Originally Posted by plasticman
Good point, I'd admit. Two thoughts that pop into my head include;
- I assume the $1.7M number probably comes from some rough math of number of non-rev's in F x the cost of an F ticket. But remember, this seat is going unused otherwise. I would put more creadence in the $1.7M number if it was the true operating cost of the seat. But I don't get the feeling that is the case ... but who knows?
- $1.7M does not strike me as a huge number for a company the size of AA. How does it compare to other benefits? ... to overall revenue?
I can't get too worked up over $1.7 million; in 2005, AA spent nearly $100 million on AAdvantage award redemptions. Just for fuel, catering and other airline award seats redemptions. Compared to $1.7 million? Liquor and BuyOnBoard revenues probably "shrink" by a lot more than $1.7 million annually.
$1.7 million amounts to a rounding error for airlines with $16 billion to $21 billion in revenue.
