Airline Productivity and Cost Analysis
Evan Demick
JetBlue Background
 Founded in February 1998 as a low cost carrier.
 Home base airport at John F. Kennedy International
Airport in New York, New York.
 Large hubs located at Logan International Airport
(Boston), Long Beach Airport (California) and Orlando
International Airport (Florida).
 Operates a fleet type consisting of two different
aircraft.
 Embraer 190
 Airbus A320 (New Orders for A320NEO and A321)
Terminology
 RPM (Revenue Passenger Miles): How many of an airlines seats are
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actually sold on a given flight.
ASM (Available Seat Miles): How many seats are actually available for
purchase on a given flight.
RASM (Revenue per Available Seat Mile – Operating Income/ASM).
CASM (Cost per Available Seat Mile – Operating Expenses/ASM).
Yield (Passenger Revenue/RPM): Average fare paid per mile, per
passenger.
PRASM (Passenger Revenue/ASM): Measure of passenger unit
revenue.
Fuel Consumed: Amount of fuel consumed by an airlines fleet.
Fuel Cost per ASM (Total Fuel Costs/ASM).
Non Fuel Costs per ASM (Operating Expenses/ASM).
JetBlue RPMs, ASMs, and Load Factor
RPM, ASM, and Load Factor
3.5E+09
1
0.9
3E+09
RPM and ASM
2.5E+09
0.7
0.6
2E+09
0.5
1.5E+09
0.4
0.3
1E+09
Load Factor (%)
0.8
0.2
500000000
0.1
0
0
Year + ( 3rd Quarter)
RPM
ASM
LF
Large fluctuations depict how summer holiday travel impacts JetBlue. JetBlue
does cater to more family “play” travelers who take summer vacations. Note the
drop in all categories at the end of Q3 each year (September).
JetBlue Operating Revenue, Operating Expenses, and
Income (Pre-Taxed)
Operating Revenue, Operating Expenses, and Income (PreTaxed)
$1,200,000.00
Operating Revenue
$1,000,000.00
$800,000.00
$600,000.00
$400,000.00
$200,000.00
$$(200,000.00)
Year + (3rd Quarter)
Operating Revenue
Operating Expenses
Income Pre - Tax
Pre-taxed income fluctuates between positive and negative, but is generally
positive. Operating revenue and expenses mirror each other.
JetBlue RASM, CASM, PRASM, and Yield per RPM
RASM, CASM, PRASM, and Yield per RPM
RASM,CASM,PRASM,Yield per RPM (Cents)
$0.00060000
$0.00050000
$0.00040000
$0.00030000
$0.00020000
$0.00010000
$2006
2007
2008
2009
2010
2011
2012
Year
RASM
CASM
Yield per RPM
PRASM
Yield has been consistently higher than RASM and CASM since 2006. All data
seems to be fairly consistent.
JetBlue Fuel Costs, Operational Costs, and Fuel
Consumption
Fuel Costs, Operating Costs, and Fuel Consumption
$180,000,000.00
60000000
50000000
$140,000,000.00
Fuel Costs
$120,000,000.00
40000000
$100,000,000.00
30000000
$80,000,000.00
$60,000,000.00
20000000
$40,000,000.00
10000000
Fuel Consumption (Gallons)
$160,000,000.00
$20,000,000.00
$-
0
Year + (3rd Quarter)
Fuel Costs
Operating Costs
Fuel Consumption
Spike in fuel pries between 07’ and 08’. Operating costs seem to follow fuel costs
and consumption.
JetBlue Operating Costs per ASM, Fuel Expenses per
ASM, and Jet Fuel Prices
Jet Fuel Prices, Operating Costs per ASM, Fuel Expenses per
ASM
4.0
$0.06000
$0.05000
3.0
$0.04000
2.5
2.0
$0.03000
1.5
$0.02000
ASM (Cents)
Fuel Costs ($/Gallon)
3.5
1.0
$0.01000
0.5
0.0
$2006
2007
2008
2009
2010
2011
2012
Year
Jet Fuel Prices
Fuel Expenses per ASM
Operating Costs per ASM
Little differentiation in Operating costs per ASM. Fuel expenses per ASM rises
and falls as fuel prices do the same.
Analysis
 Expenses in relation to fuel costs: Fuel costs provide the greatest
variation in expenses for JetBlue. Data showed a severe spike in fuel
costs between 2007 and 2008 which caused a rise in fuel related
expenses.
 Airline Finance: While fuel costs have rises (most notably in 2007),
JetBlue’s income has remained quite stable overall. There have been
times when income has gone into the red, but in general, income has
been positive.
 Airline Network Structure: RPM, ASM, and Load Factor all fluctuate
with the changing of the travel season. Chart 1 is based around quarter
3 (July, August, and September). Data shows that September is a
month with a large drop in RPM, ASM, and Load Factor.