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Topic: How Much Profit Does An Airline Make On A Flight?
Username: DeltaXNA
Posted 2013-05-03 20:20:00 and read 25936 times.

US airlines are what I am wondering about. Long Haul average and Short Haul average please.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: Roseflyer
Posted 2013-05-03 21:02:05 and read 25848 times.

Revenue management is far too complex to come up with a number. You best approximation is to get the RASM and CASM from the quarterly reports and multiply out the difference by the capacity of a plane and distance.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: Birdwatching
Posted 2013-05-04 03:21:59 and read 25418 times.

Quoting DeltaXNA (Thread starter):
US airlines are what I am wondering about.

They don't.

Soren   

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: B777LRF
Posted 2013-05-04 03:48:08 and read 25322 times.

You might as well have asked 'how long is a piece of string?'. Suffice to say airlines employ hundreds of people to figure out exactly what you asked, but the answers they find will be highly sensitive and not meant for public consumption. Anyone divulging such numbers here will be in breach of several contractural obligations.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: fun2fly
Posted 2013-05-04 04:34:08 and read 25168 times.

Take each of the airlines their latest quarterly earnings and divide by # of flights (just use avg daily) and you won't be impressed. Realize that's a huge generalization.

For DL, they made $85mm. Per their tag line: Delta offers customers more than 15,000 daily flights x 13 weeks in the quarter x 7 days per week = 1.365mm flights. That's $62 per flight or less depending on how many flights over 15,000 there are per day. That's a lot of work to make $62. Even if you take free cash flow of $465mm it's only $335 per flight. Before everyone goes nuts, it's not scientific, but a rough order of magnitude and I realize Q1 is a slow period.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: lightsaber
Posted 2013-05-04 05:13:35 and read 25021 times.

Quoting Birdwatching (Reply 2):
Quoting DeltaXNA (Thread starter):
US airlines are what I am wondering about.

They don't.

  
In the words of Warren Buffet: “As of 1992, in fact—though the picture would have improved since then—the money that had been made since the dawn of aviation by all of this country’s airline companies was zero. Absolutely zero.”

Quoting fun2fly (Reply 4):

Take each of the airlines their latest quarterly earnings and divide by # of flights (just use avg daily) and you won't be impressed.

Understatement.

Quoting fun2fly (Reply 4):
it's only $335 per flight.

And DL is doing well...

Lightsaber

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: B6JFKH81
Posted 2013-05-04 06:08:53 and read 24845 times.

Here is an interesting graphic from an article late last year

http://si.wsj.net/public/resources/images/PJ-BH720A_MIDSE_G_20120606215401.jpg

The original article:

Posted 2013-05-04 06:53:46 and read 24667 times.

Well we know for a fact that WN only made money from their oil investments, so we can exclue them from the discussion.
Kidding  

Even the diagram above with the seat distrubition is dependent on the fares one is able to charge and collect, so the odds are better of you finding the needle in the haystack versus the answer to the question.
Now what the seat diagram can do is to give a rough estimation of what fares are required to be profitable, example some cost are fixed such as government taxes and fees, airport landing fees and charges can be obtained, dig around the financial records and one may be able to get an idea of the cost of the online crew.
Next try the cost of groundling handling and fuel and you are home free, don't even need a large department since computers can do the bulk of the work, the problem is that no one really wants that information compiled into an easily accesible report.

Quoting lightsaber (Reply 5):
In the words of Warren Buffet: “As of 1992, in fact—though the picture would have improved since then—the money that had been made since the dawn of aviation by all of this country’s airline companies was zero. Absolutely zero.”

Yet they have good credit ratings, are collecting billions, spending billions, employing thousands, etc etc etc. one can only wonder how when all they do is loose money, bank account should be empty by now.
Anyone taking bets on a Ponzi scheme  

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: HOMSaR
Posted 2013-05-04 08:33:10 and read 24469 times.

Quoting fun2fly (Reply 4):
For DL, they made $85mm. Per their tag line: Delta offers customers more than 15,000 daily flights x 13 weeks in the quarter x 7 days per week = 1.365mm flights. That's $62 per flight or less depending on how many flights over 15,000 there are per day. That's a lot of work to make $62. Even if you take free cash flow of $465mm it's only $335 per flight. Before everyone goes nuts, it's not scientific, but a rough order of magnitude and I realize Q1 is a slow period.

