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1987 - April DOT Ord. & Dec. [1] (April, 1987)

handle is hein.usfed/dotod0374 and id is 1 raw text is: Order 87-4-1 / . i~ 2 -Z 2 1UNITED STATES OF AMERICA , DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued by the Department of Transportation on the 1st day of April, 1987 ESTABLISHMENT OF THE STANDARD Docket 37554 FOREIGN FARE LEVEL ORDER The International Air Transportation Competition Act (IATCA), P.L. 96-192, requires that the Department establish a Standard Foreign Fare Level (SFFL) by adjusting the SFFL base periodically by percentage changes in actual operating costs per available seat-mile (ASM). 1/ The SFFL becomes the benchmark for measuring the statutory non-suspend zone similar to the zone of reasonableness established by the Airline Deregulation Act and set forth in section 1002(j) of the Federal Aviation Act of 1958. Order 80-2-69 established the first interim SFFL, and Order 87-2-3 established the currently effective two-month SFFL applicable through March 31, 1987. In establishing the SFFL for the two-month period commencing April 1, 1987, we have projected nonfuel costs based on the year ended September 30, 1986 data, 2/ and have determined fuel prices on the basis of the experienced monthly fuel cost levels as reported by the carriers. Our calculations measure unit cost changes from October 1, 1979, to March 1, 1987, the mid-point of the February 1 - March 31, 1987 projection period, for the four ratemaking entities: Atlantic, Latin America, Pacific, and Canada. In projecting the SFFL adjustment effective February 1, the staff examined the latest available monthly fuel price data reported to the Department by the carriers, and used a least squares analysis to project fuel prices to May 1, 1987. The results of our calculations reflect the fact that fuel prices have ceased the dramatic decline which began in February, 1986. Nonfuel costs per available seat mile declined over the prior period in the Atlantic and Latin America Entities but have increased in the Pacific and Canadian Entities. The resulting projections are fuel prices as at May 1, 1987, of 52.62 cents per gallon in the Atlantic, 56.63 cents per gallon in Latin America, 60.16 cents per gallon in the Pacific, and 46.04 cents per gallon in Canada. Unit 1/ As defined in section 1002(j)(7) and (9) of the Federal Aviation Act of T958. 2/ We have used the 12 months ended September 30, 1986 for the industry a. this instance as financial data are not available by entity for Calendar Year 1986 from all carriers.

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