IDEAS home Printed from https://ideas.repec.org/a/eee/jaitra/v3y1997i1p11-22.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969699797827883
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/S0969-6997(97)82788-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tsai, Dungchun & Chang, Shaochi & Chen, WeiWei & Tran, Chau-lan, 2008. "The market valuation of new route announcements," Journal of Air Transport Management, Elsevier, vol. 14(5), pages 252-256.
    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. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yakath Ali, Nurul Syuhadah & Yu, Chunyan & See, Kok Fong, 2021. "Four decades of airline productivity and efficiency studies: A review and bibliometric analysis," Journal of Air Transport Management, Elsevier, vol. 96(C).
    2. Link, Heike & Götze, Wolfgang & Himanen, Veli, 2009. "Estimating the marginal costs of airport operation using multivariate time series models with correlated error terms," Journal of Air Transport Management, Elsevier, vol. 15(1), pages 41-46.
    3. Eric Tchouamou Njoya & Panayotis Christidis, 2017. "Potential impacts of liberalisation of the EU-Africa aviation market," JRC Research Reports JRC106855, Joint Research Centre (Seville site).
    4. Damien J. Neven & Lars-Hendrik Röller & Zhentang Zhang, 1997. "Union Power and Product Market Competition: Evidence from the Airline Industry," CIG Working Papers FS IV 97-38, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    5. EDAMURA Kazuma & Laura HERING & INUI Tomohiko & Sandra PONCET, 2011. "The Overseas Subsidiary Activities and Their Impact on the Performance of Japanese Parent Firms," Discussion papers 11069, Research Institute of Economy, Trade and Industry (RIETI).
    6. Michel Dumont & Bruno Merlevede & Christophe Piette & Glenn Rayp, 2010. "The productivity and export spillovers of the internationalisation behaviour of Belgian firms," Working Paper Research 201, National Bank of Belgium.
    7. John P. Formby & Paul D. Thistle & James P. Keeler, 1990. "Costs under Regulation and Deregulation: The Case of US Passenger Airlines," The Economic Record, The Economic Society of Australia, vol. 66(4), pages 308-321, December.
    8. Oum, Tae Hoon & Yu, Chunyan, 1995. "A productivity comparison of the world's major airlines," Journal of Air Transport Management, Elsevier, vol. 2(3), pages 181-195.
    9. Chang, Yu-Hern & Yeh, Chung-Hsing, 2001. "Evaluating airline competitiveness using multiattribute decision making," Omega, Elsevier, vol. 29(5), pages 405-415, October.
    10. Encaoua, David & Moreaux, Michel & Perrot, Anne, 1996. "Compatibility and competition in airlines demand side network effects," International Journal of Industrial Organization, Elsevier, vol. 14(6), pages 701-726, October.
    11. Kazunobu Hayakawa & Toshiyuki Matsuura & Kazuyuki Motohashi, 2016. "How Does FDI Affect Productivity at Home?: Evidence from a Plant-Level Analysis," Journal of Industry, Competition and Trade, Springer, vol. 16(4), pages 403-422, December.
    12. Delbari, Seyyed Ali & Ng, Siew Imm & Aziz, Yuhanis Abdul & Ho, Jo Ann, 2016. "An investigation of key competitiveness indicators and drivers of full-service airlines using Delphi and AHP techniques," Journal of Air Transport Management, Elsevier, vol. 52(C), pages 23-34.
    13. Nishimura, Kiyohiko G. & Nakajima, Takanobu & Kiyota, Kozo, 2005. "Does the natural selection mechanism still work in severe recessions?: Examination of the Japanese economy in the 1990s," Journal of Economic Behavior & Organization, Elsevier, vol. 58(1), pages 53-78, September.
    14. Hayakawa, Kazunobu & Matsuura, Toshiyuki, 2011. "Complex vertical FDI and firm heterogeneity: Evidence from East Asia," Journal of the Japanese and International Economies, Elsevier, vol. 25(3), pages 273-289, September.
    15. Hayakawa, Kazunobu & Matsuura, Toshiyuki & Motohashi, Kazuyuki & Obashi, Ayako, 2013. "Two-dimensional analysis of the impact of outward FDI on performance at home: Evidence from Japanese manufacturing firms," Japan and the World Economy, Elsevier, vol. 27(C), pages 25-33.
    16. Alamdari, Fariba E. & Morrell, Peter, 1997. "Airline labour cost reduction: post-liberalisation experience in the USA and Europe," Journal of Air Transport Management, Elsevier, vol. 3(2), pages 53-66.
    17. Oum, Tae Hoon & Yu, Chunyan, 1998. "Cost competitiveness of major airlines: an international comparison," Transportation Research Part A: Policy and Practice, Elsevier, vol. 32(6), pages 407-422, August.
    18. Kanafani, Adib & Hansen, Mark, 1985. "Hubbing and Airline Costs," University of California Transportation Center, Working Papers qt2w1708kq, University of California Transportation Center.
    19. Lin, Wen-Cheng, 2012. "Financial performance and customer service: An examination using activity-based costing of 38 international airlines," Journal of Air Transport Management, Elsevier, vol. 19(C), pages 13-15.
    20. Damien J. Neven & Lars-Hendrik Röller & Zhentang Zhang, 2002. "Endogenous Costs and Price-Cost Margins," Discussion Papers of DIW Berlin 294, DIW Berlin, German Institute for Economic Research.

    More about this item

    Keywords

    airline costs; cost reduction;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jaitra:v:3:y:1997:i:1:p:11-22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/journal-of-air-transport-management/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.