15,000 daily flights? Seems very doubtful for a single airline.

Are they including their SkyTeam partners in that count of total flights offered? That should probably not be counted in calculating this number.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: Beardown91737
Posted 2013-05-04 08:44:12 and read 24413 times.

Quoting par13del (Reply 7):
bank account should be empty by now.

that would be bankruptcy and all the legacies have been there

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: bobloblaw
Posted 2013-05-04 08:49:47 and read 24386 times.

Quoting B6JFKH81 (Reply 6):

Your graphic assumes a 99% BELF. That is highly unlikely for most US carriers. Its is probably more like the low to mid 80s. Certainly individual routes can have BELF at above 100%

Another fun variable is how airlines choose to measure profitability, especially with regards to connecting passengers and their contribution to each flight segment.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: rwy04lga
Posted 2013-05-04 08:55:06 and read 24365 times.

According to the show 'A Week in the Life of American Airlines', deducting all expenses, the profit from one full flight is less than $200. So, B6JFKH81's chart is right there.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: bobloblaw
Posted 2013-05-04 09:01:51 and read 24324 times.

Quoting rwy04lga (Reply 11):

That was from one 767-200 flight from JFK-LAX. Not an average of all flights or even that market.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: rwy04lga
Posted 2013-05-04 09:05:00 and read 24306 times.

And?.... Was my statement incorrect? No? I didn't think so.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: EricR
Posted 2013-05-04 09:24:41 and read 24216 times.

Quoting rwy04lga (Reply 11):

According to the show 'A Week in the Life of American Airlines', deducting all expenses, the profit from one full flight is less than $200.

And this equates to just over $1 per passenger. Great illustration to show why airlines literally "nickel and dime" passengers just to make a profit. Some of those added fees and/or elimination of minor onboard perks mean the difference between a flight making a profit or loss.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: Trijetsonly
Posted 2013-05-04 12:40:22 and read 22515 times.

Well it isn't US but LH makes an average profit of 3000€ per flight to Middle East or India, but looses ~500-1000€ on an average short haul flight. Thats what I've heard last year

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: capri
Posted 2013-05-04 13:02:57 and read 22207 times.

Maybe the question should be like what's the minimum load factor % for a flight to be profitable?? I have heard that in general on average an airline with anything over 67% load factor is considered a profit.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: EricR
Posted 2013-05-04 13:07:02 and read 22151 times.

Quoting capri (Reply 16):

Meaningless statistic by itself. The plane could have a 100% load factor but still lose money.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: bendewire
Posted 2013-05-04 13:20:28 and read 21953 times.

I know most European LCC models are based on £3-5 profit per seat, which excludes in flight sales. To account for cheap seats though to expensive seats, as the flight date approaches, is so the formula to ensure the £/seat profit is maintained, not 100% certain, but I believe the formula is based on 84% load factor.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: brilondon
Posted 2013-05-04 13:26:44 and read 21863 times.

I don't believe that airlines publish that sort of thing. Even to its stakeholders, they would not know. It would be information your competition would love to get their hands on. I know someone in the airlines would know it but it is not something that would be of interest except to us A.nutters. It really doesn't say anything about the airlines performance on the bottom line. If they used that kind of information, that would be a case of severe micro-management.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: steex
Posted 2013-05-04 13:32:49 and read 21766 times.

Quoting fun2fly (Reply 4):
Delta offers customers more than 15,000 daily flights
Quoting HOMSaR (Reply 8):
15,000 daily flights? Seems very doubtful for a single airline.

Are they including their SkyTeam partners in that count of total flights offered? That should probably not be counted in calculating this number.

Yes, that number would include all partners - and is still high. Per Delta's website, they advertise more than 13,000 flights worldwide including all of their partners as of January. Their website currently indicates that Delta operates 4,804 daily flights (again, also from January).

Still, in the grand scheme, the difference is immaterial. It would theoretically triple the profit from fun2fly's calculations, but it remains a paltry number.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: LAXintl
Posted 2013-05-04 13:33:27 and read 21766 times.

Not too complicated to figure out.

Based on Southwest Airlines 2012 annual report - they made $309.20 profit per flight.

