Operations, Information and Decisions Papers

Document Type

Journal Article

Date of this Version

7-2008

Publication Source

Journal of Air Transport Management

Volume

14

Issue

4

Start Page

179

Last Page

187

DOI

10.1016/j.jairtraman.2008.04.005

Abstract

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.

Keywords

airline operating costs, unit costs, legacy airlines, low-cost carriers

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Date Posted: 27 November 2017