319-100. The
manufacturing costs per pound and R&D cost reduction fac-
weight breakdown uses the weight fraction in Ref. 12 as an
tors. The summary of the parameters used in the calculation
assumption.
is presented in Table 16.
The data of each component are unavailable, so we assume
The results of break-even analysis of B737-800 are shown in
the values of the commonality index on the basis of the
Fig. 9. The aircraft break-even point will be moved forward
descriptive information in Table 10. The values are shown in
from 53 to 17 when the target aircraft adopts the commonality
Table 11.
strategy.
Default data are employed for the R&D costs per pound,
Table 17 summarizes the price and program value of B737-
manufacturing costs per pound, and R&D cost reduction fac-
800. The commonality implementation in the B737-800 model
tors. The parameters used in the calculation are summarized in
can increase the program value by 35.46% and the sale price
Table 12. As can be seen in Table 12, we examine the A319
by 8.11%. Note that the pricing Eq. (32) is only an estimation
model both with the impact of commonality, and without
and cannot take all the factors into consideration to model the
commonality implementation by assuming the values of all
real negotiation process.
component commonality indexes are 0. That is, to evaluate
commonality more concretely, we calculate and compare the
5.3. Example of BWB 250-C and BWB 450
program values of the target aircraft model in two conditions.
At first, the cost and price data are used to calculate the
break-even of the aircraft program without considering the This example examines Blended-Wing-Body (BWB) aircraft.
uncertainty and flexibility of the program. The calculation The BWB-450 model is a 450-passenger class aircraft and
results are shown in Fig. 6. It can be seen that when the target BWB-250C is a 250-passenger class aircraft. The latter is
aircraft adopts the commonality strategy, the cost can be assumed to share a number of components with the former.
reduced and the program revenue can be increased, as a result, Unlike conventional airplanes, the BWB airplane stretches in
the aircraft break-even point will be moved forward from 452 the spanwise direction and its passenger capacity can be
to 199. increased simply by adding a central bay. Consequently, the
Exploration and implementation of commonality valuation method 1841

Table 11 Commonality index of components of A319.

Component Wing Empennage Fuselage Landing gear Installed engine System Payload
Commonality index 1 1 0.6 0.2 0.8 0.6 0.2

Table 12 Key inputs of A320/A319.

Input A320 A319
With commonality No commonality
Commonality index Table 11 0
R&D costs Cost per pound Table 5 Table 5 Table 5
Cost reduction factor Table 8 Table 8
Manufacturing costs Cost per pound Table 6 Table 6 Table 6
slabor 0.85 0.87
smaterial 0.98 0.98
sothers 0.95 0.96
Price Operating costs b1 1 1
b2 0.6 1
Fuel cost/CAROC (%) 20 20
Residual value Residual value/price 0.1 0.1
b3 0.4 0.2
Binary tree model Volatility r 0.427 0.427
Risk-free rate rf 0.0331 0.0331
Discount rate r 0.15 0.15
Price inflation (%) 1.2 1.2
Initial demand quantity 15 15
Program periods Tt 30 30
Timestep per period 4t 1 1

