grimey
Posts: 309
Joined: Tue Jun 07, 2005 2:48 am

### Whats The Break-even Point For Pax Numbers?

What is the amount of passengers that has to be on an aircraft till the airline makes a profit? I would take it that an airline would never have it's breakven point at 100% capacity because not every single flight gets full up, I would be thinking it would be 75% upwards.

Just asking cos I'm a bit bored.

Thanks
Grimey

EMBQA
Posts: 7800
Joined: Sat Oct 25, 2003 3:52 am

### RE: Whats The Break-even Point For Pax Numbers?

 Quoting Grimey (Thread starter):What is the amount of passengers that has to be on an aircraft till the airline makes a profit? I

Every aircraft and airline is different.
"It's not the size of the dog in the fight, but the size of the fight in the dog"

Shamrock_747
Posts: 1499
Joined: Thu Mar 28, 2002 3:25 am

### RE: Whats The Break-even Point For Pax Numbers?

Completely depends on the yields.

For example on a hypothetical BA route, having a 100% load of restricted tkts such as N/V/D/I/A and mileage redemptions may not make any money whilst 50% load with every pax holding a full fare Y/W/J/F class tkt may well be profitable.

b6sea
Posts: 567
Joined: Mon Aug 22, 2005 5:44 pm

### RE: Whats The Break-even Point For Pax Numbers?

 Quoting Grimey (Thread starter):I would take it that an airline would never have it's breakven point at 100% capacity

Tell that to FlyI, but it depends on the airline, some, like flyI are above 100% hence talk of them going under some are quite low. What are SW's and B6's???

whitehatter
Posts: 5180
Joined: Sat Jun 12, 2004 6:52 am

### RE: Whats The Break-even Point For Pax Numbers?

It depends on the route flown, airport charges and so many variables you can't put a figure on it. Fares are just one part.

FR have frequently said that they could potentially fly a route with passengers at zero fare charged and pay for it with incidentals if the business model could be done right. Stuff like inflight sales and hotels/insurance. Other airlines can fly a route with every single seat full and lose money on it if they can't get the yield right.

Some of the lowcosts frequently mention a 70% figure but that's a figure averaged across flights with many variables factored in. Other carriers could possibly turn a buck on a longhaul with all the premium seats full and nobody at all in economy.

See what I mean?
Lead me not into temptation, I can find my own way there...

Avianca
Posts: 5315
Joined: Tue Jan 25, 2005 5:33 am

### RE: Whats The Break-even Point For Pax Numbers?

 Quoting Grimey (Thread starter):I would be thinking it would be 75% upwards.

I would say the average is lower, as the most airlines including the airlines that are making money in the moment have normally lower load-factors...

regards
Avianca
Colombia es el Mundo Y el Mundo es Colombia

Venezuela747
Posts: 1375
Joined: Thu Jan 01, 2004 9:36 am

### RE: Whats The Break-even Point For Pax Numbers?

Do airlines measure their profit peraircraft or as a whole? It does not make sense....I mean maybe a UA domestic flight on a B757 was really empty and was a loss but they make up for it with a full daily B744 to Asia....does that make sense to anyone?
ROLL TIDE!!!

HAWK21M
Posts: 30007
Joined: Fri Jan 05, 2001 10:05 pm

### RE: Whats The Break-even Point For Pax Numbers?

Depending on the type of carrier.An LCC would need a higher Break even point.
other carriers should be 75-80%.
regds
MEL
I may not win often, but I damn well never lose!!!

snaiks
Posts: 194
Joined: Sun Mar 06, 2005 8:01 pm

### RE: Whats The Break-even Point For Pax Numbers?

you also have to take in consideration freight, many airlines can fly completeley empty, and would still make money because they are flying freight to other places, ie. mail, overnight deliveries, etc

sidishus
Posts: 488
Joined: Mon Oct 25, 2004 1:45 am

### RE: Whats The Break-even Point For Pax Numbers?

 Quoting Grimey (Thread starter):What is the amount of passengers that has to be on an aircraft till the airline makes a profit? I would take it that an airline would never have it's breakven point at 100% capacity because not every single flight gets full up, I would be thinking it would be 75% upwards.

You are venturing into the complex and murky world of Revenue Management. Master this Black Art (some call it a discipline), and you could make a fair bit of money...Good luck on your journey.

http://www.ima.umn.edu/talks/workshops/12-3-5.2000/van-ryzin/rm.pdf

[Edited 2005-09-12 10:30:57]
the truth: first it is ridiculed second it is violently opposed finally it is accepted as self-evident

777ER
Crew
Posts: 9939
Joined: Fri Dec 19, 2003 5:04 pm

### RE: Whats The Break-even Point For Pax Numbers?

Break even for each airline doesn't always mean passengers, it also means cargo, a perfect example is EK on the Trans-Tasman (New Zealand - Australia). EKs profits from the Trans-Tasman came mostly from its cargo operation
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NZ1
Crew
Posts: 1775
Joined: Sat May 01, 2004 1:32 pm

### RE: Whats The Break-even Point For Pax Numbers?

 Quoting 777ER (Reply 10):Break even for each airline doesn't always mean passengers, it also means cargo, a perfect example is EK on the Trans-Tasman (New Zealand - Australia). EKs profits from the Trans-Tasman came mostly from its cargo operation

Thats right. EK still make a profit flying SYD-AKL with only 30pax on board, due to the freight being carried.

NZ1
--
NZ1

sidishus
Posts: 488
Joined: Mon Oct 25, 2004 1:45 am

### RE: Whats The Break-even Point For Pax Numbers?

 Quoting Sidishus (Reply 9):You are venturing into the complex and murky world of Revenue Management. Master this Black Art (some call it a discipline), and you could make a fair bit of money...Good luck on your journey. http://www.ima.umn.edu/talks/worksho...m.pdf

and if you enjoyed that link...you may want to peruse this bit of light reading....Enjoy

http://www.optimization-online.org/DB_FILE/2004/12/1025.pdf
the truth: first it is ridiculed second it is violently opposed finally it is accepted as self-evident

luvflng
Posts: 143
Joined: Tue Nov 14, 2000 8:59 am

### RE: Whats The Break-even Point For Pax Numbers?

Well, the above answers are correct but neither provides the exact formula.

In case you want to find out what the Break Even Load Factor (BELF) is you need this information:
A) Total Operating Expenses
B) Total Operating Expenses
C) ASM - Available Seat Miles (For Europe ASK )
D) RPM - Revenue Passenger Miles (For Europe RPK )
Make sure that you stay either in miles or kilometers

E) CASM = B/C
F) YIELD = A/C
G) BELF = CASM/YIELD = E/F (This will give you the percentage)

Now, you can do that per aircraft fleet, for example find out BELF for the fleet of A 330, however, you would need the A) B) C) and D) information just for that fleet and unless you have access to some specific databases such as O&D or Form 41 for US Airlines (don't think something like that is available in Europe yet) then you can compute the BELF. Airlines for sure do these types of computations as they have the data readily available.

You can plot multiple airlines with the BELF and their current Load factor and see if they are making money. At least in the US for the past 3 years, BELF is higher then their LF (duh) spelling losses for them.

Hope this helps,

luvflng

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