Originally Posted by Shareholder
Last night, I did a back-of-envelope calculation that I certainly found revealing, so here goes:
One of AC's soon-to-arrive B777s has a fuel capacity of about 48,000 US gallons. Now I haven't a clue what an airline pays per gallon, but given the current US pump price of at least $2, I am sure in most of the rest of the world, aviation fuel likely goes for at least $2 a gallon. So the fuel bill on each flight would be $96,000.
SH:
Interesting orders of magnitude. A more realistic model would account for the fact that the plane is unlikely to go out with full tanks, unless it is flying at the limit of its range. For instance, the B773 has a range of about 10595km while YYZ-LHR is a 5723km run, so the fuel load should be about 55~60%% of what you quote. The 773ER has a range of 13427km, so tanks would be less than to about half full. This divides your fuel cost by roughly about 2.
On the other hand, the price of Jet A fuel was around US$5.85/gallon this weekend in MSP (for a private plane, delivered to aircraft and dispensed from the fuel truck). Airlines do not buy at retail prices and save on service cost, but that is still significantly more than the pump price for a car. The true cost is probably less than your estimate
TC: I applaud the move by AC to include any surcharge in the base price of their ticket.
On the question of advertizing and level playing field: these are local regulations, i.e. AC must follow the advertizing laws of Australia for any ad placed in Australia. Hence, the field is perfectly level.
As to the fact that US-based airlines do not surcharge for their reward tickets, this is a question of competition. Let's face it: AC/AE can get away with it as there is serious alternative. If a US major would to this, there would be a riot (and possibly lawsuits?). From that perspective, one cannot blame AC management for squeezing every $ they can out of operations.
wannabeFF: your comment is right on the money (so to speak!) It is difficult to understand how a uniformly higher fuel price can increase operating costs in manner that is not proportional to the distance travelled. However, in all fairness, the problem of actually figuring out how to properly pass the cost of increased fuel to a consumer that is potentially making connections involving money-making segments, break-even segments and possibly money-losing segments is quite complicated, especially when some segments are quite competitive.