01589969

Component

The cost index (CI) is a tool that is growing in importance for airlines. It works by balancing the costs of time with the cost of fuel to determine the speed of a flight. Slower speeds result in fuel cost savings but higher time-dependent costs and faster flights vice versa. With the cost of fuel rising and climate change issues surrounding air travel increasing the need for efficiency, the CI needs to be optimised. However, in general airlines find the calculation of CI challenging, particularly regarding extra costs owing to delay and cumulative maintenance and crew costs. The aim of this paper is to present a new way of calculating CI values on a flight-to-flight basis through the optimised cost index (OCI) model. Instead of constraining all costs to the traditional CI equation, the OCI model uses additional alternative calculations to take all costs into account fully. The OCI model provides an accessible and transparent way of calculating optimum CI values for airlines through a simple interface. In the future the model can also be used to assess the impact of future policies on a flight-to-flight basis, adding extra value to the OCI model.

This paper was sponsored by TRB committee AV040 Standing Committee on Aviation Economics and Forecasting.

01584066

16-5574

English

15p

2016

Transportation Research Board 95th Annual Meeting

Digital/other

Figures; References; Tables

Air travel; Civil aircraft; Cost indexes; Costs; Mathematical models

Aviation; Finance; Vehicles and Equipment; I10: Economics and Administration

Transportation Research Board Annual Meeting 2016 Paper #16-5574

PRP, TRIS, TRB, ATRI

Jan 12 2016 6:26PM