Airline Cost Declines for Third Consecutive Quarter

17 January 2010 (Last Updated January 17th, 2010 18:30)

According to the Air Transport Association (ATA) of America, the composite cost index for airlines fell by 36% to 185.3 in the third quarter of 2009, compared with 289.7 in the same period of 2008, The composite cost index easily outpaced the 1.6% decline in the US consumer price index

According to the Air Transport Association (ATA) of America, the composite cost index for airlines fell by 36% to 185.3 in the third quarter of 2009, compared with 289.7 in the same period of 2008,

The composite cost index easily outpaced the 1.6% decline in the US consumer price index (CPI), ATA data said.

Labour, fuel and transport-related expense were the three largest components of the index accounting for nearly 50% of airline operating expenses.

The average price paid for fuel slid to $1.94 a gallon from $3.51 in the third quarter of 2008, while the average cost of a fulltime-equivalent worker climbed 7.6%.

Some of the rising cost categories recorded included: aircraft insurance by 53%, interest by 18%, maintenance material by 17%, advertising and promotion by 5%, and landing fees by 3%.

A number of the categories that saw an year-on-year decline in input costs included transport-related expenses down by 18%, professional services by 16%, communication by 9%, non-aircraft insurance by 9%, and property rents and ownership by 5%.

The decline in the cost index helped reduce the gap between the average break-even and actual load factors.