Most profitable routes
Thread Starter
Joined: Mar 2002
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From: England
Most profitable routes
I spotted a thread stating that the BA service to IAH was the most profitable from LGW. Anyone happen to know the 5 most profitable routes from LHR on S/H and L/H???
PS As a BA shareholder..how low can the shares go??
PS As a BA shareholder..how low can the shares go??
Joined: Sep 2000
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From: Now back in London
Its quite possible that a route with 6 flights a day is more profitable than one with one flight, but the one flight makes more money than each of the 6. Cost allocations can lead to some pretty arbitrary numbers as well.
Being in that line of work, tell me the answer you want and I'll justify it.
Might be better to look at which route gives the highest average contribution to fixed costs per planeload, but a cleaner number is probably revenue per passenger kilometre. Being simple, however, has its limitations.
Having said all that I'm still no nearer to answering your question!!!
cur
PS so am I and probably somewhere between 0 and 5p, worst possible case.
Being in that line of work, tell me the answer you want and I'll justify it.
Might be better to look at which route gives the highest average contribution to fixed costs per planeload, but a cleaner number is probably revenue per passenger kilometre. Being simple, however, has its limitations.
Having said all that I'm still no nearer to answering your question!!!
cur
PS so am I and probably somewhere between 0 and 5p, worst possible case.
Paxing All Over The World
Joined: May 2001
Posts: 10,842
Likes: 328
From: Hertfordshire, UK.
My understanding was that JNB was always a reliable 'earner'? Particularly in the days before VS got on the route. However, BA still run a 744 to JNB every day of the week. They also do CPT every day, 6 x 772 and 1 x 744, I think.
Either way South Africa is a right little gold mine.
Either way South Africa is a right little gold mine.
Joined: Oct 1998
Posts: 122
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From: Silly Cone Valley
It all depends...
A route is profitable if you spend less operating it than you earn in revenue from it. Whilst BA have 18 members of staff per pilot, and fly 625 passengers per employee as opposed to 4447 with Easy and 6000 with Ryan then few routes will be profitable.
The franchising debacle has been brought about by the frank admission of Commercial that BA cannot operate the route at a competitive price and so contractors have been brought in. A cleverer management would have reduced our MASSIVE costs to redress the balance and protect the integrity of the product.
The share price is a bit of an irrelevance, how low is low? The market is being dragged lower by American corporate earnings worries and concerns that no-one can believe the balance sheet anyway. That is a situation that nobody in the UK can control. In an environment that favours the bears and the short sellers, companies that have poor management can expect to be oversold.
That is not to say that BA could help itself immeasurably by facing up to its obesity and SACKING THE BLOODY SUITS! AARRGGHHHHHHH!
I’ll take on the opposition anyday. It’s my management I can’t beat!
The franchising debacle has been brought about by the frank admission of Commercial that BA cannot operate the route at a competitive price and so contractors have been brought in. A cleverer management would have reduced our MASSIVE costs to redress the balance and protect the integrity of the product.
The share price is a bit of an irrelevance, how low is low? The market is being dragged lower by American corporate earnings worries and concerns that no-one can believe the balance sheet anyway. That is a situation that nobody in the UK can control. In an environment that favours the bears and the short sellers, companies that have poor management can expect to be oversold.
That is not to say that BA could help itself immeasurably by facing up to its obesity and SACKING THE BLOODY SUITS! AARRGGHHHHHHH!
I’ll take on the opposition anyday. It’s my management I can’t beat!
Joined: Jan 2000
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Curmudgeon makes a good point about rooute profitability, though I'd argue that Revenue per Passenger KM is only relevant when you compare it to the appropriate costs.
Another way is to compare acutal load factor to break-even load factor on the route, but the key issue is what level of costs does each route carry. It's obvious that costs directly associated with a particular route (airport pair)- landing and handling fees, Navigation charges, Fuel, Catering, Crew allowances etc will only be incurred if that particular route is flown. Other costs such as leasing/depreciation, insurance, maintenance, crew salaries have also to be carried by the route, but they are irrespective of whether the route is to destination A or B - if they both take the same flying time. Where things can be complicated is how to deal with Indirect, Overheard, Admin, Back-office, HQ or whatever you like to call them costs. The point being that if route Y-Z looks unprofitable through one type of analysis and you decide to chop it then all the non-route specific costs that it carried will be re-allocated and it may turn out that other routes start appearing un-profitable. The answer is that if you chop a route you have to reduce your Overhead costs in the same proportion to avoid making the situation worse for the other routes.
Ok, so that doesn't answer the original question, but gives a few warnings about cost analyses.
I guess though the for BA some of the trans-Atlantic routes must have been good earners - if only since their overall performance took such a knock after Sept 11 2001.
Another way is to compare acutal load factor to break-even load factor on the route, but the key issue is what level of costs does each route carry. It's obvious that costs directly associated with a particular route (airport pair)- landing and handling fees, Navigation charges, Fuel, Catering, Crew allowances etc will only be incurred if that particular route is flown. Other costs such as leasing/depreciation, insurance, maintenance, crew salaries have also to be carried by the route, but they are irrespective of whether the route is to destination A or B - if they both take the same flying time. Where things can be complicated is how to deal with Indirect, Overheard, Admin, Back-office, HQ or whatever you like to call them costs. The point being that if route Y-Z looks unprofitable through one type of analysis and you decide to chop it then all the non-route specific costs that it carried will be re-allocated and it may turn out that other routes start appearing un-profitable. The answer is that if you chop a route you have to reduce your Overhead costs in the same proportion to avoid making the situation worse for the other routes.
Ok, so that doesn't answer the original question, but gives a few warnings about cost analyses.
I guess though the for BA some of the trans-Atlantic routes must have been good earners - if only since their overall performance took such a knock after Sept 11 2001.
Joined: Oct 2000
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From: Out of the blue
I think you are very close to the kernel here. BA are about to pull out of Charlotte, a prosperous US city destination with a comparatively low sensitivity to price (all investment bankers and $1T invested there). BA will not reduce its losses by cutting revenue generating airline operations whilst retaining loss making administrative operations. This simply cannot go on.
At this rate they’ll be operating one extremely expensive Concorde service with 66000 managers shortly before going bust.
At this rate they’ll be operating one extremely expensive Concorde service with 66000 managers shortly before going bust.
Joined: Nov 1999
Posts: 428
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From: London
Roobarb writes..
Yes, but Ryan and Easy don't do long-haul - so is a straightforward comparison between number of pax per employee per unit of time a fair comparison???
Whilst BA have 18 members of staff per pilot, and fly 625 passengers per employee as opposed to 4447 with Easy and 6000 with Ryan then few routes will be profitable.
Joined: May 2000
Posts: 724
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From: United Kingdom
Plus it may be cheaper for a larger airline like BA to keep some functions in house such as transport or check-in staff unlike easyJet and Ryanair who contract in such services. Staff/pax are not the same thing as total cost/pax.
Agree with Big Brutha below though!
Agree with Big Brutha below though!
Last edited by Lucifer; 20th September 2002 at 13:44.
Joined: Jul 2001
Posts: 389
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From: London
Most profitable routes? Anything prefixed with 'FR' or 'EZ' and NOT 'BA'!!
Skippy has a masterplan......bankrupt BA then re-emerge (like SR/SN) as a new airline, without the historical union and contractual agreements. So far he's right on course.
Skippy has a masterplan......bankrupt BA then re-emerge (like SR/SN) as a new airline, without the historical union and contractual agreements. So far he's right on course.
Only a million, try 2
