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1986 - October DOT Ord. & Dec. [1] (October, 1986)

handle is hein.usfed/dotod0368 and id is 1 raw text is: Order 86-10-1 '8,',TEJ STATES OF A1ERICA - fE[PARTr1E1T OF TRANSPORTATION IISHINGTON, D.C. Issjqud by the Department of Transportation / 5 6 on the 1st day of October, 1986 JCEIV D !WD XC4L DEPARTMENT E T'ALISH'IENT OF THE STA'haR') : Docket 37554 OCT 8 -198 FORFIGN FARE LEVEL DB MB GWB FAB NLC RAC BC - -MJD ELG EG CAR RFJ PJL J!ML JPH PAR RS DLS -AAU OR)ER The lnturnjt;nnal Ar Transportation Competition Act (IATCA), P.L. 96-192, Ses that thie 2.1;artment establish a Standard Foreign Fare Level (SFFL) by edi.;nq %hp SFFL hase periodically by percentage changes in actual operating costs p.r avalakle spat-mile (AS'I). 1/ The SFFL becomes the henchmark for ,jasjr;nr the statutory non-suspend zone similar to the zone of reasonableness estahlsied hy the Airl1ne DereguJlation Act and set forth in section 1002(j) of t'e F;!lrrl Avat~on Act of l59. Order 80-2-69 established the first interim SFFL, and )rdr l'r-'i-36 established the currently effective two-month SFFL appl~caI,le throuioh Septembner 30, 1925. in estv2 s;nq the SFFL for the two-month period commencing October 1, 1986, we have projected nonfuel costs hased on the year ended June 30, 1986 data, and have determ;ne! fuel prices on the basis of the experienced monthly fuel cost levpls ac repo-)rted by .he carriers. Our calcilat.ons , c,,4 cost changes fr-.- F~rtbr 1, 1979, to Novembpr 1, 1),6, the mid-point of the October 1 - November 30, 1986 projection period, for the foir rateiaking entities: Atlantic, Latin America, Pacific, and Canada. In projecting the SFFL adjustment effective October 1, the staff examined the latest available monthly fuel price data reported to the Department by the carriers, and used the latest fuel prices reported by the carriers (June and July 19H6). 2/ The results of our calculations reflect the fact that fuel prices have continued the dramatic decline which began in February. Nonfuel costs per avail ahle seat mile declined over the prior period in the Atlantic and Latin Arerica Entities but have increased in the Pacific and Canadian Entities. The resulting projections are fuel prices as at November 1, 1986, of 50.43 cents per gallon in the Atlantic, 60.82 cents per gallon in Latin America, 55.66 cents per gallon in the Pacific, and 47.40 cents per gallon in Canada. Unit non-fuel costs for the 12 months ended June 30, 1986, declined 6.17 percent for the Atlantic Entity, and 5.90 percent for the Latin American Entity, but increased 5.84 percent for the Pacific Entity and 2.31 percent for the Canadian Entity over the year ended June 30, 1985. 1/ As defined in section 1002(j)(7) and (9) of the Federal Aviation Act of T958. ?/ We have used the latest months' data rather than the least squares methodnlogy because of the substantial decline in world petroleum prices. This is consistent with our methodology in other periods when sharp changes occurred in oil prices. See e.g., Orders 83-4-47, April 8, 1983; 85-6-43, June 13, 1985; 86-4-19, April 7, 1926; 86-5-102, May 30, 1986; and 86-8-36, August 15, 1986.

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