This report presents a new economic model of operating expenses for 67 airlines. The model is based on data that the airlines reported to the United States Department of Transportation in 1999. The model incorporates expense-estimating equations that capture direct and indirect expenses of both passenger and cargo airlines. The variables and business factors included in the equations are detailed enough to calculate expenses at the flight equipment reporting level. Total operating expenses for a given airline are then obtained by summation over all aircraft operated by the airline. The model's accuracy is demonstrated by correlation with the DOT Form 41 data from which it was derived. Passenger airlines are more accurately modeled than cargo airlines. An appendix presents a concise summary of the expense estimating equations with explanatory notes. The equations include many operational and aircraft variables, which accommodate any changes that airline and aircraft manufacturers might make to lower expenses in the future. In 1999, total operating expenses of the 67 airlines included in this study amounted to slightly over $100.5 billion. The economic model reported herein estimates $109.3 billion.Harris, Franklin D.Ames Research CenterAIRLINE OPERATIONS; COMMERCIAL AIRCRAFT; ECONOMICS; ESTIMATES; CIVIL AVIATION; COSTS; TRANSPORTATION; CARGO

A multiple regression analysis of domestic and local airline indirect costs was carried out to formulate cost estimating equations for airline indirect costs. Data from CAB and FAA sources covering the years 1962-66 was used, and the costs were broken down into the classification of the uniform system of accounts Form 41, used by the airlines in reporting to the CAB. Thus regression equations were found for 1) annual system expenses in the categories such as Passenger Servicing, Traffic Servicing, Promotion and Sales, General and Administrative, etc. as well as an overall indirect operating cost; and 2) annual station expenses where the Aircraft and Traffic Servicing expenses for individual stations are examined. A stepwise regression technique is used to select the best combinations of independent variables for the equations. The independent variables were data such as revenue passenger miles, passengers enplaned, revenue aircraft miles, total revenue aircraft departures, etc. The results generally showed that a high degree of correlation could be found between the costs and some combination of these variables.

This report presents a new economic model of operating expenses for 67 airlines. The model is based on data that the airlines reported to the United States Department of Transportation in 1999. The model incorporates expense-estimating equations that capture direct and indirect expenses of both passenger and cargo airlines. The variables and business factors included in the equations are detailed enough to calculate expenses at the flight equipment reporting level. Total operating expenses for a given airline are then obtained by summation over all aircraft operated by the airline. The model's accuracy is demonstrated by correlation with the DOT Form 41 data from which it was derived. Passenger airlines are more accurately modeled than cargo airlines. An appendix presents a concise summary of the expense estimating equations with explanatory notes. The equations include many operational and aircraft variables, which accommodate any changes that airline and aircraft manufacturers might make to lower expenses in the future. In 1999, total operating expenses of the 67 airlines included in this study amounted to slightly over $100.5 billion. The economic model reported herein estimates $109.3 billion.