Activity 2 Essay
Activity 2.4 - Case Study 1: Cost Terms and Concepts
In this module you will have an opportunity to demonstrate your understanding of cost terms and their application in the aviation industry.
For this Case Study complete the four requirements below:
1. ABC Airlines has determined both the fixed and variable costs per flying hour associated with flying each of the 10 different types of aircraft in their fleet. How might this type of information be useful in determining the costs associated with flying different aircraft on specific routes? Knowing the variable and fixed per flying hour costs associated with each of ABC's 10 airframes is extremely useful. Fixed costs are straight forward. Variable costs are …show more content…
Operating Expenses - Fluctuations in passenger traffic is directly relational to fluctuation in the expenses incurred to support or not support that traffic. The largest component of operating expenses is personnel costs, followed by contracted services. Knowing this, one way an airport can cushion for these differences is to increase its focus on generating more Non-Airline revenues. Regardless of the amount of traffic that passes through the airport, that organization should be trying to get the most out of each passenger that passes through its gates.
Preventative Maintenance Costs - The adoption of a through preventative maintenance program will provide tremendous cost savings to any organization. Such a program has a predictable cost that will save the airport much more than if the program did not exist.
Safety and Security Enhancements - There are the fixed costs of meeting regulatory requirements, such as safety and security. A large proportion of these costs are not really controllable in that they are imposed by the very nature of the