Author Topic: Cost Index (CI)  (Read 1003 times)

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Offline Adrian Chitan

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Cost Index (CI)
« on: March 28, 2016, 06:54:13 PM »

Hi, guys

Ever wondered what that Cost Index requirement means? You always have to insert a CI while you prepare a flight in a modern FMC equipped airliner (FMC is the computer. You control it using the CDUs). This post will, hopefully, shed some light on the subject.

Airliners are part of business ventures, so a method to control and foresee the costs need to be employed at the manufacturer level. Since the '60s, the most common system for airliners is the Cost Index. Historically, there are three modes a plane can control its fuel burning: MRC (maximum range cruise), LRC (long range cruise) and ECON (economical). All these modes translate into a speed profile (actually Mach number, which is TAS/speed of sound) that the engines will try to keep during the flight.

MRC
This is the CRUISE setting at which the speed of the plane gave the maximum mileage per fuel burned. Thus the plane would reach long ranges with minimum fuel. It was a great setting when fuel prices skyrocketed.

LRC
This is the highest setting an airline would use, because long range flights have the most cost in maintenance and people. In the past, manufacturers saw that if they decrease the mileage a little, they get a larger increase in speed, thus making the flight faster without a large addition to fuel consumption and fuel costs. So LRC is the speed at which the fuel burn mileage is decreased with 1% while the speed is increased. So while you get a 1% decrease in maximum range, the flight is faster and time costs are minimum. For example, if MRC speed would be M.820, the LRC speed would be M.840 with only a 1% penalty on max range.

It may seem that LRC is closer to MRC and it's equivalent to a low CI, but if you think about the fact that LRC is the setting used for the most expensive flights, you can assume that it is not a low CI setting. All manufacturer's give CI equivalents to their LRC setting and for Boeing these are:
B737 -600 to -800: 35
B757: 85
B767: 70
B747-400: 230
B777: 180
MD-11: 200

To get an idea of how high these values are, we can compare them with what airlines usually use as CIs for their fleet:
B737 -600 to -800: 10 - 30
B757: 15 - 50
B767: 15 - 55
B747-400: 25 - 80
B777: 90 - 150
MD-11: 80 - 120

ECON
ECON is where the geniuses in the aviation industry struck gold. What happens if the cost of the fuel is low or not very important for the flight, in comparison with the maintenance cost (which is imposed after certain flight times have passed) and the pilots' and attendants' costs who are payed by the hour (e.g. like on short to medium flights or even long flights on some parts of the world)? Then you must fly as fast as you can to decrease the time of flight and the remuneration of the people involved.

Thus, a parameter called Cost Index was introduced. Generally, it is defined as the ratio between the cost of the flight, given per time, and the cost of fuel. So, as it grows larger, the cost of the flight surpasses the cost of fuel manyfold and the flight needs to be faster to overcome this discrepancy and decrease costs. Airliners' manufacturers define the actual ratio in different manners, but the general definition still applies. For example, Boeing defines the Cost Index as the ratio between Time Cost in dollars per hour and Fuel Cost in cents per pound of fuel. Thus, for a flight that costs 5000 dollars per hour, for January 2016 fuel cost of 13.3 cents per pound, the Cost Index would be 378. On the other hand, a 400 dollar per hour flight in August 2015 would have had a CI of 20. ECON thus computes a Mach number based on the inserted CI to lower the cost of the flight.

CI = 0
When the fuel burn is very important and surpasses any other cost, the pilot can ask for a CI of 0 which should be equal to MRC.

CI = max
When fuel is totally unimportant, the pilot inserts the maximum CI for the airliner to get the maximum Mach number the plane can achieve. The maximum CI is dependent on the type of the aircraft. For example:
B737 -300 to -500: 200
B737 -600 to -900: 500
B747-400: 9999
B757: 999 or 9999*
B767: 999 or 9999*
B777: 9999
* depending on how new the plane is

Virtual World

In the virtual world, the CI is not as useless as it seems. In virtual airlines, we care about fuel usage and fuel cost. Furthermore, we are even paid by the hour as in the real world. So, every virtual airline could calculate its preferred CI based on the costs it has so that profits are maximized, just as in the real world.

Even if you're flying offline using a airline management app like Air Hauler you can maximize profits based on the costs of running the cargo flights. So I strongly advise everyone to think about the CI before putting it in so that the flight becomes more realistic and rewarding.

Cheers,
Adrian

Offline Adrian Chitan

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Re: Cost Index (CI)
« Reply #1 on: March 30, 2016, 07:55:34 AM »
Just to link this topic to Air Danubius, the expenses of a flight come down to fuel and pilot pay. For my last flight (Kansas City to Denver in a B737-800) the fuel cost was 14.5 euro cents per pound (0.32 euros/kg) while the cost of the flight was, because I'm a Senior Captain, 200 euros/hr. That computes to a CI of 14 for an economical flight.

It's that easy!

Of course, this made me wonder if we could put in more costs per flight, like attendants (based on the aircraft - at least 3 for a B737-800) and/or first officer. Actually, I was thinking of employing an F/O policy in Air Danubius where any captain before a flight can add an F/O from Air Danubius roster. That way, just as in real life, both the captain and the F/O get their time in-flight increased and both get paid. This will not only bring a deeper level of economics into Air Danubius but will also make the flight cost fluctuate so the CI will fluctuate more, making the pilot do one more computation before flying (if he/she so wishes). The problem is that now we kind of have a fuel cost driven CI in Air Danubius because the cost of the flight is quite low.

For example, the only CI larger than a Senior Captain's is the Legendary Captain's which for my above mentioned flight would be 21, while the lowest would be 1 (Junior Flight Officer's salary at 10 euros/hr). Given that today's fuel prices are somewhat low, the price can only increase so the CI would go even lower. What if I take a First Officer from our ranks with me in the flight deck for the flight? The cost of the flight becomes 250 euros/hr and the CI goes to 17. And if I take a Captain in, the CI would be 21. That's one aspect of flight economics.

Another aspect would be attendants. Long range flights and medium or short range flights cannot have the same cost per hour. And the first think that comes to mind is the number of people involved because long range flights are done on bigger jets. So if a B737-600 would be attended by 2 people, a B737-800 would require 3 or even 4 on longer flights. This would increase the cost of the flight. Let's say we give every attendant 10 euros/hr. My above mentioned flight would require 3 of them and the cost of the flight would be 230 euros/hr and the CI 16 (not counting the F/O in this example).

So, what do you think?

Cheers,
Adrian

Offline Bogdan Ghincea

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Re: Cost Index (CI)
« Reply #2 on: March 30, 2016, 07:02:59 PM »
Damn you're good at calculations :)

 

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