42
$\begingroup$

I realised that this question is very broad, but I intend it as an example to illustrate the actual costs incurred by a typical long-haul commercial flight.

For the purpose of this question, I would assume the following:

  • A380 or (modern) B747 in typical 3-class configuration
  • Full occupancy
  • 12 hours flight time (or more)

Here are the cost position I can think of right now:

  • Fuel
  • Aircraft amortisation
  • In-flight crew salaries
  • Ground crew salaries (boarding crew, aircraft preparation and cleaning, luggage loading, etc.)
  • Catering
  • Various insurances
  • Airport fees (landing tax, etc.)
  • Overflight fees
  • Administrative cost (managing/issuing tickets, etc.)

What am I missing? What would be the absolute (and relative) cost budget for each of these?

Bonus question: in airline operations, is this cost typically handled as "per flight hour" (as in general aviation), "per flight", or in another way?

$\endgroup$
  • 3
    $\begingroup$ It might be better to look at this as a cost-per-hour (for the actual flight: Fuel, oil, maintenance reserve, crew salaries) plus fixed costs (things like insurance, airport fees, etc.) - It's still going to be hugely variable, but I think the resulting numbers will be more useful. $\endgroup$ – voretaq7 Jan 6 '14 at 23:34
  • $\begingroup$ @voretaq7: such a break-down maybe better indeed, and might even provide a better generalisation. Maybe there are cost items that are per-passenger, like insurances? $\endgroup$ – abey Jan 6 '14 at 23:37
  • 2
    $\begingroup$ @Voretaq7 airlines usually calculate it by "seat-mile." The airline has a certain number of SMs available, and they determine how much revenue each of those need to bring to break even. This lets them break the costs away from an individual flight and easily see the big picture. Obviously there are many ways to do what OP's asking, but as far as I know that's how the pros look at it. $\endgroup$ – StallSpin Jan 7 '14 at 0:45
  • $\begingroup$ I think you have most covered but you are missing the Air Navigation Service fees (ATC, MET etc) in the breakdown. $\endgroup$ – DeltaLima Jan 7 '14 at 10:08
  • $\begingroup$ I once saw a documentary about the inner workings of an airline. It said that the airline (for that particular flight and aircraft) only made a profit off of the last few seats. So if the plane wasn't full, they were losing money. $\endgroup$ – Yos233 Feb 13 '14 at 16:34
49
$\begingroup$

Fuel

The fuel consumption of the A380 is about 11 metric tonnes per hour. With a fuel price of \$1000 per metric tonne, this results in \$11000 per flight hour.

Amortization

An A380 will cost about \$350M. The aircraft will be used for about 25 to 30 years, but let's assume the amortization period is about 20 years with a residual value of \$50M. With an interest rate of 5%, you would pay about \$24M per year.

That is about \$2740 per hour, or \$0.76 per second, flying or not. Assuming a usage of 60%, taking into account turn around times at the gate and maintenance downtime, it boils down to \$3915 per flight hour.

Crew

Captain costs \$160K per year, the F/O \$90000. Let's assume they fly about 60 hours per month, the combined flight deck crew cost is about \$350 per flight hour for the base salary. Another \$80 needs to be added for allowances bringing the total to \$430 per flight hour.

Cabin crew rate would be around $40 per hour, so for 20 crew the cost will be \$800 per flight hour.

Also allowances for overnight stays and hotel costs need to be taken into account

Airport charges

These vary extremely between airports. You can basically break the costs down into costs related to the aircraft, the passengers and various taxes by the government.

Aircraft cost usually are related to the Maximum Take-off Mass (MTOM) of the aircraft and the noise category. A Boeing 747-400, while less heavy than an A380, will in some cases be more expensive due to the higher noise level. Many airports differentiate between peak and off-peak hour landings.

I can't find accurate data for the A380 but an old table that I have for the Boeing 747-400 suggest that total the cost vary between about \$6000 to \$25000.

Overflight charges

Fees are levied by countries whose territory is flown over, mainly to cover ATC cost. The cost is typically based on the distance flown and the MTOW. For a 747-400ER over Europe, the fee is on average 145EUR per 100km. Assuming an average speed of about 900km/h, the hourly cost is about 1300EUR/h. These costs are lower over the high seas and over the US.

Rough total

Based on the above, the total will be between \$22,000 and \$41,000 per hour.

$\endgroup$
  • 4
    $\begingroup$ This is very interesting, and it shows why some airlines would consider replacing still-flight-worthy B747 and similar craft for B787 and such, as fuel per flight hour could cost double to triple the amortization on the plane itself. $\endgroup$ – dotancohen Jan 7 '14 at 18:50
  • 5
    $\begingroup$ @dotancohen My understanding of Airline Economics is that fuel is by far the dominating cost factor - that's part of why we many airlines have single engine taxi procedures, encourage shutting off the AC packs during extended ground holds, and why companies are looking into things like electric motors on the wheels of airliners for taxi (which could be powered by the APU, using much less fuel than even a single-engine taxi). $\endgroup$ – voretaq7 Jan 7 '14 at 19:03
  • 9
    $\begingroup$ Why not develop more robust taxi tow procedures? I've always been amazed at the idea of taxing around with a jet engine. The plane doesn't need to carry around the electric motor, just pay some service at the airport to tow the craft. $\endgroup$ – dotancohen Jan 7 '14 at 19:20
  • 1
    $\begingroup$ @dotancohen The logistics would be incredibly complex with the number of airplanes moving around at the same time, the radio communication and coordination between the people towing, ATC, and the pilots, and then we would need special roads (and intersection procedures) for them to get to and from airplanes at the runway.... It's crazy enough as it is, I can't imagine what it would be like if everyone was being towed! $\endgroup$ – Lnafziger Jan 8 '14 at 22:34
  • 2
    $\begingroup$ The above under-estimates airline's crew cost. There are costs of crew overheads (the reserves/standby/training), as well as hotel and deadhead costs. These costs could easily double the overall crew costs estimated from above. $\endgroup$ – user3716 Oct 1 '14 at 18:51
4
$\begingroup$

On the bonus question: the way the costs are looked at by management is cash flow per week. An airline has more than one aircraft, more than 1 flight/day per aircraft, more than 1 crew per aircraft, flights have different durations etc etc. The only way to make sense of it all is to look at operations cost and revenue per day/week/month.

Part of the costs are fixed costs and part of them are variable, and dividing all costs by one of the variables is never a good idea. For quick decision making, treat fixed cost as a given and only look at variable costs. So for instance if we have an aircraft and a crew taxiing on the runway (fixed cost), how do we reduce variable cost such as fuel? By switching off an engine.

Cash flows per time are the only fairly objective way to measure the proceeds of operations. Profit/loss calculations are for accountants, they can be done according to many methodologies. Cash flow is measurable, profit/loss is an opinion.

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.