Title 14: Aeronautics and Space
PART 399—STATEMENTS OF GENERAL POLICY
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Subpart C—Policies Relating to Rates and Tariffs
§ 399.30 Definitions.
As used in this subpart:
DPFI formula fare means the trunk coach formula fare on July 1, 1977, as established by the Board in Phase 9 of the Domestic Passenger Fares Investigation (Docket 21866–9).
SIFL means the standard industry fare level, as set forth in §399.31.
[PS–92, 45 FR 24118, Apr. 9, 1980]
§ 399.31 Standard industry fare level.
(a) Generally. Except as set forth in paragraph (d) of this section, the standard industry fare level (“SIFL”) for coach/standard service in a market is equal to the predominant fare in effect in that market on July 1, 1977, as adjusted by the Board for cost increases.
(b) Predominant fare. For each market, the predominant fare in effect on July 1, 1977, is presumed to be as set forth below. The presumption may be rebutted, however, by showing that more passengers used a higher fare.
(1) For U.S. Mainland-Puerto Rico/Virgin Islands markets where the Board has specified day-of-week fare differentials: the peak-season midweek fare appearing in tariffs in effect on July 1, 1977.
(2) For U.S. Mainland-Puerto Rico/Virgin Islands markets where the Board has specified only seasonal fare differentials: the off-peak-season fare appearing in tariffs in effect on July 1, 1977.
(3) For U.S. Mainland-Hawaii markets: the peak-season second class fare appearing in tariffs in effect on July 1, 1977.
(4) For all other interstate and overseas markets: the lowest unrestricted fare in effect on July 1, 1977.
(c) Adjustments for cost increases. The Board adjusts the SIFL at least once every 6 months by the percentage change, since the previous adjustment, in the actual operating cost per available seat-mile for interstate and overseas transportation combined. The method of adjustment is illustrated in the example set out at the end of this subpart.
(d) Intrastate markets in California, Florida, and Texas. For each of these markets, the SIFL is equal to the level that it would be if the market were an interstate one whose predominant fare on July 1, 1977, was the DPFI formula fare.
(e) Intra-Hawaii markets. For intra-Hawaii markets, the Board's flexibility zones are based not on the SIFL, but on the standard Hawaiian fare level (“SHFL”), which is equal to 110 percent of the first class fare in effect on July 1, 1977, as adjusted by the Board for cost increases.
[PS–92, 45 FR 24118, Apr. 9, 1980, as amended by PS–95, 45 FR 42255, June 24, 1980; PS–96, 45 FR 48604, July 21, 1980]
§ 399.32 Zone of limited suspension for domestic passenger fares.
(a) Applicability. This section sets forth the Board's policy on passenger fares for scheduled service by certificated air carriers in the following areas, except to the extent that greater flexibility is set forth in §399.33:
(1) Within the 48 contiguous States and the District of Columbia (“the Mainland”); and
(2) Between the Mainland and Puerto Rico, the Virgin Islands, Hawaii, or Alaska.
(b) Downward flexibility. Each carrier may set fares in each market at any amount below the SIFL. The Board will not suspend such a fare on the ground that its level is unreasonable, except in the following extraordinary circumstances:
(1) There is a high probability that the fare would be found to be unlawful after investigation;
(2) There is a substantial likelihood that the fare is predatory so that there would be an immediate and irreparable harm to competition if the fare were allowed to go into effect;
(3) The harm to competition is greater than the injury to the traveling public if the proposed fare were unavailable; and
(4) The suspension is in the public interest.
(c) [Reserved]
(d) Upward flexibility. Each carrier may set fares above the SIFL as follows, and where they are so set, the Board will not suspend them on the grounds that their level is unreasonable except upon a clear showing of abuse of market power that the Board does not expect to be corrected through marketplace forces:
(1) For service on the Mainland: Up to 30 percent above the sum of the SIFL plus $14. Each time after January 13, 1981, that the Board adjusts the SIFL for cost increases in accordance with §399.31(c), it will adjust the $14 figure by the same percentage rounded to the nearest whole dollar. The Board order announcing the adjustment will be published in the Federal Register and served on all certificated carriers, and copies will be available through the Domestic Fares and Rates Division, Bureau of Domestic Aviation, Civil Aeronautics Board, Washington, D.C. 20428.
