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Is Concorde Profitable?  
User currently offlineSovietjet From Bulgaria, joined Mar 2003, 2616 posts, RR: 17
Posted (11 years 3 weeks 4 days 3 hours ago) and read 5505 times:
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Is the Concorde profitable and has it ever been? I've heard rumors that it is unprofitable. Why is that? If a ticket is like $5000 one way how is it possible to even be unprofitable? And if it was unprofitable why have Air France and BA been operating it for 30 years? Is it just fuel-ineffiecient like the Tu-144? Also I heard that Virgin Atlantic offered to buy them from BA for 1 pound each. Is that true? Why didn't it work out?



13 replies: All unread, jump to last
 
User currently offlineN6376m From , joined Dec 1969, posts, RR:
Reply 1, posted (11 years 3 weeks 4 days 1 hour ago) and read 5487 times:

I believe that the BA Concordes have been operationally profitable (revenue exceeding operating costs) at various times and on various routes however, on a full cost accounting basis (taking into account the depreciation on the airframes and the aircraft's development costs), they have not turned a profit.

I just read an article on this (in Vanity Fair of all places) where it goes into great detail on the economics behind the Concorde. Good article. Haven't been able to find it on-line or I would have posted a link.


User currently offlineFSPilot747 From United States of America, joined Oct 1999, 3599 posts, RR: 12
Reply 2, posted (11 years 3 weeks 20 hours ago) and read 5370 times:

From what I remember reading and hearing, the Concorde was an economic nightmare. Not only is it extremely fuel-thirsty, it can't carry any cargo.

It's extremely expensive to maintain, and if I do remember correctly, it really doesn't bring in any profit at all. BA and AirFrance only had them as more of a "Flagship" symbol. It made them unique.


FSP


User currently offlineLiamksa From Australia, joined Oct 2001, 308 posts, RR: 0
Reply 3, posted (11 years 3 weeks 16 hours ago) and read 5347 times:

I remember reading examples of the costs a concorde operator is faced with. eg: A secure cockpit door costs about $US 25,000 to install on a typical Boeing or Airbus but $US 300,000 on Concorde.

WHOA!  Wow!

No wonder profitability is a big ask!


User currently offlineGDB From United Kingdom, joined May 2001, 13229 posts, RR: 77
Reply 4, posted (11 years 2 weeks 6 days 23 hours ago) and read 5278 times:

For most of Concorde's service with BA at least, they were highly profitable, and yes they did pay for the aircraft, some 30% more expensive than a 747 at the time they were built.
BA have been private for 16 years, they would not have operated Concorde if it had not been profitable.
And when some Concorde services afterwards became unprofitable, like the IAD services in the early 1990's, they were dropped, so forget any ideas about it being all about prestige.

In fact, the process of privatisation was the making of BA Concorde, an operating subsidy which was all about the incompetent BA management of the 1970's covering their backsides, was rescinded in 1983-4, as part of this BA had to pay 80% of any Concorde profit to the government.
So BA took the plunge, paying a hefty fee to get out of that, as well as buying up much of the spares stock, the simulator and the 1st UK production aircraft as a spares source.
After that, BA were free to operate the aircraft as they wished, and keep all the profits, the highly profitable BGI service and an extensive charter programme were the results, as well as returning a stored aircraft to flight and doing the first of several major cabin upgrades.
However, at their peak, charters only made some 9% of profits, but useful in itself, and why not have such great advertising for BA?
Charters also allowed many people the chance to fly on it who otherwise would not.

However, Concorde needed the right routes, a long over-water sector between two major business locations, in other words, London and New York, which was the core of the profitability, on a double daily service.
Forget all the talk of it being a celeb service, 80% of this services pax were regular business pax, how else could you leave LHR at 10:30 am, and get into JFK at 09:20 am, ready to do business?
For that reason, the LHR-JFK were generally a bit busier than JFK-LHR.
In 1997/98, the LHR-JFK/JFK-LHR Concorde services carried only 7% of BA pax on that route, but made 30% of the revenue for BA.
For BGI services, Concorde carried 43% of BA pax when the winter Concorde service was operating, but made 75% of the revenue.
Around this time, Concorde made a profit of £30 million per year, that's only from direct Concorde pax, not counting all those pax encouraged to keep flying on BA premium services by frequent Concorde upgrades.
In fact, Concorde revenues were judged with greater rigour than other services.

