How much are the Airlines losing?
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How much are the Airlines losing?
I am intrigued to know just how much the loss making UK Airlines are really losing whilst this situation continues. Some companies where forcasting a loss of at least 3 million pounds a week before this happened so by how much has this figure now increased?
If the airlines were losing money by flying surely they are losing less by being grounded. Obviously the overheads and wage bill remain the same but I doubt whether these costs are greater than when the airlines operated normally.
The vast majority of expense is in the cost of the fuel so naturally the monthly fuel bill will be greatly reduced,in the region of 1.5 million dollars per day for an average long haul airline, BA more like 5 million.With the aircraft operating at full capacity for the next couple of weeks, the passenger ratio per kilo of fuel burnt will be reduced creating greater revenue than would have been originally forecast.
The biggest losers from all of this are the profitable airlines and the third party workers associated with airport operations, lets hope we all get flying again very soon.
If the airlines were losing money by flying surely they are losing less by being grounded. Obviously the overheads and wage bill remain the same but I doubt whether these costs are greater than when the airlines operated normally.
The vast majority of expense is in the cost of the fuel so naturally the monthly fuel bill will be greatly reduced,in the region of 1.5 million dollars per day for an average long haul airline, BA more like 5 million.With the aircraft operating at full capacity for the next couple of weeks, the passenger ratio per kilo of fuel burnt will be reduced creating greater revenue than would have been originally forecast.
The biggest losers from all of this are the profitable airlines and the third party workers associated with airport operations, lets hope we all get flying again very soon.
A lot of costs are "avoidable", fuel, landing fees, navigation charges, etc. It is possible that some will be covered by long term contracts so will not actually be avoidable at least in the short term.
BA probably didn't avoid many costs during the BASSA dispute - many planes continued to fly empty and there were charter costs. Then again it continued to fly the majority of passengers so kept a lot of revenue. You can divide WW's estimates for losses by total daily revenue to see the percentage lost (say 25% of the total).
This time there is no revenue coming in and addition costs of hotel bills, catering, etc.
Of more concern though will be the long term costs of people not booking because of fear of future disruption. How long will the volcano keep erupting?
Add on the cost to the tourism industry generally and we are looking at a SARS type scenario. Frightening indeed.
Will the airlines with deepest pockets survive? will there be a Government bailout?
I would be interested if any insider could tell me what insurance airlines cover for this sort of thing. I suspect that like SARS you cannot insure for this, so the answer is not much.
Lets hope the volcano stops erupting pronto.
BA probably didn't avoid many costs during the BASSA dispute - many planes continued to fly empty and there were charter costs. Then again it continued to fly the majority of passengers so kept a lot of revenue. You can divide WW's estimates for losses by total daily revenue to see the percentage lost (say 25% of the total).
This time there is no revenue coming in and addition costs of hotel bills, catering, etc.
Of more concern though will be the long term costs of people not booking because of fear of future disruption. How long will the volcano keep erupting?
Add on the cost to the tourism industry generally and we are looking at a SARS type scenario. Frightening indeed.
Will the airlines with deepest pockets survive? will there be a Government bailout?
I would be interested if any insider could tell me what insurance airlines cover for this sort of thing. I suspect that like SARS you cannot insure for this, so the answer is not much.
Lets hope the volcano stops erupting pronto.
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Ah, it's capt Kremin (or was it Kretin) back to taunt the "other Irish company".
Tell you what, the doors will close quite some time after your green ones down the road . . . . . .
Tell you what, the doors will close quite some time after your green ones down the road . . . . . .
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I heard the figure US$200M a day, globally. Can't cite any sources though.
Also bear in mind that airlines of course are not more profitable when they don't fly, as they lose all their income (they have to refund pax the full ticket amount, or subcharter work at high prices, plus the price of accomodating waiting pax). While this is somewhat offset by reduced variable costs such as fuel, I would beg to differ that fuel is "the vast majority of expense".
Also bear in mind that airlines of course are not more profitable when they don't fly, as they lose all their income (they have to refund pax the full ticket amount, or subcharter work at high prices, plus the price of accomodating waiting pax). While this is somewhat offset by reduced variable costs such as fuel, I would beg to differ that fuel is "the vast majority of expense".
Last edited by bfisk; 18th Apr 2010 at 13:29.
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Question could also be flipped on its head. How much money is being made by certain airlines. Wouldn't be surprised if some free seats are being held back and not released for rebooking for cancelled flights. These seats will of course be sold way over the odds to anyone willing to shell out the dosh. Now I am sure a nice IATA accredited airline wouldn't undertake such nasty tricks but perhaps a certain loco just might?