(2) For service between the Mainland and Puerto Rico, the Virgin Islands, Hawaii, or Alaska: Up to 30 percent above the SIFL.
(e) Fares above the zone. Tariff filings that state fares above the applicable zone must include the data and information set forth in §221.165 of this chapter. For peak fares, this must include a description of the carrier's off-peak fares that are available in the market. The Board will suspend a fare above the zone that it finds not to be justified by cost or competitive factors.
[PS–94, 45 FR 40973, June 17, 1980, as amended by PS–96, 45 FR 48604, July 21, 1980; PS–101, 46 FR 11809, Feb. 11, 1981]
§ 399.33 Additional fare flexibility.
For scheduled service in the areas set forth in §399.32(a), certificated air carriers have the following fare flexibility in addition to that set forth in §399.32:
(a) First class. Carriers may without restriction set the level of first class fares.
(b) Small aircraft. Carriers may without restriction set the level of fares for service with aircraft designed to have a maximum passenger capacity of 60 or fewer seats.
(c) Through service and on-line connecting service. For through service and on-line connecting service, carriers may set their fares up to the sum of the local fares minus one tax-rounded coach ceiling terminal charge for each local fare after the first, if that level is higher than the ceiling set forth in §399.32(d). The Board will not suspend such a fare on the ground that its level is unreasonable except upon a clear showing of abuse of market power that the Board does not expect to be corrected through marketplace forces.
[PS–92, 45 FR 24119, Apr. 9, 1980, as amended by PS–94, 45 FR 40974, June 17, 1980; PS–96, 45 FR 48604, July 21, 1980]
§ 399.34 Intra-Hawaii and Intra-Puerto Rico/Virgin Islands fare flexibility.
For scheduled service within Hawaii, and within and between Puerto Rico and the Virgin Islands, certificated air carriers have the fare flexibility set forth in §§399.32 and 399.33, except that:
(a) Instead of the limits set forth in §399.32(d), the upper limit of the zone for Puerto Rico/Virgin Islands is 30 percent above the SIFL, and for Hawaii is 30 percent above the SHFL; and
(b) The fare flexibility set forth in §399.33(a) (first class) does not apply to service within Hawaii.
Appendix A to § 399.34_United States-Puerto Rico Entity [Normal fares in selected markets_comparison with SIFL]---------------------------------------------------------------------------------------------------------------- July 1977 normal fare May 1980 normal fare DPFI level level formula ------------------------ DPFI ----------------------- Market Ratemaking fare Peak Offpeak formula Peak Offpeak mileage July ------------------------ May 1980 ----------------------- 1977 Mid Week Mid Week Mid Week Mid Week week end week end week end week end----------------------------------------------------------------------------------------------------------------San Juan: Atlanta....................... 1,547 $130.81 .... .... .... .... $203.53 .... .... .... .... Eastern..................... .......... ........ $113 $113 $107 $107 ........ $176 $176 $166 $166 Boston........................ 1,674 139.04 .... .... .... .... 216.33 .... .... .... .... American.................... .......... ........ .... .... .... .... ........ 209 218 199 209 Eastern..................... .......... ........ 122 128 116 122 ........ 209 218 198 209 Chicago....................... 2,072 164.83 .... .... .... .... 256.45 .... .... .... .... American.................... .......... ........ 149 149 143 143 ........ 232 232 222 222 Eastern..................... .......... ........ 149 149 143 143 ........ 232 232 222 222 Miami......................... 1,045 97.09 .... .... .... .... 151.06 .... .... .... .... American.................... .......... ........ .... .... .... .... ........ 121 131 113 121 Delta....................... .......... ........ .... .... .... .... ........ 121 131 113 121 Eastern..................... .......... ........ 