ATA says first quarter 2008 airline costs rose record 31%.

Press Release Summary:



According to ATA Airline Cost Index, which tracks quarterly and annual trends in cost of inputs to airline production for U.S. passenger carriers, composite cost index rose to 228.7 in first quarter, up 31.3% from first quarter of 2007. Three largest components of index were fuel at 28.7%, labor at 20.9%, and transport-related expenses at 14.0%. Average price paid for fuel increased 50.8%, while overall unit operating cost per seat mile rose 1.51 cents to all-time high of 13.72 cents.



Original Press Release:



Air Transport Association Says First Quarter 2008 Airline Costs Rose Record 31 Percent



Surging Fuel Prices Resulted in Fastest Cost Increase since Second Quarter of 1980

WASHINGTON, Jul. 15, 2008 - The Air Transport Association of America (ATA), the industry trade organization for the leading U.S. airlines, today announced that U.S. passenger airlines saw first-quarter 2008 costs grow at the fastest pace since the second quarter of 1980.

The composite cost index rose to 228.7 in the first quarter, up 31.3 percent from the first quarter of 2007, easily outpacing the 4.2 percent increase in the U.S. Consumer Price Index.

The three largest components of the index - which includes all operating expenses as well as interest expense - were fuel (28.7 percent), labor (20.9 percent) and transport-related expenses* (14.0 percent). On average, fuel accounted for 29.4 percent of first-quarter operating costs. Year-over-year highlights include:

o The average price paid for fuel increased 50.8 percent

o Airlines experienced a 19.9 percent jump in maintenance material costs, offset in part by a 23.9 percent decline in aircraft insurance costs and a 17.0 percent decline in other insurance costs

o Overall unit operating cost per available seat mile rose 1.51 cents to an all-time high of 13.72 cents

o Despite a 2.6 percent increase in passenger yield, the average break-even load factor rose 6.2 points to 83.5 percent, well above the average realized load factor of 77.2 percent

"Ever increasing fuel prices are forcing painful service cuts and job reductions across the industry, with significant consequences for the U.S. economy," said ATA Chief Economist John Heimlich. "Along with our customers, employees and other aligned groups throughout the country, we are actively engaged in establishing a meaningful national energy policy that includes increased domestic supply, conservation, investment in energy alternatives and immediate curbs to rampant speculation in the energy futures markets."

The ATA Airline Cost Index is the only industry analysis of its kind, tracking quarterly and annual trends in the cost of inputs to airline production for U.S. passenger carriers that report quarterly financial information to the Department of Transportation. The index facilitates comparisons between the components themselves as well as broader economic indicators.

ATA airline members and their affiliates transport more than 90 percent of all U.S. airline passenger and cargo traffic. For more information about the industry, visit www.airlines.org.

*This category primarily comprises payments by mainline carriers to their regional partners to transport passengers and cargo on their behalf.

CONTACT: Elizabeth Merida

202-626-4205

Victoria Day

202-626-4141

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