Airline report stresses cost increases

The Air Transport Association of America has released its quarterly Airline Cost Index, now incorporating data through the third quarter of 2007.The composite cost index rose to 191.2 in the third quarter of last year, up 0.2 percent from the third quarter of 2006. This increase is in contrast to a 2.4 percent increase in the Consumer Price Index (CPI). The three largest components of the index - which includes all operating expenses as well as interest expense - were fuel (25.9 percent), labor (22.8 percent) and transport-related expenses (13.3 percent). Other year-over-year highlights include:

  * The average price paid for fuel increased 1.6 percent to $2.11 per gallon
  * The average cost of employing a full-time equivalent worker rose $709 to $76,423
  * Airlines experienced a 15.3 percent jump in maintenance material costs, offset in part by a 16.4 percent decline in aircraft insurance costs and a 17.4 percent decline for other insurance costs
  * Overall unit operating cost per available seat mile was unchanged at 12.49 cents
  * The average break-even load factor (BELF) dropped 1.3 points to 76.6 percent


“The slowing economy and sky-high fuel prices are putting tremendous pressure on U.S. airlines to reduce non-fuel costs,” said ATA Chief Economist John Heimlich. “Fortunately, in the third quarter, a record load factor of 83 percent helped U.S. airlines offset the 91 percent increase in costs they have seen since 2000.”