78 84 72 78 ........ 121 131 112 121 Pan Am (National)........... .......... ........ 78 84 72 78 ........ 122 122 122 122 New York...................... 1,597 134.05 .... .... .... .... 208.57 .... .... .... .... American.................... .......... ........ 108 114 102 108 ........ 175 196 175 196 Eastern..................... .......... ........ 108 114 102 108 ........ 175 196 175 196 Pan Am...................... .......... ........ .... .... .... .... ........ 147 147 147 147 Phildelaphia.................. 1,576 132.69 .... .... .... .... 206.45 .... .... .... .... American.................... .......... ........ 115 121 109 115 ........ 197 208 187 197 Eastern..................... .......... ........ 115 121 109 115 ........ 175 196 175 196 Washington.................... 1,565 131.97 .... .... .... .... 205.34 .... .... .... .... American.................... .......... ........ 114 120 108 114 ........ 187 197 176 187 Eastern..................... .......... ........ 114 120 108 114 ........ 195 206 184 195 Pan Am (National)........... .......... ........ .... .... .... .... ........ 147 147 147 147----------------------------------------------------------------------------------------------------------------
Appendix B to § 399.34_Selected Fare and Service Data for Seattle-Alaska Markets-------------------------------------------------------------------------------------------------------------------------------------------------------- Y fare as of June O. & Actual DPFI SIFL 1980 \2\ D. Ratemaking July formula formula ------------------- passengers Carriers providing single plane Market mileage 1977 Y fare May fare May Y/E Aug. service June 1980 \4\ fare 1980 \1\ 1980 Alaska Wien 30, 1979 \10\ Airlines Alaska \3\--------------------------------------------------------------------------------------------------------------------------------------------------------Seattle: Anchorage.................................. 1,448 $119.00 $193.52 $185.14 $159 $159 196,630 AS/NW/WA/WC Cordova.................................... 1,293 118.62 176.85 184.55 178 ....... 4,330 AS Fairbanks.................................. 1,533 131.00 201.85 203.81 204 204 44,910 AS/NW/WC Gustavus (Via JNU)......................... 950 109.62 140.74 170.55 138 ....... 1,340 AS Juneau..................................... 909 90.62 137.04 140.99 141 141 40,110 AS/WC Ketchikan.................................. 680 71.62 112.96 111.43 112 112 34,970 AS/WC Petersburg (Via KTN)....................... 790 89.22 124.07 138.81 138 ....... 6,870 AS Sitka...................................... 862 85.62 131.48 133 133.21 ....... 17,240 AS Wrangell (Via KTN)......................... 762 89.22 121.30 138.81 138 ....... 4,120 AS Yakutat.................................... 1,092 117.62 155.56 182.99 175 ....... 1,500 AS Kenai \5\.................................. 1,468 124.28 198.37 193.35 ........ 159 2,470 WC King Salmon \6\............................ 1,603 167.94 209.26 261.28 ........ 200 4,090 WC Prudhoe Bay \7\............................ 1,802 190.74 229.63 296.75 ........ 273 960 WC Kodiak \8\................................. 1,439 119.00 192.59 185.14 ........ 155 11,140 WC Homer \9\.................................. 1,449 143.40 193.52 223.10 ........ 159 1,250 WC--------------------------------------------------------------------------------------------------------------------------------------------------------\1\ $25.14 plus 13.75¢ per mile (0-500); 10.49¢ per mile (501-1500); 10.08¢ per mile (1501 and over). See Order 80-4-211.\2\ Domestic Tariffs.\3\ O. & D. Origin Destination Survey of Airline Passenger Traffic, Table 8, 12 months ended September 30, 1979.\4\ AS=Alaska Airlines; NW=Northwest Orient Airlines; WA=Western Airlines; WC=Wien Air Alaska.\5\ Via Anchorage ($15.28).\6\ Via Anchorage ($48.94).\7\ Via Fairbanks ($59.74).\8\ Local WA Fare.\9\ Via Kodiak ($24.40).\10\ July 1977 fare increased by cumulative adjustment factor of 1.5558% per Order 80-4-211.
