Another measure of the vitality of the system is provided by the operating ratio, which is strictly
a financial barometer of the ratio of operating revenue to operating costs. Operating revenue is
the sum of passenger revenues, on-board service (food) revenues and air cargo revenues. The
operating costs are all costs incurred to run the service including wages, overhead, and fringe
benefits. The FRA uses both ratios to gauge the feasibility of a project. A ratio greater than 1.0
means that the operating revenue is in excess of costs. The higher the ratio is, the higher the
operating surpluses are. The calculation of the operating ratios is shown in Exhibit 7.7.