Plane Costing

 Aircraft Priced at Essay

Airline Operating Costs

By Philip Horder, Mature Vice President SH& E Ltd

Prepared intended for:

MANAGING AIRCRAFT MAINTENANCE COSTS Conference

Brussels, 22 January 2003

Agenda

Introduction Current Airline Environment Airline Cost Elements Roundabout and Immediate Operating Costs Overhead Cost Control "balance sheet" Effects Reference point Sources Conclusions

1

Intro

Current air travel environment Safety considerations and costs

– Security constraints – Insurance implications

Cost reduction compared to revenue boosts

2

Aircarrier Economic Impacts from 10 September

TIMETABLED CARRIERS! Rate of recurrence! Routes! Traffic! Revenues " Fares?! Success

Low Cost Providers! Fares " Traffic " Revenues " Profitability

Low priced Carriers have already been clear those who win since 2001

3

Airline Safety and Security

Protection is vital

– – – Airline flight procedures Maintenance procedures Floor Operations

Reliability Impacts

– – – Cockpit protection On board security Ground holds off – Elevated searches – Baggage Xray

Security costs

– Airport terminal charges – Increased traveler charges

some

Operating Price Comparisons Every ASK

Britannia Air 2000 Monarch

BY SIMPLY DP ZB TG QF BA EK FD SORENTO LX OK EW LG LO VB NI

(EUR)

Working Cost Per ASK

zero. 200 0. 175 0. 150 zero. 125

COE FD SORENTO LX VB NI EW U2 OK TV SET FR LO GO TG QF HANDBAG

Thai Air passage Qantas Uk Airways Emirates CityFlyer Exhibit Crossair Czech Eurowings Luxair LOT Maersk Air Portugalia

0. 90 0. 075 0. 050 0. 025 0. 500 0

EasyJet Go Ryanair EK BY DP ZB

U2 MOVE FR

five-hundred

1, 500

1, 500

2, 000

2, 500

3, 000

Source SH& E, AEA, IATA, Type 41

a few

Average Stage Length (Km)

Total Operating Costs

Admin & Other 12% Ticketing, Sales & Promotion 14% Flight Operations 28%

Traveler services 11% Depreciation 6% En-Route/Airport 18%

Source (ICAO 2001 Community Average)

six

Maintenance 11%

Some ICAO and F41 Cost Malfunction Percentages

90 80 62 40 20 0

In di a

en konstruera l

B ra at he natursekt

ea h

on container

Ai 3rd there’s r

General & Admin Product sales & Promo Passenger Support User Fees Depreciation & Amortisation Protection 7

Air travel Operations

C

D un ta

(F 41 )

yJ ainsi que

JA T

Labour Productivity has an Influence on Costs

485

400

350

300 Earnings per Staff (US$ 000)

250

200

150

75

50

FR

SQ

LH

CX ALTERNATING CURRENT

BA

SK GO

KL

U2

QF

EK

SOCIAL MEDIA PACKAGE

CO

AF

GF

IB

TG

TP

SV

MH

IR

UL

8

Resource: Annual Accounts, Form forty one, AAPA 2001

Fuel Cost per QUESTION

1 . 6 LA 1 . 5 AIR CONDITIONER

1 . 5 Fuel Cost per REQUEST (US cents)

1 . a few SK 1 ) 2 U2 MH AF KL CX

1 . 1

LH FRIEND CO

SQ

1 . zero FR 0. 9

IB

BA

LUKE WEIL

AI UL QF

MARCHAR 0. 8

GO

TP

EK

zero. 7 five-hundred

1, 1000

1, five-hundred

2, 500 2, five-hundred Average Level Length (KM)

3, 500

3, five-hundred

4, 500

Source SH& E 2001

9

Maintenance and Change Costs as a Percentage of Total Working Costs Percentage of Total

18 16 13. 88 14 12 10. 15 10 8 6. 06 6 four 2 zero 5. apr 8. 0 11. goal 11. 06 13. 9 15. 71 14. 40 14. 55

ya em ir Meters ae rs k ea Air sy B Plane ra for B this individual rit natursekt is l Eu ro B rapid ejaculationature climax, ry meters an upon Ai C rw ity ay florida y s i9000 er Ex pr es s G O Florida y

10

Source: SH& E, ICAO 2000 Economic Data

Li th

Ur

ua national insurance an

Lu xa ir

Si lk ai 3rd there’s r

Maintenance Cost per Airline flight hour

1600

1400

Routine service Cost every Flight Hour (US$)

twelve hundred

1000

800

600

400

200

zero NH eleven JL CX TP HANDBAG TG KL GF GO SQ IB AI ALTERNATING CURRENT U2 SK AF CO AA FR EK

Supply: Annual Accounts, Form forty one, AAPA 2001

Cost of Sales per Passenger

Cost of Sales = commissions, ticketing, sales and advertising costs forty five

40

35 Cost of Sales per Traveler (US$)

40

25

20

15

12

5

zero BA NH EK SQ QF SV KL TP AF LH IB CO GF AIR CONDITIONING UNIT TG LUKE WEIL SK PROCEED CX U2 FR

Source: Annual Accounts, Form forty one, AAPA 2001

12

Promoting Expense being a Percentage of Sales

18%

16%

14% Marketing Expense as % of Income

12%

10%

8%

6%

4%

2%

0% IRGI 13 TP SV EK BA JL QF TG AF KL GO U2 SK CO FR IB GF SQ

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