Do RJs make money?

[BigPappa]

Back to basics! Too many financial analysts are trying to reinvent the wheel in the aviation industry. The fact remains that it’s still just a matter of simple arithmetic. Let’s compare a CRJ 200 in this example: The Total operating cost of this RJ is approx. $2400.00 per hour. You can figure that the average ticket costs approx. $350.00 per person (call it a round trip). At our company the average CRJ flight is approx. 1.3 hr. Load factor most of the time is 23 or better. In this case (3120/175=17.8) the load to required to break even is 18 pax. With this in mind you can say that we are making money most of time for our big Mother!

 

[WMUSIGPI]

Very true if that is the only leg of the trip for the 18 pax. That has to be recalculated when those people then hop a 757 to the other side of the country. Most people these days connect to somewhere. They fly at least 2 legs to get where they are going. Often paying less to do so than fly nonstop.

 

[Flyer1015]

You can figure that the average ticket costs approx. $350.00 per person (call it a round trip).

Who're you kidding?

Look at some of the fares offered by JBLU, SWA, Airtran, and even the majors. You're more likely to find New York - California one ways for $99 bucks. ($198+taxes for roundtrip).

All I'm saying is that an assumption that every passenger on an RJ paid $350 roundtrip sounds hard to believe... there will be those flying for free, those flying for discounted airfares, etc etc.

 

[Flyer1015]

Very true if that is the only leg of the trip for the 18 pax. That has to be recalculated when those people then hop a 757 to the other side of the country. Most people these days connect to somewhere. They fly at least 2 legs to get where they are going. Often paying less to do so than fly nonstop.

Good point.

Look at this guy's trip:

JFK - ATL (ASA CRJ)

ATL - TPA (Delta MD88)

One way... his grand total ?


Wait for it,


$ 69 BUCKS !

From the first picture / text : http://www.airlinemeals.net/meals/DeltaConnection.html

 

[Secret Squirrel]

I think you are being a little bit SIMPLE. I pulled up a round trip ticket on Delta being operated by Comair from IAH to CHS. The ticket was for $332.00 Round trip. This is almost 4 hours of flying each way. Both are on a 50 seat RJ. So lets do your BASIC math again. That is about 8 hours of flying round trip. That means $2400 an hour JUST FOR THE OPERATING COSTS OF THE AIRPLANE. How about advertising, gates, Management, Maintenance, etc. Or does big mother take care of all that? So $2400times 8 hours is $19,200. Divide this by $330 per ticket would require you to have 58 people on your 50 seat airplane to make a profit. Now this is a very simple answer of why you are so wrong. It is logic like yours that made people think FLYI would work.

SS

 

[jehtplane]

I think you are being a little bit SIMPLE. I pulled up a round trip ticket on Delta being operated by Comair from IAH to CHS. The ticket was for $332.00 Round trip. This is almost 4 hours of flying each way. Both are on a 50 seat RJ. So lets do your BASIC math again. That is about 8 hours of flying round trip. That means $2400 an hour JUST FOR THE OPERATING COSTS OF THE AIRPLANE. How about advertising, gates, Management, Maintenance, etc. Or does big mother take care of all that? So $2400times 8 hours is $19,200. Divide this by $330 per ticket would require you to have 58 people on your 50 seat airplane to make a profit. Now this is a very simple answer of why you are so wrong. It is logic like yours that made people think FLYI would work.

SS

Don't think it takes 4 hours to fly from IAH to CHS

 

[BigPappa]

Those numbers are based on averages. I've done my research. You do yours and come back with smart answers after you've done your research. I've kept up with fares and loads for several months! That $2400 includes everything.

 

[Secret Squirrel]

Don't think it takes 4 hours to fly from IAH to CHS

When you have to go through CVG it does. That is what the delta website showed for times

 

[h25b]

Don't forget someone has to make the lease payment on the aircraft...

 

[BigPappa]

Secret,
I was comapring pure RJ flights without major connections. Your $69 might have been on Ifly, I'can't find a ticket that cheap in Delta! That's why Ifly is bye bye. Again I am talking averages. You are comparing individual trips.

 

[Crash Pad]

Ok smart guy if RJ's are making so much money and break even with 18 pax then why are all the airlines Bankrupt? The fuel spike would have raised break even a passenger or two. FlyI had loads of at least 50%. How come they are going under?
There is my research.

 

[DoinTime]

Back to basics! Too many financial analysts are trying to reinvent the wheel in the aviation industry. The fact remains that it’s still just a matter of simple arithmetic. Let’s compare a CRJ 200 in this example: The Total operating cost of this RJ is approx. $2400.00 per hour. You can figure that the average ticket costs approx. $350.00 per person (call it a round trip). At our company the average CRJ flight is approx. 1.3 hr. Load factor most of the time is 23 or better. In this case (3120/175=17.8) the load to required to break even is 18 pax. With this in mind you can say that we are making money most of time for our big Mother!

That assumes that your passenger is traveling on only one leg.

A more likely scenario is that your passenger paid $485 ($242 one way) roundtrip (thats if they weren't using frequent flyer miles) to fly from TLH (Tallahassee, FL) to CPR (Casper, WY) entirely on Pinnacle Airlines. This trip starts with a leg from TLH to MEM (1.5 hours block). Then connects from MEM to MSP (2.0 hours block). Finally, connects from MSP to CPR (2.5 hours block).

Pinnacle's operating costs plus margin are approximately $2000/block hour and our average aircraft seat capacity is approximately 47. The math works outs like this.

$2000 x 6 block hours = $12,000
$12,000/242 = 49.6

50 people need to fit into a 47 seat aircraft to break even on this flight.

