The Cost Index is one of the most powerful, sometines misunderstood, tools in airline operations. Designed to balance fuel consumption with time-related operating costs, it plays a critical role in optimizing flight efficiency. But with its technical complexity comes a fair share of myths and confusion. In this article, we break down the top 10 facts and misconceptions about the Cost Index.
Aviation Cost Index Definition
Cost Index (CI) is an expression of how time-related cost (“hourly cost”) and the cost of fuel (“fuel burn”) interact in the operation of an airplane and provides a way to optimize this ratio to suit specific flight profile requirements. Having been around since the 1970s, the Cost Index concept is still not applied everywhere and is often not fully understood or not correctly implemented.
The purpose of the Cost Index for airlines is not speed control but mission optimization, a.k.a. trip optimization.
Cost Index Formula
This optimization is achieved through a trade-off between the cost of time, or cost of operations by unit of time, and the cost of fuel, by unit of fuel. In other words, the effect of the fuel cost on the trip cost compared to the time cost in terms of operational costs. The cost index aviation formula is:
Figure 1: Airline Cost Index formula
Based on equation 1, if CI = 0, the cost of time is null, and the mission is optimized through minimum fuel consumption, which will result in maximum range airspeed. On the other hand, if CI is maximal, the cost of time is large compared to the cost of fuel. The flight will be flown using minimum time to optimize mission, without considering the fuel burn.
Figure 2: The cost index (CI) relates fuel to time costs within the aircraft performance envelope. Source: Airline Schedule Recovery at Hub Airports including Dynamic Cost Indexing and Re-Routing - Scientific Figure on ResearchGate
The purpose of the Cost Index is to capture the relationship between time cost and fuel cost. A good example of its benefit is the balance between maintenance costs and fuel costs.
A faster flight results in reduced cost of time, which leads to bigger distances flown between maintenance inspections if they are based on flight time. However, flying faster means more fuel is consumed, so the cost of fuel increases. The Cost Index is meant to balance between the two:
Time cost
It accounts for all time-dependent costs, such as:
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Hourly maintenance cost
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Engines, Auxiliary Power Units
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Crew cost, though it can be fixed or independent of the flying time, in some cases
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Marginal depreciation or leasing costs
Additional and airline-specific costs, though complex, may also be considered: crew overtime, passenger re-accommodation, and goodwill loss, for instance.
Fuel cost
Fuel cost may be difficult to capture due to high variability across countries and airports, fuel tankering, and hedging strategies.
1 - There is one single way to calculate the Cost Index
Fact or myth?
> Myth.
Though the concept is unique, there are essentially 2 ways to calculate it, with 2 units commonly used for the Cost Index.
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“Boeing” or “English Cost Index”
Also known as the “Boeing Cost Index,” the approach calculates the cost of time in $/hour terms, while the cost of fuel is calculated in $/100 pounds terms, resulting in a Cost Index expressed in 100 pounds/hour.
-
“Metric Cost Index”
The second approach uses $/minute for the cost of time and $/kg for the cost of fuel. This is known as "the Airbus Cost Index" and is expressed in kg/min.
Simple maths show that the Boeing Cost Index is equal to the Airbus Cost Index multiplied by 1,32.
2 - The optimal Cost Index is fixed
Fact or myth?
> Myth, but.
The cost of time changes continuously, and a minute of flight time may have a cost impact or cost benefit, depending on other operational aspects, such as another flight's delay or crew overtime.
The cost of fuel changes continuously as any commodity on the market.
In practice, a variable Cost Index would generally result in variable flight times and irregular schedules, making it harder to operate reliably. Note that it could also change according to the time of day, the season, the weather…
3 - Increasing the Cost Index would necessarily result in a faster flight
Fact or myth?
> Myth.
Not necessarily. Above a certain cost index, the gain is marginal, and the increased fuel burn is useless.
4 - ECON and LRC modes are conceptually similar though different
Fact or myth?
> Fact.
