JetConnect Maths
 

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

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?

Thats unlike you to be bagging QF:= You keep telling me how great it is their flights are full etc....................or have you seen the light:p

Wouldn't it be more likely that they pay Jetconnect $8000 per flight to crew their flights and thats it? Thats the Jetconnect revenue right there, nothing to do with operating an airline or how much QF charged for the tickets or paid for the fuel.
Correct me if I'm wrong, thats just how I imagine a crewing company being reimbersed.

Jet Connect and finances just don't work out.

While Qantas didn't go that low, I did pay $69 AKL-MEL on NZ last year

Doh, NZ Company Accounts are on-line http://www.business.govt.nz/companie...9C582D949D4A7C

Manpower and staff related expenditure 37,077,122
Aircraft operating variable 23,932,877

Divide by 365 (days) x 26 (flights a day) to work out the charge per flight.

Other interesting thing from the report, 149m current assets, 8m current liabilities.

2 + 2 = 5

Simple :E