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Economics of the Agricultural Aviation Industry in the United States: Determination of Optimum Profit Under Varying Aircraft and Risk
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In this thesis, we develop a stochastic simulation model with risk that simulates pricing and costs for the purpose of deriving profit per acre for a U.S. aerial applicator. Given the high startup and maintenance cost associated with the competitive aerial application industry, we look at price and cost associated with targeted profit margins and the probability of meeting those profit margins. We evaluate the empirical distribution of prices and costs for spray jobs and determine the optimum profit per acre for three different types of commonly used aircraft which are identified by hopper size; small, medium and large. This study is conducted without full cost data and therefore the conclusions drawn offer a picture into what is possible with full data. With the information available, we rank the most profitable spray application by aircraft, based on predetermined risk aversion coefficients. Across all profit margins, the small hopper (SH) aircraft is preferred by the risk averse operators while the large hopper (LH) aircraft is preferred by the risk loving operators and the medium hopper (MH) aircraft preference is in between the SH and LH.
Cain, Stephen Hartman (2019). Economics of the Agricultural Aviation Industry in the United States: Determination of Optimum Profit Under Varying Aircraft and Risk. Master's thesis, Texas A&M University. Available electronically from