BWB concept is found to be ideal for family development with
a high potential for commonality realization.
The fuselage bays are divided into cockpit, fuselage bay 1,
fuselage bay 2, fuselage bay 3 and fuselage bay 4; the wings
are divided into inner wing, outer wing and winglets. Assuming
that BWB-250C has the same fuselage bay 2, fuselage bay 3,
inner wing, outer wing and winglets as BWB-450 does, while
the other components are completely different between the
two aircraft models. The example configurations are shown
in Fig. 10.
This example takes BWB-450 as the baseline aircraft and
BWB-250C as the target aircraft. The weight breakdown and
some other features of the two aircraft models are listed in
Table 18.25
The commonality index of the wing is 1, because the two air-
crafts use the same wings. To obtain the commonality index of
the fuselage, we analyze the commonality implementation in
the fuselage. Ref. 12 points out that in BWB-450, the cockpit
is counted as part of fuselage bay 1 and fuselage bay 2, while it
is regarded as an individual part in BWB-250C. To simplify
the calculation, we assume that the cockpit in BWB-250C is
completely different from that of BWB-450. Further, given the
unknown cost information of each component, we assume that
the unit cost of each fuselage bay is identical, so the cost percent-
age of each component becomes the weight percentage, and the
final commonality index of the fuselage is 0.85. Table 19 shows
the commonality index of each component in BWB-250C.
Similar to the example of B737-700 and B737-800, the
example of BWB-250C uses the default data mentioned in
Table 19 for the R&D costs per pound, manufacturing costs
per pound, and R&D cost reduction factors. The summary
of the parameters used in the calculation is listed in Table 20.
The results of break-even analysis of BWB-250C are shown
in Fig. 11. The aircraft break-even point will be moved for-
ward from 343 to 214 when the target aircraft adopts the com-
monality strategy.
The price and program value of BWB-250C are shown in
Table 21. The commonality implementation in the BWB-
250C model increases the sale price and program value by
6.75% and 36.57%, respectively.
The three examples given above show that the commonality
evaluation strategy proposed here proves to be effective for both
the conventional airplane and BWB airplane. The economic ben-
efits of commonality, such as the increase of the program value,
can be calculated and used as a trade-off factor for future research.
5.4. Sensitivity analysis
This section presents the effects of some varying parameters of
the aircraft program value model based on the investigation of
the BWB aircraft. First, model sensitivity to the component
commonality index is addressed by comparing the calculations
with different fuselage commonality indexes. Next, the effects
of the parameters in the pricing model are discussed, including
CAROC, b2 and b3 . Finally, the effects of decision duration
and volatility are demonstrated.
5.4.1. Commonality index
Since the data of components are not ample enough, we could
only confirm the commonality index of the wings of BWB-450
1842 Y. ZHANG et al.

Fig. 8 Pictures of B737-700 and B737-800.

Table 14 Features of B737-700 and B737-800.

Parameter B737-700 B737-800
Range (n mile) 3365 3060
Seats 130 160
Sale price ($) 60,000,000 To be calculated
Empty weight (kg) 38147 41413
Wing (kg) 8774 (23%) 8774 (21.19%)
Empennage (kg) 1144 (3%) 1144 (2.76%)
Fuselage (kg) 8774 (23%) 12040 (29.07%)
Landing gear (kg) 3052 (8%) 3052 (7.37%)
Propulsion (kg) 6866 (18%) 6866 (16.58%)
Systems (kg) 4578 (12%) 4578 (11.05%)
Payloads (kg) 4959 (13%) 4959 (11.97%)

positive correlation between the value and commonality index,

Fig. 6 Break-even analysis of A319. due to the cost saving from commonality implementation.

5.4.2. 4(CAROc)
4(CAROC) is heavily influenced by the fuel cost in the Eq.
(24). The existing data and empirical function show that the
value of 4(CAROC) is usually close to or lower than 0.1; thus,
we calculate the program value and sale price of BWB250-C
with different values of 4(CAROC), ranging from 0.02 to
0.11. As shown in Fig. 13, the value remarkably decreases with
the increase of 4(CAROC), due to the fact that higher
4(CAROC) means the airliner has to spend more operation
cost than the average cost of the similar aircraft in the market.
Therefore, the manufacturing company would be at an inferior
position while the pricing and price of the aircraft decrease
obviously.
Fig. 7 Binary tree of aircraft quantity and program value.
5.4.3. b2 and b3
b2 and b3 play important roles in determining the aircraft
Table 13 Key outputs of A319. price, and their values will be negotiated by buyers and manu-
facturers. As shown in Fig. 9, there is a linear correlativity
Subitem With No Increase
commonality commonality ratio between the program value and b2 or b3, since they are the pri-
(%) mary term coefficients in the aircraft pricing formula. The pro-
gram value increases with the decline of b2 or the rise of b3. A
Sale price (Million CNY) 243.79 213.54 +14.17
lower value of b2 means that the manufacturer has more
Program value 6.858 3.921 +74.90
(Billion CNY) advantages at pricing, because the aircraft will bring less
non-fuel operation costs by using the commonality strategy
or other advanced technology. A higher value of b3 means that
and BWB-250C as 1, assuming that the index of the fuselage is the aircraft has more residual value due to the family design
0.85 based on the weight breakdown. Fig. 8 shows the aircraft and that this selling point is beneficial for raising the aircraft
program value with different commonality indexes of the fuse- price. Furthermore, the impact of b2 is greater than that of
lage, ranging from 0 to 1. As can be seen in Fig. 12, there is a b3, as shown in Fig. 14.
Exploration and implementation of commonality valuation method 1843

