Aircraft Operating Costs and Profitability
Camilleri, M. A. (2018). Aircraft Operating Costs and Profitability. In Travel Marketing, Tourism Economics and the Airline Product (Chapter 12, pp. 191-204). Cham, Switzerland: Springer Nature.
16 Pages Posted: 17 Dec 2018
Date Written: December 1, 2017
The airlines’ marketing policies are influenced by costs and expenses which could influence their levels of service, and their ability to be profitable. Their direct and indirect operating costs are affected by sector length; utilization of aircraft, fleet size and labor costs, among other issues. Moreover, the aircraft design characteristics, such as aircraft size, aircraft speed, age of the aircraft, crew complement could also affect the airlines’ cost structure. Furthermore, the airlines may have overheads, including; sales costs, administration, accounts, general management and employment costs, among others. Therefore, this chapter provides a detailed overview of airline operating costs and explains how to analyse their profitability. Initially, it introduces its readers to the airlines’ direct and indirect costs, as well as overheads. Afterwards, it deals with cost comparison parameters and metrics.
Keywords: airline, airline finance, airline costs, aircraft costs, airline direct costs, airline indirect costs, airline profitability, airline strategy
JEL Classification: M00, M1, M4, M40, M41, M10, M3, M30, Z3, Z30
Suggested Citation: Suggested Citation