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Impact of operational performance on air carrier cost structure: Evidence from US airlines

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  • Zou, Bo
  • Hansen, Mark

Abstract

The impact of operational performance on airline cost structure is empirically investigated using an aggregate, statistical cost estimation approach. Two distinct sets of operational performance metrics are developed and incorporated into the airline cost models as arguments. Results from estimating a variety of airline cost models reveal that both delay and schedule buffer are important cost drivers. We also find that flight activity outside schedule windows increases cost, whereas flight inactivity within schedule windows does not. Using the estimated cost models, we predict the cost savings to airlines of “perfect” operational performance, obtaining an estimate in the range of $7.1–13.5billion for 2007.

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  • Zou, Bo & Hansen, Mark, 2012. "Impact of operational performance on air carrier cost structure: Evidence from US airlines," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(5), pages 1032-1048.
    • Handle: RePEc:eee:transe:v:48:y:2012:i:5:p:1032-1048
    DOI: 10.1016/j.tre.2012.03.006
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