What is the concept of escapability?

Answer 1

The concept of escapability involves a temporal dimension...as the degree of escapability is determined by the time period required before a particular cost can be avoided. Management may be able to sanction immediate escapable cost while others remain possible only in the long run

For instance in airline activities the degree varies with the size and nature of operations. Cancelling one weekly flight may reduce only some costs but little else due the joint nature of costs as common costs will continue to be incurred to support remaining flights

To be successful in applying this concept one needs to apply the traditional accounting distinction between fixed and variable costs.

The variable costs such as flying costs are directly escapable in the short run; these include

- fuel

- flight and cabin crew subsitence, bonuses

- landing charges

- ground handling charges

- catering

- engeenering & maintenance ( since these are based on flight cycles & hours flown)

on the other hand Fixed costs/direct operatingcost are only escapable in the long run say after a year or two but depending on how quickly the schedules could be actually changed. Doganis (2002) cites that 40% of total costs may be saved in the short run by cancelling a scheduled flight.