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Old 27th Jul 2008, 22:33
  #187 (permalink)  
genex
 
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Don't confuse Direct Operating Costs (or variable cost) with the fully allocated costs (which includes all relevant overheads.

Second, remember that if JQ put in 25% more seats than Qantas and use the aircraft 15% more then that has a direct effect on year-in, year out costs that spreads JQs already lower overheads even thinner. If JQs average journey length is longer then the proportion of costs for landings and of course all cycle-related engineering costs will fall. As a result of these factors yields will of course be lower and it may be that the actual profit margin (in the varying ways it can be measured) would be the same.

No doubt at all though that if Qantas Group had 50 787s right now, then some (say 20) would be used on the Cityflyer routes and 30 on JQI routes with a higher proportion of price sensitive to less price sensitive traffic , leaving the 380 to do the remaining "core" of QF's mainline routes from SYD/MEL to LHR and LAX.
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