Southwest Airline's Per Flight Profit.....?
Is this a reasonable profit? Is this a good way to determine it? Southwest fly's 737-700 with a 3,300 mile range. It is roughly 2,500 miles to Baltimore from Phoenix. That means that out of the 6,875 gallon fuel capacity, that flight would roughly use 80% of that, or 5,550 gallons of Jet fuel. The cost is calculated for 5,550 gallons is at the current $4.50 per gallon rate at the Phoenix airport. So that flight costs $25,000 in fuel. Let's add an additional $5,000 in the free drinks, and the salary of the behind the scenes people. So that flight costs $30,000. Now the airfare one way, nonstop is $400 for a normal seat, booking in December. That means assuming the aircraft is relatively full, they make $48,000. So their profit is $18,000. Does this seem like right calculations? If this is right, the return flight would only profit $10,000 because Jet Fuel in Baltimore costs nearly $6 a gallon. I saw a show on the news about American Airlines. This shows how bad they are in the hole, the flight that the news people followed, only profited $200. Their exact words were, "One less person, this flight would have been in the reds"
Aircraft - 2 Answers
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1 :
Its about $100 per flight. You forgot to pay your cabin crew and you forgot to pay for the lease on the airplane. Plus, as an airplane owner I can tell you that you usually estimate the cost of maintenance to be double the cost of fuel. In 2008 SouthWest earned $178 million (about .24 cents per diluted share). According to their web site they fly 3300 flights per day so that would be 1.2 million flights per year. So that comes out to an average earning of about $150 per flight on average. This is true; margines in airlines are very, very, very slim.
2 :
A huge reason why Southwest is doing well is the fact that they locked in a fuel price many years ago when it started to go up and the other airlines thought it was too expensive to lock in. Not sure exactly what they pay for it, but they aren't paying the rate the FBO sells it for.
