1. American Airline Cost and Productivity Analysis Samira Monshi

2. American is a Network Legacy Carrier(NLC)
Question 3
American is a Network Legacy Carrier(NLC)
It is operating large hub-and-spoke networks.
It is covering regional, domestic and international services.
Has different types of aircraft
Has premium class
Has labor unions

3. Question 2 RPM One paid passenger flown one mile. ASMs
∑ i (Number of Passengers (Flight i) * Distance Flown (Flight i)
ASMs
One aircraft seat flown 1 mile.
∑ i (Number of seats (Flight i) * Distance Flown (Flight i)
RASM (Unit Revenue)
Total revenue/ASM
CASM (Unit Cost)
Total operating cost/ ASM
Yield
Average Fare paid by passenger per mile flown. Total revenue/ RPM
PRASM
total passenger revenue/ASM
Fuel Consumed
Total amount of fuel used per block hour
Fuel Costs per ASM
Total fuel cost /ASM
Non-Fuel Costs per ASM:
(Total Expenses-fuel cost)/ASM

4. RSM and Load factor increase and decrease with oscillation of ASM.
If the airline increases the ASM demands (RPM) is also increasing.
ASM, RPM and Load Factor increase in Q2 and Q3 each year.

5. Total revenue and total operating cost have the same pattern.
From 2002 Revenue and Operating Cost increase.
Income before taxes is unpredictable.

6. During 2003-2005 Revenue decreases that leads to decreasing in RASM and PRAZM.
CASM has bean oscillating with substantially large peaks in 2001 and 2008.

7. Fuel Cost starts increasing from 2002 and reaches to the max amount in 2008.
Non- fuel has the same behavior. ( probably influenced by fuel cost)
Fuel consumption decrees gradually.

8. As Jet Fuel Prices and cost per ASM are oscillating in the same pattern with a max peak in 2008
Non- fuel Costs is also influenced by 2008 recession.

9. Question 4 a. Fuel Prices on Expenses (Chart 5, 4, 3)
Fuel price can affect the total operating cost directly and Non- operating cost indirectly.
b. Fuel prices on Airline Finance (Chart 2)
It has influence on the total operating cost that lead to changes in income before tax.
c. Fuel Prices on Airline Network Structure (Chart 1)
High fuel price leads airlines to increase their Load factors in order to make sure they do not use fuel for an empty seat.