At their average system fare - that is only a bit more than what 2 passengers generate.

Or in other worlds based on their load factor, it took the first 119 passengers on board to break even with.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: 9252fly
Posted 2013-05-04 13:49:00 and read 21528 times.

Quoting fun2fly (Reply 4):
it's only $335 per flight.
Quoting rwy04lga (Reply 11):
According to the show 'A Week in the Life of American Airlines', deducting all expenses, the profit from one full flight is less than $200.
Quoting LAXintl (Reply 21):
Based on Southwest Airlines 2012 annual report - they made $309.20 profit per flight.

So it would seem that a rough estimate is about $300.00 per flight. It's really quite shocking when one thinks about the cost of the aircraft which is in the multiple millions,never mind the fuel,labour,insurance,maintenance and the list goes on and on...

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: bendewire
Posted 2013-05-04 13:50:46 and read 21495 times.

Ah, but any publicly listed company in the UK DO publish these figures as the breakdown is required by shareholders and the stock exchange, otherwise they could just pluck figures out of the air to present to their investors. It may be different in Eastern Europe and North America but I can assure you these figures are in the public domain. How they arrive at £3-5 profit per seat is what is the industry secret.

BA being a full fare carrier is another ball game due to long haul, short haul and the different classes of seats, but I reckon as a rule of thumb, any carrier should expect to earn 8-10% of the total revenue, pre tax profit per flight including in flight sales, is this achieved?

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: cschleic
Posted 2013-05-04 14:40:55 and read 20905 times.

Quoting LAXintl (Reply 21):
Not too complicated to figure out.

Based on Southwest Airlines 2012 annual report - they made $309.20 profit per flight.

I think I recall the book Nuts!, written about Southwest Airlines many years ago, came to about the same figure. It's only the last few passengers that make a profit for them. Considering the billions and billions of dollars of capital, people, resources and time involved from airports to ATC to the airlines themselves, from a business standpoint it's a ludicrous activity. At the same time, imagine what would happen to Las Vegas or the Florida cruise industry (speaking for the U.S.) if cheap air travel didn't exist.

Another way to think about it, consider how much the price of fuel, aircraft and all the infrastructure has gone up over the years, but average fares haven't as much. No wonder the industry is a financial disaster.

[Edited 2013-05-04 15:02:29]

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: bristolflyer
Posted 2013-05-04 14:50:35 and read 21378 times.

$300 doesn't seem like much but by the time you multiply that by 6 (average qty of flights per day) by 200 (average number of planes in a fleet) the numbers grow pretty quickly.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: TWA772LR
Posted 2013-05-04 15:26:27 and read 20992 times.

I saw a documentary where an AA 762 flight from JFK-LAX made like $20... and I think I'm high-balling that too.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: Aesma
Posted 2013-05-04 15:31:53 and read 21104 times.

Quoting cschleic (Reply 24):
At the same time, imagine what would happen to Las Vegas or the Florida cruise industry (speaking for the U.S.) if cheap air travel didn't exist.

That's exactly why the industry is subsidized everywhere (no tax on fuel for example) and airlines are rarely allowed to fail.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: bendewire
Posted 2013-05-04 16:19:15 and read 20529 times.

Don't bet on airlines not being allowed to fail, countless airlines have failed recently in the UK and Europe, not only by LCC competition but by regulation and in the UK APD (Aiport Pasenger Duty) tax, this is crippling many airlines as passengers are being put off by the the extra cost imposed by the government.

Excel, Zoom, Astreas, Fly Globespan, to name but a few, as an example Flyby are trying to attain £3 per seat profit, as regional flying is heavely affected by APD and passenger numbers are increasingly falling, it will be interesting to see how Virgin get on with their new regional service to and from Heathrow, I believe they have not really thought this out thoroughly due to the eagerness to compete/beat BA. Internal UK flights are notoriously expensive due to APD so this precludes many from using connecting services to Heathrow, it is cheaper to driver

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: planesmart
Posted 2013-05-04 16:34:22 and read 20341 times.

Profitability per seat targets differ based on many factors, not least short v long range and domestic v international.

Then there is disclosure. Is the profit for tax purposes, shareholders, internal, investor or creditor use?

