Circular 280. Edition 1
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Regional Differences in International Airline Operating Economics: 1997
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ICAO CIRCULAR 280-AT/117 CIRCULAR 0 QA.Ct o '1. ,o .fl 0 -' -...... 'le' vJ .w. , 2000 REGIONAL DIFFERENCES IN INTERNATIONAL AIRLINE OPERATING ECONOMICS 1997 Approved by the Secretary General and published undeJJJis authority INTERNATIONAL CIVIL AVIATION ORGANIZATION , MONTREALCANADA
Published in separate English, French, Russian and Spanish editions by the International Civil Aviation Organization. All correspondence, except orders and subscriptions, should be addressed to the Secretary General. Orders should be sent to one of the following addresses, together with the appropriate remittance by bank draft, cheque or money order in U.S. dollars or the currency of the country in which the order is placed. Credit card orders American Express, MasterCard and Visa are accepted at ICAO Headquarters. International Civil Aviation Organization. Attention Document Sales Unit 999 University Street, Montreal, Quebec, Canada H3C 5H7 Telephone 514 954-8022 Telex 05-24513 Facsimile 514 954-6769 Sitatex YULADYA E-mail salesuniticao.int Egypt. ICAO Regional Director, Middle East Office, Egyptian Civil Aviation Complex, Cairo Airport Road, Heliopolis, Cairo 11776 Telephone 20 2 267-4840 Facsimile 20 2 267-4843 Sitatex CAICA YA France. Directeur regional de l'OACI, Bureau Europe et Atlantique Nord, 3 bis, villa Emile-Bergerat, 92522 Neuilly-sur-Seine Cedex Telephone 33 1 46 41 85 85 Telecopieur 33 1 46 41 85 00 Sitatex PAREUYA India. Oxford Book and Stationery Co., Scindia House, New Delhi 110001 or 17 Park Street, Calcutta 700016 Telephone 91 11 331-5896 Facsimile 91 11 332-2639 Japan. Japan Civil Aviation Promotion Foundation, 15-12, 1-chome, Toranomon, Minato-Ku, Tokyo Telephone 81 3 3503-2686 Facsimile 81 3 3503-2689 Kenya. ICAO Regional Director, Eastern and Southern African Office, United Nations Accommodation, P.O. Box 46294, Nairobi Telephone 254-2 622-395 Facsimile 254 2 226-706 Sitatex NBOCA YA Mexico. Director Regional de la OACI, Oficina Norteamerica, Centroamerica y Caribe, Masaryk No. 29-3er. piso, Col. Chapultepec Morales, Mexico, D.F., 11570 Telefono 52 5 250-3211 Facsfmile 52 5 203-2757 Sitatex MEX CA YA Peru. Director Regional dela oAci, Oficina Sudamerica, Apartado 4127, Lima 100 Telefono 51 14 302260 Facsfmile 51 14 640393 Sitatex LIMCAYA Russian Federation. Aviaizdat, 48, 1. Franko Street, Moscow 121351 Telephone 7 095 417-0405 Facsimile 7 095 417-0254 Senegal. Directeur regional de l'OACI, Bureau Afrique occidentale et centrale, Boite postale 2356, Dakar Telephone 221 8-23-54-52 Telecopieur 221 8-23-69-26 Sitatex DKRCA YA South Africa. A vex Air Training Pty Ltd., Private Bag X102, Halfway House, 1685, Republic of South Africa Telephone 27-11 315-0003/4 Facsimile 27-11 805-3649 E-mail avexiafrica.com Spain. A.E.N.A. -Aeropuertos Espaiioles y Navegaci6n Aerea, Calle Juan Ignacio Luca de Tena, 14, Planta Tercera, Despacho 3. 11, 28027 Madrid Telefono 34 91 321-3148 Facsfmile 34 91 321-3157 Correo electr6nico sscc.ventasoaciaena.es Thailand. ICAO Regional Director, Asia and Pacific Office, P.O. Box 11, Samyaek Ladprao, Bangkok 10901 Telephone 66 2 537-8189 Facsimile 66 2 537-8199 Sitatex BKKCA YA United Kingdom. Westward Documedia, 37 Windsor Street, Cheltenham, Glos., GL52 2DG Telephone 44 1242 235-151 Facsimile 44 1242 584-139 Catalogue of ICAO Publications and Audio-visual Training Aids Issued annually, the Catalogue lists all publications and audio-visual training aids currently available. Monthly supplements announce new publications and audio-visual training aids, amendments, supplements, reprints, etc. Available free from the Document Sales Unit, ICAO 5/00
TABLE OF CONTENTS Page 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. LEVELS OF UNIT REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Passenger traffic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Freight and mail traffic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3. REGIONAL DIFFERENCES IN SCHEDULED PASSENGER UNIT REVENUES AND RELATED COSTS ............................................. 11 Overall financial results by international route group . . . . . . . . . . . . . . . . . . . . . . . . 11 Comparison of results for 1997 with those for 1992 . . . . . . . . . . . . . . . . . . . . . . . . . 12 Variations in revenue/cost ratios among airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 4. FACTORS CAUSING REGIONAL DIFFERENCES IN COSTS . . . . . . . . . . . . . . . . 21 Aircraft mix and stage length . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Prices for aircraft fuel and oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Airport and associated charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Load factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Other causes of regional differences in costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Summary of the causes of regional differences in costs . . . . . . . . . . . . . . . . . . . . . 29 APPENDIX 1. SELECTED DATA SERIES COVERING 1992 TO 1997 ............ 31 APPENDIX 2. DATA SOURCES AND COVERAGE .......................... 40 Sources ......................................................... 40 Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 APPENDIX 3. METHOD OF ANALYSIS AND MARGINS OF UNCERTAINTY ...... 45 Method of analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Margins of uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 APPENDIX 4. QUESTIONNAIRES RELATING TO REVENUES AND COSTS . . . . . . 50 I. Facsimiles of questionnaires and attachments . . . . . . . . . . . . . . . . . . . . . . . . . . 50 II. Respondents to questionnaires ...................................... 54 i
