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How Airlines Spend Your Airfare
On an airplane carrying 100 passengers, how many customers does it take, on average, to cover the cost of the flight? This is a fine article from the Wall Street Journal. The article breaks down the number of PAX on a typical flight and shows you where the money goes. My bottom line? Don't invest in airline stocks!!!! (online.wsj.com) Más...Sort type: [Top] [Newest]
I believe US Airways made a lot of money on my flight from London to US in May of this year. I watched as they Loaded so much airfreight on to the plane that I wonder if we were over loaded on takeoff.
Are you the same guy who is into the UFO stuff?
Agreed. This article didn't mention cargo aspect (both income and expense)
As Warren Buffett once said about investing in airline stocks many years ago... "If I was at Kitty Hawk, I would have shot that plane right out of the sky". His point- airlines perform a great service, but don't make for very good investments.
An interesting eye opener. I have an invoice for a ticket to Europe on UAL. The taxes and fees are broken out into all the component parts. The ticket price seems high, certainly compared to a domestic RT, but looking at all the fees and taxes, US, European, airport, etc, the fees/taxes are about 65% of the total cost!! Now thats worth a closer (media) look see.
Give me a break - this is a pretty basic piece of reporting. You don't need a hypothetical flight of 100 people to explain the airlines' cost structure, I hope -- all you need is the breakdown of what percentage of costs go to fuel, to salaries, to maintenance, etc. Then you do the same for the revenue side.
The airlines are just like any other business. They (try to) put a product into a marketplace, they have customers, they generate revenue, and it costs them expenses. What's left is profit. Or loss. If they can't make money in their chosen business, and one in which they supposedly are 'experts', then they shouldn't be in the business.
Which is what's really wrong with the US carriers: they simply have no clue as to how to run their chosen business successfully. The first problem is that they don't know how to price their product properly. The second is they have no sense of satisfying the customer or of putting a quality product on the table. The third problem is a lack of desire for excellence in their business. The fourth is customer service: why do they exist as a business at all if not to provide their customer a decent product worth paying for?
It's pretty easy to go on... Yet airline management loves to whine about security costs, or fuel costs, or food costs, or blanket costs, or baggage costs (wait -- they're going to carry the weight of your bag anyways...), or (oh no, here they come again) uppity customers.
My fuel costs have gone up 5x in the last 10 years: $1.25 a gallon to $6. My equipment costs are higher. My annual costs more. My cost to transport me to my destination is up. Even my food cost is up. This is not just me, but this affects the airlines too. Why then, haven't their ticket prices risen commensurately as mine has?
Answer: because the Tilsons of the country don't understand their own business, and don't understand how to price a product that allows them to deliver one of quality.
If the WSJ really wanted to do an expose on this area, they should have focused on pricing and WHY there's only ONE person on the plane paying "profit". That's the real deal here.
The airlines are just like any other business. They (try to) put a product into a marketplace, they have customers, they generate revenue, and it costs them expenses. What's left is profit. Or loss. If they can't make money in their chosen business, and one in which they supposedly are 'experts', then they shouldn't be in the business.
Which is what's really wrong with the US carriers: they simply have no clue as to how to run their chosen business successfully. The first problem is that they don't know how to price their product properly. The second is they have no sense of satisfying the customer or of putting a quality product on the table. The third problem is a lack of desire for excellence in their business. The fourth is customer service: why do they exist as a business at all if not to provide their customer a decent product worth paying for?
It's pretty easy to go on... Yet airline management loves to whine about security costs, or fuel costs, or food costs, or blanket costs, or baggage costs (wait -- they're going to carry the weight of your bag anyways...), or (oh no, here they come again) uppity customers.
My fuel costs have gone up 5x in the last 10 years: $1.25 a gallon to $6. My equipment costs are higher. My annual costs more. My cost to transport me to my destination is up. Even my food cost is up. This is not just me, but this affects the airlines too. Why then, haven't their ticket prices risen commensurately as mine has?
Answer: because the Tilsons of the country don't understand their own business, and don't understand how to price a product that allows them to deliver one of quality.
If the WSJ really wanted to do an expose on this area, they should have focused on pricing and WHY there's only ONE person on the plane paying "profit". That's the real deal here.