Cost per hour of a 737

[smith]

I am not a pro pilot but was flying down to Malaga last week from Glasgow and had paid GBP29.99 plus GBP5 tax. Just wondered what is the break even cost of flying a 737 GLA-AGP? Say on averge each pax paid GBP70 and there were 120 seats, that would be 8,400GBP. Would this be enough to pAY THE FUEL ETC? I know there are many variables but how much would an "average" flight from GLA-AGP cost the airline? You can tell me to PFO if you want as I am not a pro but just curious of the running cost per hour of a 737 when the cost of a PA28 is approx 125GBP (am using GBP as I am in Spain and ther is no pound sign on the pc)

[oceancrosser]

Quite a few variables in there, even from one operator to the next. The trip cost (ACMI) on an average B737 could be in the region of GBP 4000 plus fuel for GBP 2-2,5K. Then there´s handling and landing charges, plus all the sales and distribution cost plus overheads. Probably GBP 8000 would break even for some operators and constitue a significant loss for others.

[Wee Jumbo]

I expect substantial subsidies are also given to the airlines from the tour companies. For example at my company, even if we fly empty we still get paid for the flight from certain companies that require us to fly to a destination 7 days a week.

[Kiwiguy]

Hi Smith,

I gather that Easyjet for one uses commissions from hotels and rental car companies to offset the real cost of flying.

The idea being to sell a ticket at par or below cost is an inducement to get you to make other travel bookings through their website.

[BOAC]

'smith' - as you and 'ocean' have said, there are far too many variables. Lease rates for 737s vary from cheap to horrendous depending on the type and the deal you have struck. Maybe, like Ryanair, the a/c has been bought 'at a good price'. Maintenance, crew and fuel costs will not vary much between operators in terms of how the overall costs arrive.

As you say, not all seats are at £29.99. Perhaps the return flight is 'stuffed' with high-price tickets. Maybe, as 'WJ' says, for a charter airline, the 'series' of flights is paid for regardless of loads. For a holiday company's airline, the costs will be built into the holiday. For a scheduled airline, it may be a 'loss-leader' route or a 'start-up' which will almost certainly run at a loss for a while.

[Dani]

...and a few LCC operators fly only to have a reason to order new planes, so they can lease them back and live from the difference. There are certain analyst who remark that some LCC would become illiquid immediatly as soon as they would stop expanding.

But I guess nowadays the yields (earnings per seat) are significantly higher than they used to be two or three years ago.

Dani

[smith]

BOAC

Lease rates for 737s vary from cheap to horrendous depending on the type and the deal you have struck

Was not actually enqiring about lease rates, was actualy enquiring about the running costs of a B737. Again I know this will vary for each operator, but just wondered the "average" cost of say a 3 hour flight. I know there a lot of add-ons like in paying for in-flight meals etc but the question arose in my head when I paid just £29.99 for a one way flight. When you add crew salaries, ground handling, navigation charges etc I know the cost of keeping a 737 in the air must be in the thousands and this is what I wanted to know.

Regards

[A2QFI]

737 Costs

Smith - a thought provoking post! I came back from Malaga a few days ago in an Eezy 737 which did not have one empty seat on it and it crossed my mind that they probably were making money on that particular sector.

The other side of the coin is that I have investigated flying to Knock at the end of Jan 07 and if I book today it is under £17 return! Not every seat on the flight is going to be sold at that price but where is the profit in operating a 737 on that sector?

[Desert Budgie]

Smith

Ocean crosser gave you an idea. ACMI (Aircraft, Crew, Maintenance, Insurance) 4000 quid. You DO have ACMI costs, even if you own the aircraft yourself. That cost probably includes most of the fees minus the fuel in Scotland. Then fuel at 5000 pounds and any associated charges at the destination. Remember, if landing costs are not already free at the destination, it WILL be added to your ticket price. A lot of airports charge per passenger, for example 5 quid a head. This will most definately be added to your ticket price. Id say between 8 and 10 grand to operate.

Cheers

DB

[Doors to Automatic]

Here are some typical sector costs for a low-cost config (149 seat) 737 - the example is an approximation of an easyjet operation:

GLA-AGP one-way

Fuel: 1370
Maintenance: 812
Landing, Parking: 261
Airport Infrastructure: 33
Handling: 449
Navigation: 1267
Crew Allowance:67
Contingency: 213
Crew Salaries: 666
Lease: 1066
Insurance: 133
Overheads: 1118

Total: 7455

The above assumes full airport charges at both ends of the route and that the passenger charges and taxes are added onto the ticket on top of the fare.

At a 70% load this flight would require a contribution of £71.48 per passenger on average. This will be a combination of the fare paid plus any bar profit (usually £3-4 per pax).

[ABX]

Other Income ...

Don't forget that SLF is not the only way an airline can make revenue, one of the other main sources of income is freight & mail etc.

All in all those expenses are big numbers.

Thanks for the thread smithy, a very interesting read.

[Doors to Automatic]

Originally Posted by ABX

Don't forget that SLF is not the only way an airline can make revenue, one of the other main sources of income is freight & mail etc.

Good point although most short haul carriers regard the contribution from these as an additional bonus and don't consider it when assessing whether or not a route will be viable. This is different from long-haul routes where cargo revenue is counted in general.

[smith]

Agree Dooors to Automatic, I cant see that much freight being taken on a daily rotation GLA-Malaga, then again, I may be wrong.

[Kiwiguy]

I always understood LCCs shied away from loading cargo to avoid the cost of ground handling ?

[barit1]

Also note that an airplane flies some kind of round trip - either out-and-back, round robin etc. Some legs may be more profitable than others; some legs may be essentially positioning flights and make a loss; So long as the overall circuit is profitable, it's a good deal for the airline.

[Ignition Override]

The very successful US airline JetBlue supposedly paid nothing for the A-320 aircraft leases for the first one or two years. This was supposedly not to be found in print. Competition can create irresistable incentives to offer aircraft for almost nothing.
But maybe you guys/gals pay even higher taxes to support such sales/lease strategies, along with the German and French taxpayers. Ouch. The west Germans are seriously gouged due to the 'merger' in '89 (schmerzhaft ).

Maybe it was only a very strong, frequent rumour about JetBlue.

Could Boeing have also priced certain products below cost? If so, wish they would give us some cheap 737s, but an article in the "Wall Street Journal" claimed that Boeing's Sales Reps are/were not given enough latitude in time-sensitive price negotiations, compared to Airbus Sales Reps, and therefore many sales were lost due to the more centralized control at Boeing.

It must be quite interesting nowadays over in the P.R. China.