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Profits & Profit Margins  
User currently offlineBtriple7 From United States of America, joined Sep 2005, 1176 posts, RR: 8
Posted (3 years 11 months 3 weeks 4 days ago) and read 1670 times:

Hi all,

I have a few rookie questions for everyone. I've been following aviation for about as long as I can remember, but one thing I never took the time to get a grasp of were the actual numbers.

A few questions:
What do profit margins look like for most airlines? How much money does an airline make when they fly a particular route?

Does it vary greatly or just a little from airline to airline?

Does it vary between domestic and intercontinental flights? (I'm guessing the answer is yes, but by how much?)

Does it vary from region to region? (i.e. Do airlines in Asia have larger profit margins than those in the US?)

What percent of the cost to fly a route goes to fuel? To the crew? To maintenance? etc.


These are some pretty broad questions, and I'm sure there are at least a thousand variables that make every route unique, but I've never been able to step on a plane have an approximate number in my head as to how much this airline is putting into this flight that I'm about to take and how much profit they will make off it.

Also, point me in the right direction if there is already a thread on this topic.

Regards,
Bt7


Just...fly.
6 replies: All unread, jump to last
 
User currently offlineRoseFlyer From United States of America, joined Feb 2004, 9701 posts, RR: 52
Reply 1, posted (3 years 11 months 3 weeks 4 days ago) and read 1665 times:

The most accurate information will be airline quarterly reports available via the web. Most comments here will be conjectures or guesses rather than have any basis since airlines do not publish margins on a route by route basis, since that is internal information which is not shared with the public or competitors.

Here's a financial link for UAL
http://finance.yahoo.com/q/ks?s=UAL+Key+Statistics



If you have never designed an airplane part before, let the real designers do the work!
User currently offlineB6JFKH81 From United States of America, joined Mar 2006, 2900 posts, RR: 7
Reply 2, posted (3 years 11 months 3 weeks 4 days ago) and read 1633 times:

...and here is the 3Q results for B6:

http://investor.jetblue.com/phoenix....-newsArticle&ID=1485439&highlight=

Quoting Btriple7 (Thread starter):
What do profit margins look like for most airlines? How much money does an airline make when they fly a particular route?

You're going to be researching for a looooooooooooooooooong time to find out the operating margins for every individual route for each airline. Some routes are "bread and butter" for the airlines, some actually operate at a loss to allow for the connecting pax possibilities, some are subsidized by the government (here in the US under E.A.S.) or even by the airports themselves.

Quoting Btriple7 (Thread starter):
Does it vary greatly or just a little from airline to airline?

Sure, especially when you are looking at individual routes as you mentioned before. You can have 2 airlines operating the same routes, using different aircraft with different operating costs, different number of crew onboard, different onboard services, etc. Different airlines have different operating principles and business techniques, the outcome they want to achieve is the same though...profit.

Quoting Btriple7 (Thread starter):
Does it vary between domestic and intercontinental flights? (I'm guessing the answer is yes, but by how much?)

I can't speak on behalf of the larger airlines that fly intercontinental (TATL/TPAC), but I do know the caribbean routes that my airlines opened up have done EXTREMELY well for us, hence our continued growth. But my airline is focusing on leisure markets, others focus on business markets.

Quoting Btriple7 (Thread starter):
What percent of the cost to fly a route goes to fuel? To the crew? To maintenance? etc.

Gas is the biggie on that list. All the other things are standard overhead. Crew is definitely a big factor, and you have to consider all the people that are behind the scenes that a pax will never see during the course of their flight...there's a ton of us that work behind the scenes. Maintenance cost is expected, and grows over time. Diversifying your fleet increases that cost because of the extra training, facilities, spare parts and tooling. You would be amazed at the millions upon millions of dollars of inventory that is needed to be onhand to support the aircraft!

You're going to have so much information and numbers being thrown at you in the responses here you're head is going to spin LOL!

~H81



"If you do not learn from history, you are doomed to repeat it"
User currently offlineBtriple7 From United States of America, joined Sep 2005, 1176 posts, RR: 8
Reply 3, posted (3 years 11 months 3 weeks 3 days 23 hours ago) and read 1585 times:

Quoting B6JFKH81 (Reply 2):
You're going to be researching for a looooooooooooooooooong time to find out the operating margins for every individual route for each airline.

I'm just looking for a few averages (if there is such a thing) or just some example figures from a few airlines.

Quoting B6JFKH81 (Reply 2):
You're going to have so much information and numbers being thrown at you in the responses here you're head is going to spin LOL!

Yeah... I had figured. It's just right now, I don't have any point-of-reference whatsoever for the sort of money that goes in and comes out of these things.

//Bt7



Just...fly.
User currently offlineB6JFKH81 From United States of America, joined Mar 2006, 2900 posts, RR: 7
Reply 4, posted (3 years 11 months 3 weeks 3 days 23 hours ago) and read 1563 times:

If you go to the airline websites and look up their press releases for the quarterly earnings, that is a good start, or even some of the discussion forums on here. Each quarter, a thread is opened for all the major airlines when they post their earnings for that quarter and the discussions get quite lively. It's a lot of info to read through, but the discussion forums on here really do have a lot of interesting conversations once the results come out each quarter, including strategy, route network projections, etc.  


"If you do not learn from history, you are doomed to repeat it"
User currently offlinethegeek From Australia, joined Nov 2007, 2638 posts, RR: 0
Reply 5, posted (3 years 11 months 3 weeks 3 days 22 hours ago) and read 1497 times:

Quoting Btriple7 (Thread starter):
What percent of the cost to fly a route goes to fuel? To the crew? To maintenance? etc.

Pretty sure Qantas have said that in the days of cheap fuel, it was around 15% of their cost (can't remember exactly), but when the price of fuel went through the roof a few years back it went to over 30%, and overtook crew costs as the biggest single cost. I expect crew costs are again the largest cost.

There is also ownership costs (leasing or financing) of planes which isn't cheap.


User currently offlinecslusarc From Canada, joined May 2005, 842 posts, RR: 0
Reply 6, posted (3 years 11 months 3 weeks 3 days 20 hours ago) and read 1444 times:

Generally speaking, over the past year airline profit margins have been about 5%. Airlines like DL and AA have a target for a 10% profit margin. In one of their recent reports Ireland-based FR, reported that their profit margin was about 25% or so.


--cslusarc from YWG
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