The Air Transport Association of America’s (ATA) quarterly Airline Cost Index, shows costs faced by US passenger airlines rose 5% to 209.8 in the third quarter of 2010 compared to the same period of 2009.
The composite airline cost index remains approximately 110 percent higher than its level of 100 in 2000.
The three largest components of the index – which includes all operating expenses, as well as interest expense – were fuel, laboir and transport-related expense, respectively. Improvements in fuel efficiency, labor productivity and revenue generation helped offset the higher composite costs, pushing the break-even load factor down 8.7 percentage points to 75.9 percent – the lowest level since the first quarter of 2001 – and enabling the first consecutive quarters of profitability since the middle of 2007.
"The third-quarter results highlight the continued importance of offsetting the rising costs of doing business through operational efficiencies, productivity gains, and diversification of revenue streams. Thanks to a strengthening economy and the continuing efforts of airlines to adapt to a volatile environment, the increase in costs did not stand in the way of profitability this quarter,” said ATA Chief Economist John Heimlich. “Nonetheless, with costs likely to continue rising in this period of economic uncertainty, financial discipline remains paramount.”