Direct Operating Cost and Pricing.docx - Kourtney Porter...

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Kourtney Porter 10620421 9/16/16 Direct Operating Cost and Pricing Fuel Costs- Most times this is split into two components. Fuel price and efficiency. This is a fixed cost. This is determined upon the price per gallon. This changes depending on the price per barrel but this is fixed to price per gallon when the fuel is purchased for the aircraft. Capital Costs – A combination of depreciation and rental costs. This also includes interest charges on loans which is a non-operating costs. The depreciation depends on the airline depreciation policy that determines the period over which the aircraft are depreciated and the residual value of the asset at the end of this period. This is a variable. Because this involves
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Unformatted text preview:many companies and variables there is no set limit. Flight Operations - This includes the salaries of the pilots and the rest of the flight crew. This is usually a variable expense because it depends on the size of the crew and how many hours they are needed for. Most people on this crew are paid by the hour. Example: Aircraft - B767 - $8000 Fuel: $15,000 Crew - $2000 Maintenance - $ 2500 Insurance - $300 Accessorial - $3000 Total - $30,800 per hour Sources 1. Unknown; "Aircraft Operating Costs"; retrieved from ; ( 2016) 2. Conklin & de Decker; "Understanding Your Costs"; retrieved from ; (2016)