However, the 2000/2001 suspension, the return to flight mods and worst of all re-launching just after Sept 11th made things difficult.
But, loads were generally good, however BA were afraid to commit to a double daily service, no doubt fearful of bad PR if it was not profitable in this new business environment and had to be scaled back again.
The result was an operating profit, but not enough to fund upcoming maintenance, as well as additional stuff like the aforementioned cockpit doors, no Federal-style help for BA for stuff like this.
BA do not get the aid seen in the US or some EU nations since 2001.
Then AF bailed out for a variety of reasons, making the BA operation unsustainable as they now would have to carry the whole support burden themselves.

I suspect BA now regret not returning OAA and OAB to flight, as apart from the difficulty of placing them in museums, BA cannot now expand services to take account of the huge demand, last week Concorde made £5 million for BA, that's tickets only, not counting the extra £5000 per flight in onboard sales.
To be honest, BA took their eye off the Concorde ball somewhat, not showing the boldness of the past, understandable perhaps as the whole airline struggled to survive in late 2001 and early 2002.
The general weakness of the whole airline market, and it not improving, was a blow to Concorde planning.

It was always the case that when costs exceeded revenues, that would be the end, a variety of events in the past few years have brought that forward, most annoyingly for BA these were all beyond their control, the 2001 relaunch was intended to move back to a full scheduled service by mid/late 2002, charters would have been scaled right back as they used up airframe life out of proportion to the revenues.

Had the accident and/or Sept 11th not happened, most of the fleet reaching 24,000 hrs requiring major maintenance in around 2004/6 would have been a challenge, as experience eroded by retirements as well as the costs, in this case BA would have either proceeded with this work taking the fleet to 2009/10 or retired when AF always said they would, in 2006/7.
BA would have hoped that AF would have carried on after that had BA chosen the former, they would have needed them to really to make maintenance viable, AF had lower utilization (the oldest AF Concorde had slighly less hours than BA's youngest), but in the past AF had usually gone along with maintenance planning by BA, as of course they needed BA Concorde to be flying for their own fleets viability.

With the market not improving as rapidly as planned, BA had considered a late 2004 retirement, though nothing was decided before AF dropped their bombshell early this year, then BA had to fight hard to keep support going to late October, they pressed for early 2004, to allow for the next winter BGI season, for which seats were already selling, as well as making use of spares just brought for upcoming heavy maintenance on OAD and OAF.
But Airbus played hardball, they would have much preferred for BA to retire when AF did.


User currently offlineLehpron From United States of America, joined Jul 2001, 7028 posts, RR: 21
Reply 5, posted (11 years 2 weeks 5 days 11 hours ago) and read 5180 times:

The problem is that too many people act like technology has not changed and that because Concorde was and economic white elephant that every future concept or idea will get spayed. This ignorance needs to stop or the next gen plane wont get funding.


The meaning of life is curiosity; we were put on this planet to explore opportunities.
User currently offlineAirplanepics From United Kingdom, joined Jun 2003, 2739 posts, RR: 40
Reply 6, posted (11 years 2 weeks 5 days 7 hours ago) and read 5159 times:

The trouble is Concorde is unique in everyway. Can you name any other mode of transport where you can depart before you arrive? I think BA need to wake up, and if need be, sell them onto Virgin (afterall, in the original contracts it stated that any other airline wishing to purchase them after Ba has the right to do so)
BA are just scared that Sir Richard Branson WILL make a profit with his highly successful Virgin Atlantic Airways.

Regards,
Simon



Simon - London-Aviation.com
User currently offlineManzoori From UK - England, joined Sep 2002, 1516 posts, RR: 33
Reply 7, posted (11 years 2 weeks 5 days 7 hours ago) and read 5156 times:

Simon,

As stated in GDB's post, much as we'd all love to see Concorde fly on, at the end of the day Airbus want no more to do with this aircraft. Without manufacturer support then no-one gets permission to fly the aircraft.

Sad, but true!

Rez



Flightlineimages DOT Com Photographer & Web Editor. RR Turbines Specialist
User currently offlineB2707SST From United States of America, joined Apr 2003, 1369 posts, RR: 59
Reply 8, posted (11 years 2 weeks 5 days 7 hours ago) and read 5158 times:

How can Branson make Concorde work when Airbus has refused to support it past this October? From what GDB and others have said, I'm sure BA has used every bargaining tactic with Airbus just to keep Concorde flying this long after AF shut down. British could sell Concordes to anyone it likes and make a little profit with zero risk, because the aircraft will be grounded within weeks no matter who is flying them. Instead, BA has rightly chosen to donate its Concordes to museums around the world.

I wonder if this dispute over Concorde support has created any bad blood between BA and Airbus. Airbus may have chosen the wrong option by axing the aircraft so quickly if it ends up losing BA's business in the future (A380, anyone?).

