![]() ![]() Some data can be gathered from competitors’ public filings and results: for example, most airlines report the size of their staffs, as well as the cost of labor, sales, distribution, and leasing aircraft. For example: What is the airline’s credit rating? Over how many years does it depreciate aircraft? What residual value does the airline assume for the aircraft? We call this a driver-based approach. ![]() The only real way for airlines to learn how cost differentials add up is to build a bottom-up view of the unit costs, volumes, and productivity of their cost buckets. This gives airline executives an all-too-easy excuse when presented with CASK comparisons-“that airline isn’t like us”-and leads to inaction. CASK neither gives companies deep insight into their costs nor identifies concrete levers to reduce them. Such problems make like-for-like comparisons difficult. For example, the costs of owning aircraft fall as a result of income from leasing them to other carriers or of profits from sales and leasebacks. AirAsia, for instance, counts parts of the cost of owning aircraft as contra revenue, since it also has an aircraft-leasing business. The carriers’ different accounting policies also bedevil attempts to compare CASKs. Comparisons are almost impossible between carriers that aggregate freight or third-party maintenance operations in their financial reports. What’s more, CASK includes the costs incurred by nonpassenger divisions, such as cargo or maintenance. Yet Emirates flew a wide-body-only fleet, while 30 percent of Etihad’s consisted of narrow-body aircraft. Over the past three years, for example, Emirates Group and Etihad Airways, which both focus on the Middle East, had roughly the same CASK (8 $ cents) and passenger-haul length (6,000 kilometers). Air France, for instance, has four class-777-300ER aircraft, with 303 seats each, on business-oriented routes (to Japan, among other places) and three class-777-300ER aircraft, with 468 seats, for leisure-oriented routes (such as those to the French Caribbean).Ĭarriers based in the same region may have different network and fleet strategies and therefore use different kinds of fleets to serve similar networks. As we have noted before, seat densities explain half of all differences among the CASKs of long-haul flights. Seat configurations are another key and variable driver of CASK’s denominator. is a common but crude industry work-around. Stage-adjusted CASK = unadjusted CASK x (current stage length ÷ target stage length) 0.5. Only 5 percent of its flights go beyond New Zealand and Australia, but these account for 60 percent of the airline’s available seat kilometers. Consider an extreme example: Air New Zealand. The underlying network, for example, can play a misleading role in CASK’s denominator. ![]()
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