For inherently profitable airlines, there all sorts of legal profit minimisation tectics, just as for unprofitable airlines, there are loss maximisation tactics.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: rwy04lga
Posted 2013-05-04 17:46:57 and read 19736 times.

Quoting TWA772LR (Reply 26):
I saw a documentary where an AA 762 flight from JFK-LAX made like $20... and I think I'm high-balling that too.

That's the one I referred to in post 11 and which 'bobloblaw' added to in post 12. See below.

Quoting rwy04lga (Reply 11):
According to the show 'A Week in the Life of American Airlines', deducting all expenses, the profit from one full flight is less than $200. So, B6JFKH81's chart is right there.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: cschleic
Posted 2013-05-04 17:56:34 and read 19673 times.

Quoting Aesma (Reply 27):
and airlines are rarely allowed to fail.

Rarely allowed to fail? Huh? Pan Am, Eastern, Independence Air, Muse Air, ATA, Air Midwest, Aloha, Champion, Maxjet, Skybus, Midway, Braniff (multiple times), Kiwi, MarkAir, Pacific Express, Air One, New York Air, Presidential, MGM Grand Air, and that's just part of the U.S., and passenger carriers.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: flylku
Posted 2013-05-04 18:42:18 and read 19181 times.

This is not really knowable (apportioning overhead is an art not a science) but even if it were it is not important. An airline is a system. Just like a grocery store has loss leaders like milk and eggs airlines have routes that by themselves are very similar in nature. But taken together, the objective is that the entire system is profitable over the long term.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: RDUDDJI
Posted 2013-05-04 19:31:47 and read 18689 times.

Nothing new, airlines are marginally profitable...*if* they're having a good year. That's their model. However, when you have large sums of money, i.e. many billions, a small percentage of that is many millions...

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: EaglePower83
Posted 2013-05-06 06:53:32 and read 17081 times.

Quoting rwy04lga (Reply 11):
According to the show 'A Week in the Life of American Airlines', deducting all expenses, the profit from one full flight is less than $200. So, B6JFKH81's chart is right there.
Quoting bobloblaw (Reply 12):
That was from one 767-200 flight from JFK-LAX. Not an average of all flights or even that market.

Yea I remember that show.
However, a midcon AA flight made like $6,000 if I remember.
So it seems like the shorter flights or other legs where they can price gouge, subsidize the flights that don't make money but are mission critical to the network.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: mbm3
Posted 2013-05-06 08:15:19 and read 16897 times.

I have been told that in recent history, many flights are lucky to churn a profit, it is the unbundled extra service fees that have helped airlines make a profit.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: nkops
Posted 2013-05-06 09:00:11 and read 16793 times.

Quoting EaglePower83 (Reply 34):
However, a midcon AA flight made like $6,000 if I remember

IIRC, that was a DFW-BDL flight on an M80... I remember watching that.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: EaglePower83
Posted 2013-05-06 13:49:10 and read 16463 times.

Quoting nkops (Reply 36):

Quoting EaglePower83 (Reply 34):
However, a midcon AA flight made like $6,000 if I remember

IIRC, that was a DFW-BDL flight on an M80... I remember watching that.

WOW, then with the 737s on that route, and the HIGH ticket prices often out of BDL now, they must be printing money on that route  

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: CitationJet
Posted 2013-05-06 14:26:04 and read 16294 times.

Quoting rwy04lga (Reply 11):
According to the show 'A Week in the Life of American Airlines', deducting all expenses, the profit from one full flight is less than $200. So, B6JFKH81's chart is right there.
Quoting TWA772LR (Reply 26):
I saw a documentary where an AA 762 flight from JFK-LAX made like $20... and I think I'm high-balling that too.
Quoting nkops (Reply 36):
IIRC, that was a DFW-BDL flight on an M80... I remember watching that

Here is the show:
http://www.youtube.com/watch?v=-Q78s-HKnyI

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: Flighty
Posted 2013-05-06 14:51:31 and read 16176 times.

Average profit is like rose flyer said. Rasm-casm basically equals profit per asm. I you have a 10 percent margin on 13 cent rasm, you multiply miles * seats * 1 cent. So for a 150 seater at 1000 miles that is a $1500 profit. Rough guesstimate but it will do. Average across the US industry, you will get something like that.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: tugger
Posted 2013-05-06 15:42:41 and read 16079 times.