--B2707SST



Keynes is dead and we are living in his long run.
User currently offlineAirplanepics From United Kingdom, joined Jun 2003, 2739 posts, RR: 40
Reply 9, posted (11 years 2 weeks 5 days 7 hours ago) and read 5154 times:

yeh, thats the problem aswell, If Airbus got off of there backsides are tried to see that Concorde can be operated profitablly, everything would be ok!!!!

As you said 'sad, but true!'
Hope to see you all on the 24th at LHR!!!

Simon



Simon - London-Aviation.com
User currently offlineGDB From United Kingdom, joined May 2001, 13229 posts, RR: 77
Reply 10, posted (11 years 2 weeks 5 days 6 hours ago) and read 5152 times:

Make no mistake, if AF had not bailed out, then there still would have been problems.

For one, the refusal of AF to buy new rudders 10 years ago when BA did came back to bite them this year, now the newer rudders were not so good (we think that different sealants were used as some of the ones used for the originals in the 70's would not meet modern health and safety regs), but the originals that AF had were bound to delaminate at some point, especially as AF only inspected them to the minimum standards, after BA's delaminations on the newer ones which happened in 1998 to one, we doubled the NDT inspection regime.
So early this year, AF had a rudder failure, another was damaged in a hangar accident, and new C-Scan inspections showed all of AF's rudders in poor condition.
Additionally, BAE shifted the rudder work they had done since the start to Airbus France, we think that a mod carried out at Nantes in France may have caused the unexpected delam of a BA rudder in late 2002, a 'learning curve' victim.
As a result, AF only made it to the end of May as BA had a few of our old rudders to loan to AF, they only had to fly for a few weeks anyway.
New rudders for both fleets would have cost something like ?15 million, with no delivery for at least 9 months, in 1993 BAe had to bring people out or retirement to help make the new ones.
In the near future, 22 of BA's elevons would have to be replaced, as would many of the air intake ramps.
New I.N.S. units were required from 2004, a Litton unit adapted for Concorde had been picked, but the retirement preceded their production and installation.

The fallout from TWA800, a requirement for extra inspections of fuel tanks on aging aircraft, also were looming, in fact Airbus even wanted us to do this (at a cost of ?2 million) after the retirement announcement with 6 months flying left, it took a lot of persuading to prevent this as it would have badly impacted on services, all this despite the fact we'd done a lot of positive work in the fuel tanks as part of the tank mods in 2001/2002, a result of this has been much less fuel leaks, a real improvement from before, that was always a headache on Concorde previously due to the expansion at Mach 2 caused by friction heating.

That's not the whole story, AF had other troubles both commercial and technical, frankly they had little choice but to retire, sadly with no other operators except BA it was curtains for our operation.
And we've always known that if one airline pulled out, that would be the end, only the difficult business conditions now made our stay of execution 6 months rather than the year to 18 months we could have sustained in better times.

Supporting Concorde has become very unprofitable for Airbus as well, I don't like what's happened of course, but I see their point of view, they've done a challenging job these last 27 years, and the tank mod was an excellent, elegant solution developed with amazing speed, as well as being carried out in parallel with the accident investigation rather than as usually happens, being done afterwards.
Whether they were actually needed (and many involved with Concorde think not), time and the full story of the accident will tell.
Nonetheless, 3 years ago it was the only game in town, Airbus France did a tremendous job, with no impact on aircraft systems and only 400kg of extra weight, which the excellent NZG tyres reduced by 160kg.
If BAE had done it we'd have waited a year for the bloody drawings, in any case, BAE's return to flight ideas were unsatisfactory.


User currently offlineN6376m From , joined Dec 1969, posts, RR:
Reply 11, posted (11 years 2 weeks 5 days 5 hours ago) and read 5140 times:

Airplanepics

Can you name any other mode of transport where you can depart before you arrive?

Don't most of DL's flights out of ATL for Birmingham, AL "arrive before they depart"?

Hmmmmmmmm.....

 Big grin


User currently offlineAirplanepics From United Kingdom, joined Jun 2003, 2739 posts, RR: 40
Reply 12, posted (11 years 2 weeks 5 days 5 hours ago) and read 5133 times:

ok ok, I simple typo!!!

I ment, Arrive before you depart!! :p  Big grin  Big grin  Big thumbs up

Simon



Simon - London-Aviation.com
User currently offlineStartvalve From , joined Dec 1969, posts, RR:
Reply 13, posted (11 years 2 weeks 5 days 3 hours ago) and read 5117 times:

Also in regards to Virgin wanting to buy the Concordes. That was more of a ploy by Branson to make BA look like weenies.. He knew he had no support on the things so there was little or no point in buying (that's why he offered them a pound for each one) them but he has never been one to turn down a chance to make British Airways look like they were being selfish.

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