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How American Airlines Saved $3 Million/Yr.

I just saw this show on CNBC called “Inside American Airlines”, which was basically an hour long commercial for American Airlines disguised as a show, but it was very interesting. One segment featured how the airline saved money, a lot of money, in fact it was a whopping $3 million a year, $25 at a time.

Fuel is the biggest cost for the airline. This led American Airlines to focus on ways to make the plane lighter since lighter planes use less fuel and cost less to operate. They weighed everything and figured out the cost of carrying each item, even down to a cup of coffee! American Airlines had to justify everything that took up weight on the plane.

American-Airlines

Here is what they did to save money:

Removed all magazines. They took out all the magazines that are found in the seat pockets except for the American Airlines inflight magazine, which brings in revenue through advertising

Removed extra ovens and catering weight

Removed extra water. They took out some of the water for lavatory use. They decided to fill the water up only 75% full

Lessened the use of auxillary power. They favored using electrical power when the plane is grounded

Pull shades down. Asking passengers to pull down shades to cool off the plane

Carry only the exact amount of fuel. Carrying only the amount of fuel that they need to make the flight, being careful not to overfuel which was common practice in the past

Charging for extra baggage

Taxiing. (not a typo) Landing with only one engine instead of two.

Hedging. This is the process of betting on the price of next year’s fuel prices. Southwest got good at this and managed to get a contract for low fuel prices for a certain amount of time. That’s probably why their ticket prices are so low.

The ex-CEO kept repeating that American Airlines saved $3 million, $25 at a time. Everything adds up. For American Airlines, it was $3 million a year. How much can you save by trimming expenses a few dollars at a time?

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