The Air Transport Association of America (ATA), the industry trade organization representing the leading U.S. airlines, released its quarterly Airline Cost Index, incorporating data through the first quarter of 2009.

The composite cost index fell to 176.9 in the first quarter of 2009, down 22 percent from the first quarter of 2008, easily outpacing the 0.2 percent decline in the U.S. Consumer Price Index (CPI). The three largest components of the index - which includes all operating expenses as well as interest expense - were labor, fuel and transport-related expense, respectively. Other highlights include the following:

- Labor costs overtook fuel costs in the quarter, as the average price paid for fuel fell 36.1 percent while the average cost (wages, benefits and payroll taxes) of employing a full-time equivalent worker rose 5.6 percent to $77,677.

- In addition to labor, other rising cost categories included professional services, landing fees and other miscellaneous expenses.

- In addition to fuel, other categories seeing year-over-year declines in input costs included aircraft rents and ownership, food and beverage, maintenance material (cost of maintaining and purchasing materials for airframes, aircraft engines, ground property and equipment), insurance, travel agency commissions, communication, advertising, utilities and office supplies, transport-related expense and interest expense.

- The drop in the cost index helped reduce - but not eliminate - the unfavorable gap between average break-even and actual load factors from 6.1 percentage points to 4.6 percentage points.

"The combination of rising nonfuel costs and a significant deterioration in passenger revenue in the first quarter proved too great to offset the year-over-year plunge in fuel prices," said ATA Chief Economist John Heimlich. "Consequently, airlines remain focused on seeking every feasible opportunity to realize cost savings and generate new streams of revenue."