Cost convergence in the US airline industry: An analysis of unit costs 1995–2006

Gerassimos Tsoukalas, Peter Belobaba and William Swelbar

Journal of Air Transport Management, 2008, vol. 14, issue 4, 179-187

Abstract: Recent changes in the strategies of US airlines have led to a convergence of unit costs between the network legacy carriers and low-cost carriers. We develop a methodology for breaking down operating cost data reported by the airlines and argue that certain cost categories must be excluded to make a valid comparison between the carrier groups. We find significant evidence of convergence in unit costs excluding fuel and transport-related expenses, and labor unit costs in particular. While network legacy carriers have improved cost efficiency through dramatic labor cost reductions and longer stage length flying, low-cost carriers labor unit costs continue to increase as these former new entrant airlines mature.

Keywords: Airline operating costs; Unit costs; Legacy airlines; Low-cost carriers (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaitra:v:14:y:2008:i:4:p:179-187

DOI: 10.1016/j.jairtraman.2008.04.005

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