Billion-dollar airline routes

https://www.travelstatsman.com/05112018/the-billion-dollar-airline-routes/

74 88 5 years ago

marcc• 5 years ago

Don't forget about taxes and fees. When you look at the price of a domestic (US) ticket, it's surprising how much of this is taxes and fees that the airline is passing through and not directly profit.

Gravityloss2• 5 years ago

https://www.airlines.org/dataset/government-imposed-taxes-on...

Seems fuel taxes are next to nothing? Not sure how to read this...

londons_explore2• 5 years ago

Aircraft fuel is pretty much untaxed in most countries in the world.

Since a plane can easily fly from country to country, any country who taxed airline fuel would simply deter planes from visiting.

Probably the biggest climate move that could have happened at COP26 would have been a global agreement on $1/liter aircraft fuel tax. But it didn't happen.

edwardwatson• 5 years ago

Many will also pay a few dollars per booking to a distribution system that makes their inventory available to travel agencies and other resellers https://en.m.wikipedia.org/wiki/Global_distribution_system

bredren• 5 years ago

I saw the headline and thought this was about Overflight Fees, which are the fees a country charges just for passing through their airspace.

For example, it cost $950 to travel over Afghanistan in 2020. [1]

[1] https://simpleflying.com/overflight-fees/

Faa’s fees for the US: https://www.faa.gov/air_traffic/international_aviation/overf...

wolverine8764• 5 years ago

Tip on pricing: 'Taxes and fees', etc., are BS. It's just a way of getting consumers to pay more (and to create political pressure to limit such things).

They are expenses, and like all expenses they are the business's problem, not yours. Somehow, people are conditioned to think that they should pay the airline's taxes (some of them) and 'fees' for them, and somehow customers mentally remove that from the bottom line price. If only they could get customers to believe they should cover other expenses, like income taxes, fuel (oh yeah, they did that), maintenance, and lunch the other day with the Boeing salesperson, they could itemize those too. And where are the discounts when the expenses are less than expected? When profits are high? Oh, suddenly that's their business, not mine.

The pro tip is this, for anything: Just look at the bottom line. Businesses can itemize things however they want, including discounts ('special for you today - 50% off!'), the price of item A can be marked up, the price of item B marked down, it's all meaningless.

filereaper• 5 years ago

Highly recommend Wendover's videos on Airline economics, this specific one is about the various classes in Airline seats

https://www.youtube.com/watch?v=BzB5xtGGsTc

paxys• 5 years ago

So, take a single data point (price for an economy seat 6 months in advance), add on a hundred different assumptions with zero backing data (% capacity filled? Different seat classes? Fluctuation in ticket prices? Connecting routes?), and present it as some deep analysis.

The-Bus• 5 years ago

What I find interesting is that the writer goes through the trouble of answering a question that OAG has already answered[1], and he uses OAG as a source.

1: https://www.oag.com/blog/billion-dollar-route-jewels-in-the-...

blakesterz• 5 years ago

I like to board last. I’ve never understood the appeal of being on the plane any longer than I need too (I’m yet to travel in business class).

I don't understand that opening at all. We all want to get on so we get space in the overhead bins, don't we? Maybe he just never has a bag, but the reason should be obvious regardless.

hereforphone3• 5 years ago

I'm the same. I stand around until the last minute. We're all getting there at the same time, and I'd rather be standing because soon I have to sit for hours. My bag fits nicely under the seat in front of me.

ethbr02• 5 years ago

I flew most domestic US when I was in the air, and rarely did I need more than under-seat sized.

If you have a garment bag, I suppose that's a consideration, but I remember there always being "lay on top" free space in the overheads, even if full of bags.

darkwizard42• 5 years ago

But then where do your feet go when you want to stretch out? I find it terribly annoying to have to keep adjusting my bag when I want to stretch out or sit normally (knees bent)

Aperocky2• 5 years ago

I stand up every hour to stretch all limbs, and I always sit aisles.

wolverine8764• 5 years ago

I board late or last, and I almost always find overhead space. Also, these days I don't want to stand on a crowded jetway.

nradov2• 5 years ago

For most short haul flights yes. For international with newer 787 or A380 equipment the bin space seems adequate for everyone.

jeffasinger• 5 years ago

I'd imagine that airlines tend to give out free checked bags on these flights also changes the calculus.

