Well, our CPA with CAL has a block hour rate of a bit less than $1900/hr. That number was derived from published information--the income from CAL divided by the number of hours flown for them in a given period. The actual CPA rate is not public information, so I could be off by an unknown amount. The CAL CPA has a fuel price to XJT of something like $.70/gallon for fuel, but they keep any extra profits over 10%. So them paying for most of our fuel under the CPA is counterbalanced by them also keeping any extra profits from ticket sales too.
So if $1900/hr is historically profitable for us paying only about $230/hr for fuel (figure avg burn of 2500# or 325 gallons/hour) and now with paying all of our own fuel that figure would be roughly a bit over triple at about $720/hr, then our required revenue per hour (to at least equal the profits we derive from the CAL CPA) would be $1900 plus the difference in fuel costs $1900+$490=$2390/hr. Also need to add in our new overhead costs for training/ticketing/advertising/airport services/catering etc. I don't know what that cost is, but for sake of argument, let's say around 10%. That means our required revenue is about $2600/flight hour to make money. Or said another way, we need to get about $52 per flight hour from every passenger on a full flight to make money on our branded flying. Let's say eventually our loads are around industry average of 65ish% that's about 32 people per flight, which, by the way, we have been far exceeding on some routes. That means with 32 pax on board, we make CAL CPA profits or better on a 3 hr flight at an average ticket price of about $243.75, which is a fair price you'll find on our website. Much less if you buy a few weeks in advance, much more if you want to fly in the next few days (we do not claim at all to be a low cost airline).
That's my math, so if we can get an average of 32 folks to show up for most flights, I think we'll be OK. And that doesn't even take into account that we can bleed on the branded for a quite a long while because it is such a small part of our big picture when other areas are more than making up for start up costs.
So far its working and we are only a few weeks into it. Thanks for your concern though and your factual information.
