I normally take any comments on dodgy internal pricing within the Qantas Group with a grain of salt figuring that for every such occurrence there should be a middle manager looking at his monthly reports going WTF why should I have to wear that, however I was intrigued by this article today ...
Trans-Tasman flight war set to heat up - Qantas | Stuff.co.nz
Accounts filed to the Companies Office just before Christmas show Qantas's New Zealand subsidiary, Jetconnect, reported a profit of $11.3 million for the year to June 30, almost unchanged on the previous year. It posted revenue of $77.7m, compared with $78.3m previously.
The latest government figures show Air New Zealand's seat utilisation on the route averaged almost 84 per cent in October, Qantas's 77 per cent, Virgin's 74 per cent and Jetstar's 73 per cent.
So doing some back of the envelope maths...
JetConnect has revenue of $77.7m per year,
divide by 365 gives $212,876 per day
divide by 26 flights a day gives $8187 per flight
divide by .77 of 168 seats gives $63.28 revenue per passenger per flight
I haven't included any Cargo Revenue, or charges for JetConnect cabin crew operating services in the wider Qantas network but I figure they wouldn't adjust the number by more than 20%.
I made 20 or so trans-tasman flights during the year and I didn't pay anywhere near $63.28 on any of them!!!
So what is this saying, Qantas books the full amount of the sale fare revenue, looks at what expenses it wants JetConnect to pay (presumably labour costs and other expenses incurred in NZD), adds a margin of 16% (77m revenue->11.3m profit), and passes that amount to JetConnect as its "revenue", and records it as an expense in the Qantas books. That amount being approximately $63.28 per passenger per flight!.
At the end of the year, JetConnect has $11m in its bank a/c (if it has one yet), of which it then pays 3m in tax to the NZ government (I bet it doesn't), and $8m back to the parent as a dividend.
Am I missing something?