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How Do You Tell If A Flight Is Profitable?  
User currently offline727LOVER From United States of America, joined Oct 2001, 6439 posts, RR: 17
Posted (4 years 1 week 3 days 8 hours ago) and read 5221 times:

Lets take DL 0333 on 01/17/11 operating TPA-BDL I have chosen this flight because it is most likely, entirely O&D.

83 pax

payment for one-way portion:

4 paid $399
6 paid $159
7 paid $139
11 paid $119
22 paid $109
15 paid $99
12 paid $89
6 paid $79

1596 + 954 + 973 + 1309 + 2398 + 1485 +1068 + 474 = $10,257 in pax fare revenue.
Now lets say of the 83 pax, 25 had two checked bags, 17 had one checked bag. 9 were exempt and the rest had carry-on only.I don't know what DL's bag fees are.

So, how would we figure the cargo rev, and the costs of airport fees, crews....bla bla bla?

How does it work?


Listen Betty, don't start up with your 'White Zone' s*** again.
14 replies: All unread, jump to last
 
User currently offlinejlbmedia From United States of America, joined Jun 2002, 622 posts, RR: 0
Reply 1, posted (4 years 1 week 3 days 7 hours ago) and read 5116 times:

For an airline outsider, I think your best bet is to wait about 1 year, and see if they are still offering the flight...   


JLB54061
User currently offlinepnwtraveler From Canada, joined Jun 2007, 2243 posts, RR: 12
Reply 2, posted (4 years 1 week 3 days 7 hours ago) and read 5102 times:

Cargo is extremely variable. There are contract to carry items when space is available, that generate much less profit than lucrative just-in-time high value shipments, and lucrative mail contracts. Similar to the seats in the cabin, not all packages go for the same listed rates as you walk in to the cargo office. Some flights can go with a half full cabin and yet turn a very good profit with the right mix of cargo.

User currently offlineEricR From United States of America, joined Jul 2010, 1904 posts, RR: 1
Reply 3, posted (4 years 1 week 3 days 6 hours ago) and read 4927 times:

Quoting jlbmedia (Reply 1):
For an airline outsider, I think your best bet is to wait about 1 year, and see if they are still offering the flight...

Some airlines will fly marginal to slightly unprofitable routes for the benefit of the overall system whether it be to offer connection opportunities, FF's, corporate contracts, etc.

Quoting 727LOVER (Thread starter):
So, how would we figure the cargo rev, and the costs of airport fees, crews....bla bla bla?

I'm not clear if your question is in theory or in reality. In other words, are you wanting to know how an airline calculates it or how do you (as an airline outsider) calculate it?

Unless you directly work for the airline (and are in specific departments within the airline), you will truly never know. You can do some high level math to determine the revenue and costs, but this will only get you in the ballpark.

The revenue component will be tricky because as an outsider you will not be able to determine cargo revenue, revenue guarantees from corporate contracts, and revenue from local incentives. These variables can play big roles on profitability for certain flights.


User currently offlineRoseFlyer From United States of America, joined Feb 2004, 9652 posts, RR: 52
Reply 4, posted (4 years 1 week 3 days 6 hours ago) and read 4865 times:

One change to your method is that airlines use a specific amount of money per passenger that they count on as ancillary revenue. It depends on the airline, but about $15 per passenger is about normal now (Allegiant is number one at about $30). This comes from food sales, bag fees, liquor sales, seat assignment fees, change fees, vacation packages, etc.

Quoting pnwtraveler (Reply 2):
Cargo is extremely variable. There are contract to carry items when space is available, that generate much less profit than lucrative just-in-time high value shipments, and lucrative mail contracts. Similar to the seats in the cabin, not all packages go for the same listed rates as you walk in to the cargo office. Some flights can go with a half full cabin and yet turn a very good profit with the right mix of cargo.

Cargo can be big, especially in international markets, but I doubt there is much revenue off of it on a domestic fliying like TPA-BDL. At United Airlines last year, cargo and freight only represented 3% of the company's revenue.

Quoting EricR (Reply 3):

Some airlines will fly marginal to slightly unprofitable routes for the benefit of the overall system whether it be to offer connection opportunities, FF's, corporate contracts, etc.

Absolutely! Some routes only exist for feed. I have heard that some of DL's JFK feeder flights go out with less than passengers who are not connecting.



