On May 02, 2019

Top 10 facts or myths about Cost Index

Have you ever come across a concept which raises much interest and discussions, and equally much or more myths and misconceptions? The Cost Index is such a concept.

 

As the devil is in the details, we would like to help the understanding of the Cost Index through a selection of 10 facts or myths, following some basic principles. So, let’s come on board!

 

 

Basic principles

The purpose of Cost Index is not speed control but mission optimization a.k.a. trip optimization.

 

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 is calculated as follows:

 

cost-index-equation

Figure 1: Cost Index simple representation

 

 

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 in comparison to the cost of fuel. The flight will be flown using minimum time to achieve mission optimization, without considering the fuel burn

 

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, more fuel is consumed and 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:

  • Hourly maintenance cost
  • Engines, Auxiliary Power Units
  • Crew cost, though it can be fixed or independent of the flying time, in some cases
  • 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, and in addition, to fuel tankering and hedging strategies.

 

 

 

Fact or myth 1 - There is one single way to calculate the Cost Index.

 

> Myth.

Though the concept is unique, there are essentially 2 ways to calculate it, with 2 units commonly used for the Cost Index.

 

  • “Boeing” or “English Cost Index”

Also known as “Boeing Cost Index”, the approach is to calculate the cost of time in $/hour terms, while the cost of fuel is calculated in $/100 pounds terms, which results 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.

 

 

Fact or myth 2 - The optimal Cost Index is fixed

 

> Myth, but.

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 the delay of another flight, or the crew overtime.

 

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 schedule making it harder to operate reliably.

 

 

Fact or myth 3 - Increasing the Cost Index would necessarily result in a faster flight

 

> Myth.

Not necessarily. Above a certain cost index, the gain is marginal and the increased fuel burn useless.

 

 

Fact or myth 4 - ECON and LRC modes are conceptually similar though different

 

> 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.

 

 

cost-index-mrc-lrc

Figure 2. MRC and LRC relationship

Source 

 

On the other hand, ECON (Economical) speed is based on richer tradeoffs between trip time and trip fuel and includes the time-related operating expenses. Also, The LRC speed calculated by the Flight Management system is typically not adjusted for winds while ECON is. As an example, ECON is reduced with tail winds. ECON also takes three other input variables: aircraft weight, temperature, altitude, in addition to wind and CI.

 

In short, LRC is based on a 1% penalty on fuel mileage, while ECON uses Cost Index as input with a more detailed accounting of actual costs.

 

cost-index-lrc-ci

 

Figure 2. LRC and CI relationship 
Source 

 

Fact or myth 5 - Flying below LRC Cost Index can be very economical despite the potential flight time increase

 

> Myth.

As shown in Figure 1, below LRC speed, fuel gains are marginal since LRC is only 1% worse than MRC for fuel mileage.

 

 

Fact or myth 6 - The ECON speed is unique for a given CI

 

> Myth.

In general, the higher the Flight Level or the higher the aircraft gross weight the higher the ECON Speed. ECON Speed is very sensitive to Cost Index below optimum Flight Level, especially for low cost indices.

 

 

Fact or myth 7 - Aircraft speed is controlled through the Cost Index

 

> Myth.

Using Cost Index as speed control is not recommended, 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 auto throttle. The aircraft can usually be operated in two basic system states:

  • Strategic Operation: FMS Programming with Lateral Navigation (LNAV) and Vertical Navigational (VNAV) Modes selected;
  • Tactical Operation: Mode Control Panel/Flight Control Unit (MCP/FCU) Manipulation.

Source: skybrary.aero

 

 

Fact or myth 8 - Flying "Managed" mode has no flight time benefit compared to flying "Selected" modes

 

> 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.

 

 

Fact or myth 9 - Headwinds command higher ECON speeds

 

> 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:  

  • +0.5 point of Mach for 50 knots headwind.
  • -0.5 point of Mach for 50 knots tailwind.
 
Fact or myth 10 – Pilots are best equipped to set the cost index for a flight

 

> Myth.

Operations Control department, supported by the Flight Dispatch department, and by the Finance department are 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.

 

 

 

Through this article, we hope to contribute to a better understanding of the Cost Index, and as we eluded in the introduction, capturing the “true” cost of time and cost of fuel is most complex.

 

In a future article, we would like to focus on Cost Index calculation and practice State-Of-The-Art. In this perspective, we welcome your insights on the same:

  • Which departments are in charge of Cost Index calculation?
  • How do they overcome the challenges of establishing a cost of time and a cost of fuel?
  • Do the Cost Index vary by fleet, flight, region?
  • How do they manage the balance between mission optimization and operational reliability?

So, please reach out to us!

 

 

References

 

 


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Like what you see? Want to learn more about fuel efficiency?

Discover how Transavia engaged pilots in their fuel conservation program: 

 

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