Domenic_S• 5 years ago

I've never been so tight for time that gate-checking if I need to isn't an option. The stuff I want during the flight is in my personal item under the seat in front of me. So long as seats are assigned I'll board when it's convenient.

Same with standing up once we pull into the gate btw. 95% of people shoot out of their chairs the instant the seatbelt sign turns off, which is still 5-10 minutes from actual deplaning. I'm sure some of them are looking to stretch, but 95% of them? Even funnier are the middle and window passengers standing, but ducking under the luggage compartment at an uncomfortable angle.

toast02• 5 years ago

Even funnier are the middle and window passengers standing, but ducking under the luggage compartment at an uncomfortable angle.

That uncomfortable angle is often less uncomfortable than the seat is at that point.

anm89• 5 years ago

depends on the flight. In most cases there is somewhere to put your bag. If you can tell it's going to be absolutely full then maybe it's worth it

notacoward2• 5 years ago

We all want to get on so we get space in the overhead bins, don't we?

No. Some people don't much care for the overhead-bin battle, bringing only under-seat baggage for shorter trips or under-seat plus checked for longer ones.

sharps_xp• 5 years ago

we have a number of airline credit cards that give us free check-in, which is way less stressful on both departure and arrival procedure. So i can minimize the time spent sitting inches from strangers in a seat that is too small for me.

cududa• 5 years ago

I do the same - I try and minimize my time in airports and on the plane as much as possible. If you're flying international the checked bag will be waiting for you when you get through customs. Domestically, if I'm the last one on, and my carry on is the last thing loaded, it's the first thing off. I get off the plane, go have a cigarette, and when I'm done it's the first thing off the belt.

sokoloff• 5 years ago

Internationally, it’s waiting for you after immigration and before customs in most places. (If you’re trying to smuggle something past customs, the case is much stronger if you’re caught with the bag, plus it's easier to do the inspections if they give you the bag before customs.)

jdavis703• 5 years ago

First, business and premium class usually have plenty of overhead space. Nowadays as long as you’re not flying “basic economy” you’ll probably get overhead space, even regular economy. Besides even if I miss overhead bins, I can pack the bag under my seat.

MattGaiser• 5 years ago

I don't sleep before flights so I can sleep away my time on the plane. So by the time I get to the aircraft I am quite tired.

caymanjim• 5 years ago

I've flown over 100 times and only once had to gate-check my bag due to insufficient space. I was thankful for the chance because it's free, you get your bag faster on landing, and you don't have to wrangle it down the aisle.

I always board as late as possible. Why sit in a hot/cold/stuffy plane while people jostle all around you?

jwcacces• 5 years ago

Haha, lucky you. I might not fly as much as you, but in my experience the moment a bag leaves my line of sight, the chance it gets lost leaps dramatically. As someone who's had checked bags lost, and gate-checked bags lost, the ability to get on earlier translates directly into peace of mind that my bag will be with me when I land.

As for getting my bag faster if it was gate-checked, how does that happen? Every time I've been gate-checked, my luggage ends up down in baggage claim the same as if I had regular-checked it. The only luggage that has met me at the gate has been a stroller.

Maybe I'm just flying cheap airlines, but I'll take first on and sitting in a stuffy plane over the chance of disaster and standing in the terminal any day of the week. You're waiting the same amount of time either way wherever you are.

But hey, your yin and my yang work great together, so you do you!

dllthomas• 5 years ago

Why sit in a hot/cold/stuffy plane while people jostle all around you?

Because I can get lost in my book and not worry about missing anything. YMMV (mine does).

jwilber• 5 years ago

I flew twice a week for years and it really just depends on the route (ie airports, day of week, and time of day) that you’re flying.

Popular business routes will always have full overhead bins, so you either check your luggage, bring a week-bag that you can fit under the seat, or get on early and get the overhead space.

