The executive view on the cost problem of European airlines

Summarizes European airline executives’ views on the reasons for the cost problem in major airlines and on the potential areas and measures of cost reduction in airline operations. Presents a survey where 28 executives from 17 European airlines were respondents. In the executives’ opinion the cost problem in major European airlines is primarily due to high salaries and inflexible work rules. Of the various functions in airlines, general administration was seen as the least cost efficient, whereas flight operation was seen as an area with most potential for cost reduction. Most respondent airlines had made route and fleet changes after the beginning of 1991 to reduce costs. Concludes from the survey results that privatization would be an important step towards more efficient airline operations. Also, flexibility from the labour unions would be very much welcomed.