Estimate the number of planes that are in the air in an hour?

Hello!

Your breakdown indeed is good, however, I think you are leaving out another branch of the tree. 

• Basically, you 1st break down into commercial and military, and then discard military.
• Then, in the commercial bucket, you would need to make the difference between passenger and cargo. There, you chose passenger
• Finally, the split I believe you are missing is that the prompt is "Estimate the number of planes that are in the air in an hour, in the US". Hence, you need to consider: 
  • Planes taking off 
  • Planes going over the US "aerial space", whose destination/origin is not the US. THis is the part you are missing and you would need to include

Hope it helps!

Cheers,

Clara

From my perspective, there are a number of reasons why your approach would end up not being 100% accurate given how many uncertain assumptions are included. I think the main logical fallacy here is that it is not the number of airports that drive how many planes are in the air at a given point in time but rather the demand for traveling. Some issues that I can think of:

• The approach is driven by supply of airports rather than demand for flights
• You are not considering differences in peak vs. off-peak traffic (at large airports there is a heavy concentration to certain "banks")
• Most US states would not have a major airport with 2 runways, some have multiple 
• The gaps between take-offs do not really make sense for a large airport unless averaged out over 24 hours. In real life, the gap would be much smaller.
• Large airports typically would use one runway for take-offs the other for landings to optimize utilization

If we are to take a demand-driven approach you could take an approach that looks roughly as follows:

• Number of passengers flying at a given point in time/average airplane size/load factor = number of airplanes in the Air
• Number of passengers at a given point in time
  • Assumption: average American flies x times per year  (consider mix between business travelers and leisure)
  • US Population: 330M
  • Assumption: all flights are equally distributed over the year and time of day 
• Average airplane size:
  • Assumption: ~150 passengers to account for mix between short-haul and long-haul
  • Accounts for the fact that the same passenger volume can be served by larger or smaller airplanes. The mix will impact planes in the air.
• Load factor:
  • Depends on the time of year/day but assume 70 or 80% 

To make the approach more sophisticated you may want to consider international passengers flying to the US on long-haul flights. This is a bit more complicated and is likely a relatively small portion of overall flights. 

Hope that helps!

Hi Piyush, you are getting better at this, good job :)

just out of curiosity: what company are you preparing for? I'm asking because at MBBs estimations are not that frequent (at McKinsey they can sometimes come in the second round, but also rarely) and it's better to focus your time and efforts on practicing the standard cases (structuring, analyzing exhibits and doing case math).

Best,
Daniel

Hi,

It will depend on whether its a peak / off-peak hour. So I would clarify first what is exactly the hour we are talking of. Average here will not be helpful

Best

Hi, I think it is a good approach. Always try to stay in 20 minutes and - if needed - accelerate some estimations by asking to the interviewer

Best,
Antonello 

Hi,

Your approach is indeed a good one.

If you want to master your market sizing skills I suggest that you sholud focus on segmentations patterns. You can use the following segmentation for market sizes:

B2C:
-Demographics (Age, education, income, family size, race, gender, occupation, nationality)
-Behavioral (Purchasing behavior, customer journey stage, occasion & timing,
customer loyalty & interest, risk tolerance, user status) 
-Psychographic (Lifestyle, personality traits, values, opinions, interests of consumers) 
-Geographic (Geographical boundaries)

B2B:
-Company characteristics (Industry, company size, number of employees)
-Geography (Geographical boundaries)
-Purchasing Approach (Occasion & timing, customer capabilities, nature of existing relationship) 
-Personal Characteristics (Loyalty, risk attitude, user status)

B2G:
-Demographics  (Type of agency, size of budget, the amount of autonomy) 
-Geographic (Geographical boundaries) 
-Government Tier (Federal , State, Local, Quasi-governmental, International)
-Bid type (Closed, Open)

But sometimes you don’t need to segmentation. Here is an example of case that could be solved with high level top down approach - estimate the size of credit card market in the US:
https://www.preplounge.com/en/consulting-forum/how-should-i-approach-the-following-question-estimate-the-market-size-of-credit-cards-in-the-us-6695