If you have never designed an airplane part before, let the real designers do the work!
User currently onlinevin2basketball From United States of America, joined Dec 2009, 317 posts, RR: 0
Reply 5, posted (4 years 1 week 3 days 5 hours ago) and read 4699 times:

There's Data on the DOT website showing average, I use it all the time. And it shows the average cost for the aircraft

User currently offlineEricR From United States of America, joined Jul 2010, 1904 posts, RR: 1
Reply 6, posted (4 years 1 week 3 days 5 hours ago) and read 4683 times:

Quoting vin2basketball (Reply 5):
There's Data on the DOT website showing average, I use it all the time. And it shows the average cost for the aircraft

Yes, but isn't this data limited only for paying customers? In other words, it would not factor in cargo revenue, revenue guarantees, local incentives, etc.


User currently onlinevin2basketball From United States of America, joined Dec 2009, 317 posts, RR: 0
Reply 7, posted (4 years 1 week 3 days 4 hours ago) and read 4520 times:

You can do that at the airport websites, as long as the airport's publicly owned, they have to give you their full operations breakdown.

User currently offlineXT6Wagon From United States of America, joined Feb 2007, 3411 posts, RR: 4
Reply 8, posted (4 years 1 week 3 days 2 hours ago) and read 4283 times:

Quoting RoseFlyer (Reply 4):


Cargo can be big, especially in international markets, but I doubt there is much revenue off of it on a domestic fliying like TPA-BDL. At United Airlines last year, cargo and freight only represented 3% of the company's revenue.

WN for example is only domestic and makes a good bit of cash from cargo each quarter. I don't have the numbers but its alot better than 3%.


User currently offlineRoseFlyer From United States of America, joined Feb 2004, 9652 posts, RR: 52
Reply 9, posted (4 years 1 week 3 days 1 hour ago) and read 4145 times:

Quoting XT6Wagon (Reply 8):

WN for example is only domestic and makes a good bit of cash from cargo each quarter. I don't have the numbers but its alot better than 3%.

Annual Southwest Airlines Numbers in 2009
Total revenue: 10,350 Million
Freight Revenue: 118 Million
Freight Percentage = 1.1%

It is a myth that freight is a goldmine for US airlines. It is great additional revenue since the costs of transporting freight on a passenger plane is low, but domestic routes are not justified by cargo with the exception of the occasional equipment modification for high volume routes.

[Edited 2010-09-14 16:07:46]


If you have never designed an airplane part before, let the real designers do the work!
User currently offlineFlyDeltaJets87 From , joined Dec 1969, posts, RR:
Reply 10, posted (4 years 1 week 3 days ago) and read 4009 times:

It's much simpler on a flight like TPA-BDL where most of the traffic is O&D. But try figuring it out for TPA-ATL-DAY. What percentage of the fare goes to the TPA-ATL leg? The ATL-DAY leg? From what I can tell, you probably have to be on the inside to know this.

User currently offlineXT6Wagon From United States of America, joined Feb 2007, 3411 posts, RR: 4
Reply 11, posted (4 years 1 week 2 days 23 hours ago) and read 3859 times:

Quoting RoseFlyer (Reply 9):
Annual Southwest Airlines Numbers in 2009
Total revenue: 10,350 Million
Freight Revenue: 118 Million
Freight Percentage = 1.1%

I stand corrected


User currently offline9252fly From Canada, joined Sep 2005, 1392 posts, RR: 0
Reply 12, posted (4 years 1 week 2 days 18 hours ago) and read 3645 times:

Quoting jlbmedia (Reply 1):
For an airline outsider, I think your best bet is to wait about 1 year, and see if they are still offering the flight...

  


User currently onlineHNLPointShoot From United States of America, joined Feb 2007, 320 posts, RR: 0
Reply 13, posted (4 years 1 week 2 days 18 hours ago) and read 3604 times:

Buy stock in an airline, then send an e-mail to their investor relations department (or CEO, or CFO) and hope they give you a response. If the airline is privately held, you're out of luck.  

User currently offlinePSU.DTW.SCE From United States of America, joined Jan 2002, 7591 posts, RR: 27
Reply 14, posted (4 years 1 week 2 days 6 hours ago) and read 2294 times:

A lot depends on an airline's allocation methodology - particularly on overhead costs and how they allocate revenue from tickets booked across multiple segments. I'm not familar at all with airline financial and accounting practices but a lot of those rules help deteremine how P&L is calculated for specific flights.

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