FlyerTalk Forums - View Single Post - Plans to restart LH destinations? [and other new routes speculations]
Old Sep 13, 2012, 3:16 am
  #23  
ded0r
 
Join Date: Oct 2009
Posts: 504
Originally Posted by N1003U
Very well said.

It would not be the first time that well-meaning managers have strategically cut "low margin" of "unprofitable" products from their offerings, only to learn the hard way that they have actually cut their own throats...
I really disagree here. LH management does not get a lot of credit from me these days, but I don't think they are complete idiots. If they make decision to cut service on certain routes, then because these are unprofitable and capacity can be used more profitable somewhere else.

Originally Posted by TRAVELSIG
The problem with the bean counters excel test often is they fail to consider that the fixed costs do not have anywhere else to be allocated to. A famous case of a company that kept cutting business lines as they were not profitable and customers as they were not profitable- only each time to learn that the remaining customers and the remaining business units were each time not profitable with the attached incremental expense allocation increases.
This would only apply if LH decides to leave the aircraft parked instead of reutilizing freed capacity somewhere else. And I don't think that reflects reality
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