Samira Monshi Question 3 American is a Network Legacy CarrierNLC It is operating large hubandspoke networks It is covering regional domestic and international services Has different types ID: 753783
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Slide1
American Airline Cost and Productivity Analysis
Samira
MonshiSlide2
Question 3
American is a
Network Legacy Carrier(NLC
)
It is operating large hub-and-spoke networks.
It is covering regional, domestic and international services.
Has different types
of
aircraft
Has
premium
class
Has labor unionsSlide3
Question 2
RPM
One paid passenger flown one mile.
∑
i
(
Number of Passengers (Flight
i
) * Distance
Flown
(Flight
i
)
ASMs
One aircraft seat flown 1 mile.
∑
i
(Number of
seats
(Flight
i
) * Distance Flown (Flight
i
)
RASM (Unit Revenue)
Total revenue/ASM
CASM (Unit Cost)
Total operating cost/ ASM
Yield
Average Fare paid by passenger per mile flown. Total revenue/ RPM
PRASM
total passenger revenue/ASM
Fuel Consumed
Total amount of fuel used per block hour
Fuel Costs per ASM
Total fuel cost /ASM
Non-Fuel Costs per ASM:
(Total Expenses-fuel cost)/ASMSlide4
RSM and Load factor increase and decrease with oscillation of ASM.
If the airline increases the ASM demands (RPM) is also increasing.
ASM, RPM and Load Factor increase in Q2 and Q3 each year.Slide5
Total revenue and total operating cost have the same pattern.
From 2002 Revenue and Operating Cost increase.
Income before taxes is unpredictable.Slide6
During 2003-2005 Revenue decreases that leads to decreasing in RASM and PRAZM.
CASM has bean oscillating with substantially large peaks in 2001 and 2008. Slide7
Fuel Cost starts increasing from 2002 and reaches to the max amount in 2008.
Non- fuel has the same behavior. ( probably influenced by fuel cost)
Fuel consumption decrees gradually.Slide8
As Jet Fuel Prices and cost per ASM are oscillating in the same pattern with a max peak in 2008
Non- fuel Costs is also influenced by 2008 recession.Slide9
Question 4
a
.
Fuel Prices on Expenses
(Chart 5, 4, 3
)
Fuel price can affect the total operating cost directly and Non- operating cost indirectly.
b.
Fuel prices on Airline
Finance
(Chart 2
)
It has influence on the total operating cost that lead to changes in income before tax.
c
.
Fuel Prices on Airline
Network Structure
(Chart
1)
High fuel price leads airlines to increase their Load factors in order to make sure they do not use fuel for an empty seat.