COC and DOC Part IV

Over at Leeham News where is a heated debate (once more) over if the A320(neo) or the B737(MAX) is the more efficient aircraft. As both aircraft were ordered and are flown in thousands both aircraft obviously cater their respective users - besides there are quite a few airlines operating both aircraft.
I tried to lay out how looking at DOC's or COC's or looking at costs per flight or per seat influences such a comparison in an earlier post.
Let's have another look at it. DOC or Direct Operating Costs are comprised of
  • Fuel Costs
  • Flight Crew Costs
  • Cabin Crew Costs
  • Landing Fees
  • Maintenance Costs for the Aircraft
  • Maintenance Costs for the Engine
This is true for the North American Environment. In Europe there are additionally en-route fees. Another difference is that airports in North America base their landing fees on Maximum Landing Weight where European Airports base them on Max Takeoff Weight and many have additional fees for noise and  NOx.
I concentrated on the North American Environment and found $4.40 per 1,000lbs landing weight to be a fair value. The Max Landing Weight (MLW) I took from the information provided by Airbus and Boeing for the respective highest weight variants.
I found pilot and 1st officer wages here. I took the average from Southwest and Jetblue and came out with $305.50 for both per hour. For the flightcrew I got information here and picked $50/hour for my calculation. I calculated with one flight attendant per 50 seats.
The most difficult part is the maintenance cost evaluation. I found some valuable information here and here and decided to take $600 per flight hour for aircraft maintenance and $300 per flight hour for engine maintenance into the calculation, regardless of the engine involved (and I know that some readers might cry "foul" here, but at least the CFM56-5B and -7B should not be that far apart).
If you sum all these cost elements up and calculate the fuel burn (I used well calibrated models for the A320 and B737-800), you have a comparison of the DOC per trip. Divide it by the number of seats and you have the DOC per seat (and trip). I took the numbers that Boeing uses (150 for the A320 and 162 for the B737-800).
I did calculations for a 500nm mission and a 800nm mission. Boeing likes to present their numbers based on the shorter, Airbus favors the longer mission.
Fuel burn for the A320 was found to be between 0.4% (500nm) and 1.6% (800nm) lower than for the B737-800. on a per sear basis that means the Boeing aircraft is more efficient by between 7.1% (500nm) and 5.9% (800nm). A fuel price of $3/gallon was assumed for this analysis.
The result:
  • The B737-800 has between 2.6% (500nm) and 3.3% (800nm) higher trip costs than the A320.
  • The B737-800 has between 5% (500nm) and 4.4% (800nm) lower seat costs compared to the A320.
Now let us have a look at the Direct Operating Costs, which include the capital costs. Conventional wisdom is that the monthly leasing rate is about 0.8% of the list price.
The current list price for the A320ceo is $88.3million, the B737-800 sells for $84.8million at list.
This translates into a monthly leasing rate of $706.400 for the A320 and $678.400 for the B737-800.
Assuming around 3.000 operating hours a year the aircraft can operate we get lease cost per trip between
  • $4.238 - $6.216 for the A320
  • $4.070 - $5.970 for the B737-800
depending on the trip length.

This leads to a DOC/trip cost advantage of roughly 0.15% for the
  • B737-800 for the 500nm mission
  • A320 for the 800nm mission
On a per seat basis the B737-800 is better by
  • 7.6% for the 500nm mission
  • 7.25% for the 800nm mission
The leasing cost account for roughly 42% of the trip costs. If the leasing rate of one of the aircraft is considerably lower than for the other, the picture changes pretty much: if, for example, the monthly leasing rate for the A320 is just 0.75% of the list price, the DOC/trip advantage for the A320 is between 2.5% and 3%.

This little analysis shows how unimportant a few percentage of fuel burn are even in a high fuel cost environment. The higher capacity of the B737-800 can result in more revenue and profit when you are able to fill the additional seats. If your load factor is in the 80% range with a A320, you are probably better off with the slightly smaller aircraft.

UPDATE: Scott Hamilton was so kind to provide "real-life" monthly lease rates for the A320 ($325,000) and the B737-800 ($385,000). I used the list prices as I had no better source. Counting in these lease rates, based on discounted list prices, the picture somewhat changes:

It leads to a DOC/trip cost advantage for the A320 between
  • 6.5% for the 500nm mission and
  • 7.2% for the 800nm mission
On a per seat basis the B737-800 is still better, but only marginal at
  • 1.4% for the 500nm mission
  • 0.7% for the 800nm mission
Again, this analysis shows that fuel burn is only one factor and that fuel burn difference between two aircraft stemming from a few percentages in engine SFC is way less influential as the capital costs. Hence Delta Airline opting to lease the B717 from Southwest/Airtran instead of buying (for example) the CSeries. The lower fuel burn would (at least in the Delta Airlines Cost World) not offset the higher capital costs involved with buying or leasing a brand new aircraft.
Another example of this "business model" (low capital costs coupled with higher fuel costs) is Allegiant. They are buying their MD-80 for $2-$3 million a piece - leasing a B737.-800 would cost them about $4.62 million a year with a monthly rate of $385,000! Say Allegiant financed the $3m buy of an MD-80 with an 8% loan, so they have to pay $20,000 in interests each month - still they are saving $365,000 over the B737-800.
I remember American Airlines stated that a B737-800 burn about 30% less fuel than a MD-80. For an 800nm trip I get fuel costs for the MD-80 that are $1,404 higher than for the B737-800. Theoretically you could fly 260 each month for the saved $365,000 before you have the same costs for fuel + financing. Of course the maintenance costs for a  20+year old  MD-80 are way higher than for a brand new B737, so this is only one side of the medal - but it shows why different airlines can make money with different business models.


  1. Thank you for this report. It shows a lot about what goes on into aircraft's operation and cost association with flying them. Now, I read one sentence that kind of makes me pause and still cannot quite get it. You say that if the airplanes (A320 and B737) are flown at 80% capacity (load factor), that the smaller plane (A320) is probably better off. If the math is consistent, would it not 80% of 162 seats be more seats than 80% of 150 and so still an advantage in seat count? I know that this rule would not be ass efficient for all type of planes, but still, 80% capacity for an A380 for example, should be more passenger than a B747 fill to 80% capacity. Whether any of these planes can be more profitable (if any profitability) at this capacity percentage is another matter all together.

    1. Sorry, my mistake. I meant if you have 80% load factor with an A320 it makes no sense to use a larger aircraft with lower seat costs but higher trip costs.

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  3. AeroTurbo, you do not account for purchase price discounts in calculating lease rates. Actual market lease rates for new A320s are in the range of $325,000; and for the 738 in the area of $385,000. This really skews your data above.

    With these lease rates, what does that do to your conclusions?

    Scott Hamilton

  4. Do you have any adjustments you can make based on actual seat counts? I don't know whether it is the case for the narrowbodies but for the widebodies the assumption of seating capacity the manufacturers offer is well above what actual airlines fit. When looking at per seat benefits, realistic seat counts would be interesting.

    Thanks for sharing this.

    1. Rob,
      150 seats is reasonable for the A320 (see jetblue). 162 is also a good number for the B737-800. There are airlines with up to 180 seats in the A320 and even more in the B737-800 (like Ryanair).

    2. I assume the legacy carriers that have some premium seating in their aircraft have considerably lower seating counts. I always find it hard to compare aircraft when the carriers have a different seating pitch and need for different classes of service. The density of seating will also impact on fuel burn of course since the payload carried will increase fuel required.

  5. I guess the 737-900 beats the 737-800 hands down using this methodology. Not in sales though.. capasity requirements are probably the most often ignored variables in these blogs..