3 ms·

My guess is that it's because labour is not a very large % of overall costs. A similar example is the car industry. Car manufacturing plants are often located

My guess is that it's because labour is not a very large % of overall costs. A similar example is the car industry. Car manufacturing plants are often located in high wage countries, simply because labour does not represent a large % of the overall cost of producing a car.

mediaman 17y ago
Labor is actually a substantial part of airlines' expenses. Southwest's most recent SEC filing indicates that its 35,000 employees represent 32% of its total operating costs, or about $3.4bn. These employees served about 101.9 million passengers. [1] That's about 2,911 passengers per employee, or $33 of labor cost per passenger. A traditional airline such as American Air, with 70,900 employees, has labor costs of $5.9bn, serving just 98 million passengers [2], which is 1,382 passengers per employee or $60 labor cost per passenger. So costs per passenger are almost 2X. That makes me question the data in this chart. The only two data points related to labor are crew costs (3% of savings) and administration (2%). But actual labor costs appear to be a much more substantial part of the savings. [1] http://www.sec.gov/Archives/edgar/data/92380/000119312509015591/d10k.htm http://www.sec.gov/Archives/edgar/data/92380/000119312509015... [2] http://www.sec.gov/Archives/edgar/data/4515/000000451509000008/aa120810k.htm http://www.sec.gov/Archives/edgar/data/4515/0000004515090000...
- fauigerzigerk 17y ago
  There's probably some labour cost hidden in other categories as well, like station costs and reservation costs. But still, I'd expect labour to rank much higher considering that 10:1 productivity advantage. There's actually another thing that's surprising. Low cost airlines, at least in europe, have a younger fleet of aircraft using less fuel. That doesn't seem to figure in the chart either.

3 ms·

My guess is that it's because labour is not a very large % of overall costs. A similar example is the car industry. Car manufacturing plants are often located

by arihelgason 17y ago

mediaman 17y ago
Labor is actually a substantial part of airlines' expenses. Southwest's most recent SEC filing indicates that its 35,000 employees represent 32% of its total operating costs, or about $3.4bn. These employees served about 101.9 million passengers. [1] That's about 2,911 passengers per employee, or $33 of labor cost per passenger. A traditional airline such as American Air, with 70,900 employees, has labor costs of $5.9bn, serving just 98 million passengers [2], which is 1,382 passengers per employee or $60 labor cost per passenger. So costs per passenger are almost 2X. That makes me question the data in this chart. The only two data points related to labor are crew costs (3% of savings) and administration (2%). But actual labor costs appear to be a much more substantial part of the savings. [1] http://www.sec.gov/Archives/edgar/data/92380/000119312509015591/d10k.htm http://www.sec.gov/Archives/edgar/data/92380/000119312509015... [2] http://www.sec.gov/Archives/edgar/data/4515/000000451509000008/aa120810k.htm http://www.sec.gov/Archives/edgar/data/4515/0000004515090000...
- fauigerzigerk 17y ago
  There's probably some labour cost hidden in other categories as well, like station costs and reservation costs. But still, I'd expect labour to rank much higher considering that 10:1 productivity advantage. There's actually another thing that's surprising. Low cost airlines, at least in europe, have a younger fleet of aircraft using less fuel. That doesn't seem to figure in the chart either.