Chapter 1 INTRODUCTION 1.1 This circular has been prepared pursuant to lCAO Assembly Resolution A32-17, Appendix G, which directs the Council to issue periodically "a study on regional differences on the level of international air transport operating costs, analysing how differences in operations and input prices may affect their levels and the impact that changes in costs may have on air transport tariffs". Focusing on the year 1997, this study on Regional Differences in International Airline Operating Economics, is a successor to the series of annual studies on Regional Differences in Fares, Rates and Costs for International Air Transport, which covered the years 1976 to 1992 the 1992 results being published in Circular 254-AT/104. 1.2 For 17 international route groups, comprising all international routes, passenger, freight and mail revenue yield data are presented in Capter 2 for scheduled services along with passenger and freight revenue yield data for non-scheduled operations. For the same route groups, regional differences in the costs related to the scheduled service passenger yields are presented in Chapter 3. Finally, major causes of regional differences in costs are identified in Chapter 4. 1.3 This study compares the 1997 results with those for 1992, with data for the intermediate years 1993 to 1996 also provided in Appendix 1. The sources of data used in the study are given in Appendix 2 together with information on the sample sizes on which revenue and cost data are based. The method of analysis used in the study is presented in Appendix 3 together with information on the margins of uncertainty, which should be borne in mind when considering the results of studies of this nature. 1.4 Unless indicated otherwise, all references in this circular to "cents" mean "U.S. cents", and all references to "dollars" mean "U.S. dollars". 1
Chapter 2 LEVELS OF UNIT REVENUES Passenger traffic 2.1 Estimates of average unit passenger revenues in 1997 by route group are presented in Table 2-1. 2.2 The first column of Table 2-1 shows the average revenue per passenger-kilometre for scheduled passenger traffic on each route group. These data are considered representative of all airlines operating on that route group and also include estimates for non-reporting airlines. The data are presented without distinction to class of travel or fare type. Thus they represent the overall weighted average for all individual routes on all route groups and for all fare types. The overall average revenue per passenger-kilometre was estimated at 8.20 cents for 1997, but the route group averages vary from a high of 17.3 cents in local Europe to a low of 5.5 cents on routes across the Mid-Atlantic. Due to inadequate representation in reporting, two route groups, Central America/Caribbean and local Africa, are not included in this analysis, although their estimates are included in the worldwide totals. 2.3 The second column ofTable 2-1 depicts the average revenue per passenger-kilometre for nonscheduled passenger traffic reported for each route group. In this case, no attempt has been made to estimate unit revenues for non-reporting air carriers. The average revenue per passenger-kilometre for non-scheduled services ranges from a high of 13.6 cents for traffic within North America to a low of 4.3 cents on routes between North America and Central America/Caribbean. Except for routes in local Europe, where the bulk of non-scheduled operations is to be found, the non-scheduled traffic reported is limited in volume. It is estimated that non-scheduled traffic represented just under 14 per cent of the total international passenger-kilometres performed in 1997. The final two columns of Table 2-1 show the average passenger load factor for scheduled services and non-scheduled services. 2.4 On a worldwide basis, the estimated average revenue per passenger-kilometre for scheduled services excluding incidental revenues at 8.20 cents in 1997 showed a decrease of about 10 per cent from the 9.08 cents achieved in 1992. Comparable data by route group between 1992 and 1997 are only available for 15 individual route groups. Figure 2-1 shows that of these 15 route groups, 9 showed significant decreases in yields between 1992 and 1997, ranging from a reduction of some 28 percent for routes between Europe and Africa to almost 7 per cent for routes between North and South America. For the South Pacific and North American route groups, the average yield remained almost the same. For the remaining 4 route groups, minor increases were observed, except for routes within South America where an increase of 14 per cent occurred. A year-to-year comparison of the estimated average revenue per passenger-kilometre for the years 1992 to 1997 is shown in Table A 1-1 of Appendix 1. 2.5 The changes in yields experienced between 1992 and 1997 reflect the strengthening of the U.S. dollar against most of the otherworld currencies, especially the currencies of African countries. However, some States in the Asia/Pacific Region saw their currencies appreciating against the U.S. dollar. Hence the relative change between 1992 and 1997 would, in many cases, be significantly different if expressed in the national currencies of the airlines concerned. A brief evaluation of this effect is given in Chapter 3, 3.10 and 3.11. 2
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Annex 9. Edition 16. FacilitationCircular 254. Regional Differences in Fares, Rates and Costs for International Air Transport - 1992Doc 9770. Annual Report of the CouncilCircular 260. Aircraft Accident Digest No. 35Circular 306. Edition 1. Regional Differences in International Airline Operating Economics: 2000 and 2001Circular 310. Edition 1. Regional Differences in International Airline Operating Economics, 2002 and 2003Circular 316. Edition 1. Regional Differences in International Airline Operating Economics, 2004 and 2005Circular 327. Edition 1. Regional Differences in International Airline Operating Economics: 2006 and 2007ВСЕ ДОКУМЕНТЫALL DOCUMENTSICAO CIRCULASЦИРКУЛЯРЫCircular 280
Table Of Contents
COVER PAGE
TABLE OF CONTENTS
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Appendix 1
Appendix 2
Appendix 3
Appendix 4