How do you calculate cost index?

Cost Index = Cost of Time / Cost of Fuel

Cost of Time or C(t) is the complete cost to operate in one hour: Flight Crew Wages, Maintenance, Leases, etc

Cost of Fuel or C(f) is the cost of fuel per gallon converted to cents; so, times 100.

Example:

>Capt is paid 70/hr, FO is paid 40/hr and FA is paid 25 and then the extras = $150/hr operating cost

>fuel is purchased at 3.50/gal

CI = C(t) / C(f)

= 150 / 350

= .42

what does that mean? As CI approaches 0 the airplane should be flown closer to MRC (Max Range Cruise Speed, a slower speed that enables time aloft) while the closer the value to 1 a faster speed should be flown to obtain LRC (Long-Range Cruise, a speed that is "conducted at the flight condition which provides 99 percent of the absolute maximum specific range. the advantage is that 1 percent of range is traded for 3 to 5 percent higher cruise velocity. Since higher cruise speed has a great number of advantages, the small sacrifice of range is a fair bargain.

Basically CIs are a way to penny pinch on each flight. If a plane can save as little as 200lbs of fuel on one flight, factor that value against the near 1500 daily departures of a large airline and you are saving yourself some serious change

1500 flights x 200lbs of fuel saved x $3.50 per gallon = $1.05M/day in fuel savings!