Appendix C to § 399.34_Adjustment of the Intra-Hawaiian Fare Level July 1, 1977, To Reflect Cost at 12.35 Percent Return-------------------------------------------------------------------------------------------------------------------------------------------------------- Regulatory actual Y.E. March Cost inflation adjusted to July 1, July 1, 1977 1977 1977, at ------------------------------------------------------------------------- 12.35 pct Aloha Hawaiian Total Aloha Hawaiian Total R.O.I.--------------------------------------------------------------------------------------------------------------------------------------------------------RPM's (000)........................................................ 321,578 404,793 726,371 321,578 404,793 726,371 726,371ASM's (000)........................................................ 489,128 638,050 1,127,178 489,128 638,050 1,127,178 1,127,178Load Factor (percent).............................................. 65.75 63.44 64.44 65.75 63.44 64.44 64.4Yield (dollars) \2\................................................ $0.1427 $0.1453 $0.1441 $0.1427 $0.1453 $0.1441 $0.1589Operating Revenue_Total............................................ $47,648 $71,599 $119,247 ........... ........... ........... ..........Passenger Related Revenue.......................................... $46,301 $59,942 $106,243 $46,301 $59,942 $106,243 $116,966Operating Expense_Total............................................ $45,195 $68,836 $114,031 ........... ........... ........... ..........Passenger Related Expenses......................................... $43,858 $57,501 $101,359 \1\ $45,937 $59,013 \1\ $104,950 $104,950Operating Profit_Passenger......................................... $2,443 $2,441 $4,884 $364 $929 $1,293 $12,016Interest Expense................................................... $741 $2,583 $3,324 $741 $2,583 $3,324 $3,324Earnings Before Tax................................................ $1,702 $(142) $1,560 $(377) $(1,654) $(2,031) $8,692Tax at 48 Percent.................................................. $817 $68 $749 $181 $794 $975 $4,172 ------------------------------------------------------------------------------------Net Income......................................................... $885 $(74) $811 $(196) $(860) $(1,056) $4,520Return Element..................................................... $1,626 $2,509 $4,135 $545 $1,723 $2,268 $7,844Investment......................................................... $16,192 $47,326 $63,518 $16,192 $47,326 $63,518 $63,518Return on Investment (percent)..................................... 10.04 5.30 6.51 3.37 3.64 3.57 12.35Increase Factor \3\................................................ ......... ......... .......... ........... ........... ........... 10.27--------------------------------------------------------------------------------------------------------------------------------------------------------\1\ Cost inflation to July 1, 1977; 1.047 percent for Aloha, 1.026 for Hawaiian. The differing rates for the two carriers, having equivalent aircraft and duplicate route structures, is due primarily to a shift by Hawaiian to larger DC-9-50 aircraft starting in the fourth quarter of 1976.\2\ Passenger revenue divided by RPM's.\3\ Passenger yield at 12.35 percent return divided by actual passenger yield for the year ended March 1977.
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[PS–96, 45 FR 48604, July 21, 1980] § 399.35 Special tariff permission.
(a) Definition. As used in this section, to grant STP means to approve a carrier's application for Special Tariff Permission to file a tariff on less than the statutory notice set forth in §221.160(a) of this chapter.
