Must-know: The role of technology in the airline industry

By

Sep. 5 2014, Updated 5:00 p.m. ET

The role of technology

Technological advancement has been the driving factor for improving airlines’ operational efficiency. Airlines have been able to reduce costs and improve operations by using advanced aircraft engine technology, IT solutions, and mobile technology. The technology has created better connectivity and enhanced passengers’ travel experience.

Use of technology to reduce fuel cost

Fuel is an airline’s largest cost component. Currently, it accounts for more than 30% of total operating expenses. According to Boeing, one of the largest aircraft manufacturers, advanced aircraft technology provides the following benefits:

Article continues below advertisement
  • New aircraft—like the Boeing-787, 747-8, 737 MAX—reduce fuel consumption by double-digit percentages compared to older ones. Aircraft performance also improves by using advanced technology winglets. You can learn more about winglets in “Why winglets reduce aircraft drag and improve fuel efficiency.”
  • Some of the technologies used for fuel efficiency reduce noise by as much as 30%. They also improve range—distance that the aircraft can travel with a given amount of fuel—and payload—carrying capacity of an aircraft measured by weight. Increasing the range allows the airline to expand its connectivity and network. Payload improvements increase revenue and profitability. Some of the new aircraft designs, like the 777-300ER, provide the flexibility to add ten economy class seats. This increases the payload.

Other airline operations like—maintenance and engineering and in-flight operations—have also improved considerably by using innovative technology solutions. Among the top U.S. airlines, Delta (DAL) has been the most efficient in reducing fuel cost to $2.93 per gallon. This is the lowest cost among its peers including Southwest (LUV) at $3.02, American (AAL) at $3.03, and United (UAL) and JetBlue (JBLU) at $3.09 per gallon in 2Q14.

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.