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created about 1 year ago | Tagged: |
Byron
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On an airplane carrying 100 passengers, how many customers does it take, on average, to cover the cost of the flight?
US Airways created a hypothetical flight of 100 passengers. Each one paid the average $146 fare for a domestic flight ($292 round-trip), plus $18 each in fees and add-ons, based on a year's worth of data ending March 31. The bottom line: There is very little wiggle room on the plane for profit.
Somebody on every flight helps cover crash insurance and compensation paid for bumped passengers or lost luggage. The person beside you on your next trip may be partly paying to repair baggage carts or to buy and maintain passenger oxygen and defibrillators. "It's like a wristwatch. You only see the face and hands, but all the parts inside are really necessary," said former airline chief executive Gordon Bethune. "Those bags don't get downstairs by themselves. All those things that move bags have to be purchased and then they break. It never stops."
Fuel now is by far the biggest cost for airlines—greater than even airline salaries. On that 100-passenger US Airways flight, the tickets and fees of 29 people pay just for the fuel to make the trip. (Salaries are the second-highest cost, with 20 passengers covering personnel paychecks.)
Bigger carriers with longer flights tend to spend a bigger portion of their money at the fuel pump. The industry spent more than 34% of its revenue on fuel—it takes the fares of more than one-third of passengers on a flight, on average, to pay for the gas.
Airline gas mileage has improved over the years, the result of filling more seats on each flight, replacing multiple trips on small planes with fewer trips on larger aircraft and replacing older planes with newer, more fuel-efficient jets. In 2000, U.S. airlines burned 28.6 gallons of jet fuel per passenger, according to the Bureau of Transportation Statistics. Last year, that improved to 22.5 gallons per passenger. The industry is using less fuel but carrying more passengers. But the fuel bill tripled—airlines spent $32 billion more on fuel in 2011 than in 2000.
After fuel and salaries come ownership costs—buying and leasing planes. That includes the cost of spare engines and insuring planes in case of accidents. In the hypothetical 100-passenger flight, 16 people cover these costs.
While ticket revenue pays the bulk of these costs, "ancillary revenue" supplements the flight by another $18 per person on a 100-passenger flight. That includes fees for checked baggage, seat assignments, ticket penalties and revenue from cargo. According to the Bureau of Labor Statistics, baggage fees for the U.S. airline industry last year totaled a hefty $3.4 billion, or roughly $5 for every passenger boarded. Cancellation and change fees totaled $2.4 billion, or more than $3 for every passenger.
It's these myriad fees that can be most maddening to passengers—customers who now pay higher fares yet feel like they're getting less service. But these fees, in part, offset the expense of operating an airline. "It's a crazy business," Mr. Bethune said. "There are so many costs you could never articulate it all."