(b) Lower fares, rates, and charges. It is the policy of the Board to grant STP for tariffs that state lower fares, rates, or charges and any rules affecting only those lower fares, rates, or charges, except that:
(1) The Board will not grant STP to match a tariff filed on statutory notice; and
(2) The Board will not grant STP if the proposed fares, rates, charges, or rules raise significant questions of lawfulness, that is, could reasonably be expected to be found unjust or unreasonable, unjustly discriminatory, unduly preferential, unduly prejudicial, or predatory, under current statutory or Board guidelines. In these situations, if the carrier files the tariff on statutory notice and at the same time applies for STP to advance the tariff's effective date, the Board will use its best efforts to act within 15 days to grant or deny STP.
(c) Higher fares or rates. For tariffs that state higher fares or rates, and any rules affecting only those fares or rates, the Board's policy on STP is, except in unusual or emergency circumstances:
(1) To grant STP if the resulting fares or rates are within a statutory or Board-established zone of fare or rate flexibility; and
(2) Otherwise, to deny STP.
[PS–94, 45 FR 40974, June 17, 1980, as amended by PS–109, 48 FR 4279, Jan. 31, 1983] § 399.36 Unreasonable discrimination.
(a) As used in this section:
(1) Unreasonable discrimination means unjust discrimination or unreasonable preference or prejudice; and
(2) Rate means rate, fare, or charge.
(b) Except in unusual circumstances or as provided in paragraph (c) of this section, the Board will find a rate for domestic air transportation to constitute unreasonable discrimination only if:
(1) There is a reasonable probability that the rate will result in significant long-run economic injury to passengers or shippers;
(2) The rate is in fact discriminatory according to a reasonable cost allocation or other rational basis;
(3) The rate does not provide transportation or other statutorily recognized benefits that justify the discrimination; and
(4) Actual and potential competitive forces cannot reliably be expected to eliminate the undesirable effects of the discrimination within a reasonable period.
(c) A rate that discriminates on the basis of the status of the traffic carried will not be presumed to be unreasonably discriminatory, unless the use of the status categories in question is contrary to established national anti-discrimination policy.
[PS–93, 45 FR 36062, May 29, 1980] § 399.37 Joint fares.
There should be joint fares in all markets over all routings within the contiguous 48 states and the District of Columbia as follows:
(a) Level. The level shall not exceed the sum of the maximum local fares permitted by this subpart minus one tax-rounded coach ceiling terminal charge for each interline connection, and in any event shall not exceed the sum of the actual local fares.
(b) Division. Joint fares shall be divided according to the relative costs of the mileage flown by each carrier participating in the interline movement. However, where a joint fare is equal to the sum of the actual local fares, each carrier shall get the local fare as its share.
[PS–92, 45 FR 24119, Apr. 9, 1980, as amended by PS–95, 45 FR 42255, June 24, 1980] § 399.39 Equipment purchase deposits.
Equipment purchase deposits are advance payments made by air carriers to manufacturers for the purchase of equipment to be delivered in the future, or funds segregated by air carriers for this purpose. It is the policy of the Board not to recognize equipment purchase deposits in an air carrier's investment base for ratemaking purposes. When equipment is acquired by an air carrier and placed in air-transport service, the Board will recognize in the air carrier's investment base interest on purchase deposits on such equipment capitalized and amortized in accordance with the Uniform System of Accounts and Reports for Certificated Air Carriers (part 241 of this chapter).
[PS–32, 32 FR 5370, Mar. 30, 1967] § 399.40 Tariffs for domestic air transportation on or after January 1, 1983.
The Board will not approve or accept any tariff filings for interstate of overseas air transportation to be performed on or after January 1, 1983. Any tariffs for such transportation that do not specify an earlier expiration date shall expire at midnight on December 31, 1982.
[PS–107, 47 FR 14893, Apr. 7, 1982] § 399.41 Zones of limited suspension for international cargo rates.
(a) Applicability. This section states the Board's policy for suspending rate changes for the transportation of property in foreign air transportation. It does not affect the Board's authority to suspend any rate as unjustly discriminatory, unduly preferential, or unduly prejudicial. This section applies to rate changes by all direct air carriers and direct foreign air carriers.
