Measure 1: System
Operating Profit/(Loss) per Originating Passenger (Tables 1-3):
In 2006, the network carriers surpassed the low-cost
carriers in system operating profit/loss per originating passenger for the first
time since 2000.
2006, all of the network carriers except Delta and Alaska
exceeded the profitability per originating passenger of Southwest, the
most profitable of the low-cost airlines.
2006 results reversed the post-2000 trend when network carriers showed
large losses while the low-cost carriers, led by Southwest, consistently reported
a profit per originating passenger. Although their profits continued, the
low-cost carriers have not returned to the profit levels of 2000.
- Of the
network carriers, Northwests and US Airways profitability per originating
passenger was over $25 while American and Continental exceeded $13 and United
was above $11.
- In the
low-cost group, Southwest was the leader with almost $11 per passenger with
only JetBlue and AirTran showing profitability, while Frontier, America West, Spirit
and ATA reported operating losses per originating passenger. ATAs loss
per originating passenger was $15.64.
Return to Performance Measure 1
Measure 2: System
Operating Expenses (excluding Regional Jet Contract) per Originating Passenger (Tables
low-cost carriers spent $198 less per passenger than the network airlines
in 2006. That spread per passenger maintained
the cost advantage the low-cost carriers have sustained since 2001. The spread has ranged from $208 to $190.
costs for the last four months of 2001 were inflated. The National Air
Space was temporarily shut down after September 11 while the airlines
were saddled with fixed operating costs that anticipated normal
costs per enplanement for low-cost carriers increased $19 per passenger or
18 percent, mainly related to double-digit fuel cost increases and higher
wages for a maturing work force. The network carriers aggressive
downsizing in operations reduced other costs, partially offsetting the
rise in fuel expense and holding the cost increase to $9 per passenger.
had the highest expense per passenger at $396 while Southwest operating
cost per passenger was the lowest at $95.
Return to Performance Measure 2
Measure 3: System
Operating Expenses (excluding Regional Jet Contract) per Aircraft (Tables 7-9):
2000 gap of $10.3 million in cost per aircraft between the low-cost
carriers and the network airlines was the largest since at least
2000. The gap widened even though
low-cost carrier operating expenses per aircraft increased by 24 percent from
2001 to 2006 while network costs per aircraft rose by 18 percent. The higher network costs reflect the
larger size of their aircraft.
costs per aircraft rose for all the network carriers except US Airways, which
reduced expenses by $4.8 million per aircraft. Delta had the highest average cost per
aircraft in 2006 at $35.9 million. US
Airways at $22.4 million had the lowest aircraft expense in 2006 in the network
group. US Airways cost was higher
than all but two of the low-cost airlines expense per aircraft.
the low-cost group, ATA had the highest average cost per aircraft at $35.6
million. Spirits increase of 45 percent from 2001 to 2006 was the most in
the low-cost group. AirTran had the lowest overall average
cost per aircraft among the low-cost airlines at $16.2 million per
aircraft but JetBlue, at 13 percent, reported the lowest rate of operating
expense growth per aircraft from 2001 to 2006.
Return to Performance Measure 3
Measure 4 (Tables 10-12):
Passenger Revenue per Originating Passenger (excluding Regional Jet Contract Revenue):
network airlines collected $293 for every originating passenger in 2006,
$171 more than the $122 the low-cost airlines collected. The gap grew more than 15 per cent from
2001 as the network airlines increased their international service.
groups benefited from fare increases that began in mid-2005. Network airlines passenger revenue per
originating passenger rose 6 percent from 2001 to 2005 but 10 percent from
2005 to 2006. Low-cost carrier revenue
per passenger rose 11 percent from 2001 to 2005 and 8 percent from 2005 to
the network carriers only American had less passenger revenue per
originating passenger in 2006 than in 2001. United, at $355, had the most revenue
per originating passenger among the network carriers. Delta with an increase of $64 per
passenger from 2001 had the largest gain of the network carriers. Alaska
reported the $194 in revenue per passenger, the lowest of the network
best performing low-cost airline was ATA with $371 per originating
passenger. Southwest trailed the
rest of the low-cost group with $100 per passenger. Frontier reported a $36
reduction in its revenue per passenger compared to 2001, the only low-cost
carrier with a loss in revenue.
