ATA Reports 5.6% Rise in Q2 Industry Cost Index

The Air Transport Association of America, the industry trade organization representing leading US airlines, has announced that the composite cost index for the second quarter of 2007 rose to 185.7, up 5.6% from the second quarter of 2006, compared to a 2.4% increase in the consumer price index.

The three largest cost components were fuel (25.4%), labor (23.6%) and transport-related expenses (13.7%). The average price paid for fuel increased 2.2% to $2.02 per gallon and the average cost of employing a full-time equivalent worker fell $1,479 to $73,292.

Overall unit operating cost per available seat mile fell 1.1% to 12.46 cents. The average break-even load factor dropped 0.3 points to 76.4%. Airlines experienced a 21.1% jump in maintenance material costs, offset in part by a 28.7% decline in aircraft insurance costs and a 16.5% decline for other insurance costs.

ATA chief economist John Heimlich said: “Soaring fuel prices, among other pressures, leave little room for error in maintaining today’s modest profit margins. With the cost of running an airline up 86% since 2000, the industry remains laser-focused on improving efficiency and finding additional sources of revenue.”