Quoting bristolflyer (Reply 25):
$300 doesn't seem like much but by the time you multiply that by 6 (average qty of flights per day) by 200 (average number of planes in a fleet) the numbers grow pretty quickly.

  

In just one year, Walmart moves about 5.5 billion cases of products through its distro centers. If you guesstimate an average that each case has 24 items in it (a seriously WAG) that could mean 360,000,000 "items" per day.
Last year they made $17B in profit (according the the latest Fortune 500 numbers), with 4,200+ stores that is about $11k in profit per store per day. So if they sell about 85,000 items per day per store, that means they make only about 13¢ on each item they sell.

It's all about scale and the law of large numbers, if you can do the same thing/function over and over again, over a protracted period of time, and on average can make money doing so, even a small profit adds up when multiplied hundreds, thousands, or especially millions of time a day. A lot of big business is not for the faint of heart, when one one averages out all costs and expenses etc. profits per each transaction/item be frighteningly small.

You want something that looks better? Look at Qualcomm, based on current numbers they are making something like $10 on each chip they sell. That is pretty healthy. But again look at all they have to do to keep making that.

Tugg

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: robsaw
Posted 2013-05-07 10:58:25 and read 15483 times.

Quoting Aesma (Reply 27):
That's exactly why the industry is subsidized everywhere (no tax on fuel for example) and airlines are rarely allowed to fail.

"everywhere"? Hardly.

"rarely allowed to fail"? How about frequently allowed to fail?

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: lightsaber
Posted 2013-05-07 11:49:29 and read 15408 times.

Quoting B6JFKH81 (Reply 6):

Here is an interesting graphic from an article late last year

Very interesting. It seems to be 738 economics scaled to percentages (expressed as seats).

Quoting LAXintl (Reply 21):
Or in other worlds based on their load factor, it took the first 119 passengers on board to break even with.

No wonder they demand aircraft with lower fuel burn and maintenance costs.

Quoting Aesma (Reply 27):
That's exactly why the industry is subsidized everywhere (no tax on fuel for example) and airlines are rarely allowed to fail.

Not taxed and subsidized are two completely different problems. But as to failing, we see that regularly in the USA and elsewhere.

Lightsaber

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: planesmart
Posted 2013-05-07 13:11:59 and read 15246 times.

As an earlier poster stated, it's like asking how long is a piece of string.

In a de-regulated market, where do subsidies come into the equation?

Tax on fuel is just another tax on costs, and can be mitigated / offset by tax on sales and international flights.

The finance industry applies 4-5 risk grades (fewer than credit rating agencies) to set margins, fees, etc. Unfortunately, the riskier the funding, the higher the margin. So we end up with the situation that those least able to pay, who would benefit from low funding costs, incur the highest.

Of course, a point can be reached, where thru bankruptcy, or other lender intervention, funding costs are deferred, discounted or even forgiven. This could be described as a subsidy, apparently incurred by private sector funders, but as tax is minimised / losses maximised by all parties, the taxpayer does ultimately pay.

And those with the best credit risk, receive not only the lowest funding costs, but can also access the most creative funding packages.

Off and on balance sheet action can make a significant difference to the apparent bottom line. Some countries and airlines are better at exploiting the opportunities.

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: EricR
Posted 2013-05-07 20:07:33 and read 14978 times.

Quoting LAXintl (Reply 21):

Not too complicated to figure out.

Based on Southwest Airlines 2012 annual report - they made $309.20 profit per flight.

At their average system fare - that is only a bit more than what 2 passengers generate.

Or in other worlds based on their load factor, it took the first 119 passengers on board to break even with.


I don't think this formula provides a meaningful figure for carriers with various sized aircraft. It only works assuming the carrier has one type of aircraft.

[Edited 2013-05-07 20:13:42]

Topic: RE: How Much Profit Does An Airline Make On A Flight?
Username: superjeff
Posted 2013-05-08 07:30:52 and read 14675 times.

Quoting bobloblaw (Reply 12):
That was from one 767-200 flight from JFK-LAX. Not an average of all flights or even that market

Actually, a B737-800 operating DFW-BDL. And the numbers are correct.


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