Friday, January 07, 2011

U.S. airline costs outpace revenues

U.S. airline costs outpaced rising revenue, labor productivity and efficiencies in the third quarter despite an improving financial system, the Air Transport Association said Thursday.

ATA, the trade group representing the major U.S. airlines, said carriers' expenses - measured by the "composite cost index" - rose 5 percent, to 209.8, in the third quarter compared with 2009's third quarter, exceeding the 1.2 percent increase in the U.S. shopper Price Index.

The composite airline cost index remains about 110 percent higher than its level of 100 in 2000, ATA economists told.

"The third-quarter results highlight the continued importance of offsetting the rising costs of doing business through operational efficiencies, productivity gains and diversification of revenue streams," told ATA Chief Economist John Heimlich. "Thanks to a strengthening economy and the continuing efforts of airlines to adapt to a volatile environment, the raise in costs did not stand in the way of profitability this (third) quarter.

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