Airlines_Runway_Joe-Pries.jpg Joe Pries

Real MRO Unit Costs Dropped Significantly For U.S. Airlines In 2018

Network airlines record strong gains over the last decade.

Despite modest increases in average real mechanics’ pay, U.S. passenger carriers continued to reduce their real unit maintenance costs in 2018, according to FAA data summarized by the Massachusetts Institute of Technology. Adjusted for general inflation, average MRO cost per available seat mile (ASM) was $.0114 in 2018 for the top 10 U.S passenger carriers, down nearly 8% from the year prior’s level of $.0123. Those new, maintenance-stingy jets coming into fleets were delivering real gains, at least before the Boeing 737 MAX problems.

Over the past 10 years, average real MRO cost per ASM for the same 10 airlines was down nearly 13%, better than a percent per year, but not nearly at the pace of trimming in 2018.

The network airlines have shown very strong gains over the past decade, with American, Delta and United Airlines cutting real cost per ASM by about 2% annually. Consolidation in the legacy airline sector likely accounts for some of this efficiency improvement.

The already lean Southwest registered a more modest gain in efficiency over the decade since 2008. But the original LCC now has cost per ASM just about at the industry average, even though it does not enjoy the scale economies of the network airlines’ widebody fleets.

According to FAA data, Alaska Airlines has cut costs per ASM about 2% annually since 2008, and Hawaiian has trimmed about 1% annually over the same period.

Fuel costs have been erratic over the last decade, and labor costs often reflect whatever market conditions happen to be in effect when the most recent labor agreement was negotiated. But newer aircraft and smarter maintenance seem to be ensuring that maintenance will impose a generally declining cost burden on airlines year after year.

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