The prices I quoted are available for this roundtrip on NWA.com.

 

[BigPappa]

Lease Payments Are Included In The $2400.00

 

[BigPappa]

The airlines are going under because of mainline load factor/ticketcost ratio does not equal profit!

 

[Secret Squirrel]

Those numbers are based on averages. I've done my research. You do yours and come back with smart answers after you've done your research. I've kept up with fares and loads for several months! That $2400 includes everything.

And how did you figure out the average cost per passenger on your flight? There is no way to know unless you are in accounting or you surveyed everyone who got off your flight. Even then you would not know what percentage of the ticket price went to your leg or to the next leg they were making on their way to LAS or LAX or SLC or whatever. Too many variables unless you have information that the normal line pilot does not have access to.

 

[BigPappa]

Secret,

Since you are the smart guy you tell the world how to come up with the cost figures!

 

[BigPappa]

My comparison is on a leg by leg basis on the RJ.

 

[Secret Squirrel]

There is no way to know that. You can not just look at what the airline is charging for a round trip ticket between IAH and CVG when the person is actually going from IAH to CHS. On Delta's website they are charging $243 from IAH to CVG round trip and $447 round trip from CVG to CHS round trip. But a round trip from IAH to CHS, with a connection in CVG is only $332. All I did was take 8 hour of flying and multiply it by your average cost of $2400 per hour to operate. I then devided by $332 ( the cost to fly round trip from IAH to CHS) and came up with 58 people required to break even. It is way too complicated to figure out using Delta website and a calculator.

 

[BigPappa]

You are taking the furthest legs. You need to average!

 

[Secret Squirrel]

You are taking the furthest legs. You need to average!

Average what? Both of those legs were LONGER than what your average was and the average price per leg was around $80 per leg. That is just a trip I picked at random that was two weeks out. You give me an example.

 

[jehtplane]

Ok smart guy if RJ's are making so much money and break even with 18 pax then why are all the airlines Bankrupt? The fuel spike would have raised break even a passenger or two. FlyI had loads of at least 50%. How come they are going under?
There is my research.

Piss poor management, ridiculously low fares, high fuel costs, and the list goes on and on!

 

[Secret Squirrel]

Piss poor management, ridiculously low fares, high fuel costs, and the list goes on and on!

Now that is a statement I will agree with 100%.

 

[BigPappa]

ATL-ISO @ 392.50 round trip ($196.25 one way). flight time 1.4 hr. 2400*1.4/196

break even point = 18 pax.

 

[BenderGonzales]

Mike Boyd should quit now. You guys obviously have it all figured out.

 

[BigPappa]

Bender why don't you add something constructive!

 

[Secret Squirrel]

ATL-ISO @ 392.50 round trip ($196.25 one way). flight time 1.4 hr. 2400*1.4/196

break even point = 18 pax.

The problem is you do not know how many people on your flight are only going ATL-ISO. I would guess only about 10%. The rest of the people are CONNECTING from somewhere else.

What about the guy that is going from MKE-ISO and connecting through ATL. He payed $420 per the delta website. Are you still attributing $392 to your flight when Delta flew him from MKE-ATL? That is very flawed logic.

This is my last post on this subject. I am not saying that the RJ is a total goat and I think certain markets it can make money. But your theory is not correct.

SS

 

[BenderGonzales]

There is nothing constructive to add to this argument. "RJs" have been around for decades. Up until the mid-90's they were simply airplanes.

DC9-10s, Bac 1-11s, BAe146, F28, F100... all "RJs".

Then a Canadian company decided to start marketing THEIR 50 seat platform to commuters... where employee costs were a fraction of what they were at the mainline.

Management was thrilled. Lower costs, but with the same revenue stream. The customers didn't get an "I have to fly on an RJ" discount.

So yeah. These things may be profitable. But it has NOTHING to do with the vehicles economics. They are profitable on the backs of the poor shmucks who fly them for pennies.

Want to visit the real baseline economics for the RJ? Leverage the total cost for the flight over the number of seats.

More seats? Lower cost per seat mile.

How do the airlines correct for that? By going out to the "Comedy Air Academy's" of the world and finding kids who are willing to sell their soul to strap on a uniform (without the hat of course) and go fly a jet-plane.

Was this at all constructive? No. But I feel better.

 

[say again]

Quick answer- NO!!!! These airfares are ridiculous, and the airlines need to wake up and start charging the flying public whatever it takes to make a profit. ALL airlines must be in on this, but unfortunately I don't see it ever happening.

 

[bvt1151]

Back to basics! Too many financial analysts are trying to reinvent the wheel in the aviation industry. The fact remains that it’s still just a matter of simple arithmetic. Let’s compare a CRJ 200 in this example: The Total operating cost of this RJ is approx. $2400.00 per hour. You can figure that the average ticket costs approx. $350.00 per person (call it a round trip). At our company the average CRJ flight is approx. 1.3 hr. Load factor most of the time is 23 or better. In this case (3120/175=17.8) the load to required to break even is 18 pax. With this in mind you can say that we are making money most of time for our big Mother!

Wow, your numbers are way off. First off, a CRJ 200 costs closer to $1500 per hour, and most passengers on an RJ connect, which means you have to divide the fare by 4, not 2...less taxes.

CRJ Operating Costs (about 3/4 from the bottom):
http://www.airlineempires.net/mambo/index.php?aircraft=629&carrier=OO&year=2005&quarter=2&option=com_content&task=view&id=51&Itemid=31http://www.airlineempires.net////ma...&option=com_content&task=view&id=51&Itemid=31

 

[BigPappa]

bvt,

read the post before you post!