Rex recruiting coming to a town near you!
KRUSTY 34:
You guys have got to stop making these simple calculations - they ultimately result in you getting all mystified and hot under the collar.
For the net revenue to be $6.25, the actual price increase would have to be somewhere around $10 (to allow for GST and other fees and charges). Rex fares seem to range between about $80 and $150 so that increase would be between 7% and 12.5%.
The biggest problem with your calculation however, is that it assumes the number of passengers, after the price increase, will remain exactly the same.
The vast majority of passengers would not notice the increase but it would certainly prevent some passengers from buying the ticket (it is the price of the ticket that is relevant, rather than whether the price has changed).
How many passengers would be prevented? In an earlier post to this thread, I used "price elasticity" estimates to calculate that between 1 and 3 less passengers would buy the ticket (assuming a 30 seat aircraft). That estimate was based on a $5 increase to the ticket price, so a $10 increase would have an even greater effect.
On many flights, it may well be that no less passengers travel. But, on most other flights, it should be assumed (from my calculation), that at least one less passenger will have purchased a ticket.
To look at the effect of one less passenger on your calculation, consider a 30 seat aircraft and a ticket price, before the increase, of $120.
30 pax at $120 per ticket = $3,600 gross revenue;
29 pax at $130 per ticket = $3,770 gross revenue.
More revenue, certainly, but only $170 more when your calculation (for this scenario) assumed $300 more (i.e. 30 x $130 = $3,900 - $3,600 = $300).
So, after allowing for the reduced ticket sales, it can be seen that the increase needs to be quite a bit more than $10 (to bring in the revenue that will provide a 40% improvement in terms and conditions). But, the more the increase, the more the dampening of demand.
If you were to redo your calculation, taking into account the decline in sales as the price goes up, you would probably arrive at an interesting but highly unpalatable reality: that the law of diminishing returns makes it simply not possible to achieve the hoped for gains - that you just cannot wring that much more out of those routes, in other words.
Such an exercise would not be a "calculation", but more a case of "modelling", and it would yield an estimate of what the maximum sustainable price increase could be. Such a number could well be of the order of only a few dollars!
But there is no need for you to commission that modelling - airline management do this sort of thing all the time - if there is more to be wrung out of a particular route they want to know it, and rest assured, will immediately commence doing so!
The cost of such an adjustment (the 40%) would be in the order of $6.25 a ticket! ... Believe me the travelling public will pay, and with many airline fares barely more than the associated taxes and charges, they will barely notice!
For the net revenue to be $6.25, the actual price increase would have to be somewhere around $10 (to allow for GST and other fees and charges). Rex fares seem to range between about $80 and $150 so that increase would be between 7% and 12.5%.
The biggest problem with your calculation however, is that it assumes the number of passengers, after the price increase, will remain exactly the same.
The vast majority of passengers would not notice the increase but it would certainly prevent some passengers from buying the ticket (it is the price of the ticket that is relevant, rather than whether the price has changed).
How many passengers would be prevented? In an earlier post to this thread, I used "price elasticity" estimates to calculate that between 1 and 3 less passengers would buy the ticket (assuming a 30 seat aircraft). That estimate was based on a $5 increase to the ticket price, so a $10 increase would have an even greater effect.
On many flights, it may well be that no less passengers travel. But, on most other flights, it should be assumed (from my calculation), that at least one less passenger will have purchased a ticket.
To look at the effect of one less passenger on your calculation, consider a 30 seat aircraft and a ticket price, before the increase, of $120.
30 pax at $120 per ticket = $3,600 gross revenue;
29 pax at $130 per ticket = $3,770 gross revenue.
More revenue, certainly, but only $170 more when your calculation (for this scenario) assumed $300 more (i.e. 30 x $130 = $3,900 - $3,600 = $300).
So, after allowing for the reduced ticket sales, it can be seen that the increase needs to be quite a bit more than $10 (to bring in the revenue that will provide a 40% improvement in terms and conditions). But, the more the increase, the more the dampening of demand.
If you were to redo your calculation, taking into account the decline in sales as the price goes up, you would probably arrive at an interesting but highly unpalatable reality: that the law of diminishing returns makes it simply not possible to achieve the hoped for gains - that you just cannot wring that much more out of those routes, in other words.
