Outlook for Air Transport to the Year 2025 - FILT CGIL Foggia

Chapter 4. Airline Financial Trends 2984Airline unit cost(left-hand scale)9060Change in cost/ATK (%)0–4300Change in fuel price (%)–8Fuel price(right-hand scale)–30–12–601975 78 81 84 87 90 93 96 99 2002 2005Source: ICAO Reporting Forms A and EF, US Department of Energy.Note.— Excluding domestic operations of airlines registered in the Russian Federation prior to 1996.Figure 4-4. Changes in unit operating costs ofscheduled airlines and fuel prices — World (1975–2005)(U.S. cents per ATK in real terms)6. Airline operating costs are heavily influenced by jet fuel prices. Due to large increases in oil prices in1979, unit costs rose sharply in 1980 with fuel costs accounting for almost 29 per cent of the total costs ofscheduled airlines. Unit costs declined during the period 1982–1985 partly as a result of declining fuel prices. Theshare of aircraft fuel and oil costs in total operating costs varies in tandem with fuel prices as illustrated inFigure 4-5, Following the sharp increases in oil prices in the years 2004 and 2005, the share of fuel and oil costsregained its 1985 level after remaining confined within the 10 to 15 per cent range over the period in between Inthe absence of hedging, short-term variations in fuel prices would have an immediate impact on unit costs forcingthe airlines to look for alternative cost reduction measures or pass the costs to the passenger through higher fares.In the long term, fuel prices are expected to remain within the range of 40 to 60 dollars per barrel and theirpressure on costs is expected to remain at its current level. In addition to aircraft fuel costs, other factors that havean important impact on unit costs include aircraft utilization and capacity.Operating revenues and expenses by category and region7. When comparing 1985 and 2005, as presented in Table 4-3, the share of revenues from scheduled servicesdeclined more than 3 percentage points and accounted for nearly 87 per cent of total operating revenues in 2005,while that of incidental revenues (which cover sales of services and maintenance, leasing of aircraft to other airlinesand other non-core transport-related activities) jumped to 10 per cent. But this distribution has broadly been aboutthe same since the early 1990s.