Premium #328 – Comparing US airline fleet size, taxi times and flights

An airline typically tries to sell tickets roughly three weeks before any given flight to stockpile cash.  The airline then operates the flights and ultimately pays vendors about 120 days later.   This is oversimplified, but it represents the general industry model.   Real-world operations are of course vastly more complex. This week we have more insight into US airline operations focusing on taxi times and the potential impact of time savings for the industry.

We can divide airline flight operations into two parts: ground ops and flight ops

.  This may be simplistic, too, but follow our thinking.   The meat and potatoes of the business is moving people and goods.  The greater the efficiency, the more likely an airline is profitable.  What are the efficiencies an airline can control with respect to these two operations?  After all, airlines operate in a highly-regulated arena.

Improving airline operational efficiency must invariably include time management. Schedules drive the business, and time is a core metric.  Various sources have tried to estimate what one minute of operations costs an airline.  In 2003, McKinsey determined  “45 percent of an airline’s cost structure consists of maintenance, ground handling, in-flight services, call centers, and aircraft acquisitions.” The US trade group Airlines4America calculates an airline’s operational cost per block minute is $65.  This is likely a low-end estimate; we have seen numbers as high as $150 per minute.