Airline flight networks, cycle times, and profitability: 2004–2006

Abstract

This research investigates the relationships between airline flight networks, aircraft cycle times, and carrier profitability for ten large US domestic airlines. We find that direct point-to-point flight networks and short cycle times are operational factors that airlines should exploit to improve profitability. These findings are based on the analysis of 11.9 million flight records from 2004 through 2006. The results contradict earlier research validating performance advantages of hub-and-spoke flight networks. Today, the advantages of passenger consolidation at hub airports are lost to lower aircraft utilization and productivity problems created by the extended cycle times at hubs. We also find that airline operating profit can be increased by improving the efficiency of the aircraft turnaround process and decreasing aircraft fleet complexity. This research also provides an estimate of the marginal opportunity cost of ground time. A 1-min reduction in aircraft fleet ground time increases the average sized carriers’ operating income by $12 to $18 million.