Such an exercise would not be a "calculation", but more a case of "modelling", and it would yield an estimate of what the maximum sustainable price increase could be. Such a number could well be of the order of only a few dollars!
But there is no need for you to commission that modelling - airline management do this sort of thing all the time - if there is more to be wrung out of a particular route they want to know it, and rest assured, will immediately commence doing so!
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Who cares? Err, you do.
According to my calculations, a reduction in pilots by 10% will result in a decrease in ticket price by 15% and an increase in the number of passengers by 5%. Therefore, commonsense tells me that if we get rid of all the pilots, we'll be flying more passengers than we have aircraft and our profits will go through the roof.
Last edited by Lodown; 23rd Aug 2007 at 23:15.
Some problems are just not solvable.
In the current climate, the problem Rex has in attracting and retaining pilots may well fit into that category, but rest assured, the Rex management are not stupid and will be working hard to find a solution.
In the current climate, the problem Rex has in attracting and retaining pilots may well fit into that category, but rest assured, the Rex management are not stupid and will be working hard to find a solution.
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Rex management are not stupid
I have been moved by inspirational leaders in the past, but this group “had me at hello”. Where do I sign? Bravo, bravo.
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They should have a look at what Netjets (Europe) did wrt to changing conditions and renumeration for their crews - and to attract crews - when they were really starting to get into trouble crewing their expansion plans.
Oh, and get the crews a fukcing ride from the car park to the terminal in Sydney, tightar$es
Oh, and get the crews a fukcing ride from the car park to the terminal in Sydney, tightar$es
Ok Jet_A_Knight,
What did Netjets do?
Genuine question. Were they successful?
As for the Carpark in Sydney, Crews can catch the Long term carpark shuttle as it goes by, usually every 15 mins. Mind you, my crew and I tried to catch it this morning only to see it sail past because it was full!
What did Netjets do?
Genuine question. Were they successful?
As for the Carpark in Sydney, Crews can catch the Long term carpark shuttle as it goes by, usually every 15 mins. Mind you, my crew and I tried to catch it this morning only to see it sail past because it was full!
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From memory, the pilots were going to organise into a collective to improve conditons. Whther that came off or not, I;m not sure but From what I read and understood, the company made it more attractive to crews by increasing renumeration and rostering practices, from what i gather. I think they also streamlined progression in the company. As far as I can tell, it had the desired effect.
So far as the bus is concerned, I forgot about that option. I just have the image stuck in my mind of many times watch crews, in full uniform with flt bags and o'night bags in tow, walking to the terminal in 40degree heat
So far as the bus is concerned, I forgot about that option. I just have the image stuck in my mind of many times watch crews, in full uniform with flt bags and o'night bags in tow, walking to the terminal in 40degree heat
Thanks J.A.K
Sometimes it doesn't take much, especially when so much is at stake.
To date REX management's entire stategy in dealing with this crisis has been to focus on recruiting and nothing else.
As far as improving the working conditions of existing crew....
D!CK!
Sometimes it doesn't take much, especially when so much is at stake.
To date REX management's entire stategy in dealing with this crisis has been to focus on recruiting and nothing else.
As far as improving the working conditions of existing crew....
D!CK!
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No matter how much you guys think they have a pilot shortage, which they do don't get me wrong, they've got a bigger problem in engineering.
It's not just this industry thats hurting any industry that has tradsmen going to the mines or any job that hasn't been "attractive" to the universities is really up **** creek. The money aint there and it is a joke.
Take your car to the dealers and they will charge you 100-120 an hour to work on it and most people will pay without batting an eyelid because they have no idea about their vehicle. When i comes to flying but all of a sudden 120 bucks an hour, +/- average sector length, in a million dollar operation, seems out of the question.
Any way thats my two cents worth make of it what you will.
It's not just this industry thats hurting any industry that has tradsmen going to the mines or any job that hasn't been "attractive" to the universities is really up **** creek. The money aint there and it is a joke.
