4Measures of Performance

Several measures of performance are used by the airline network planning practitioners. Some of these measures are undisclosed information and kept confidential by the airline, while other measures are reported to governments, airports, and aviation agencies. Airlines use their own performance measures to evaluate the impact of their decisions. They also observe the performance of their competitors to extract useful information on their strategies and possible moves. It is very crucial to understand these measures and interpret their meaning. These performance measures are easy to understand when compared across airlines or when compared against historical values. Thus, these measures are typically presented in the form of a time series data that illustrates their values over a defined past horizon.

4.1 Operating Cost

Operating costs are the expenses associated with the operation of the airline. They include the cost of resources used by an airline to maintain the operations (Tsoukalas et al. 2008; Zou and Hansen 2012). Operating cost is usually classified as direct operating cost and indirect operating cost. Direct operating costs are the cost elements that depend on the aircraft type(s) used by the airline. Indirect operating costs are cost elements that do not depend on the aircraft type. Example of direct operating cost includes cockpit crew cost, maintenance cost, landing fees, aircraft insurance, aircraft rents and ownership, fuel consumption, ...

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