What are the Best Options for Airlines to Reduce Costs?

With rising costs and ongoing operational difficulties around the world, airlines (like most other companies) are keenly looking at ways to reduce expenditure and costs.

This is, of course, nothing new. All companies would like to reduce costs wherever possible. For airlines, there are several good ways to do so – whilst still studying customers and meeting strict safety requirements to ensure the best journey possible.

Optimise schedules and reduce delays

This may seem like an obvious area and something that airlines are acutely aware of. With the changes and disruption seen in the industry at the moment, though, it is more important than ever to review these areas of operations.

We have seen many scheduled airlines cutting services in 2024. Whilst this is obviously disruptive, doing so in a planned and timely manner makes sense. Planned reductions in this way are more cost-effective than last-minute changes – both through operational costs and with compensation due to passengers (especially so in the EU and UK).

This is a major area for cost-saving. According to the FAA, additional costs incurred due to delays were estimated at $28 billion annually (pre-COVID). Advance planning, avoiding compensation payouts, and ensuring flexibility and backup in operations can help greatly.

Look at ground handling, maintenance, and other services

All aircraft operators need to handle extensive pre-flight planning, and ground handling and operations by Flightworx, as well as longer-term aircraft planning and servicing. How this is handled can have a big impact on operating costs.

Operators need to look at not just how much these services cost but the time taken and the impact on aircraft turnaround. Outsourcing parts of these processes is common, especially when dealing with multiple locations or countries.

Aircraft maintenance, too,  is a significant cost for airlines. This cost comes through both actual work and in taking aircraft out of service. Once again, good planning, links, and potential outsourcing are reliable ways to control these costs.

Review fuel costs and contracts

Aviation Fuel is, of course, a significant part of any airline or aircraft operator’s costs. In 2024, it is expected to account for over 19% of total airline expenditure worldwide. Not for the first time; we are currently seeing rising and changeable prices here.

Regularly reviewing suppliers and contracts will help ensure the best fuel prices. This can be especially complex, though, when operating in many different locations. Partnering with a third-party management company can help with sourcing and obtaining the best prices – no matter how much they change.

Update ticketing and passenger services

For scheduled or charter operators, the shift to unbundled airfares and a la carte ticket pricing is well underway. Full-service airlines have followed low-cost carriers in this area.

Many changes have been made, but there is still much more happening – and more ways for airlines to lower costs. Separately priced seating, meals, and luggage have been common for some time. New areas being explored include unbundled business class services and different options for airport services. All of these can help airlines lower base costs by charging for services when provided.

Using the latest technology to streamline costs

Another cost-saving measure is to make use of new technology and software, such as more fuel-efficient aircraft and automated systems for handling baggage and reservations to help reduce the overheads of keeping a lot of staff. These cost savings can then be passed onto the customer booking their flights.

Reorganisation and restructuring

Airlines can also save money by streamlining their organisational structures and cutting back on non-essential services. By carefully evaluating all of their options, airlines can find the best ways to reduce costs without compromising on quality or safety.

Another option is to focus on cost-cutting measures that do not reduce service levels. This might include eliminating unnecessary overhead expenses, such as advertising and marketing budgets. It could also involve negotiating better deals with suppliers and vendors. Reducing costs in these areas can help airline companies save money without impacting the quality of their service.

Sharing resources with other airlines

Some airlines can also save money by working with other airlines to share resources and costs. For example, many airlines now share crew members and equipment, which helps to reduce training and maintenance costs. By working together, airlines can save money while still providing quality service to their passengers.

Reducing unnecessary flight routes

One option is to reduce the number of flights. This can be done by eliminating routes that are not profitable, or by cutting back on the number of flights per day on popular routes. While this may save money in the short term, it can actually lead to higher costs in the long run, as passengers will be forced to take longer and more expensive trips to their destinations.

Offer discounts & baggage charges

One way is to offer discounts for customers who book their tickets in advance. This encourages people to plan their travel early and helps to fill seats that would otherwise go empty. Another way for airlines to reduce costs is to charge for baggage or other extras. This allows airlines to keep their base fares low while still generating revenue from travellers who need or want these additional services.

Getting rid of old aircraft

Another option is to reduce the number of aircraft in its fleet. This can be done by selling older aircraft or leased aircraft that are no longer needed. Doing this can raise funds whilst also reducing the ongoing monthly costs of maintenance and crewing the planes. It may not make sense to reduce the size of your fleet, however these funds can be used to buy more up to date and efficient aircraft.

Final Thoughts

There are many ways that airlines can reduce costs without compromising safety or passenger experience. Clearly, a lot has changed in the industry in the past few years. Reviewing current operations and costs with this in mind can find new savings that could potentially save an airline becoming insolvent.