Operating costs and capacity in the airline industry

Fuel hedging and airline operating costs

Fuel hedging is a common risk management tool used in the airline industry. But past studies have not addressed the question of whether fuel hedging creates any benefit to airline operations. This study is the first work that empirically examines the role of fuel hedging in reducing airlines’ operating costs. Using US airlines data from 2000 through 2012, we find that, after accounting for the ...

Internet Penetration and Capacity Utilization in the US Airline Industry∗

Despite vigorous competition, airlines regularly fly their airplanes below full capacity. One reason for this is that airline fares are set before airlines observe demand. Moreover, even when airlines have accurate forecasts of demand, their ability to use prices and revenue management to smooth demand is constrained by the amount of information consumers have about prices and schedules, or mor...

Or in Airline Industry or in Airline

Next to fuel costs, crew costs are the largest direct operating cost of airlines. Therefore much research has been devoted to the planning and scheduling of crews over the last thirty years. The planning and scheduling of crews is usually considered as two problems: the crew pairing problem and the crew assignment (rostering) problem. These problems are solved sequentially. In this paper we foc...

Or in Airline Industry

The Costs of Inefficient Robust Scheduling Practices in the U.S. Airline Industry

Airlines today use robust scheduling to plan ahead for unforeseeable disruptions. We empirically examine three common robust scheduling practices: flexibility to swap aircraft, flexibility to swap gates, and scheduled downtime. To do so, we characterize efficient operating practices in the airline industry by estimating a multiple-outcome, multiple-input production frontier. Estimates of how ro...