running an airline
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Join Date: Mar 2001
Location: Toronto, Ont, Canada
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running an airline
Ok, I have no idea of what it takes to run a huge business like an airline.
Still, I'm a little amazed at how much financial trouble the airlines are in lately.
Is it as simple as saying that operating costs and (salaries of all employees, not just pilots) have outraced ticket sales ?
Govt taxes ? Other fees/charges ?
Is it even possible to run a profitable airline these days?
If the salary spread ranged from say 25-50k U.S. for all employees, would that make any difference ?
Mike
Still, I'm a little amazed at how much financial trouble the airlines are in lately.
Is it as simple as saying that operating costs and (salaries of all employees, not just pilots) have outraced ticket sales ?
Govt taxes ? Other fees/charges ?
Is it even possible to run a profitable airline these days?
If the salary spread ranged from say 25-50k U.S. for all employees, would that make any difference ?
Mike
Join Date: Sep 2003
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Mate,
I haven't go a clue.
I have been involved with a number of airlines at different levels and I still wonder how it all works!! beats me!
So I dont worry about it too much any more. As long as I get paid and do what I am asked to do, I am happy.
A while back I used to evaulate aircraft that I knew would never get a look in but after realsing that, I enjoyed it because it actually gave me something to do.
Hay Ewe
I haven't go a clue.
I have been involved with a number of airlines at different levels and I still wonder how it all works!! beats me!
So I dont worry about it too much any more. As long as I get paid and do what I am asked to do, I am happy.
A while back I used to evaulate aircraft that I knew would never get a look in but after realsing that, I enjoyed it because it actually gave me something to do.
Hay Ewe
A Runyonesque Character
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Location: The South of France ... Not
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It’s absolutely the easiest thing in the world!
You have only three things to worry about:
YIELD – revenue per unit of traffic
UNIT COST – cost per unit of capacity
LOAD FACTOR – occupancy rate of the aeroplane.
If you divide unit cost by yield, you arrive at the load factor you need to break even*. If your planes are fuller than that, you’re making a profit. If they are not, you have three choices – reduce costs, increase yield, or fill more seats.
Voila!
* this formula does not necessarily apply to ‘low-cost’ carriers
You have only three things to worry about:
YIELD – revenue per unit of traffic
UNIT COST – cost per unit of capacity
LOAD FACTOR – occupancy rate of the aeroplane.
If you divide unit cost by yield, you arrive at the load factor you need to break even*. If your planes are fuller than that, you’re making a profit. If they are not, you have three choices – reduce costs, increase yield, or fill more seats.
Voila!
* this formula does not necessarily apply to ‘low-cost’ carriers
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Compounded by financing of aircraft: for example the adverse movement of exchange rates once your loan is set in Yen with Bank of Tokyo Mitsubishi, means you are in a bad position if the loan is not completely hedged. All aircraft are priced in dollars, which does not help anyone not operating and reporting in dollars.
Oil has further compounded recent problems.
If it were so easy, why have the cumulative profits of all US airlines since inception in the 1920s been negative? Why is it so hard to make a startup work otherwise?
Oil has further compounded recent problems.
If it were so easy, why have the cumulative profits of all US airlines since inception in the 1920s been negative? Why is it so hard to make a startup work otherwise?
Paxing All Over The World
Non-aviation employee speaking: The above questions/answers apply to ALL commerce! In the past 25 years, in my career in telecommunications (Permanent and as consultant for 14 years) , I have worked in (not in sequence): Govt; Retail; Transport (air + sea); Finance; Chemicals; Pharmaceutical; Security; and many others.
Of 90% I have thought, "If the Shareholders/Owner/Voters knew what was going on in this company - they would sack the lot of them." Once I had been working for 15 years, I realised that it was not just one or two companies/organisations but ALL. After 25 years, I am convinced of it. The variable as the levels of stupidity, arrogance, veniality that they display. Oh yes and Luck that keeps them in biz and they think it's because they are clever!
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"I tell you, we are here on Earth to fart around, and don't let anybody tell you any different." Kurt Vonnegut, Jr.
Of 90% I have thought, "If the Shareholders/Owner/Voters knew what was going on in this company - they would sack the lot of them." Once I had been working for 15 years, I realised that it was not just one or two companies/organisations but ALL. After 25 years, I am convinced of it. The variable as the levels of stupidity, arrogance, veniality that they display. Oh yes and Luck that keeps them in biz and they think it's because they are clever!
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"I tell you, we are here on Earth to fart around, and don't let anybody tell you any different." Kurt Vonnegut, Jr.