Return to Performance Measure 4
Measure 5 (Tables 13-15):
Full-Time Equivalent Employees (FTEs) per Aircraft:
- The network airlines closed the gap in
FTEs per aircraft with the low-cost airlines between 2001 and 2006. In 2001, the network carriers employed 38
more FTEs per aircraft than the low-cost carriers. In 2006, the gap closed to 28 FTEs per
aircraft. FTEs per aircraft is a
measure of operational efficiency.
carriers reduced FTEs per aircraft by 17 percent from 90 FTEs per aircraft
in 2001 to 75 FTEs in 2006.
network carriers did even better by reducing FTEs by 20 percent or 25
fewer FTEs per aircraft.
industry showed a wide-range of performance, with AirTran reporting 62
FTEs per aircraft, the fewest of any carrier and about half the 123 FTEs
reported by Delta and ATA.
- In the
network group, Northwest, Alaska
and US Airways reported the fewest FTEs per aircraft. United, American and Delta reported the
- US Airways reduced FTEs per aircraft by 42 percent, the best improvement in
the network group followed by United with a 27 percent decrease. Delta increased
FTEs per aircraft by 5 to 123.
- In the
low-cost group, AirTran, Spirit and Southwest reported the fewest FTEs per
aircraft. ATA and America West
reported the most.
led the low-cost group with a 20 percent reduction in FTEs per aircraft
while Frontier and America West lagged the group with a 3 percent increase.
- FTE calculations count part-time workers as
one-half of a full-time employee.
Return to Performance Measure 5
Measure 6 (Tables
16-18): Average monthly Available Seat-Miles (ASMs) per Full-Time Equivalent
the network carriers and low-cost airlines substantially improved
productivity with more ASMs generated per FTE from 2001 to 2006.
network carriers, with a 46 percent improvement, cut the 23 million ASM
per FTE gap with the low-cost carriers in 2001 by 40 percent in the five
years. The low-cost carriers
improved 35 percent. But the low-cost carriers still generated 14 million
more ASMs per FTE than the network carriers in 2006.
network and low-cost airlines increased their average ASMs flown per FTE
by flying longer distances with larger aircraft in 2006 than in 2001.
generated 252 million monthly ASMs per FTE, the most of any network or
low-cost airline in 2006 although its 12 percent increase over the 2001
average was the lowest gain for the low-cost group. ATA improved its performance over 2001
by 79 percent.
generated 235 million monthly ASMs per FTE, the most of any network
carrier. United and US Airways showed the most improvement with increases
of 53 percent or greater, from 2001 to 2006. American, with 197 million ASMs per FTE,
was the last place performer among the network airlines.
- Full-time Equivalent Employee
(FTE) calculations count part-time workers as one-half of a full-time
Return to Performance Measure 6
Measure 7 (Tables 19-21):
Average Monthly Revenue Aircraft Minutes per Full-Time Equivalent Employee (FTE)
- The low-cost
carrier group has a wide advantage over the network airlines in average
monthly revenue air minutes per FTE, a key productivity measurement. The low-cost group improved its performance
by 59 minutes from 2001 to 2006 and as a result, raised its 2001 advantage
of 56 minutes over the network carriers to 72 minutes in 2006 expanding
the gap by 29 percent.
- The network
carriers improved by 36 percent, but the increase in revenue airborne
minutes per FTE was only 43 minutes to 162 minutes compared to the low
cost carrier gain of 72 minutes to 234 minutes or nearly four hours per
led the low-cost group with nearly four and one-half hours of airborne
time per FTE at 263 minutes. Five
low-cost carriers generated more minutes per FTE than the leading network
leading network carrier was Alaska Airlines which generated 208 minutes of
airborne time per FTE. American lagged the group with 146 minutes per FTE.
calculations count part-time workers as one-half of a full-time employee.
Return to Performance Measure 7
Measure 8 (Tables 22-24):
Average Monthly Originating Passengers per Full-Time Equivalent Employee (FTE)
- Both the
network and low-cost groups improved their performance from 2001 to 2006
but the low-cost carriers still boarded more than twice as many passengers
per employee than the network group. The gap with the network carriers was
moderately smaller in 2006 than in 2001.
