Cost Economies for an Airline: An Analysis of Airlines’ Operating Costs

Abstract

This study focuses on analyzing the variables affecting the average operating cost per aircraft movement. Since airlines around the world are operated on thin profit margins and with increasing competition from Low Cost Carriers it will be important for an airline to get a complete understanding about their operating cost structure. The aim of this study is to suggest an airline of actions to reduce their operating cost and will differentiate the cost structures of Low Cost Carriers and Full Service Carriers. This study was conducted for 20 airlines which were operating in Asia Pacific region. Published financial and statistical data were used for analysis and a parametric approach was used. The results of this study do not suggest economies of scale for the airline, which is to have higher number of aircraft to reduce cost.