Assessing the influence of the scale of operations on maintenance costs in the airline industry

The aim of this study is to investigate whether the size of airline operations has any statistically significant effect on the costs of its aircraft maintenance. By investigating the impact of the extent of operations on unit costs of carriers, it was inspected the existence of economies of scale in providing maintenance services. Through an econometric model of maintenance costs, it was estimated the influence of key drivers such as the aircraft average stage length, aircraft size and load factors. It was performed an application to the Brazilian airline industry. The empirical model makes use of a Fixed- Effects Estimator (FE), using a four-dimensional panel data of flight segments, carriers and equipment over a period of ten years. Results showed support for the hypothesis of scale economies in maintenance services. The academic gain of this article is through econometric analysis identify factors that influence the maintenance costs for airlines. Noting that the largest companies have lower maintenance costs (economies of scale), enables administrators and air planners a better understanding of the phenomenon, as well as a better use of the resources available. For smaller companies, outsourcing or sharing of maintenance with other companies, can result in major savings and profitability.

Language

  • English

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Filing Info

  • Accession Number: 01600110
  • Record Type: Publication
  • Files: TRIS
  • Created Date: May 11 2016 12:25PM