In the competitive airline industry, reducing costs is vital. Passengers have a choice of airline to fly on most routes, and the ticket price is a top consideration when choosing. Aviation is, of course, a very safe and regulated sector, so cutting costs may seem like a difficult task. However, there are many ways that airlines can and are reducing costs to offer passengers lower fares.
Reduce Delay Related Costs
Some of the most significant but controllable costs faced by airlines aredelay-related. Airlines incur additional costs whenever a flight is delayed – including staff costs, airport fees, passenger costs and compensation. According to the FAA, these costs pre-COVID were estimated at $28 billion annually for the industry.
Of course, some delays are unavoidable. Others, though, can be mitigated for – including crew issues, fueling delays, or aircraft availability. Airlines that get this right will face lower costs, translating into lower fares.
Control Aircraft Maintenance
Aircraft maintenance is a significant cost for airlines – both in terms of the actual work and taking aircraft out of service. Ensuring this is carefully controlled and time out of service minimized can be a major cost saver.
Research suggests that some of the main savings can be made by making maintenance processes less variable, with fewer surprises. Many tasks which are considered non-routine may be better thought of as routine. This can reduce time in checks and ensure the fast availability of items. Consultancy McKinsey looked at this in a study and found that:
“when one airline reviewed the maintenance tasks data on A320 checks, it found that 60% of those tasks turned out to be quite predictable and, therefore, essentially routine.”
Look at the Aircraft Turnaround Process
The turnaround of aircraft between flights is an area where many airlines have made significant savings. You only have to look at how quick low-cost airlines turn short-haul flights around to see this.
Keeping an aircraft on the ground longer reduces its operational use. It also costs to keep an aircraft at the gate – an even bigger consideration at the busiest airports. Moving the aircraft to a remote location for servicing is common, but this also adds time.
Looking at cabin preparation can save time too. Tasks that may seem simple, such as buckling and arranging seat belts in a certain way, can be a major task in a large aircraft.
Limiting or Removing Check-in
For many years, check-in was an integral part of the flying experience and process. These days though, many airlines are offering online check-in. This started with low-cost airlines but spread to legacy airlines quickly. Any airline that doesn’t needs to consider what value they are getting from it.
Plenty of other services, from seat selection and upgrades to visa and document processing, can be moved online too. This saves money and actually appeals more to many customers.
A la Carte Ticket Pricing
As well as operational changes, airlines can reduce passenger costs with changes to ticket inclusions. Again, this was a shift introduced by low-cost operators that has spread to full-service airlines. Charging extra for services such as food and drink, seats, and airport services is seen as a good way for airlines to increase revenue. It also lets passengers choose what they need and gives a chance for a much lower fare without inclusions.
There are many ways that airlines can reduce costs without compromising safety or passenger experience. Some of these are operational, and others are related to how tickets are priced and offered to the customer. In such a competitive market, airlines need to keep updated with trends and costs to offer good value to passengers.
CONTACT OUR TEAM TODAY
If you have any questions about how airlines can reduce costs to passengers, feel free to contact our team today for more information.