Re: DJ $158 million profit

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Actually gates and airports are costs outside the control of an airline
because they usually are owned by other companies or Qangos.  LCCs usually
pay their people less than full service airlines which is the main reason
why their cost base is lower. The majors in the US are in such deep trouble
at the moment precisely because their labour costs are so high.  The cabin
crew at DJ are probably paid commensurate with their duties and experience
but they are definitely not highly paid. Just ask them!

As for cost of aircraft, that really depends on the method of
purchasing/leasing and timing. QF got a better deal on their B738s than DJ
because they were in the right place at the right time. Sept 11th had
kicked the guts out of the airline industry in the US and AN had collapsed
over here. AA had an order for B738s they didn't need and QF needed more
planes in a hurry. Result was a cheaper plane than what DJ bought. Nothing
to do with LCC versus Full Service Carrier.

Your point about Southwest being profitable with S/Fs under 70% is exactly
what I'm saying. Their cost base is lower so their profits aren't just
revenue driven, they're cost driven

Grant
SYD
QF
PS jetBlue consider themselves a full service airline. They won't thank you
for calling them a low cost carrier.



At 12:35 AM 20/05/03 -0400, you wrote:
>     Southwest keeps costs low where it counts, gates and airports, but pays
>their employees well and keeps their planes at the top of the industry.  As
>you may or may not know, they have never had a crash and the only incident
>was just that, an incident.  jetBlue does the same.  Ryanair has low costs as
>well, but their revenue keeps growing, even when they offer seats for 2 euros
>(as I paid).  jetBlue, in fact, has grown so fast that I think they will set
>a record next year when they qualify to be a major carrier (over 1 billion US
>in revenue).
>     Not to come across as a jerk, since I know you guys at QF do a good job
>of keeping that airline in the black, but the low fare carriers do a good job
>of keeping costs down and yields up.  Southwest makes their huge profits on
>load factors under 70%, while the others have loads near 90%

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