You've rather artfully made a point I've brought up on here more than = once: lower fares does not, by definition, translate into increased long-term revenue (that is, profit). Not everyone seems to grasp that concept. -----Original Message----- From: The Airline List [mailto:AIRLINE@xxxxxxxxxxxxxxxxx] On Behalf Of = Grant McKenzie Sent: Monday, May 19, 2003 10:37 PM To: AIRLINE@xxxxxxxxxxxxxxxxx Subject: Re: DJ $158 million profit So what is that it doesn't work. Or more accurately, it only works up to = a point. It becomes an exercise in creative accounting rather than genuine excess of income over outgoing. Put another way, there is only so much profit you can squeeze out of cost cutting if revenue is static or only growing slowly. If QF reduced their cost base to DJ level their profits = on the balance sheet would triple overnight. Doesn't mean they earnt more money. Revenue growth is the only long term way any company can survive As I said previously, DJ (and QF) gained a windfall of pax when AN = collapsed but from now on market growth will be incremental rather than quantum. = Their profit increased from $47 mil last year to $158 mil this year but I = doubt very much whether they will record a comparable increase next year. Lowering fares doesn't always work either. It might encourage more = people to fly but it will narrow the margin between cost of seat and revenue per = seat and hence reduce rather then increase profits. There is a finite point beyond which an airline can't make a profit no matter how many seats = they sell. Low Cost Carriers like Virgin, Ryanair, Easyjet et al have a lower point than majors like QF, BA, etc but it's there none the less. Grant SYD QF PS I work in QF Yield Management PPS Hope I don't come across as lecturing. It's rare I get a chance to = rant on about my chosen field and I get a bit excited sometimes. ----- Original Message ----- From: Alireza Alivandivafa <DEmocrat2n@xxxxxxx> Date: Tuesday, May 20, 2003 9:25 am Subject: Re: DJ $158 million profit > So what. It works. They over charge though, and could really make a=20 > killing if they were truely low fare. >