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How Airlines Spend Your Airfare

Posted: Fri Jul 13, 2012 3:24 pm
by Avi8r747
Found this article in the WSJ to be pretty interesting. Just a little insight to where all the money from passengers go to and how little extra is left over for actual profit.

http://www.emailthis.clickability.co...Map=viewThis&etMailToID=1643517008

I didn't see this posted yet, so I do apologize if it was earlier.


source from:
wsj.com/blogs

RE: How Airlines Spend Your Airfare

Posted: Fri Jul 13, 2012 6:17 pm
by KDAYflyer
Interesting read. It amazes me how many seats are needed to cover the government regulatory costs and so on.

RE: How Airlines Spend Your Airfare

Posted: Fri Jul 13, 2012 6:25 pm
by Cabincrewifly
Thanks for posting. Its an interesting article

RE: How Airlines Spend Your Airfare

Posted: Fri Jul 13, 2012 6:36 pm
by planespotting
Quoting KDAYflyer (Reply 1):
Interesting read. It amazes me how many seats are needed to cover the government regulatory costs and so on.

That's what I thought too (FYI for folks who didn't read the article - it's 14 seats worth). I wonder what the breakdown of those 14 seats is for the following:

- Navigational aids (upkeep of GPS system, VOR/ILS, etc.)
- ATC (controller salaries, facilities, radar, communications)
- Ground infrastructure (terminal buildings, runways/taxiways, snowplows, etc.)
- FAA regulatory/administration (FSDOs, airman/aircraft licensing and documentation, NTSB/accident investigation, etc.)

Am I missing any categories?

RE: How Airlines Spend Your Airfare

Posted: Fri Jul 13, 2012 7:03 pm
by BEG2IAH
I had a pleasure to meet the author of this article, Mr. Scott McCartney. He is a real aviation enthusiast and takes his job very seriously. A breath of fresh air in today's media.

RE: How Airlines Spend Your Airfare

Posted: Fri Jul 13, 2012 11:52 pm
by Avi8r747
Even though this particular artical was based off a hypothetical flight, it still gives you a great insight into how little profit an airline makes, and opens your eyes to literally everything needed to occur to get that aircraft in the air with everyone on board. With almost half the passengers paying for fuel and salary alone.

RE: How Airlines Spend Your Airfare

Posted: Sat Jul 14, 2012 2:25 am
by traindoc
Unfortunately John Q Public will not see (or read) this article. The American public wants to pay Walmart prices for air travel, but wants to fly on Nieman Marcus. Yes, the airlines live on a thin line between profit and loss. They are getting smarter and controlling capacity which allows them to do less discounting. However, the frequent and premium traveller are their main source of profit as many of the seats are still priced below cost.

The economy has gotten softer. I have received more emails about fare sales in the last 3-4 months, than I have in the past 2 years. This includes AA, CX, WN, UA, LH and QF.

RE: How Airlines Spend Your Airfare

Posted: Sat Jul 14, 2012 2:50 am
by KFlyer
This is when you look at a US carrier. If you looked at the finances of an Asian counterpart, you will note that 45%+ of the expenditure is on fuel, nearly 5% on various regulatory costs, about 8-10% on crew salaries and in most cases less than 5% for all the expenditure of corporate/office staff (even including items such as housing, medical etc.).