Originally Posted by
funkydrummer
User Dave_C claimed more-or-less the opposite a few posts up.
I think the truth is somewhere in the middle. The Euro carriers have brought profitability of short-haul up a bit. It's nowhere near the profitability of, say, US domestic. (Europe hasn't seen the kind of consolidation as the US, but that's another topic.)
Most likely, few of BA's short haul routes earn the ROI which IAG desires to attain overall. Short haul isn't the total cost center it used to be ten years ago anymore. Better load factors (until early this year) have contributed to that. But it's stil sort of a hybrid cost model. BA would have fewer short-haul routes if there wasn't that feeder aspect towards high-margin long-haul traffic.
Sorry, just wanted to clarify my comments a little.
Post-COVID-19, clearly the current mostly short-haul operation isn’t covering the costs of the whole airline. I don’t know if each route works standalone, but I’d argue that’s not that important in the current environment. They have fixed costs which they’re working to get down but need to be super flexible about maximising revenue.
In normal times, from what I understand, it’s marginally profitable. The devil as always is where you allocate the revenue from a ticket that has a longhaul and short haul sector. I have no insight as to how BA do that.
There’s a million ways I could think of doing it, but I’m not sure I fully understand the intricacies of how airlines manage P&Ls by division and route.
I think it would be fascinating to sit down with PowerBI and have a play with some of their data.