Airlines' cost index plunges

By D.R. STEWART World Staff Writer - 11/4/2009


The composite cost index for U.S. airlines dropped 29 percent in the second quarter, easily outpacing the 0.9 percent decline in the U.S Consumer Price Index, executives at the Air Transport Association said Tuesday.

ATA, the trade group representing the major U.S. airlines, said the three largest components of the composite cost index were labor, fuel and transport-related expense.

ATA executives said combined labor and fuel costs accounted for nearly half of airline operating expenses in the second quarter. The average price paid for fuel fell 36 percent from record levels one year ago, ATA officials said, while the average cost of employing a full-time equivalent worker — wages, benefits and payroll taxes — rose 6 percent, to $79,657.

ATA officials said other rising cost categories included aircraft insurance, up 24 percent; interest, up 22 percent; landing fees, up 7 percent; and professional services, up 6 percent.

U.S. airlines in the second quarter had year-over-year declines in aircraft rent and ownership, food and beverage, maintenance material, nonaircraft insurance, travel agency commissions, communication, utilities and office supplies and transport-related expense, ATA executives said.

"Airlines remain intensely focused on reducing expenses and identifying additional sources of revenue, but this is a challenging environment," said ATA Chief Economist John Heimlich. "Carriers are demonstrating tremendous cost discipline in the face of a weak demand environment and continuing fuel-price volatility."



D.R. Stewart 581-8451
don.stewart@tulsaworld.com




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