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Old 5th Mar 2010, 16:35
  #1952 (permalink)  
chrisbl
 
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Quote:
Not the brightest thing to say;

No, all profits come out of the pockets of the customer.
You've misunderstood the point. You don't take on a staff member unless the revenue you gain exceeds the amount it costs to employ them. If the staff cost exceeds the revenue, you have a problem. Where it's difficult in a big company is you can't accurately assign revenue against cost, but the central principle stands, that staff are there to generate profit for the company.
I did not misunderstand the point. Actually in a big company it is much easier to match revenue with their costs as roles and functions are more specific. In smaller companies where people carry out a number of roles, it becomes more difficult to assign in this way.

As far as staff costs and revenue is concerned where you say "if the staff costs exceeds the revenue you have a problem" nothing profound there. The issue is not just staff costs. Total costs have to be less than revenue to make a profit, not just staff costs.

Some costs are more controllable than others. Fuel is less controllable and if everyone gets it about right costs the same.
Aircraft maintainence costs vary depending on the condition of the fleet.
Aircraft financing costs depend on the viability of the carrier, its creditworthiness and therefore the costs it has to pay to borrow money.
And so on.
Labour costs are controllable. Either people change or people change.

Oversimplification underestimates the complexity of running a major business especially an airline of the size of BA. Want BA to be simple, look at Ryanair.
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