Must-know: Factors that affect aircraft utilization

Overview of aircraft utilization

Aircraft utilization is one of the important measures of operational efficiencies that low-cost airlines count on to lower unit costs. Higher utilization will result in lower fixed costs per unit, as the costs spread across more air trips and passengers and results in lower cost per available seat mile.

Must-know: Factors that affect aircraft utilization

Factors affecting utilization rates

The factors that affect utilization rates include:

  • Airplane availability: the total number of days in a given period minus downtime required for airplane maintenance
  • Average elapsed time per trip: the average block time per trip distance plus the average turn-time
  • Maximum number of trips: the airplane availability divided by the average elapsed time for a trip

Block time is the time taken from the departure gate at origin to arrival at the destination gate. Turn-time is the time spent at the gate between two trips for unloading and reloading cargo and baggage, airplane service, and boarding passengers for the next trip.

According to Boeing, for an average trip distance of 500 nautical miles, a ten-minute reduction in turn-time will increase the aircraft utilization by 8%. This is because of increased number of trips that are enabled by reduced turn-time. Boeing also said that increasing utilization by 20% will lower operating costs by 5%.

JetBlue’s network structure allows higher aircraft utilization

Point-to-point carriers like JetBlue Airways (JBLU) have better aircraft utilization rates, resulting in lower operating costs compared to hub-and-spoke carriers for two reasons. Firstly, their shorter trip distance enables higher number of trips in a given period. Secondly, their turn-times are shorter than hub-and-spoke carriers. Higher turn-times allow passengers to arrive from different feeder airlines. But, the lower aircraft utilization of hub-and-spoke carriers is offset to an extent by their higher load factor.

Must-know: Factors that affect aircraft utilization

As can be seen from the table above, stage-lengths are relatively shorter for low-cost carriers such as Southwest Airlines (LUV) and JetBlue, compared to legacy competitors such as American Airlines Group (AAL), Delta Air Lines (DAL), and United Continental Holdings (UAL). JetBlue has a high daily aircraft utilization rate, as seen in the number of hours flown per aircraft per day in the table below. This allows JetBlue to generate more revenue per aircraft. But, it’s not free from risks of adverse weather conditions that lead to cancellations and delays since the majority of JetBlue’s operations are concentrated in the Northeast and Florida—areas vulnerable to weather and congestion delays.