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How much is United losing (making?) on this flight

How much is United losing (making?) on this flight

Old Jan 22, 22, 1:52 am
  #16  
 
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I am sure that there is a thread somewhere on this site to discuss Wendover, but I would be remiss not to bring up one of his videos that walks through this exact scenario. The fixed costs are a much larger portion than you might think. And given that we are the people who milk airlines out of every mile they will give to us, just know that all of those come back to bite you with higher prices in the end. Airlines are essentially banks who happen to fly planes sometimes. Enjoy this video, and his other content (if you bought the Wi-Fi on your flight )

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Old Jan 22, 22, 1:58 am
  #17  
 
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Originally Posted by az22 View Post
Depreciation?
The fascinating part here is that planes depreciate based on times they go up and down, rather than hours the engine is running. Long haul planes are infinitely more profitable than a CRJ, because they (1) command prices that are multiples higher than domestic and (2) can operate many years longer than your typical A319
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Old Jan 22, 22, 2:37 am
  #18  
 
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Originally Posted by ContinentalFan View Post
How about cargo?
Yeah, this is a huge missing element.
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Old Jan 22, 22, 4:09 am
  #19  
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Not only cargo but mail accounts for a significant portion of revenue. These flights will fly whether you're on them or not, which is why the carbon footprint thing is such a load of nonsense.
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Old Jan 22, 22, 6:37 am
  #20  
 
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Originally Posted by 1P View Post
Not only cargo but mail accounts for a significant portion of revenue. These flights will fly whether you're on them or not, which is why the carbon footprint thing is such a load of nonsense.
There is a small amount of cost for Polaris lounge. AA sells a $169 pass for its Flagship lounge. The real cost might be near $100 for each Polaris passenger. So, add this cost to your ticket, David.
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Old Jan 22, 22, 6:53 am
  #21  
 
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As Rodney Dangerfield says in “Back to School”, “you left out so much.”

As others have noted, on the revenue side, you left out cargo revenue, which can be significant. You may also have left out no-shows on BE tickets who weren’t in seats but won’t get refunds.

On the expense side, you left out items too:
- Lodging for crew in CDG
- Per Diem for crew during the trip
- Overhead and admin costs
And just like for a car your only expense to go somewhere isn’t just gas but also wear & tear that takes into account both scheduled and unscheduled maintenance, insurance, and also the acquisition cost of the plane and how that gets spread over the life cycle of the aircraft (and of course other expenses).

Airlines track many of costs by “block hours” costs which provide an average hourly rate for an aircraft based on numerous factors/pieces of data for input.

And to bring this post full circle, given that it left EWR, I’m sure there were other “extra expenses” too, as Rodney Dangerfield talked about in “Back to School”

Last edited by ATOBTTR; Jan 22, 22 at 7:00 am
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Old Jan 22, 22, 7:02 am
  #22  
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Cost of sale (distribution costs like GDS, NDC , IT; promotional costs)

Overheads (HDQ)

Outstation handling costs (handling agent at CDG) - would 2k be enough to cover both EWR and CDG?; flights from Europe require extra security handling

Do they have 4 pilots on such the short TATL flight?
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Old Jan 22, 22, 7:06 am
  #23  
 
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As others have pointed out you are missing the largest source of revenue, cargo sales.

I believe you are way under on your pilot salary estimate, it's probably north of $300/hr for a 767, offset however by the fact there are only three pilots on this route not 4.
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Old Jan 22, 22, 7:44 am
  #24  
 
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You didn't add in the $5 every three years that it costs United to keep the plane registered with the FAA (the fee is the same for a 777 as it is for a Cessna 172).


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Old Jan 22, 22, 8:10 am
  #25  
 
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Originally Posted by kyleclogan View Post
The fascinating part here is that planes depreciate based on times they go up and down, rather than hours the engine is running. Long haul planes are infinitely more profitable than a CRJ, because they (1) command prices that are multiples higher than domestic and (2) can operate many years longer than your typical A319
Airplanes depreciate over their useful life, which is generally constant across categories of airplanes. If United depreciates an A319 and 787 differently, it’s immaterial because it’s not disclosed.
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Old Jan 22, 22, 8:45 am
  #26  
 
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I imagine UA is making a mint on cargo. I remember years ago hearing from someone close to the matter that (even with full cost allocation) when BA was running SAN-LHR (or SAN-PHX-LHR) the cargo business/demand was so strong that BA turned a substantial-enough-to-be-worth-a-LHR-slot profit even with 0 passengers on board. Every passenger above 0 was essentially pure profit... The demands for and fees charged for US/Europe air freight have only gone up since then.

