Shanti
Topic Author
Posts: 59
Joined: Thu Dec 30, 1999 2:41 am

How Many Pax To Make Profit?

Wed Jun 13, 2001 11:11 pm

Do you know how many passengers, in percentage, an aircraft (747, 737, a340)has to bear to cover transport cost and make profit?
I wondered that when it happend to me to fly FLR-MUC (ARJ) and we were 2 (two) passengers....

 
CactusA319
Posts: 2821
Joined: Fri Jan 21, 2000 1:51 am

RE: How Many Pax To Make Profit?

Wed Jun 13, 2001 11:15 pm


It depends on the aircraft and the airline. If the airline has a high cost structure, it may take tmore pax to make a profit on a flight. Also if the aircraft is an older type with a higher operating cost (fuel, maintenance, etc.) they also tend to need a higher load factor to earn a profit.

 
cfalk
Posts: 10221
Joined: Mon Dec 04, 2000 6:38 pm

RE: How Many Pax To Make Profit?

Wed Jun 13, 2001 11:17 pm

A lot goes into it - Fuel costs and labor costs in the country of operation being one, and the rate of depreciation allowable under that country's accounting laws being another (granted, it's a non-cash item, but it does hit your P&L).

From what I've seen any average of more than about 70% is considered OK. If you are on a really cheap, price cutter airline like Southwest or Easyjet, that rate may go up to 80 or 90%.

Charles
The only thing you should feel when shooting a terrorist: Recoil.
 
goingboeing
Posts: 4727
Joined: Sat Dec 04, 1999 1:58 am

RE: How Many Pax To Make Profit?

Thu Jun 14, 2001 12:45 am

I believe Southwest's break-even load factor is in the neighborhood of 54%. I'm not certain, but I AM certain that they do not need an 80 or 90% load factor to make money. Don't know about easyjet.
 
cfalk
Posts: 10221
Joined: Mon Dec 04, 2000 6:38 pm

RE: How Many Pax To Make Profit?

Thu Jun 14, 2001 12:55 am

54%!!!

I'm impressed. But how is breakeven defined? If it's cash cost, I can believe it, but a bargain airline like Southwest had better have better averages than that, I would hope.

Charles
The only thing you should feel when shooting a terrorist: Recoil.
 
B747-437B
Posts: 8777
Joined: Thu May 30, 2002 6:54 am

RE: How Many Pax To Make Profit?

Thu Jun 14, 2001 1:09 am

Every airline must publish what is known as a "Breakeven Load Factor" in their quarterly form 10-Q SEC filings.

Presently, most of the majors average between 65-70% as their breakeven number.
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada
 
GDB
Posts: 12652
Joined: Wed May 23, 2001 6:25 pm

RE: How Many Pax To Make Profit?

Thu Jun 14, 2001 1:47 am

On Concorde's transatlantic scheduled flights, it's about 30-40%, admittedly not exactly a typical service.

 
VC-10
Posts: 3546
Joined: Tue Oct 26, 1999 11:34 am

RE: How Many Pax To Make Profit?

Thu Jun 14, 2001 1:54 am

Nobody has mentioned cargo, the more cargo carried the less pax rqd to break even.
 
caetravlr
Posts: 856
Joined: Mon Oct 16, 2000 8:19 am

RE: How Many Pax To Make Profit?

Thu Jun 14, 2001 1:59 am

It also depends on how much they are charging for the tix. If it is a tightly competitive market, they may have to reduce fares to get any kind of load factor. Therefore, they need even more because they are not getting as much per passenger.
A woman drove me to drink and I didn't have the decency to thank her. - W.C. Fields
 
B747-437B
Posts: 8777
Joined: Thu May 30, 2002 6:54 am

RE: How Many Pax To Make Profit?

Thu Jun 14, 2001 2:11 am

I don't think its feasible today to calculate each individual flight segment for its own break-even factor. The hub-and-spoke system as well as yield management has thrown traditional concepts of a linear relationship between price and costs out the window. The only accurate figure would probably be a systemwide (or at least a regional) average calculation.
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada

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