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Cost Index…

March 6th, 2008 · 3 Comments

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With the rising cost of aviation fuel, every airline on the planet has been in a sort of panic mode for the last two years. Right behind labor, fuel represents the biggest cost to an airline. Therefore, it is wise for an airline to do everything it possibly can to be as economical as possible with fuel.

On the equipment I operate for my employer, our Flight Management Computer (or “FMC,” the control panel of which is shown above) requires an input on the performance screen for something called a “Cost Index.” The Cost Index is essentially the ratio of the time-related cost (in $ per hour) of operating an airplane to the cost in fuel (in cents per pound). From the time I first started, it was Company policy to enter Cost Index figures of 28 for our 737-300/500 series aircraft, and 36 for our newer 737-700 aircraft.

The FMC uses the cost index along with some other data (winds, temperature, aircraft weight, etc) to figure the climb, cruise, and descent speeds for various conditions. We would always ask the FMC to compute ECON speeds, which are the most economical speeds (for the aircraft’s weight and the outside air temperature) related to the Cost Index you’ve inputed. We would typically see speeds in the -700 series aircraft in the range of 290 knots climb speed to .78 Mach cruise speed to 280 knot descent speeds. We were told that by following the speeds given to us by the FMC, we would save as much fuel as possible. Of course, being that our profit-sharing program is such a good one, all we pilots always strive to comply unless air traffic control requests different speeds. All descents are flown at flight idle, when possible.

Recently, the Company put out a bulletin revising our Cost Index to 20 for all aircraft. In the -700 I flew today, that made a difference of about a 10 knots slower ECON climb speed, a .01 to .02 Mach slower ECON cruise speed, and a 19 knots slower ECON descent speed. We’re told in the bulletin that flying these new ECON speeds at optimum cruising altitudes will save our company an estimated $45 million dollars in fuel costs annually. We pilots are also hearing rumor of our dispatch computer software being upgraded to allow individually tailored Cost Indexes to be calculated (using estimated takeoff weights, winds, and temperatures aloft) and printed on dispatch releases for every flight. That should save the company even more money every year!

Maybe that’ll help our stock price go up again!

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3 responses so far ↓

  • 1 Javier Herrero // Apr 16, 2008 at 3:48 pm

    Very interesting comments on the Cost Index policy. I work in aviation and I have been debating the evolution of cost index with my colegues at work.

    My understanding is that United is also moving to a “dynamic cost index” information system for their dispatching.

  • 2 Javier Herrero // May 3, 2008 at 12:23 pm

    There was news about airlines flying slower all over the media yesterday, since several airlines are flying slower to conserve fuel…United, JetBlue, SWA. Directly related with your cost index comments.
    I work for an airplane manufacturer, in airliner marketing in a role connected with Flight Ops Engineering, and we have been giving the Cost Index a lot of thought, how can we help the airlines with their CI…proactive airlines are moving faster though,upgrading their software.

  • 3 Sean Oswald // Jun 16, 2008 at 4:42 am

    Greetings. Like yours, our company is also looking at modifying the dispatch release to include variable CI numbers. Out on the line, there has been increasing discussion on saving fuel and how the changing the cost index will effect fuel use.

    I find it interesting that your company policy, similar to ours, is using a straight cost index for all flights. The lower the cost index, the more the possibility of actually increasing, significantly, the total burn on longer flights against headwinds!

    As I am sure you are aware and have observed, if you get too slow the fuel burn is the same as if you were going “normal” speed, though the true and ground speed may be significantly reduced. Go to slow and the fuel is greater than normal!

    E.g.: MDW-PHX. With an average headwind of 60 knots the (normal) en route time will be +/- 3:30, but reducing the TAS (20 v 45 CI) the en route time increases to more than 3:50 with approximately the same average fuel burn, plus the increased en route time, for a potential increased total burn . However, inputting cruise / leg winds will mitigate a portion of this difference (WN may address this fact, our company does not).

    Further, depending on how marketing develops block times, connecting passengers are more likely to miss flights due to late arrivals; net results are increased cost and further dissatisfaction of the customer. Since the bean-counters have a hard time quantifying “good will” [it] seems often omitted from the equation.

    It has been my experience using a higher cost index against a headwind and low CI with a tail wind is the best basic method to save fuel and run on-time. I also pay close attention to the forecast cruise winds and may not go high and slow in to a headwind.

    Setting up a cost index, variable, or not, does nothing when the VNAV is disconnected and “Level Change” is used for an early descent. Asking for a “discretionary” descent from ATC can also save some extra gas. If an early descent is required, engaging the VNAV for a 1,000 fpm descent until recapturing the “path” is another fuel saving technique.

    Dispatch and pilots local knowledge of the arrival and airport can also offer some big savings. On a recent PHX-SMF leg we were dispatched along a southerly routing over PMD/CZQ. The arrival winds favored landing runway 16. I asked dispatch to reroute over LAS/SWR and arrive from the east. We were told this would increase consumption by 200 lbs of fuel. The actual result was an 800 pound savings over the original release.

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