(b) Standard foreign rate levels. For each market in foreign air transportation, the standard foreign rate level for the carriage of property shall be the bulk general commodity rates in effect in that market on April 1, 1982, as adjusted in accordance with paragraph (f) of this section. However, the general commodity rate for shipments larger than 500 kg. shall be deemed to be the same as the 500 kg. rate for the purposes of this paragraph, regardless of any different rate in effect in the market.
(c) Ceilings of limited rate suspension. Except as provided in paragraph (d) of this section, the Board will not suspend as unreasonable any proposed rate for foreign air transportation of property equal to or less than the following levels:
(1) For all bulk rates (GCR's and SCR's) in the Atlantic region, 20 percent above the standard foreign rate level.
(2) For all bulk rates (GCR's and SCR's) in the Pacific region, 15 percent above the standard foreign rate level.
(3) For all bulk rates (GCR's and SCR's) in the Western Hemisphere region (except Mexico and Canada), 5 percent above the standard foreign rate level.
(4) For all bulk rates (GCR's and SCR's) in Canada/Mexico transborder markets, 10 percent above the standard foreign rate level for the Western Hemisphere.
(5) For all container rates, no maximum level.
(d) Extraordinary circumstances. The Board may suspend any tariff if it finds that:
(1) The suspension is in the public interest because of unreasonable regulatory action by a foreign government with respect to rate proposals of an air carrier, or
(2) All of the following extraordinary circumstances are present:
(i) It is highly probable that the fare would be found unreasonable after investigation;
(ii) There is a substantial likelihood of immediate and irreparable harm to the public if the rate is allowed to go into effect; and
(iii) The suspension is required by the public interest.
(e) Burden of proof. Persons requesting tariff suspension under paragraph (d) of this section shall have the burden of producing convincing evidence that the conditions of that paragraph are present.
(f) Standard foreign rate level adjustments. (1) The Board will periodically adjust the standard foreign rate levels to reflect the percentage change in average operating costs per available ton-mile since the previous adjustment.
(2) Costs will be averaged for three regions—the Atlantic, the Pacific, and Western Hemisphere—and applied equally among all markets in each region.
(3) Cost computations will be based on scheduled freighter and combination service by U.S. air carriers.
(4) Adjustments will be made on April 1 and October 1 of each year, or more frequently as the Board finds appropriate.
(5) In computing costs under this section, the Board will make no adjustments for load factors, aircraft utilization, or other matters due to operational decisions made solely by carrier management. However, the Board retains the discretion to normalize costs for strikes, mandatory aircraft groundings, and other occurrences not solely due to management decisions.
(g) Definitions. For the purpose of this section:
(1) GCR means general commodity rate.
(2) SCR means specific commodity rate.
(3) Container rate means any rate specifically applicable to property tendered to the carrier in a unit load devise.
[PS–109, 48 FR 4279, Jan. 31, 1983] § 399.42 Flight equipment depreciation and residual values.
For rate-making purposes, for air carriers receiving subsidy under section 406 of the Act, it is the policy of the Board that flight equipment depreciation will be based on the conventional straight-line method of accrual, employing the service lives and residual values set forth below:
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[In percent]------------------------------------------------------------------------ Service life in Residual value as years percent of cost------------------------------------------------------------------------Turbofan equipment: 4-engine.................................. 14 2 3-engine.................................. 14 2 2-engine.................................. 14 2Turbojet equipment: 4-engine.................................. 10 5 2-engine.................................. 10 5Turboprop equipment: 4-engine.................................. 12 5 2-engine.................................. 10 15Wide-body equipment: 4-engine.................................. 16 10 3-engine.................................. 16 10------------------------------------------------------------------------
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[PS–54, 38 FR 24643, Sept. 10, 1973, as amended by PS–99, 45 FR 82625, Dec. 16, 1980] § 399.43 Treatment of leased aircraft.
