How many flights does it take to pay down a plane?
#1
Original Poster

Join Date: Jan 2012
Posts: 36
How many flights does it take to pay down a plane?
Obviously numbers differ so we can only ballpark this, unless we have someone who can give exact examples. I was trying to think through the payback period on an airplane during a flight from LAX to Bangkok. $1,100 round-trip ticket. If I consider myself an average fare, x 350 seats = $385,000 in revenues.
I'm not sure how business and first class factors in, so I'll round up to $500,000 in fares.
I believe the cost of most high-capacity jetliners is over $200 million, is that correct? Seems like an insane amount to recover!
I think 50% of the revenues going to overhead is a fairly generous allowance, I would actually expect more than that. But let's say the airline retains $250,000. So now they're looking at 800 flights to pay off their plane assuming no interest costs. That's a hell of a lot of time spent in the red.
Maybe someone who understands numbers better can offer some more insight, thanks.
I'm not sure how business and first class factors in, so I'll round up to $500,000 in fares.
I believe the cost of most high-capacity jetliners is over $200 million, is that correct? Seems like an insane amount to recover!
I think 50% of the revenues going to overhead is a fairly generous allowance, I would actually expect more than that. But let's say the airline retains $250,000. So now they're looking at 800 flights to pay off their plane assuming no interest costs. That's a hell of a lot of time spent in the red.
Maybe someone who understands numbers better can offer some more insight, thanks.
#2
FlyerTalk Evangelist




Join Date: Apr 2001
Location: Denver, CO
Programs: UA Silver, Bonvoy Gold, Hyatt Discoverist
Posts: 23,178
Here's another over-simplistic view...
Say you want to buy a car and use it to provide UberX service. You finance the car for 5 years at a certain percentage rate. Car payments are $X/mo. You need to make enough money so that you cover...
* Car payment
* Insurance
* Fuel
* Maintenance
* UberX fees
* Your salary
Plus it would also be nice to make a little more money on top of that (called profit). Then it's pretty easy to see that you need to make X trips to/from downtown and the airport in order to make a profit and pay off the car without any financial hardships.
Say you want to buy a car and use it to provide UberX service. You finance the car for 5 years at a certain percentage rate. Car payments are $X/mo. You need to make enough money so that you cover...
* Car payment
* Insurance
* Fuel
* Maintenance
* UberX fees
* Your salary
Plus it would also be nice to make a little more money on top of that (called profit). Then it's pretty easy to see that you need to make X trips to/from downtown and the airport in order to make a profit and pay off the car without any financial hardships.