Table 15 Commonality index of components of B737-800.

Component Wing Empennage Fuselage Landing gear Installed engine System Payload
Commonality index 1 0.8 0.7 1 1 0.8 0.8

Table 16 Key inputs of B737-700/B737-800.

Input B737-700 B737-800
With commonality No commonality
Commonality index Table 11 0
R&D costs Cost per pound Table 5 Table 5 Table 5
Cost reduction factor Table 8 Table 8
Manufacturing costs cost per pound Table 6 Table 6 Table 6
slabor 0.85 0.87
smaterial 0.98 0.98
sothers 0.95 0.96
Price Operating costs b1 1 1
b2 0.6 1
Fuel cost/CAROC (%) 20 20
Residual value Residual value/price 0.1 0.1
b3 0.4 0.2
Binary tree model Volatility r 0.427 0.427
Risk-free rate rf 0.0331 0.0331
Discount rate r 0.15 0.15
Price inflation (%) 1.2 1.2
Initial demand quantity 15 15
Program periods Tt 30 30
Timestep per period 4t 1 1

5.4.4. Parameters in binary tree model

Among the parameters in the binary tree model, three are
examined in this study: Td, volatility and the risk-free rate.
Fig. 15 shows the relationship between the program value
and decision period. The value decreases with the increase of
the decision period, which is consistent with the theory in the
real option method. Since the total program time (30 years)
is constant, the longer the manufacturer waits at the beginning
of the program, the less time left for producing aircraft. The
benefit of the entire program will also be reduced. Note that

Table 17 Key outputs of B737-800.

Subitem With No Increase
commonality commonality ratio (%)
Sale price (Million 575.42 532.26 +8.11
CNY)
Program value 20.362 15.032 +35.46
(Billion CNY)

Fig. 9 Break-even analysis of B737-800. Fig. 10 BWB example configurations.

1844 Y. ZHANG et al.

to the program. The risk-free rate is functioned as the growth

Table 18 Features of BWB-450/BWB-250C.25
rate in the binary tree model, and its increase can enlarge the
Parameter BWB-450 BWB-250C demand quantity rising probability. The change of the risk-
Range (n mile) 8550 8550 free rate is not drastic in real life; thus, it is important to deter-
Seat 475 272 mine the optimum value of rf.
Sale price ($) 195,000,000 To be calculated
Empty weight (kg) 210438 141624 6. Conclusions
Wing (kg) 26368 (12.54%) 26385 (18.63%)
Empennage (kg) 0 (0%) 0 (0%)
Fuselage (kg) 61764 (29.35%) 35165 (24.83%) (1) The existing product commonality indexes are summa-
Cockpit (kg) 5286 rized in this paper. Their limitations and complexity in
Fuselage bay 1 (kg) 31895 the application to commercial aircraft family design
Fuselage bay 2 (kg) 16911 17192 are also analyzed. A component commonality index,
Fuselage bay 3 (kg) 12684 12687 based on the component decomposition structure, is
Landing gear (kg) 19297 (9.17%) 14573 (10.29%) then proposed, which can be used to evaluate the impact
Propulsion (kg) 24137 (11.47%) 20720 (14.63%) of commonality on the program value and time saving.
Systems (kg) 31103 (14.78%) 16513 (11.66%)
(2) A calculation model for the aircraft program value is
Payloads (kg) 47748 (22.69%) 28268 (19.96%)
proposed. The impact of commonality on R&D costs
and time, manufacturing costs and time, and sale price
is analyzed and quantified. A commonality evaluation
strategy is also obtained, which comprehensively consid-
there is data fluctuation around Td = 1 because the annual air- ers the program value and time saving.
craft quantity is converted from decimal to integer when calcu- (3) The operating costs are divided into two parts: the fuel
lated in the program, thus causing a model error. cost and other cost (non-fuel cost). This paper focuses
Table 22 shows the effects of volatility and the risk-free on the impact of commonality on the non-fuel cost,
rate. Both the two parameters are in direct proportion to the which is more conducive to the calculation of the air-
program value, and the impact of the risk-free rate is more craft value. The calculation model for the aircraft value
obvious. A higher volatility means more risks of the program, takes the aircraft residual value into consideration to
which increases the choice space of management flexibility. make the pricing of aircraft more reasonable and
Thus, the option of larger choice space can bring more value comprehensive.

