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Whats The Break-even Point For Pax Numbers?  
User currently offlineGrimey From Ireland, joined Jun 2005, 449 posts, RR: 5
Posted (8 years 10 months 3 weeks 3 days 19 hours ago) and read 5357 times:

What is the amount of passengers that has to be on an aircraft till the airline makes a profit? I would take it that an airline would never have it's breakven point at 100% capacity because not every single flight gets full up, I would be thinking it would be 75% upwards.

Just asking cos I'm a bit bored.

Thanks
Grimey

13 replies: All unread, jump to last
 
User currently offlineEMBQA From United States of America, joined Oct 2003, 9364 posts, RR: 11
Reply 1, posted (8 years 10 months 3 weeks 3 days 19 hours ago) and read 5338 times:

Quoting Grimey (Thread starter):
What is the amount of passengers that has to be on an aircraft till the airline makes a profit? I

Every aircraft and airline is different.



"It's not the size of the dog in the fight, but the size of the fight in the dog"
User currently offlineShamrock_747 From , joined Dec 1969, posts, RR:
Reply 2, posted (8 years 10 months 3 weeks 3 days 19 hours ago) and read 5337 times:

Completely depends on the yields.

For example on a hypothetical BA route, having a 100% load of restricted tkts such as N/V/D/I/A and mileage redemptions may not make any money whilst 50% load with every pax holding a full fare Y/W/J/F class tkt may well be profitable.


User currently offlineB6sea From United States of America, joined Aug 2005, 340 posts, RR: 0
Reply 3, posted (8 years 10 months 3 weeks 3 days 18 hours ago) and read 5325 times:

Quoting Grimey (Thread starter):
I would take it that an airline would never have it's breakven point at 100% capacity

Tell that to FlyI, but it depends on the airline, some, like flyI are above 100% hence talk of them going under some are quite low. What are SW's and B6's???


User currently offlineWhiteHatter From , joined Dec 1969, posts, RR:
Reply 4, posted (8 years 10 months 3 weeks 3 days 17 hours ago) and read 5269 times:

It depends on the route flown, airport charges and so many variables you can't put a figure on it. Fares are just one part.

FR have frequently said that they could potentially fly a route with passengers at zero fare charged and pay for it with incidentals if the business model could be done right. Stuff like inflight sales and hotels/insurance. Other airlines can fly a route with every single seat full and lose money on it if they can't get the yield right.

Some of the lowcosts frequently mention a 70% figure but that's a figure averaged across flights with many variables factored in. Other carriers could possibly turn a buck on a longhaul with all the premium seats full and nobody at all in economy.

See what I mean?


User currently offlineAvianca From Venezuela, joined Jan 2005, 5922 posts, RR: 40
Reply 5, posted (8 years 10 months 3 weeks 3 days 17 hours ago) and read 5256 times:

Quoting Grimey (Thread starter):
I would be thinking it would be 75% upwards.

I would say the average is lower, as the most airlines including the airlines that are making money in the moment have normally lower load-factors...

regards
Avianca



Colombia es el Mundo Y el Mundo es Colombia
User currently offlineVenezuela747 From United States of America, joined Jan 2004, 1427 posts, RR: 5
Reply 6, posted (8 years 10 months 3 weeks 3 days 16 hours ago) and read 5213 times:

Do airlines measure their profit peraircraft or as a whole? It does not make sense....I mean maybe a UA domestic flight on a B757 was really empty and was a loss but they make up for it with a full daily B744 to Asia....does that make sense to anyone?


