Cost Structure Comparison: PeopleExpress vs. United Airlines PPT

This PPT slide, part of the 16-slide Value Chain Analysis PowerPoint presentation, presents a comparative analysis of cost structures for PeopleExpress and United Airlines, focusing on their respective expenditures per 1,000 seat miles across various operational categories. This detailed breakdown highlights significant differences in cost allocation, which can inform strategic decisions for stakeholders in the airline industry.

Starting with advertising and publicity, PeopleExpress incurs a cost of $1,000, while United Airlines spends $1,300. This suggests a slightly more efficient marketing spend for PeopleExpress. The ticketing offices category shows a stark contrast, with PeopleExpress at $9,000 compared to United's $13,200. This discrepancy indicates that United may have higher operational costs in ticketing, potentially due to a more extensive service offering or higher staffing levels.

Fleet costs reveal another notable difference. PeopleExpress spends $4,900, whereas United Airlines allocates $6,700. This could reflect differences in fleet size, maintenance practices, or aircraft types. Aircraft operations costs are also higher for United at $15,600, compared to PeopleExpress's $11,600, which may point to operational inefficiencies or a more complex operational model.

On-board service costs show a similar trend, with PeopleExpress at $1,500 and United at $4,700. This suggests that United Airlines may provide a more comprehensive in-flight service, contributing to higher costs. The total costs reveal a significant gap: PeopleExpress totals $28,400, while United Airlines stands at $41,500.

Understanding these cost structures can guide strategic initiatives, operational improvements, and pricing strategies. This analysis serves as a critical tool for executives aiming to optimize their competitive positioning in the airline market.

This slide is part of the Value Chain Analysis PowerPoint presentation.

This presentation is created by former McKinsey, BCG, Deloitte, EY, and Capgemini consultants. It teaches a practical consulting framework actively used by tier-1 consulting firms.

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