14. DECLINE IN AIRLINE COSTS
US airline systemwide unit cost declined 12.6% year-over-year to 11.5¢ during second
quarter 2015, marking the largest overall cost decline since 2009. Network carrier system
cost slid 12.6%, falling from 13.5¢ to 11.8¢.
Value carriers reduced systemwide costs from 11.8¢ in 2014 to 10.4¢ in 2015, down 11.7%.
The network carrier domestic unit cost declined 13.2% in second quarter 2015 from 14.1¢
to 12.2¢. Value carrier costs dropped at a slightly slower rate (11.7%), slipping from 12.0¢ in
second quarter 2014 to 10.6¢ in 2015.
The rapid decline in cost was driven by falling fuel prices, with the network unit fuel cost
falling 30.2% and value carrier unit fuel cost down 34.7%. After the decline, fuel cost
represents 26.2% and 25.3% of unit cost for network and value carriers, respectively.
As a result of the significant decline in fuel cost, labor now represents the largest cost
category for US airlines. It accounts for 32.9% of the network carrier systemwide unit cost
and 34.5% of value carrier cost. Value carrier unit labor cost increased 5.6% year‑over-year.
During the same period, network unit labor cost increased only 0.5%.
Network carriers also reduced aircraft ownership unit cost (-5.9%) as well as aircraft
maintenance unit cost (-7.1%) year-over-year in second quarter 2015. Additionally, aircraft
maintenance is 9.8% of network carrier total unit cost and ownership is 6.8%.
Value carrier aircraft ownership unit cost decreased 4.7% and now represents 7.9% of total
cost, while maintenance cost was down 3.0% year-over-year.
Both groups benefited from a decline in all other unit costs. All other costs represent 24.1%
of network carrier cost and 23.1% of value carrier unit cost. Network carriers reported lower
passenger food cost, commissions and landing fees. Value carriers reported lower landing
fees and non-aircraft rentals.