Long-Range Cruise (LRC) speed is the traditional cruise speed. It has been historically defined as the speed above Maximum-Range Cruise (MRC) speed with a 1 percent decrease in fuel mileage, but a 3-5% gain in cruise velocity, as illustrated below.
Figure 3. MRC and LRC relationship
Source: Boeing
On the other hand, ECON (Economical) speed is based on richer tradeoffs between trip time and trip fuel and includes time-related operating expenses. Also, the LRC speed calculated by the Flight Management system is typically not adjusted for winds, while ECON is. For example, ECON is reduced with tailwinds. ECON also takes three other input variables: aircraft weight, temperature, and altitude, in addition to wind and CI.
In short, LRC is based on a 1% penalty on fuel mileage, while ECON uses the Cost Index as input and provides a more detailed accounting of actual costs.
Figure 4. LRC and CI relationship
Source: Boeing
5 - Flying below the LRC Cost Index can be very economical despite the potential flight time increase
Fact or myth?
> Myth.
As shown in Figure 3, below LRC speed, fuel gains are marginal since LRC is only 1% worse than MRC for fuel mileage.
6 - The ECON speed is unique for a given CI
Fact or myth?
> Myth.
Generally, the higher the flight level or the aircraft's gross weight, the higher the ECON speed. ECON Speed is very sensitive to Cost Index below optimum Flight Level, especially for low cost indices.
7 - Aircraft speed is controlled through the Cost Index
Fact or myth?
> Myth.
It is not recommended to use the Cost Index as speed control; pilots should select speed via the Flight Control Unit (*).
(*) Large aircraft are typically equipped with an Autopilot Flight Director System (AFDS), which includes an auto-thrust system, referred to as an autothrottle. The aircraft can usually be operated in two basic system states:
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Strategic Operation: FMS Programming with Lateral Navigation (LNAV) and Vertical Navigational (VNAV) Modes selected;
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Tactical Operation: Mode Control Panel/Flight Control Unit (MCP/FCU) Manipulation.
Source: skybrary.aero
8 - Flying "Managed" mode has no flight time benefit compared to flying "Selected" modes
Fact or myth?
> Myth.
Flying "managed speed" mode means flying at a given Cost Index, rather than a selected speed. It results in flying an optimum speed, depending on gross weight, Flight Level, head or tail wind component. "Managed" can save fuel relative to "Selected" mode, which translates in fixed Mach schedules, irrespective of the variable flight conditions, which will result in suboptimal mission.
9 - Headwinds command higher ECON speeds
Fact or myth?
> Fact.
And, tailwinds command lower ECON speeds, on the principle of “let winds work”. In fact, the ECON Mach will be corrected in relation to the wind as follows:
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+0.5 point of Mach for 50 knots headwind.
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-0.5 point of Mach for 50 knots tailwind.
10 – Pilots are best equipped to set the cost index for a flight
Fact or myth?
> Myth.
The Operations Control department, supported by the Flight Dispatch department and the Finance department, is best equipped to capture the cost of time and the subtleties of the cost of fuel. These departments should cooperate to calculate the cost index.
To Sum up
The Cost Index is a key concept in aviation. As we’ve seen, it helps airlines balance time-related and fuel costs to improve overall flight efficiency. While the formula may appear straightforward, its real-world application is complex and influenced by multiple factors such as aircraft weight, weather conditions, and operational constraints. Mastering its use to make cost-effective operational decisions requires not only a solid understanding but also access to accurate, dynamic data.
First publication date: May 2, 2019
Last Update: April 7, 2025
References
- https://www.boeing.com/commercial/aeromagazine/articles/qtr_2_07/article_05_3.html
- https://www.skybrary.aero/index.php/Automatic_Flight_-_A_Guide_for_Controllers
- Guidance material and best practices for Fuel and Environmental Management, 5th ed., 2011, IATA
- Getting to grips with the cost index, Issue II - May 1998 Airbus Customer Services
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