How American Airlines Saved $40,000 One Olive At A Time
This isn’t exactly new but it was new to me so I thought I would share it assuming that it is new to some of you. And with airlines hemorrhaging money during this pandemic I think there will be a few stories shared like this 30 years from now too! This is the story of how American Airlines saved $40,000 one olive at a time and some other interesting cost cutting measures by airlines.
Update 1/9/21: There is a new cost savings story from United Airlines that needed to be added to the list. Added below.
American Airlines
It was the 1980’s and Robert Crandall was the head of American Airlines. He was famous for being very stingy and cutting costs wherever he could. One such story of him replacing security guards with a tape of a dog barking have been shared numerous times. Then one day he had a simple idea, what if we removed one olive from every salad on board? Passengers wouldn’t care and it would save the airline money, but how much? It saved more than I would have thought, to the tune of $40,000 that year. Who knew something so small could save so much?
United Airlines
Live and Let’s Fly broke a story a few weeks back about a new cost savings measure from United Airlines. There was a memo sent around to flight attendants that there will no longer be cocktail sticks for drink service. You know those little things that go through a lime wedge before they are plunked into your drink. The things that are completely useless and don’t have the aesthetic appeal of a cocktail umbrella. The lime will still make its way into the drink but without that small stick of plastic attached and the savings will add up. United estimates the savings will be around $80,000 per year. I expect more stories like this to roll out as we continue to see record low air travel from the pandemic.
Northwest Airlines
Before Northwest Airlines merged with Delta they noticed that they were saving $500,000 a year compared to Delta by cutting their limes differently. Northwest was cutting their limes into 16 pieces for soft drinks and mixed drinks while Delta was only cutting them into 10 pieces. That simple adjustment meant they had to buy over 60% less limes compared to Delta, a savings of half a million dollars a year.
Delta decided to continue cutting their limes into 10 pieces after the merger but they realized they were carrying too many limes on each flight. By carrying less limes they were able to better control waste and reduce their costs that way.
Ryanair
The cheapest airline out there has to have an interesting cost cutting story right? I mean they were considering charging passengers to use the bathroom at one point! Ryanair does not disappoint with a few of their money saving schemes.
- They removed 2 of the 3 toilets on their aircraft to fit additional seats.
- They enforce weight limits on their flight attendants to save on fuel costs. How much it actually saves, no one knows.
Ryanair has thrown out some other crazy ideas in the past that didn’t pass the smell test. Things like removing the armrests on planes and having standing room only seats in the back of the plane. I imagine they will continue to come up with “inventive” cost saving ideas on top of hitting up their passengers with every fee imaginable.
Air Canada
In 2008 Air Canada’s regional carrier Jazz removed life jackets from their planes. They replaced them with personal flotation devices to cut down on extra weight and save on fuel costs. This was given an okay by the Canadian government if they stayed within 50 nautical miles of shore during the flight.
Final Thoughts
These are some fun and interesting cost saving measures (well some of them at least). And the savings really stack up, a lot more than I would have expected. When removing one olive from a salad or cutting a lime a different way equals 10’s to 100’s of thousands of dollars in savings, that is kind of insane. I imagine similar measures will be taken in the coming months and years. It will be an uphill battle to get these airlines back to profitability.
What is the crazies cost cutting measure you have seen an airline take? What are some ideas you think will be implemented in the future?
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[…] how the concept of wasted hours bugged the hell out of management accountants almost as much as the extra olive in First Class whose removal delighted the cheese-parers at American […]
[…] that American Airlines saved $40.000 in a year just by cutting down an olive from the catering, the cost of free giveaways is not one to be […]
“They removed 2 of the 3 toilets on their aircraft to fit additional seats.”
Ryanair floated the idea a decade ago, but they never followed through, most likely because their 737-800s already have the maximum 189 passengers that the aircraft is certified for.
A lot of Ryanairs ideas are just marketing. They throw a wild idea out and it makes the news, thus
reinforcing the idea that they are low-cost amongst the public
Very true
When I used to fly ever week for work, I would sit in up in first class and think up ways that the airlines could save money. The best idea I came up with was to put small angled fins around the outside perimeters of the landing gear tires. This would cause the wheels to spin up to speed when the gear went down. This would prevent excessive rubber burn off on touchdowns. However, after some google searching, it seems this idea has been considered and rejected by manufacturers for technical reasons.
Getting super technical Brant – I like it 🙂
I recall reading reading a story about American Airlines deciding to decrease amount of water carried per flight. The decreased weight saved the company millions of dollar a year in fuel. Might be the same guy who thought of the olive idea. But one line in the article always stuck with me.
You can make or lose a million dollars, a few dollars at a time.
Great words to live by!
Awesome quote and thought SHP – thanks for sharing. It rings so true!