Abstract
We develop three fleet standardisation measurements to estimate their impacts on airline costs and profitability. Using panel data for a group of US airlines from 1999 to 2009, we find that fleet standardisation, as expected, leads to lower unit costs. However, after controlling for its cost-reducing effects, fleet standardisation is negatively related to profit margin. Our findings provide quantitative evidence of the trade-off between the costs and benefits from fleet commonality. Although airlines can benefit from cost savings in flight operations and maintenance with a more standardised fleet, the potential negative revenue impacts from fleet standardisation have generally been overlooked.
Original language | American English |
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Journal | Journal of Transport Economics and Policy |
Volume | 49 |
State | Published - Jan 2015 |
Keywords
- airlines
- aircraft
- unit costs
- profit margins
- revenue
- passengers
- operating costs
- transportation economics
- economic policy
- economic models
Disciplines
- Business
- Finance and Financial Management
- Business Analytics