Operation Cost Control Strategies for Airlines

The purpose of this study is to explore the ranking of international airlines operation cost control strategies based on empirical studies of an international full-service airlines operation in Taiwan. Cost control has become more and more important for airlines in recent years, especially after experiencing a severe increase in crude oil prices and the 2008 serious financial crisis. In this study, the criteria and strategies were extracted from questionnaires answered by airline industry experts and evaluated using fuzzy Delphi method. Then the cost control strategies were ranked using the analytic hierarchy process (AHP). The findings of this study can provide international full-service airlines with five key criteria for the operational cost control including fuel cost reduction policy, employee’ productivity improvement, flight operations, aircraft maintenance cost reduction, and operation procedure simplification. By ranking these potential cost reduction strategies, we identified the top ten significant strategies out of twenty-one that branched out of their upper five criteria. They include: (1) optimizing aircraft fleet dispatch, (2) conducting fuel hedging strategies, (3) improving aircraft fuel saving performance, (4) reducing the dead weight of an aircraft, (5) optimizing flight speeds using the efficient cost index, (6) scheduling reasonable flight hours for flight crew, (7) correcting en route flight plans and alternate airports, (8) increasing direct ticket sales, (9) encouraging employees to provide cost-control strategies, and (10) replacing old aircraft. Therefore, this study uncovered airlines operation cost-control strategies and ranked them in order to establish guidelines for international airlines on the distribution of operational resources. We expect that the total operating costs of airlines can be reduced significantly through the use of these cost control strategies.