JULY 2009

Quarterly Cost Index:

The ATA U.S. Passenger Airlines next edition will be released in late October 2009, with data extending through 2Q09.

Purpose

ATA produces the Airline Cost Index to monitor trends in the cost of inputs (e.g., labor, fuel, food, aircraft ownership, airport landing fees, insurance, utilities, interest) to the provision of air service over time. The various indices also facilitate comparisons among the components themselves and between airline costs and broader economic indicators. Long-term cost trends are important determinants of airfares.

While the Airline Cost Index includes the traditional measure of unit cost--cost per available seat mile (CASM)--the index values themselves are the superior bellwethers of the price of inputs to production. CASM can mask the true cost of an input because it also reflects changes in productivity over time.

Release

ATA publishes the Airline Cost Index and restates prior quarters as data becomes available from DOT. It reflects all U.S. passenger airlines filing complete reports for the corresponding quarter. In addition to the summary below, you can view any of the following in the ATA data base.:

Tables (Excel) -- includes quarterly history from 1971-present

Charts (PDF)

Definitions

Methodology (PDF)

Note: Data prior to 1990 excludes airlines with annual revenues less than $100 million. Results for a given quarter are typically available within 120

days of its completion (i.e., Jan. 31, 2007, for 3Q06).

% of

Passenger Airline Cost Index

First Quarter 2009    INDEX Operating

(Source: DOT Form 41) Index        (2000 = 100)  Expenses

(2000=100)  % of Operating Expenses 

FUEL per gallon 223.4      21.3

LABOR per FTE   121.2      25.8

AIRCRAFT RENTS & OWNERSHIP per operating seat      78.6 7.5

NON-AIRCRAFT RENTS & OWNERSHIP per enplanement     118.0 4.9

PROFESSIONAL SERVICES per ASM       120.4 8.7

FOOD & BEVERAGE per RPM     58.7 1.4

LANDING FEES per capacity ton landed   153.0 2.2

MAINTENANCE MATERIAL per aircraft block hour    72.7 1.8

AIRCRAFT INSURANCE as % of hull net book value 98.1 0.1

NON-AIRCRAFT INSURANCE per RPM      185.4 0.4

PASSENGER COMMISSIONS as % of passenger revenue 29.1 1.0

COMMUNICATION per enplanement   78.0 1.0

ADVERTISING & PROMOTION per RPM     65.9 0.7

UTILITIES & OFFICE SUPPLIES per FTE    76.5 0.5

TRANSPORT-RELATED per ASM      420.6      14.1

OTHER OPERATING per RTM    126.8 8.6

TOTAL OP. EXPENSES nmf     100.0

INTEREST* as % of outstanding debt         95.9 nmf

COMPOSITE (PRETAX) EXPENSES*   176.9

*Although interest is a non-operating expense, it is factored into the composite cost index to capture the role of debt in the provision of air service. It is not included in the composite cost per ASM or share of operating expenses.

Notes

The vast majority of the Cost Index is derived from quarterly financial and operational information collected by DOT (principally Form 41 reports), and historical data may be restated as warranted. Neither the Cost Index nor its components are seasonally adjusted because 1) users may find seasonal fluctuations of great interest and 2) leaving the data unfettered allows users to impose adjustments of their own choosing. Consequently, quarter-to-quarter movements in certain indices may be driven in part by the seasonality of the variables used to compute them. Each category of expenses in the

Cost Index is described on ATA's Definitions page.

Last Modified: 7/10/2009

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