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Airlines: The Most Profitable Industry In The World  
User currently offlineVV701 From United Kingdom, joined Aug 2005, 7685 posts, RR: 17
Posted (6 years 3 months 1 week 6 days 19 hours ago) and read 6721 times:

At trhe risk of being ridiculed by all of you I just found an article published in the independent Harvard Business School's students' newspaper, The Harbus, with this title.

The article relates to a presentation by Joe Schottland, MD of cosultants Seabury Group. Admittedly the article is not very recent but when it was published just over three months ago I believe the oil price was about where it is today.

Read it at:

http://media.www.harbus.org/media/st...MIIHost=media.collegepublisher.com

and then flame Schottland, not me!

8 replies: All unread, jump to last
 
User currently offlineSevenHeavy From United Kingdom, joined Mar 2004, 1156 posts, RR: 9
Reply 1, posted (6 years 3 months 1 week 6 days 19 hours ago) and read 6679 times:



Quoting VV701 (Thread starter):
The article relates to a presentation by Joe Schottland, MD of cosultants Seabury Group. Admittedly the article is not very recent but when it was published just over three months ago I believe the oil price was about where it is today.

The way I read it, it was published in April '06?. For exmaple, it references Skybus as being about to start up and they have been and gone since then  Wink

Regards



So long 701, it was nice knowing you.
User currently offlineVV701 From United Kingdom, joined Aug 2005, 7685 posts, RR: 17
Reply 2, posted (6 years 3 months 1 week 6 days 18 hours ago) and read 6664 times:



Quoting SevenHeavy (Reply 1):
The way I read it, it was published in April '06?.

I think you are right. I took the "May 5 2008" date alongside the "Search" box to be the publication date but reading it all again it does look like April 2006. Sorry!


User currently offlineDC8FanJet From United States of America, joined Aug 2006, 397 posts, RR: 0
Reply 3, posted (6 years 3 months 1 week 6 days 18 hours ago) and read 6657 times:

Like the old joke...

How to make a small fortune in the airline business?


Start with a large fortune....


User currently offlineElite From Hong Kong, joined Jun 2006, 2875 posts, RR: 10
Reply 4, posted (6 years 3 months 1 week 6 days 18 hours ago) and read 6632 times:



Quoting DC8FanJet (Reply 3):

Or the one where it goes...

If you want to be a millionaire in a week, just invest a billion dollars in the airline industry.


User currently offlinePanAm747 From United States of America, joined Feb 2004, 4242 posts, RR: 8
Reply 5, posted (6 years 3 months 1 week 6 days 17 hours ago) and read 6454 times:

Proof that even "experts" - including those published by the College Publisher Network - believe in the concept of a perpetual motion machine.

Here's two examples of what I mean: In the late 1990's, there was the "dot com" boom. People were making lots of money on people investing in any company with "dot com" in their name. The state of California found its coffeurs filled to the brim based on income taxes from the mega-wealthy.

The belief that this was a sustainable situation was ludicrous to anyone with the least bit of common knowledge, but that didn't apply to our state lawmakers. Instead of realizing that the situation was going to come crashing down at any moment (which it did very quickly), they put it into their plans to not only spend this new money, but assume that it would be there forever! We're still digging out of that mess.

The other example is the housing boom. Shaky lending practices coupled with the American public buying larger and larger houses they could never afford created a bubble more delicate than the dot-com boom, but the U.S. didn't care - this would last forever.

Look at the foreclosure rate now. We all saw it coming, yet we closed our eyes to its consequences, hoping that if we ignored it, it would go away.

The same is happening with the author here. He addresses the airline industry, yes, but not the related industries that keep the airlines going!! He assumes that things like fuel, labor, wages of ticket buyers, maintenance, and other things will remain static and won't change dramatically over time. The disaster that has befallen in the industry because of rampant speculation driving the price of fuel through the roof alone has resulted in a situation almost unimagineable just a couple of years ago.

Predicting profits, unless you are shareholder in Exxon-Mobil, is shortsided to the point of comedy - and would be funny if there weren't so many lemmings willing to believe that "prosperity is just around the corner!!"



Pan Am:The World's Most Experienced Airline - P(oor) S(ailor's) A(irline): San Diego's Hometown Airline-Catch Our Smile!
User currently offline2175301 From United States of America, joined May 2007, 1075 posts, RR: 0
Reply 6, posted (6 years 3 months 1 week 6 days 14 hours ago) and read 6266 times:

Of the businesses that are generally legal in the world; I believe that any review would show that the Software industry is the most profitable industry in the world. Typical profit margins are in the range of 20+%.

The Oil industry importers/refiners (Exxon, Mobile, etc) only operates at a couple of a percent (or less) profit margin.


User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17784 posts, RR: 46
Reply 7, posted (6 years 3 months 1 week 6 days 13 hours ago) and read 6190 times:

I believe Sadiq Gillani was one of the bright minds behind Skybus and Eos. Wink


E pur si muove -Galileo
User currently offlineCloudy From , joined Dec 1969, posts, RR:
Reply 8, posted (6 years 3 months 1 week 4 days 11 hours ago) and read 5821 times:

The article puts forth only two pieces of real evidence. Both are questionable.


He mentioned that Southwest and Ryanair were very profitable in the good times. This is true only in comparison to other airlines. It is not true if the comparison is with business in general. Much larger profits are available in other industries. The airline industry is on the low end profitwise even in good times.

He also said the profitability of the industry follows a pattern that can be mathematically analysed, and that pattern predicts an upsurge of profitability. How this view can be maintained in the face of unpredictable factors such as oil prices is beyond me. The fact that at least domestic US airlines are not VERY profitable even in the best of circumstances also argues against such a model


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