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AA's LAX-JFK route one of the world's most profitable

AA's LAX-JFK route one of the world's most profitable

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Old Jul 6, 18, 12:56 pm
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AA's LAX-JFK route one of the world's highest revenue

Interesting story here. Fifth-highest revenue (#1 is BA's LHR-JFK), at $698 million per year for AA. Beats out UA's SFO-EWR route.

Last edited by 1K-SFO; Jul 6, 18 at 1:17 pm
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Old Jul 6, 18, 1:13 pm
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The subject of the article is revenue, not profit.
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Old Jul 6, 18, 1:17 pm
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The article is titled "World's Most Profitable Flights" but the ranking is done by revenue, which is not profitability.

Edit: see UpgradeMe beat me to it
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Old Jul 6, 18, 1:52 pm
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Originally Posted by JJeffrey View Post
The article is titled "World's Most Profitable Flights" but the ranking is done by revenue, which is not profitability.

Edit: see UpgradeMe beat me to it
Amazing that writers at Forbes don't know the difference
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Old Jul 6, 18, 2:10 pm
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Though I would imagine that AA's LAX-JFK is in fact more profitable than Singapore's LHR-SIN, or BA's JFK-LHR, since fuel is such a big part of the expense there. And CRAZY to see MEL-SYD is #2 . That's...bonkers.
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Old Jul 6, 18, 3:11 pm
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Originally Posted by dll View Post
And CRAZY to see MEL-SYD is #2 . That's...bonkers.
I can easily understand why MEL-SYD would be so high-up. SYD-MEL, on the other hand, wouldn't be in the top 100
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Old Jul 6, 18, 8:18 pm
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Similar discussion already on BA: Highest revenue airline routes in the world

There are serious doubts on data integrity of the report from that post.
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Old Jul 6, 18, 8:57 pm
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It's not even highest revenue routes: it's carrier airport pairs.
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Old Jul 6, 18, 9:34 pm
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Originally Posted by dll View Post
And CRAZY to see MEL-SYD is #2 . That's...bonkers.
That actually doesnít surprise in the least. This is measuring total revenue, not per seat or per flight. Thereís tons of traffic on that route because itís short (<1.5 hours gate to gate) enough so that lots of business folks do multiple day trips a week but thereís no other reasonable option (9 hours to drive; train takes longer). And with only two significant airlines, QF being the significantly larger, not a lot of competition for that business traffic. QF and VA each have hourly flights all day with flights every 15 minutes ó some of them on widebodies (at least as of a few years ago) ó at peak hours. So thatís a boatload of available revenue between by far the two major cities in Australia. No analog anything like it in the US or Europe: any flight that short can be done by car or train quickly enough so that those options are competitive, and airport security/overhead is much more of a hassle in the US and Europe than for domestic Australia.

This list is somewhat silly in many ways, though. One is that it considers AA/BA and VS/DL separate carriers in tabulating JFK-LHR revenue, which is of course incorrect.
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Old Jul 6, 18, 10:03 pm
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Originally Posted by wetrat0 View Post
Amazing that writers at Forbes don't know the difference
The Forbes website is largely "crowd-funded" and written by unpaid or lowly paid "contributors" who are bloggers, not journalists, and whose stories receive little or no editing. This has pretty much destroyed the credibility of Forbes (at least its web presence). Although this article is not going to win a Pulitzer, the problem seems really with the headline, which uses the word "profit." The story itself doesn't.
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Old Jul 7, 18, 4:59 am
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The initial report was published by OAG. Forbes writers are simply rehashing it.
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Old Jul 7, 18, 5:49 am
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2006 CNBC aired episode of American Airlines on their A Week in the Life series program. In the program American Airlines gave insight to their operation. Revenue management, at that time the top guy at the revenue management said 80% tickets sold were controlled by revenue management software and fares were set by the software, and 20% of situations requires human intervention to override software. The cargo division said South America is most profitable for AA Cargo and top destination for cargo from South American is NYC area and Southern California. The top guy at the cargo department said the cargo department continuously requests wide body aircraft on MIA-JFK/EWR/LAX.

to CNBC episode on Vimeo.

On the show American showed the profit of individual flights. Showed one DFW-BDL 737 flight, cheapest fare was somewhere around $50 and only less than 10 of those fares were sold and most expensive fare sold was somewhere of $700 where passenger was sitting in Main Cabin. All 16 F seats were occupied by FF upgrades and there was not a single F fare sold on that flight.

They showed AA 1 JFK-LAX (operated by 767-200 back then) and showed profit calculation. Total ticket sales, total cargo sales, total luggage fees, total onboard liquors and food sales, etc. Then AA subtracted fuel cost, salary for pilots, salary for FAs, maintenance cost, airport fees, liquor and food catering cost, etc. After all were calculated AA said that this particular flight made a profit of $210, yes, only $210.

It was just one example of one particular flight and it was 2006.
It was just a snapshot of one flight on one day. For example DFW-BDL flight shown on the show made around $3000 profit, but AA said that was exception and majority of flights does not earn that much profit.

Last edited by JDiver; Jul 28, 18 at 1:15 pm Reason: Insert video link
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Old Jul 7, 18, 11:22 am
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Originally Posted by AlwaysAisle View Post
2006 CNBC aired episode of American Airlines on their A Week in the Life series program. In the program American Airlines gave insight to their operation. Revenue management, at that time the top guy at the revenue management said 80% tickets sold were controlled by revenue management software and fares were set by the software, and 20% of situations requires human intervention to override software. The cargo division said South America is most profitable for AA Cargo and top destination for cargo from South American is NYC area and Southern California. The top guy at the cargo department said the cargo department continuously requests wide body aircraft on MIA-JFK/EWR/LAX.

On the show American showed the profit of individual flights. Showed one DFW-BDL 737 flight, cheapest fare was somewhere around $50 and only less than 10 of those fares were sold and most expensive fare sold was somewhere of $700 where passenger was sitting in Main Cabin. All 16 F seats were occupied by FF upgrades and there was not a single F fare sold on that flight.

They showed AA 1 JFK-LAX (operated by 767-200 back then) and showed profit calculation. Total ticket sales, total cargo sales, total luggage fees, total onboard liquors and food sales, etc. Then AA subtracted fuel cost, salary for pilots, salary for FAs, maintenance cost, airport fees, liquor and food catering cost, etc. After all were calculated AA said that this particular flight made a profit of $210, yes, only $210.

It was just one example of one particular flight and it was 2006.
It was just a snapshot of one flight on one day. For example DFW-BDL flight shown on the show made around $3000 profit, but AA said that was exception and majority of flights does not earn that much profit.
That is extremely interesting, but I do not think it is accurate for todays AA. In 2006, LAA made $231 million and LUS made $304 million. In 2017, AA made $1.9 billion after taxes.
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Old Jul 7, 18, 1:24 pm
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Then came the baggage fees........and the windfall. Businesses with small margins need to be efficient. AA is far from it (as we all know from their IT infrastructure). They started with the fuel surcharges then added the baggage fees. Revenue from baggage fees have increased upwards of 30x in the last 20 years. There was also a time where it cost $25 to change your ticket. There's no reason to charge $200 for this nonsense. AA hasn't increased it's efficiency, they've increased their inane fees to cover their lack of efficiency. They operate like banks now.
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Old Jul 7, 18, 1:28 pm
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Originally Posted by Uncle Nonny View Post
There's no reason to charge $200 for this nonsense.
The fact that people pay it is a perfectly legitimate reason.
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