The Cost Of Airline Operations
SP's Airbuz|October - November 2019
Time and again, airline failures can be traced to one key item which is the ‘Cost of Operations’ that spiraled out of control
Satyendra Pandey
The Cost Of Airline Operations

HERB KELLEHER, THE LEGENDARY CEO of Southwest Airlines, once joked stating, “If the Wright Brothers were alive today, Wilbur would have to fire Orville to reduce costs.” This statement is indicative of just how challenging and frustrating it is to consistently attack the cost base of airline operations. Yet it is an action that cannot be overlooked. Time and again, airline failures can be traced to one key item which is the ‘Cost of Operations’ that spiraled out of control.

The cost of airline operations is particularly challenging because of the nature of fixed and variable costs. The fixed costs are fairly high whether it is aircraft, maintenance, renting airport space, and IT systems. The way to manage this is to amortize this over a large base, but not all airlines have this as a part of their strategic plan. As for variable cost, the nature of the costs is such that the airline always carries risk. Flying from one-point to another, crewing costs are constant, there are minimum fuel requirements, landing and parking costs are based on the Maximum Take-Off Weights (MTOWs) and costs of disruption are borne by the airline. Thus for airlines, there is a rush to attack each cost item no matter how minuscule it may be. Consider the following:

-American Airlines saved over $40,000 by removing just one olive from its meal tray – impacting both food costs and weight reduction.

-United Airlines saved hundreds of thousands of dollars by removing towels on short flights.

-Northwest Airlines started to slice its limes into 16 pieces instead of 10, thus reducing the number of limes carried on a flight and saving over $5,00,000 per year.

-British Airways started printing the in-flight magazine on thinner paper and reduced the weight by 70 grams per piece. Savings were $3,00,000 per year.

Esta historia es de la edición October - November 2019 de SP's Airbuz.

Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.

Esta historia es de la edición October - November 2019 de SP's Airbuz.

Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.

MÁS HISTORIAS DE SP'S AIRBUZVer todo
Travel Transitions In 2021
SP's Airbuz

Travel Transitions In 2021

From contactless checkin to biometric gateways, cabin cleaning, increased collaboration, domestic travel, common travel digital passport, travelling in 2021 and beyond comes decked up with innovations

time-read
5 minutos  |
February - March 2021
Supersonic Airliners On The Horizon
SP's Airbuz

Supersonic Airliners On The Horizon

Although the aviation industry has been severely hit by the coronavirus pandemic, the nascent field of high-speed civil aviation is one area that is recording noteworthy progress

time-read
6 minutos  |
February - March 2021
TATA GROUP RIDING THE AMBITIOUS AVIATION ARC
SP's Airbuz

TATA GROUP RIDING THE AMBITIOUS AVIATION ARC

Having raised its stake in AirAsia India, alongside operating Vistara, Tata Group is a strong bidder for Air India too

time-read
4 minutos  |
February - March 2021
PRATT & WHITNEY PUREPOWER ENGINES
SP's Airbuz

PRATT & WHITNEY PUREPOWER ENGINES

The Pratt & Whitney PurePower Geared Turbofan engine introduced dramatic improvements in propulsive efficiency and noise reduction

time-read
5 minutos  |
February - March 2021
SIX BOEING 777 FREIGHTERS FOR CHINA AIRLINES
SP's Airbuz

SIX BOEING 777 FREIGHTERS FOR CHINA AIRLINES

China Airlines has becomes the 20th operator of the twin-aisle freighter. The company’s Chairman Hsieh Su-Chien stated:

time-read
1 min  |
February - March 2021
TATA'S STAKE CLIMB UP THE LADDER IN INDIAN AVIATION INDUSTRY
SP's Airbuz

TATA'S STAKE CLIMB UP THE LADDER IN INDIAN AVIATION INDUSTRY

Tata group increased its holdings in AirAsia India to 84 per cent

time-read
3 minutos  |
February - March 2021
INDIAN AIRLINE INDUSTRY ON THE ROAD TO RECOVERY
SP's Airbuz

INDIAN AIRLINE INDUSTRY ON THE ROAD TO RECOVERY

Around two months after the imposition of total lockdown for three weeks commencing March 23, 2020, domestic flights albeit with much reduced frequency, were permitted to operate

time-read
3 minutos  |
February - March 2021
EMBRAER E190 OPERATING WITH MYANMAR AIRWAYS
SP's Airbuz

EMBRAER E190 OPERATING WITH MYANMAR AIRWAYS

On December 21 last year, Myanmar Airways International’s (MAI) first Embraer E190 commenced operations from Yangon.

time-read
1 min  |
February - March 2021
EMERGING CONFIGURATIONS FOR SUSTAINABLE AVIATION
SP's Airbuz

EMERGING CONFIGURATIONS FOR SUSTAINABLE AVIATION

Aviation contributes two per cent of humanmade Co 2 emissions and has challenged itself to reduce net emissions even while demand for air travel and transport has grown significantly

time-read
8 minutos  |
February - March 2021
BLURRING DISTINCTION BETWEEN NARROW-BODY AND WIDE-BODY AIRLINERS
SP's Airbuz

BLURRING DISTINCTION BETWEEN NARROW-BODY AND WIDE-BODY AIRLINERS

The major benefit which will emerge is that terribly busy hubs will de-congest with the number of transiting passengers reducing drastically as the layovers at the hubs will be done away with

time-read
8 minutos  |
February - March 2021