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Airline Operating Costs and Airline Productivity: Frontier Airlines

Airline Operating Costs and Airline Productivity: Frontier Airlines. Danielle Hettmann SYST461 Homework Assignment. Chart 1: ASMs, RPMs, and Load Factor. Overall upward trend Load Factor and RPM have similar behavior ASM has transient behavior but is also apparent in RPM and Load Factor.

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Airline Operating Costs and Airline Productivity: Frontier Airlines

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  1. Airline Operating Costs and Airline Productivity: Frontier Airlines Danielle Hettmann SYST461 Homework Assignment

  2. Chart 1: ASMs, RPMs, and Load Factor • Overall upward trend • Load Factor and RPM have similar behavior • ASM has transient behavior but is also apparent in RPM and Load Factor

  3. Chart 2: Income Before Taxes, Total Operating Expenses, Total Operating Revenue • Total Operating Expenses and Income Before Taxes are inversely related • Total Operating Revenues and Total Operating Expenses have high correlation

  4. Chart 3: RASM, CASM, Yield per RPM, PRASM • Strong outliers in 2009-Q2 for RASM and CASM • Very steady behavior in Yield per RPM and PRASM

  5. Chart 4: Operating Expenses • Overall, operating expenses are increasing • Spike in aircraft fuel operating expenses does not imply a spike in non-fuel operating expenses

  6. Chart 5: Operating Expenses • Correlation between increase in jet fuel price and aircraft fuel operating expenses per ASM • Non-fuel operating expenses are fairly constant per ASM but large changes can be attributed to large fluctuations in fuel prices and market response

  7. Analysis of Fuel Prices • Effect on Expenses: Increase in fuel prices drives up operating expenses for airlines, causing the cost for ASM to increase • Effect on Airline Finance: Increase in fuel prices reduces the profit for airlines due to an increase in operating costs • Effect on Airline Network Structure: Increase in fuel prices causes yield to rise, meaning less aircraft flying but more people flying on each aircraft

  8. Sources • 1: http://www.frontierairlines.com/who-we-are/company-info/our-fleet • 2: http://www.frontierairlines.com/plan-book/routes-schedules/route-map • 3: http://www.afafrontier.org/?zone=/unionactive/view_page.cfm&page=About20AFA2DCWA • 4: http://www.frontierairlines.com/flight-info/seating-options • 5: http://www.frontierairlines.com/plan-book/fare-options • 6: http://www.frontierairlines.com/Home/flight-info • 7: http://www.frontierairlines.com/frequent-flyers/how-it-works

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