Date of this Version
Journal of Air Transport Management
Recent changes in the strategies of US airlines have led to a convergence of unit costs between the network legacy carriers and low-cost carriers. We develop a methodology for breaking down operating cost data reported by the airlines and argue that certain cost categories must be excluded to make a valid comparison between the carrier groups. We find significant evidence of convergence in unit costs excluding fuel and transport-related expenses, and labor unit costs in particular. While network legacy carriers have improved cost efficiency through dramatic labor cost reductions and longer stage length flying, low-cost carriers labor unit costs continue to increase as these former new entrant airlines mature.
airline operating costs, unit costs, legacy airlines, low-cost carriers
Tsoukalas, G., Belobaba, P., & Swelbar, W. (2008). Cost Convergence in the US Airline Industry: An Analysis of Unit Costs 1995–2006. Journal of Air Transport Management, 14 (4), 179-187. http://dx.doi.org/10.1016/j.jairtraman.2008.04.005
Date Posted: 27 November 2017