Title 14 Part 399 Appendix A Code of Federal Regulations

PART 399 APPENDIX A

Appendix A to Subpart C of Part 399 - Example of SIFL Adjustment

14:4.0.1.6.68.3.24.4.12 : Appendix A

Appendix A to Subpart C of Part 399 - Example of SIFL Adjustment

[Methodology for determining change in operating expense per available seat-mile]

Year ended September 1979	Trunks	Locals	Trunks plus locals	Total passenger/cargo ¹⁶
Total operating expense ¹ (millions)	$16,455	$2,522	$18,977	$19,384
Less:
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	416
Plus: Capitalized lease adjustment ¹⁰	119	2	121	121
Passenger operating expense	14,833	2,294	17,127	17,462
Passenger 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	16,448
Less:
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	454
Plus: Capitalized lease adjustment ¹⁰	78	1	79	79
Passenger operating expense	12,396	1,799	14,195	14,470
Passenger 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	.04951
Percent change in nonfuel operating expense per ASM (percent)			8.13	N.A.
Projected change in nonfuel expense from April 1, 1979 to April 1, 1980 ⁶			8.13	N.A.
Estimated change in fuel cost, year ended September 1979 average to April 1, 1980 ¹⁴			73.06	N.A.
Nonfuel operating expense per ASM at April 1, 1980 ⁷ (dollars)			.04474	N.A.
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	$13,601
Less:
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	554
Passenger operating expense	10,112	1,348	11,460	11,678
Passenger fuel cost	2,190	230	2,420	N.A.
Scheduled service ASM's (mils.)	239,593	23,428	263,021	265,837
Operating expense per ASM (dollars)	.04221	.05754	.04357	.04393
Projected expense per ASM (dollars) as at July 1, 1977 ¹³				.04593
Projected operating expense per ASM as at April 1, 1980 (page 1) (dollars)				.06782
Ceiling adjustment factor ⁸ (percent)				47.66

Year ended September 1979

Trunks

Locals

Trunks plus locals

Total passenger/cargo ¹⁶

Total operating expense ¹ (millions)

$16,455

$2,522

$18,977

$19,384

Less:

All-cargo expenses ²

269

Belly offset ³

952

153

1,105

1,153

Nonscheduled ⁴

141

187

205

Transport related ⁵

379

410

416

Plus: Capitalized lease adjustment ¹⁰

119

121

Passenger operating expense

14,833

2,294

17,127

17,462

Passenger 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

16,448

Less:

All-cargo expenses ²

282

Belly offset ³

869

152

1,021

1,065

Nonscheduled ⁴

193

246

256

Transport related ⁵

419

449

454

Plus: Capitalized lease adjustment ¹⁰

Passenger operating expense

12,396

1,799

14,195

14,470

Passenger 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

.04951

Percent change in nonfuel operating expense per ASM (percent)

8.13

N.A.

Projected change in nonfuel expense from April 1, 1979 to April 1, 1980 ⁶

8.13

N.A.

Estimated change in fuel cost, year ended September 1979 average to April 1, 1980 ¹⁴

73.06

N.A.

Nonfuel operating expense per ASM at April 1, 1980 ⁷ (dollars)

.04474

N.A.

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

$13,601

Less:

All-cargo expense ²

238

Belly offset ³

729

825

865

Nonscheduled ⁴

220

225

266

Transport related ⁵

427

111

538

554

Passenger operating expense

10,112

1,348

11,460

11,678

Passenger fuel cost

2,190

230

2,420

N.A.

Scheduled service ASM's (mils.)

239,593

23,428

263,021

265,837

Operating expense per ASM (dollars)

.04221

.05754

.04357

.04393

Projected expense per ASM (dollars) as at July 1, 1977 ¹³

.04593

Projected operating expense per ASM as at April 1, 1980 (page 1) (dollars)

.06782

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.