Take your car to the dealers and they will charge you 100-120 an hour to work on it and most people will pay without batting an eyelid because they have no idea about their vehicle. When i comes to flying but all of a sudden 120 bucks an hour, +/- average sector length, in a million dollar operation, seems out of the question.
Any way thats my two cents worth make of it what you will.
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Putting the whole retention of senior staff issue aside. The F/O's are being paid what they are legally entitled, ie; the Award. This award is developed by the government, hopefully with input from the appropriate unions. Therefore that is what they think we are worth and more concerning that is what the union think we are worth.
So rather then try and get payrises out of the company management why not make them by getting the union to raise the award? The AFAP seem unwilling to do this so why not form or call in one that will?
So rather then try and get payrises out of the company management why not make them by getting the union to raise the award? The AFAP seem unwilling to do this so why not form or call in one that will?
Nunc est bibendum
$57K for a Saab F/O?
I don't think it's unreasonable given that this was in the Australian today:
An Army Admin Clerk (about six months training all up I think) is on the same money as a Saab F/O. We're deluding ourselves if we think that a Saab driver isn't worth more than that!
A marine technician earning $50,254 in 2001 now receives $80,451, including a $10,000 retention bonus.
Over the same period, pay for an army administrative clerk has jumped from $41,237 to $56,101.
Over the same period, pay for an army administrative clerk has jumped from $41,237 to $56,101.
Thanks Keg,
The Saab F/O was on the same money as the Army Clerk. Said clerk is now on substantialy more!
The marine technician is now earning the same as a senior Saab Captain. Plus a retention bonus! Not for one minute suggesting that the mechanic isn't worth every penny, and it appears this particular company has recognised that.
Plenty more of this to come methinks.
The Saab F/O was on the same money as the Army Clerk. Said clerk is now on substantialy more!
The marine technician is now earning the same as a senior Saab Captain. Plus a retention bonus! Not for one minute suggesting that the mechanic isn't worth every penny, and it appears this particular company has recognised that.
Plenty more of this to come methinks.
Kavorka,
I think what Keg was saying, was that the Army Clerk was on what a Saab F/O is on today; $41K.
But now is being paid what a Saab F/O should at least be on now; $57K.
We all know that REX pays its new professional airline pilots a base salary that is approx $10K below that of the average Aussie salary.
Unless this practice is reversed imediately, and their F/O's are remunerated to at least the rate of an Army Clerk, (not too much to ask I would imageine) then nobody considering a career in aviation will even give REX a second thought.
If they think cadets are the answer, then ponder this. It will still cost the applicant in the order of 60-80K to qualify, and Qantas are going to need hundreds!
What airline do you think they will head for?
I think what Keg was saying, was that the Army Clerk was on what a Saab F/O is on today; $41K.
But now is being paid what a Saab F/O should at least be on now; $57K.
We all know that REX pays its new professional airline pilots a base salary that is approx $10K below that of the average Aussie salary.
Unless this practice is reversed imediately, and their F/O's are remunerated to at least the rate of an Army Clerk, (not too much to ask I would imageine) then nobody considering a career in aviation will even give REX a second thought.
If they think cadets are the answer, then ponder this. It will still cost the applicant in the order of 60-80K to qualify, and Qantas are going to need hundreds!
What airline do you think they will head for?
... that the Army Clerk was on what a Saab F/O is on today; $41K.
But now is being paid what a Saab F/O should at least be on now; $57K.
But now is being paid what a Saab F/O should at least be on now; $57K.
It is wrong to think that pilot salaries should stay in step with salaries elsewhere in the community. We all wish it were true but unfortunately, that is just not in the nature of commercial aviation.
If you consider that commercial aviation has been on a 50 year quest to make air travel ever more affordable to the people of the world, you should expect pilot salaries, in real terms, to be slowly decreasing.
And slowly decreasing, they have been. And slowly decrease, they will continue to do - but rest assured, they cannot decrease to zero!
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And slowly decreasing, they have been. And slowly decrease, they will continue to do - but rest assured, they cannot decrease to zero!
I've never made a "personal attack" on any level....... but aircraft...... your post wasn't worth..... "2 squirts of ferrets P!sS"
honestly.
Crawl back in your hole, son.
