UBC Theses and Dissertations

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UBC Theses and Dissertations

Traffic costing, pricing and planning -- the airline decision Murphy, John Daniel


Two words in the title of this thesis typify its objectives. They are the words "costing" and "planning." Costing because costs are such a sensitive and influential factor in the economy that they require careful analysis; and planning because it attempts to inter-relate the many diverse roles and areas of a business operation into a meaningful whole and provide direction for the future. Throughout this presentation, techniques and skills of costing, pricing and planning have been proposed, developed and then adapted to the underlying functions and the formal organization of a hypothetical airline. While the major theme is analysis of costs for planning and decision making functions, a more than brief reference to the complementary fields of revenues and performance statistics is made as they form an integral part of an airline’s operation. The areas of airline operation to which this study is intended to make its major contributions are: 1. Provide an accurate measure of the relative profitability of the many services and types of equipment operated. 2. Provide a uniform basis for the pricing of fares for airline services, in which the cost factors can be weighed in terms of the other contributing factors. 3. Provide an effective and realistic basis for planning and decision making—ensuring that control is exercised and the desired results are achieved. The subject of this thesis is a hypothetical Canadian airline, which operates on routes and uses equipment which are familiar to Canadian travellers. The costs and performance information used are fully representative of airline operations, although they have been drawn from published regulatory sources, aviation journals and periodicals. The subject of this thesis is recognized as being both broad and complex. This study is but a brief investigation of the subject and only some of the major forces have been considered. A detailed study is impossible considering the time and other limitations which are imposed. However, this thesis should provide an insight into current complications which prevail in the airline industry and also suggest a course of action to overcome some of the problems, and at the same time provide management with a useful basis for planning and decision making.

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