In determining the appropriate treatment of leased aircraft for ratemaking purposes, it is the Board's policy to recognize actual rental expenses. In unusual circumstances where the leased aircraft value (determined on a constructive depreciated basis) in relation to net book value of owned aircraft operated by the same air carrier is significantly in excess of the ratio for the aggregate of the domestic trunklines and local service carriers (computed on the same basis), a reasonable profit element may be added which shall reflect the additional risks of operations with the leased aircraft, to the extent that such risks are not compensated by the return on investment. Such profit element would be determined by applying the standard rate of return, less 6 percentage points, to the value of the leased aircraft, on a constructive depreciated basis, to the extent the ratio of such value to depreciated cost of owned aircraft plus the value of leased aircraft exceeds the average for the domestic air carriers. Rental cost plus allowable profit, if any, will not be recognized in amounts exceeding depreciation plus return on investment computed as if the aircraft had been purchased by the carrier.
[PS–44, 36 FR 7229, Apr. 16, 1971] § 399.44 Treatment of deferred Federal income taxes for rate purposes.
For rate-making purposes other than the determination of subsidy under section 406(b), it is the policy of the Board that Federal income tax expense should be based on the normal taxes that would be paid under the depreciation standards used for rate making, and that accumulated reserves for deferred taxes should be excluded from the recognized capitalization for rate-base purposes.
[PS–46, 36 FR 7232, Apr. 16, 1971] Example of SIFL Adjustment
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[Methodology for determining change in operating expense per available seat-mile] [See footnotes at end of table]---------------------------------------------------------------------------------------------------------------- Total Year ended September 1979 Trunks Locals Trunks plus passenger/ locals cargo \16\----------------------------------------------------------------------------------------------------------------Total operating expense \1\ (millions)...................... $16,455 $2,522 $18,977 $19,384Less: All-cargo expenses \2\.................................... 269 ........... 269 269 Belly offset \3\.......................................... 952 153 1,105 1,153 Nonscheduled \4\.......................................... 141 46 187 205 Transport related \5\..................................... 379 31 410 416Plus: Capitalized lease adjustment \10\..................... 119 2 121 121Passenger operating expense................................. 14,833 2,294 17,127 17,462Passenger fuel cost \11\.................................... ........... ........... 4,103 N.A.Scheduled service ASM's (mils.)............................. 281,671 33,051 314,722 318,459 ===================================================Passenger nonfuel operating expense per ASM (dollars)....... ........... ........... .04138 N.A.Passenger fuel expense per ASM (dollars).................... ........... ........... .01304 N.A. --------------------------------------------------- Total passenger expense per ASM (dollars)............... ........... ........... .05442 .05483---------------------------------------------------------------------------------------------------------------- Year ended September 1978----------------------------------------------------------------------------------------------------------------Total operating expense \1\ (millions)...................... 14,081 2,033 16,114 16,448Less: All-cargo expenses \2\.................................... 282 ........... 282 282 Belly offset \3\.......................................... 869 152 1,021 1,065 Nonscheduled \4\.......................................... 193 53 246 256 Transport related \5\..................................... 419 30 449 454Plus: Capitalized lease adjustment \10\..................... 78 1 79 79Passenger operating expense................................. 12,396 1,799 14,195 14,470Passenger fuel cost \11\.................................... ........... ........... 3,129 N.A.Scheduled service ASM's (mils.)............................. 262,068 27,067 289,135 292,255 ===================================================Passenger nonfuel operating expense per ASM (dollars)....... ........... ........... .03827 N.A.Passenger fuel expense per ASM (dollars).................... ........... ........... .01082 N.A. --------------------------------------------------- Total passenger expense per ASM (dollars)............... ........... ........... .04909 .04951Percent change in nonfuel operating expense per ASM ........... ........... 