Many years ago CNBC, IIRC, did "a day in the life" of AA and one of the most interesting things from that show was they followed a JFK-LAX fight with a complete income/expense breakdown... IIRC their net profit was around $5k...Would love to see that updated or revisited.
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Old Jan 22, 22, 8:56 am
  #27  
 
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Originally Posted by lincolnjkc View Post
I imagine UA is making a mint on cargo. I remember years ago hearing from someone close to the matter that (even with full cost allocation) when BA was running SAN-LHR (or SAN-PHX-LHR) the cargo business/demand was so strong that BA turned a substantial-enough-to-be-worth-a-LHR-slot profit even with 0 passengers on board. Every passenger above 0 was essentially pure profit... The demands for and fees charged for US/Europe air freight have only gone up since then.

Many years ago CNBC, IIRC, did "a day in the life" of AA and one of the most interesting things from that show was they followed a JFK-LAX fight with a complete income/expense breakdown... IIRC their net profit was around $5k...Would love to see that updated or revisited.
these are not really things we have to imagine. FYE 2021 UA had 2,349 mil in cargo revenue (out of 24,634 total revenue). operating expenses were 25,656 mil and non-operating expenses were -1,535 mil. for a net loss of (2,557) mil. before taxes. Whether 9.5% of total revenue is making a 'mint' or not is a judgment call.
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Old Jan 22, 22, 8:59 am
  #28  
 
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Originally Posted by lincolnjkc View Post
I imagine UA is making a mint on cargo. I remember years ago hearing from someone close to the matter that (even with full cost allocation) when BA was running SAN-LHR (or SAN-PHX-LHR) the cargo business/demand was so strong that BA turned a substantial-enough-to-be-worth-a-LHR-slot profit even with 0 passengers on board. Every passenger above 0 was essentially pure profit... The demands for and fees charged for US/Europe air freight have only gone up since then.

Many years ago CNBC, IIRC, did "a day in the life" of AA and one of the most interesting things from that show was they followed a JFK-LAX fight with a complete income/expense breakdown... IIRC their net profit was around $5k...Would love to see that updated or revisited.
They actually tracked/analyzed two flights - a flight between LAX and JFK and a flight between DFW and I think BDL. I believe the DFW-BDL flight netted several thousand while the LAX-JFK flight barely broke even.
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Old Jan 22, 22, 9:22 am
  #29  
 
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Originally Posted by prestonh View Post
these are not really things we have to imagine. FYE 2021 UA had 2,349 mil in cargo revenue (out of 24,634 total revenue). operating expenses were 25,656 mil and non-operating expenses were -1,535 mil. for a net loss of (2,557) mil. before taxes. Whether 9.5% of total revenue is making a 'mint' or not is a judgment call.
That, though, is on a global basis -- we know for example that US/AU is very cargo heavy. We can assume that any route served by a CR2/E145 is likely not a cargo powerhouse and may yield near $0 in cargo income. I don't believe that UA discloses on a route or region basis so it is up to the individual assumption

Originally Posted by ATOBTTR View Post
They actually tracked/analyzed two flights - a flight between LAX and JFK and a flight between DFW and I think BDL. I believe the DFW-BDL flight netted several thousand while the LAX-JFK flight barely broke even.
Ahh, thanks for setting me straight That was a looooong time ago....
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Old Jan 22, 22, 10:13 am
  #30  
 
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Originally Posted by lincolnjkc View Post
That, though, is on a global basis -- we know for example that US/AU is very cargo heavy. We can assume that any route served by a CR2/E145 is likely not a cargo powerhouse and may yield near $0 in cargo income. I don't believe that UA discloses on a route or region basis so it is up to the individual assumption
ok, for US<>AU it may be cargo heavy. just like other TPAC routes. But the cargo revenue comes at a cost (freight does not ride for free, weight is weight, there is handling on both ends and the more the plane weighs the more it costs in fuel to ferry it across the ocean). This is why the tpac cargo carriers can economically schedule a tech stop so they don't have to ferry as much fuel. Also, consider the reasons freight rates have increased. Labor, fuel, congestion at ports, covid etc. All of these UA is also exposed to as well. Whether cargo is a meaningful profit center is up for debate. we won't know because that data is not publicly available afaik. as you say in certain markets it likely works but I doubt they are going to bump bags/pax/fuel to do it.

On the domestic side, UA does charge for cargo, it is just rolled into passenger revenue in the form of bag fees. The bag may be more valuable than cargo in many markets.
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