Cost index calculation

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  • #1379

    Dear all,

    I am conducting a study on the impact of cost index usage for airlines and I would like to have a feedback from airlines and OEMs on how are you considering cost index calculation.

    By definition the cost index is the ratio of time related costs per fuel related costs.

    Fuel related costs are very easy to consider.
    The issue is the time related costs.

    For my study I am considering a fixed number of trips (or cycles) per year and I am changing only the cruise Mach number.
    Based on this assumption the only time related costs on my understanding are:

    (1) Aircraft direct maintenance costs (the ones affected only by flight time not flight cycle).
    (2) Crew costs (only the part that is variable with flight time, not all the cabin or flight crew salary.)

    I am not considering the aircraft ownership because as I have fixed the number of trips per year, in my understanding the ownership cost will not be affected by the changing of the flight time.
    The only time related cost I believe I am not considering is the delay cost.

    My questions are:

    (1) For a basic analysis may I consider as time related costs for cost index calculation only the DMC + Crew costs (only the components affected by flight time)?
    (2) How do you model the delay costs?
    (3) Is there any other time related costs that I should consider for the cost index calculation or should I consider the aircraft ownership for any other reason?

    Thanks a lot for your attention!

    Daniel de Oliveira Costa
    Aeronautical Engineer
    Aircraft Performance & Airline Fleet Planning
    Market Intelligence
    Embraer Commercial Aviation
    Phone (+55) 12 39 27 30 95

    Armando Gonzales

    Hi Daniel,
    A few thoughts:
    * You are correct that crew costs MAY have a time-related component, but salary structures vary from airline to airline. Further, some elements of the time-costs are non-linear “step functions,” so there is no “one size fits all” rule. You would have to develop an airline-specific model that considers the crew cost-model of that airline.
    * The FMC cost index function (on larger airplanes) is not intended to account for post-flight delay costs. These costs are also non-linear and include step functions. In any event, for the typical mission ranges that today’s E-jets fly, it is unlikely the difference between MRC and MMO will be able to recover even a short delay.
    * The simple conclusion: it is likely best to target a speed somewhere between min fuel and LRC. On shorter flights (1-3 hrs), it usually makes sense to target fuel efficiency as those costs will likely dominate.


    Hi Daniel,
    the big thing about cost index is that real trajectory optimization considers altitude simultaneously, and this can have a much bigger impact on flight time. On a short haul flight of 1:45, you can experience a difference of 10-12 minutes between maximum range cruise (CI=0) and minimum time (CI=999), of course at the cost of fuel. But this makes delay cost optimization extremely important, as those 10 minutes can make the difference between getting you passengers connected or not. Furthermore, in some cases, CI will give you a time advantage with very little extra fuel burn.
    Together with dynamic inflight updates, CI can be very useful and efficient in delay cost management, even on short-haul flights.

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