ROLL TIDE!!!
User currently offlineHAWK21M From India, joined Jan 2001, 31667 posts, RR: 56
Reply 7, posted (8 years 10 months 3 weeks 3 days 6 hours ago) and read 5113 times:

Depending on the type of carrier.An LCC would need a higher Break even point.
other carriers should be 75-80%.
regds
MEL



Think of the brighter side!
User currently offlineSnaiks From Panama, joined Mar 2005, 216 posts, RR: 0
Reply 8, posted (8 years 10 months 3 weeks 3 days 6 hours ago) and read 5108 times:

you also have to take in consideration freight, many airlines can fly completeley empty, and would still make money because they are flying freight to other places, ie. mail, overnight deliveries, etc

User currently offlineSidishus From United States of America, joined Oct 2004, 519 posts, RR: 4
Reply 9, posted (8 years 10 months 3 weeks 3 days 6 hours ago) and read 5093 times:

Quoting Grimey (Thread starter):
What is the amount of passengers that has to be on an aircraft till the airline makes a profit? I would take it that an airline would never have it's breakven point at 100% capacity because not every single flight gets full up, I would be thinking it would be 75% upwards.

You are venturing into the complex and murky world of Revenue Management. Master this Black Art (some call it a discipline), and you could make a fair bit of money...Good luck on your journey.

http://www.ima.umn.edu/talks/workshops/12-3-5.2000/van-ryzin/rm.pdf

[Edited 2005-09-12 10:30:57]


the truth: first it is ridiculed second it is violently opposed finally it is accepted as self-evident
User currently offline777ER From New Zealand, joined Dec 2003, 12082 posts, RR: 18
Reply 10, posted (8 years 10 months 3 weeks 3 days 6 hours ago) and read 5073 times:
AIRLINERS.NET CREW
FORUM MODERATOR

Break even for each airline doesn't always mean passengers, it also means cargo, a perfect example is EK on the Trans-Tasman (New Zealand - Australia). EKs profits from the Trans-Tasman came mostly from its cargo operation

User currently offlineNZ1 From New Zealand, joined May 2004, 2250 posts, RR: 25
Reply 11, posted (8 years 10 months 3 weeks 3 days 5 hours ago) and read 5037 times:
AIRLINERS.NET CREW
FORUM MODERATOR

Quoting 777ER (Reply 10):
Break even for each airline doesn't always mean passengers, it also means cargo, a perfect example is EK on the Trans-Tasman (New Zealand - Australia). EKs profits from the Trans-Tasman came mostly from its cargo operation

Thats right. EK still make a profit flying SYD-AKL with only 30pax on board, due to the freight being carried.

NZ1


User currently offlineSidishus From United States of America, joined Oct 2004, 519 posts, RR: 4
Reply 12, posted (8 years 10 months 3 weeks 3 days 4 hours ago) and read 5029 times:

Quoting Sidishus (Reply 9):
You are venturing into the complex and murky world of Revenue Management. Master this Black Art (some call it a discipline), and you could make a fair bit of money...Good luck on your journey.

http://www.ima.umn.edu/talks/worksho...m.pdf

and if you enjoyed that link...you may want to peruse this bit of light reading....Enjoy  Wink

http://www.optimization-online.org/DB_FILE/2004/12/1025.pdf



the truth: first it is ridiculed second it is violently opposed finally it is accepted as self-evident
User currently offlineLuvflng From Costa Rica, joined Nov 2000, 178 posts, RR: 0
Reply 13, posted (8 years 10 months 3 weeks 3 days 2 hours ago) and read 4972 times:

Well, the above answers are correct but neither provides the exact formula.

In case you want to find out what the Break Even Load Factor (BELF) is you need this information:
A) Total Operating Expenses
B) Total Operating Expenses
C) ASM - Available Seat Miles (For Europe ASK )
D) RPM - Revenue Passenger Miles (For Europe RPK )
Make sure that you stay either in miles or kilometers

E) CASM = B/C
F) YIELD = A/C
G) BELF = CASM/YIELD = E/F (This will give you the percentage)

Now, you can do that per aircraft fleet, for example find out BELF for the fleet of A 330, however, you would need the A) B) C) and D) information just for that fleet and unless you have access to some specific databases such as O&D or Form 41 for US Airlines (don't think something like that is available in Europe yet) then you can compute the BELF. Airlines for sure do these types of computations as they have the data readily available.

You can plot multiple airlines with the BELF and their current Load factor and see if they are making money. At least in the US for the past 3 years, BELF is higher then their LF (duh) spelling losses for them.

Hope this helps,

luvflng



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