- The network
carriers improved performance by 44 percent from 2001 to 2006 while the low-cost
carriers improved by 25 percent. But the low-cost carriers added 35
passengers per FTE compared to 23 for the network carriers.
2006, the low-cost carriers generated 173 originating passengers per FTE
employee compared to 75 passengers per FTE for the network airlines.
was the low-cost group leader with 223 originating passengers per FTE. ATA
trailed the group with 61 passengers per FTE.
led the network group with 111 originating passengers and United lagged
the network group with 62 passengers per FTE.
- FTE calculations count part-time
workers as one-half of a full-time employee.
Return to Performance Measure 8
Measure 9 (Tables 25-27):
Fuel Cost Per Originating Passenger:
expense per originating passenger rose sharply for both carrier groups in
network airlines fuel cost per originating passenger more than doubled from
2001 to 2006, rising to $98 per passenger from $43.
low-cost groups 2006 fuel cost per originating passenger of $37 was less
than half the network cost but it was a sharp increase over the 2001
expense of $18 per passenger. It was still $6 less than the network fuel
costs in 2001.
low-cost group paid $61 less in fuel costs per originating passenger than
the network carriers in 2006. In
2001, the low-cost carriers paid $25 less.
Northwest and Delta all had fuel expense of more than $100 per originating
passenger in 2006, the highest of the network group. Alaska Airlines cost
of $62 per passenger was the least expensive.
- ATA paid
$121 for fuel per originating passenger, the most in both groups, while
heavily fuel-hedged Southwest had the lowest expense of only $27 per passenger.
of the seven low-cost airlines fuel expense per originating passenger was
lower than the least expensive network carriers unit fuel expense.
Return to Performance Measure 9
Measure 10 (Tables 28-30):
Average Full-Time Equivalent Employee (FTE) Compensation Per Originating
network carrier group reduced labor expense per originating passenger by $32
from 2001 to 2006.
financially stronger low-cost carrier groups compensation expenses increased
a modest $4 per originating passenger, reflecting wage increases for the
groups increasingly senior work force partially offset by sustained
- The 2006
low-cost carriers employee compensation per originating passenger was
still $56 less per passenger than that of the network carriers, compared
to $92 less per passenger in 2001 when the network numbers were significantly
impacted by September 11.
labor expense per passenger was highest among the network carriers at $115
while Alaska had the lowest
labor costs at $66 per passenger. Alaska
was the only network carrier in 2006 with higher labor costs per
originating passenger than in 2001. United reduced labor costs by $56 per originating passenger from
2001 to 2006, the most of any of the carriers.
the network carrier with the lowest labor cost per originating passenger,
paid more than all carriers in the low-cost group excluding ATAs $115 per
Airways, at $28 per originating passenger, had the lowest labor expense in
the low-cost group while Frontier and AirTran were the two low-cost
carriers that reduced their labor costs per originating passenger compared
Return to Performance Measure 10
Measure 11 (Tables 31-33):
Average Annual Full-Time Equivalent Employee (FTE) Compensation:
2001 to 2006, low-cost carrier annual compensation costs rose 40 percent
while network airline costs were up a more modest 8 percent reflecting the
networks stringent labor cost-cutting policies in the aftermath of September
- The annual
compensation cost gap between the two groups was reduced to less than $5,000
in 2006 from over $21,000 in 2001.
carrier Southwest Airlines average annual compensation of $100,254 was
the highest of the 14 airlines. In
2001, all the network carriers
had higher average compensation than Southwest.
low-cost carriers, Southwest, ATA and Spirit, had average labor cost
increases of more than $20,000 in the five years. Only network carrier US Airways reduced
average annual labor costs from 2001.
average annual compensation of $91,618 was the highest of the network
carriers. US Airways reported the lowest annual compensation among the network
carriers, which at $74,204 was higher than five of the seven low-cost
average compensation was nearly $17,000 higher than ATA, the next highest
low-cost carrier. Although
Southwest had the highest average compensation, the carriers $37 labor
cost per originating passenger was 44 percent less than the $66 per passenger
paid by Alaska Airlines, the lowest network carrier (Performance Measure 10).
- FTE calculations count part-time
workers as one-half of a full-time employee.
Return to Performance Measure 11