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Airline cost drivers: cost implications of fleet, routes, and personnel policies

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  • Seristö, Hannu
  • Vepsäläinen, Ari P.J.

Abstract

The aim of the study is to define the factors that offer cost reduction possibilities in airline operations and to assess the impact of different cost reduction measures. It is concluded that fleet structure, route network and company policies on remuneration and work rules are the key factors affecting indirect operating costs, which, in turn, determine the total cost differences between airlines. Particularly for small and medium-sized carriers, concentration with sufficient volume in some traffic type—short-haul, medium-haul or long-haul—would appear to produce marked cost savings. Most airlines would benefit from a more uniform fleet structure and more flexible work rules.

Suggested Citation

  • Seristö, Hannu & Vepsäläinen, Ari P.J., 1997. "Airline cost drivers: cost implications of fleet, routes, and personnel policies," Journal of Air Transport Management, Elsevier, vol. 3(1), pages 11-22.
    • Handle: RePEc:eee:jaitra:v:3:y:1997:i:1:p:11-22
    DOI: 10.1016/S0969-6997(97)82788-3
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    References listed on IDEAS

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    1. Caves, Douglas W & Christensen, Laurits R & Tretheway, Michael W, 1983. "Productivity Performance of U.S. Trunk and Local Service Airlines in the Era of Deregulation," Economic Inquiry, Western Economic Association International, vol. 21(3), pages 312-324, July.
    2. Encaoua, David, 1991. "Liberalizing European airlines : Cost and factor productivity evidence," International Journal of Industrial Organization, Elsevier, vol. 9(1), pages 109-124, March.
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    Cited by:

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    2. Brüggen, Alexander & Klose, Levin, 2010. "How fleet commonality influences low-cost airline operating performance: Empirical evidence," Journal of Air Transport Management, Elsevier, vol. 16(6), pages 299-303.
    3. Zuidberg, Joost, 2014. "Identifying airline cost economies: An econometric analysis of the factors affecting aircraft operating costs," Journal of Air Transport Management, Elsevier, vol. 40(C), pages 86-95.
    4. Low, Joyce M.W. & Lee, Byung Kwon, 2014. "Effects of internal resources on airline competitiveness," Journal of Air Transport Management, Elsevier, vol. 36(C), pages 23-32.
    5. Kang, Yicheng & Liao, Sha & Jiang, Changmin & D’Alfonso, Tiziana, 2022. "Synthetic control methods for policy analysis: Evaluating the effect of the European Emission Trading System on aviation supply," Transportation Research Part A: Policy and Practice, Elsevier, vol. 162(C), pages 236-252.
    6. Bießlich, Peter & Wegmann, Kai & Lütjens, Klaus & Gollnick, Volker, 2018. "A hierarchical metamodeling approach for airline costs," Journal of Air Transport Management, Elsevier, vol. 71(C), pages 193-200.
    7. Narcizo, Rodolfo R. & Oliveira, Alessandro V.M. & Dresner, Martin E., 2020. "An empirical model of airline fleet standardization in Brazil: Assessing the dynamic impacts of mergers with an events study," Transport Policy, Elsevier, vol. 97(C), pages 149-160.
    8. Kilpi, Jani, 2007. "Fleet composition of commercial jet aircraft 1952–2005: Developments in uniformity and scale," Journal of Air Transport Management, Elsevier, vol. 13(2), pages 81-89.

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    Keywords

    airline costs; cost reduction;

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