8.13 N.A. (percent)..................................................Projected change in nonfuel expense from April 1, 1979 to ........... ........... 8.13 N.A. April 1, 1980 \6\..........................................Estimated change in fuel cost, year ended September 1979 ........... ........... 73.06 N.A. average to April 1, 1980 \14\.............................. ===================================================Nonfuel operating expense per ASM at April 1, 1980 \7\ ........... ........... .04474 N.A. (dollars)..................................................Fuel expense per ASM at April 1, 1980 \7\ (dollars)......... ........... ........... .02257 N.A. --------------------------------------------------- Total expense per ASM at April 1, 1980 \7\ (dollars).... ........... ........... .06731 \15\ .06782---------------------------------------------------------------------------------------------------------------- Year ended March 1977----------------------------------------------------------------------------------------------------------------Total operating expense \1\ (millions)...................... $11,726 $1,520 $13,316 $13,601Less: All-cargo expense \2\..................................... 238 ........... 238 238 Belly offset \3\.......................................... 729 96 825 865 Nonscheduled \4\.......................................... 220 35 225 266 Transport related \5\..................................... 427 111 538 554Passenger operating expense................................. 10,112 1,348 11,460 11,678Passenger fuel cost......................................... 2,190 230 2,420 N.A.Scheduled service ASM's (mils.)............................. 239,593 23,428 263,021 265,837Operating expense per ASM (dollars)......................... .04221 .05754 .04357 .04393Projected expense per ASM (dollars) as at July 1, 1977 \13\. ........... ........... ........... .04593Projected operating expense per ASM as at April 1, 1980 ........... ........... ........... .06782 (page 1) (dollars).........................................Ceiling adjustment factor \8\ (percent)..................... ........... ........... ........... 47.66----------------------------------------------------------------------------------------------------------------
D.P.F.I. formula effective July 15, 1977 \12\:Terminal charge..................... $16.16 Plus.............................. .0884/mile (0-500 miles). Plus.............................. .0674/mile (501-1,500 miles). Plus.............................. .0648/mile (over 1,500 miles).Ceiling formula through April 30, 1980 \9\:Terminal charge..................... $23.86 Plus.............................. .1305/mile (0-500 miles). Plus.............................. .0995/mile (501-1,500 miles). Plus.............................. .0957/mile (over 1,500 miles).------------------------------------------------------------------------ \1\ Total operating expense for all operations and service (in millions).\2\ Scheduled all-cargo operations expense.\3\ Total scheduled-service cargo revenue, less scheduled all-cargo operations revenue, carried as a by-product in aircraft belly compartments. Includes freight, express, priority and non-priority U.S. mail, and excess baggage.\4\ Total non-scheduled revenues times 0.95, assuming charter operations would only be conducted at a profit.\5\ Total transport-related expense, less any excess of expense over total transport-related revenues.\6\ We here project costs from April 1, 1979 (the midpoint of the data year ended September 1979) to April 1, 1980 the resultant increase factor effective through April 30, 1980.\7\ Operating expense per ASM for year-ended September, 1979, times projected change.\8\ Projected operating expense per ASM on April 1, 1980 divided by the operating expense as at July 1, 1977.\9\ Adjustment results in a 2.5 percent increase in level over current January 1, 1980 factor.\10\ Additional rental expense that would have been incurred had leases not been capitalized under FASB-13, less actual amortization of capitalized lease expense.\11\ Total fuel cost, scheduled service, times complement of rate of All- Cargo expense to total Operating Expense.\12\ Order 77-7-26.\13\ Year ended March, 1977 cost per ASM, times cost escalation factor of 1.04543 (to July 5, 1977). See DPFI workpapers, Y.E. March, 1977.\14\ Estimated average cost per gallon for the trunk plus local service carriers at April 1, 1980, divided by the average for the year ended September, 1979 (48.33¢).\15\ Change in Trunks plus Locals cost per ASM as at April 1, 1980, to year ended September, 1979 times total Psgr/Cargo cost for the year ended September, 1979.\16\ Includes Alaskan, Hawaiian and other regional carriers.
