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Topic: weird airline fares
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Scott Norwood
Film God
Posts: 8146
From: Boston, MA. USA (1774.21 miles northeast of Dallas)
Registered: Jun 99
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posted 10-08-2010 02:07 PM
Now, I am curious about how airlines make any money (I suppose that history would indicate that many don't). I know that we have some people here who either are or were involved in that industry. Please tell me what about the following set of assumptions is wrong:
Cost of plane: per the Embraer web site, the cost of a new EMB175 is $37 million. Assuming a 20 year lifespan, that is about $5k/day for the aircraft. Assume 50% of purchase price for maintenance, etc. Cost per day for the plane is $7500.
Cost of fuel: per the Embraer web site, the EMB175 holds 20k pounds of jet fuel. This is about 6 lbs./gallon and about $4/gallon. Fuel capacity is roughly 3000 gallons, plus reserves, etc. Range of plane is 2000 nautical miles. Cost per nautical mile is about $6/nm.
Top speed is .82M. Assume that average cruse speed is about 500 knots. Fuel cost per hour is therefore about $3k.
Assume 8 flights per day, with an average length of 1.5 hours. Plane cost per flight is about $925 and fuel cost is about $4500 for a total of about $5500 per flight.
Assume 80% average load (54 passengers). Cost per passenger per flight is almost exactly $100.
This is just for the plane and fuel. It does not include the pilots, the stewardesses, airport fees, other fees, other employees (except, perhaps, maintenance), ticketing, insurance, scheduling, weather delays, advertising, customer service, etc. This must total at least another $100/passenger/flight.
So, just using round numbers and some wild-ass guesses, the average ticket price for a flight on one of these planes would need to be in the $150-250 range just to break even.
Presumably larger planes are cheaper per passenger to fly, but airlines seem to be moving in the other direction. In the '80s, I did BOS-IND many times on American or United; they would fly a DC-10 or 767 (or, occasionally, a 727-200) from BOS to ORD and a DC-9 or 727 from ORD to IND. Now, everyone is flying regional jets or, at most, 737s for these types of flights. I'm sure that traffic has changed on this route, but it's rare to see a widebody aircraft on a domestic route now.
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Scott Norwood
Film God
Posts: 8146
From: Boston, MA. USA (1774.21 miles northeast of Dallas)
Registered: Jun 99
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posted 10-11-2010 09:42 AM
I ended up going with the IND->JFK option. I acutally got the date wrong originally; I'm booked for 12/29, not 12/28, but the fares and schedules are the same.
I figure that there is maybe a 10% (max.) chance that something will get cancelled or rescheduled and I will end up at JFK instead of BOS, and that there are plenty of ways to get from JFK to BOS for under $200. Therefore, the expected value of the trip is $120, which is still cheaper than the Airtran option. Plus, if all goes well, I get the nonstop flight to BOS and can get to my day job that morning, rather than take the day off. I am not much of a gambler, but I will do it in cases like this where the expected value is positive and the risk of loss is minimal.
I did look at PVD and MHT, but those fares were in line with the Airtran flight to BOS. Plus, I'll be leaving my car on the street near my apartment, and travel from either PVD or MHT to my neighborhood won't be as easy and cheap as taking the MBTA from BOS.
I also looked at Amtrak, but the only way to do that is to go through Washington DC, which is time consuming and expensive.
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