Originally Posted by
dead_pan
It will be costing GTE, the organisation which have chartered it, a lot more than the ACMI going rate for this type, which I suspect your software may be using. Also, I think your assumption of break-even at 50% load may be optimistic.
Eastern won't be taking any financial risk on this route as such - GTE will have to pay them regardless of how many seats they sell.
Still, its nice to see someone taking the proverbial plunge in these difficult times.
I have to agree with you on this, dead_pan.
JonEMA: I use what is probably the same route economics package as you, developed not a million miles from Loughborough :-) . I'm not sure how you reached your estimate of a 50% breakeven load factor, even if we exclude Eastern's profit margin. I haven't seen it mentioned elsewhere, but unless Eastern is operating some other charter flight to/from OXF or PMI (which seems unlikely), then the costs of positioning sectors need to be included as well - realistically that's at least £1500-£2000 per sector depending on where the aircraft is coming from/going back to.
So your £12000 round-trip to PMI now becomes maybe £16000, and then there's the profit margin to the carrier. Let's imagine that they settle for as little as £4000 profit (remember, just one tech aircraft in PMI during the season would eat into this cumulative profit pretty quickly!) and you're looking at £20000 per round-trip.
If everyone were paying £395 that'd be a breakeven load factor of - oh, 100% if we count all 50 seats
- so I could imagine that the goal is to increase the average yield (I notice that the operator's website says "
from £395").
Looked at another way: if the tour operator are only selling 40 seats per flight, then they need to fill all those 40 seats at an average round-trip yield of £500. Not impossible, but not exactly a dead cert either.