ABSTRACT
The airline industry is dynamic, fast-changing and subject to sudden and unexpected variations in the cost of many of its inputs. A cost breakdown developed for general management and accounting purposes may be useless as a guide to pricing strategy and may be of little help in making operating decisions or deciding on aircraft purchases. The nature of each airline’s non-operating costs and revenues is probably unique, in that many non-operating items are influenced by circumstances very particular to each airline. Airlines must also pay en-route navigation charges to cover the cost of en-route navigation services that their aircraft use while flying and during landing and take-off. Maintenance costs cover not only routine maintenance and maintenance checks carried out between flights, known as line maintenance, but also the more extensive periodic overhauls and major checks of airframes and engines. Depreciation of flight equipment is the third component of direct operating cost since it is very much aircraft dependent.
