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What Makes For A Profitable Flight?  
User currently offlineNo YYC From Canada, joined Jul 2000, 73 posts, RR: 0
Posted (13 years 4 months 1 week 2 days 21 hours ago) and read 1606 times:

At what point does an airline consider a certain flight to be profitable? Of course, the main idea is to put as many bums in seats as the aircraft can hold. But not every single flight can be sold out. Yes, there are your high revenue 1st & business class travellers and then your low yield tourists. Would anyone know what the airlines consider to be a "good" load factor. These questions stem from Air Canada's recent decision to drop YUL-YEG flights, eventhough the flights have been operating at 71% capacity. AC claims that this route was extremely unprofitable for them!

10 replies: All unread, jump to last
 
User currently offlineEarly Air From United States of America, joined Jan 2001, 611 posts, RR: 1
Reply 1, posted (13 years 4 months 1 week 2 days 20 hours ago) and read 1579 times:

It really all depends, you factor the a/c, length of flight, airport charges ect.. and add them all together. That flight you mentioned can loose money for AC in many ways, when you add in stuff like extra gate rentals at the airport and if the tickets are cheap the flight may not be profitable. I know what Southwest sais that they need at least 70 people aboard the aircraft for the flight to be profitable.

Rgds,
Early Air


User currently offlineIainhol From , joined Dec 1969, posts, RR:
Reply 2, posted (13 years 4 months 1 week 2 days 20 hours ago) and read 1568 times:

It does not depend on many things all a flight has to do to be profitable is have its revenue greater then total costs!
Iain


User currently offlineTrvlr From United States of America, joined Feb 2000, 4430 posts, RR: 21
Reply 3, posted (13 years 4 months 1 week 2 days 18 hours ago) and read 1543 times:

There is whether or not the flight is getting revenue from cargo. It is possible for a flight to be profitable even if it is only 30% filled with passengers.

Aaron G.


User currently offlineRamperjoe From United States of America, joined Mar 2001, 13 posts, RR: 0
Reply 4, posted (13 years 4 months 1 week 1 day ago) and read 1509 times:

A flight operating at 71% average capacity and AC is saying that the flight isn't profitable! If an airline like AC can't make money on a flight like that then there has got to be something wrong with them. A 71% load factor is pretty good and according to OAG the aircraft used on the YUL-YEG route is a 737-200. It's not like you have to fill 200+ seats to make money. I think AC is making excuses for pulling the route. They probably don't have enough aircraft to fulfill all of their routes. So, they pull aircraft from the backwater routes. Airlines tend to cut service first from areas that won't make a big stink about it (i.e. the business community). I think AC is giving the people on this route the shaft.

User currently offlineNo YYC From Canada, joined Jul 2000, 73 posts, RR: 0
Reply 5, posted (13 years 4 months 1 week 1 day ago) and read 1499 times:

Would anyone know what Royal's load factors on this route are? Obviously, they think that there is money to be made here.

User currently offlineAirbusluver From United States of America, joined Feb 2001, 155 posts, RR: 0
Reply 6, posted (13 years 4 months 6 days ago) and read 1466 times:

For a route to be profitable, of course, the revenue must be more than the cost. Here is how airlines can calculate the fare for a route.

An airline has a CASM of 9 (CASM is Cost per Available Seat Mile--meaning how much it costs an airline to fly one seat one mile)

So, say on an 800 mile flight, multiply 800 times 9, and you get the cost of the trip. And if you wanted to make sure you make money on a flight with a 50% load factor, multiply 800 times 18. Of course, the CASM is just an average, and is higher on short flights, and lower on longer flights, because takeoffs and climbs cost more than level flight. A good load factor is usually about 62-67% for an average.

Hope this helps.

airbusluver


User currently offlineEliBen From , joined Dec 1969, posts, RR:
Reply 7, posted (13 years 4 months 5 days 23 hours ago) and read 1453 times:

Profits are simply revenues less cost. Period.
You can have a plane full of low-fare-paying pax (100% load factor) and lose money on the flight.
There are a couple of ways to calculate profitability and it is beyond the scope of this forum.
As to load factors - you have to calculate your break-even load factor that is, per the existing revnue, at what point you will break even. Any number higher than that one is profitable so as you can see - a certain percentage load factor caannot be judged in itself.

Eli


User currently offlineCPDC10-30 From United Kingdom, joined Feb 2000, 4780 posts, RR: 24
Reply 8, posted (13 years 4 months 5 days 23 hours ago) and read 1442 times:

It also depends on the type of fares that the passengers are paying. Canada 3000 would probably be losing money on any route with less than 75%...while some majors can profit with 50% or less loads if there are premium fares being paid. Cargo also figures in.

User currently offlineRamperjoe From United States of America, joined Mar 2001, 13 posts, RR: 0
Reply 9, posted (13 years 4 months 5 days 21 hours ago) and read 1425 times:

As an expatriate living in the states, I find it very sad that the AC reputation is going down into the dumps pretty quick. I used to really enjoy flying with AC and always looked for the red Maple Leaf with the circle on the tail whenever I was abroad. It appears that Air Canada is trying to cut service to all the areas it doesn't consider important enough. It's one thing if nobody takes your flight but it another if the flight is being strongly supported

User currently offlineBostonBeau From United States of America, joined Sep 2000, 462 posts, RR: 0
Reply 10, posted (13 years 4 months 5 days 7 hours ago) and read 1407 times:

It also depends on whether the aircraft being used is paid for yet. A B727 25 years ago cost $6-$8 million...which is probably less than what the YEARLY payments are on a new comparable aircraft.

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