Table 19 Commonality index of components of BWB-250C.

Component Wing Empennage Fuselage Landing gear Installed engine System Payload
Commonality index 1 0 0.85 0 0 0 0

Table 20 Summary of parameters used in BWB-450/BWB-250C.

Input BWB-450 BWB-250C
With commonality No commonality
Commonality index Table 15 0
R&D costs Cost per pound Table 5 Table 5 Table 5
Cost reduction factor Table 8 Table 8
Manufacturing costs cost per pound Table 6 Table 6 Table 6
slabor 0.85 0.87
smaterial 0.98 0.98
sothers 0.95 0.96
Price Operating costs Fuel burn (for 3000n mile) (t) 35 35
Fuel cost/CAROC (%) 20 20
b1 1 1
b2 0.8 1
Residual value Residual value/price 0.1 0.1
b3 0.4 0.2
Binary tree model Volatility r 0.456 0.456
Risk-free rate rf 0.0331 0.0331
Discount rate r 0.15 0.15
Price inflation (%) 1.2 1.2
Initial demand quantity 16.7 16.7
Program periods Tt 30 30
Timestep per period 4t 1 1
Exploration and implementation of commonality valuation method 1845

Fig. 13 BWB250-C program value and sale price: effect of

4(CAROC).

Fig. 11 Break-even analysis of BWB-250C.

Fig. 14 BWB250-C program value: effect of b2 and b3.

Table 21 Key outputs of BWB-250C.

Subitem With No Increase
commonality commonality ratio (%)
Sale price (Million 862.65 808.07 +6.75
CNY)
Program value 26.055 19.078 +36.57
(Billion CNY)

Fig. 15 BWB250-C program value: effect of Td (decision

period).

(4) The real option method and the binary tree model are
used to forecast aircraft sale quantity, which ensures
that the aircraft program value calculation considers
uncertainty and flexibility. Three examples are used to
verify the rationality and applicability of both the model
Fig. 12 BWB250-C program value: effect of commonality of for calculating the aircraft program value and the com-
fuselage. monality evaluation strategy utilized in aircraft design
1846
Table 22 BWB250-C program value: effects of r and rf.
Item Volatility r
Parameter value 0.4 0.6
Program value (Billion CNY) 25.434 27.394
process. Sensitivity analysis of the relevant parameters is
also conducted. The value of parameters will influence
the result drastically, so the determination of parameters
should be as precise as possible.
(5) The accuracy of the model can be improved if more cost
data (such as the R&D and the manufacturing costs of
the aircraft) and market data (such as price and sales
quantity of the aircraft) could be obtained. Extending
the commonality index to assess the effect of the com-
mon software can increase the effectiveness of the index.
(6) The quantitative method of the aircraft performance
could be analyzed and determined for the future com-
mercial aircraft family design. The problem of the per-
formance and economic benefits of the aircraft family
can be studied to make the commonality valuation
model more comprehensive.
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