3
$\begingroup$

I was computing the hypothetical profitability of commercial airline flights and it seems to be pretty extreme. For example, looking at the Boston-DCA shuttle, pro-rating all costs to the just the flight itself using conservative figures I came up with the following:

aircraft: A320
distance: 346 nautical miles
fuel usage: 6500 pounds

fuel: 3800
maintenance: 2000
crew: 1200
hangar: 900
insurance: 400

Total costs: 8,300

passenger count: 150
ticket charge: 200

Total revenue: 30,000

Based on these figures, profitability of this route seems to be about 350%, i.e., more than tripling your costs on every flight. Even if we allow for tickets of $100 each, it is still almost a 100% profit.

Am I missing something, or are these figures in the right ballpark?

THIS IS NOT A DUPLICATE OF long-haul flight costs. That post is for LONG HAUL flights. This is a shuttle. That post concerns a completely different aircraft with costs amortized ANNUALLY. This is post is about PER-FLIGHT profitability, not ANNUAL profitability.

ALSO: This post asks about PROFITABILITY on this route, not just costs. It includes REVENUE. I am not asking general profitability; I am asking about this calculation for profitability on the route in question using the aircraft in question (A320).

|improve this question
$\endgroup$
  • 1
    $\begingroup$ You need to include airport fees and several other related expenses. A new route initiation takes a lot of time, money and lobbying. A lot of regulations have to be maintained. Then you need to add executives', lawyers' and flight crew's salaries. $\endgroup$ – Farhan♦ Dec 30 '14 at 19:16
  • 1
    $\begingroup$ Your cost calculation doesn't include anything like infrastructure (ticketing, baggage, ground support, reservations) and other GA costs. $\endgroup$ – douggro Dec 30 '14 at 20:07
  • 1
    $\begingroup$ Additionally, your calculation doesn't include the amortization cost of the aircraft itself. $\endgroup$ – reirab Dec 30 '14 at 20:34
  • 1
    $\begingroup$ Also, the revenue estimate is probably way off. It seems very unlikely that the airline is averaging \$200/seat for a single 350 nm flight segment. I usually get round-trips with each way being twice that distance for between \$200 and \$300 USD. Finally, even if the figures were correct, 30,000 - 8,300 = 21,700 which is 260% of 8,300, not 350%. $\endgroup$ – reirab Dec 30 '14 at 20:47
  • 2
    $\begingroup$ I think that profitability is a lot more difficult to estimate than costs: the price of jet-A is public, but an airline may offer dozens of different seat prices for one flight. And there's cargo too, which could bring a lot of money or just a little. But in any case, the Economist said that in 2012 airlines worldwide made a profit of $4 per customer carried, so your calculation seems very optimistic (unless BOS-DCA is a very profitable outlier). $\endgroup$ – Pondlife Dec 30 '14 at 21:35