What do direct operating costs encompass?

Direct operating costs encompass a wide range of expenses that are directly tied to the operation of an aircraft. This includes aircraft-related costs, such as fuel, maintenance, and crew salaries, as well as other operating expenses necessary for the effective functioning of the aircraft. By including all relevant costs associated with running the aircraft, the comprehensive view provided by direct operating costs helps in accurately assessing the financial performance of aviation operations.

Management salaries, crew salaries, and legal fees, while they may fall into various operational and administrative costs, do not alone represent the full spectrum of direct operating costs. Management salaries are typically classified as general and administrative expenses rather than direct costs tied to aircraft operations, while legal fees are often unpredictable and not directly linked to the aircraft's operational expenses. Crew salaries, though an essential part of operating costs, are just one component, which is why a broader aggregation encompassing all aircraft-related costs and other operational expenses gives a complete picture. Thus, the correct understanding of direct operating costs compasses a comprehensive aggregation of all these relevant expenses.