Personally, I prefer to travel light so always wait until the last second to board. But that also depends on the cabin - if you’re at all above average height it’s absolute hell to fly in general, even worse when your limited leg room has a backpack.

zz865• 5 years ago

I hate US-sized hand luggage. Boarding an American plane is like being in a storage locker where people carrying these suitcases fight for bin space.

cstejerean• 5 years ago

I remember a time before the last recession when none of the major airlines charged for checked bags. The major US airlines added those fees around 2008 IIRC to pad their bottom line and predictably people started cramming more into carry on bags, making the whole process more miserable.

nwatson• 5 years ago

If you're last on board and you see those three seats together you can always pretend your seat is the middle one of those three.

rtkwe3• 5 years ago

I just took a couple flights and they were all booked solid and the main routes that weren't spur routes to county airports also had 10+ person standby lists. Granted this was just a few weeks ago during the American Airlines rash of cancellations so there were lots of rebookings but my understanding is most flights are booked solid these days.

ncallaway• 5 years ago

We all want to get on so we get space in the overhead bins, don't we?

No. Overhead bins are terrible and bad. It baffles me that anyone would want to fight for overhead bin space. It's a terrible game, and the winning move is not to play.

I always gate-check my luggage if it won't fit under the seat in front of me.

thecopy• 5 years ago

When checking luggage you lose significant time upon arrival, at least in Europe. From gate i can be on the train to the city in 10 minutes without checked luggade. With it is probably 30minutes.

throwaway1777• 5 years ago

Checked luggage sometimes takes a long time to get from baggage claim. Additionally sometimes luggage is lost.

mithr2• 5 years ago

Overhead bins are a bit annoying, but for me, less annoying than having to stick around waiting for the luggage to be unloaded. If you're lucky it's quick, but there have been enough times where that hasn't been the case to make me only check bags when I have to. Just walking straight out of the plane and then the airport is a great feeling.

Obviously the easiest is if you've only got a small bag and can fit it under the seat, in which case this question becomes moot -- but when you do need a bigger piece of luggage for whatever reason, gate-checking isn't such an obvious win.

AaronM• 5 years ago

I like the idea of having some stuff (clothes, necessities) that I carried onto the plane. I don't trust the airline not to lose my bags.

outside1234• 5 years ago

If you travel a lot you basically have to fight for that overhead space - otherwise you will periodically end up in travel hell when they lose your suitcase.

The good news is that if you travel a lot, you probably have status, and so you are one of the first to get on the plane.

jjav• 5 years ago

I always gate-check my luggage if it won't fit under the seat in front of me.

I've watched the gate checked bags thrown down the chute, and missed, one too many times to ever gate check anything. Maybe a duffel bag of clothes, where nothing can break on the fall, but nothing else.

ssss11• 5 years ago

Yep. Last means you have nowhere to put your bag.

sharkmerry• 5 years ago

> I don't understand that opening at all. We all want to get on so we get space in the overhead bins, don't we?

I think most are doing it for the overhead space, which leads to my misunderstanding. Why did they charge for checked bags. Its the more time-consuming option, who would pay for that.

they should be charging for overhead and offering checked bags for free. Pay for the time-saving

aketchum• 5 years ago

this is southwests philosophy

warent• 5 years ago

Great point I hadn't considered that before!

I'd guess it's for two primary reasons. 1: it takes workers to load and unload checked bags. Contrast to overhead where you are doing the work. 2: checked bags are pretty much unlimited. You can have several huge ones.

For some reason I was also under the impression that a checked bag was actually opened up and rummaged thru as well, hence the word "checked", but maybe I've just been misunderstanding?

midasuni2• 5 years ago

I like to board when I get to the gate, which I’ll usually leave late if it’s not too far as it’s comfier in the lounge, and I’ve been caught out by “boarding” messages when the plane isn’t even there too many times.

Get on board, have a champagne, look at the menu, give the IFE a cursory glance to see if there any interesting new releases on

celticninja3• 5 years ago

I have also never understood the rush to get on. In the past space in the overhead lockers was not an issue (because flights were not nickel and diming passengers for every little thing), but people still rushed to get on asap back then.

sys_64738• 5 years ago

Stepping on last means you can get it checked on the jetway and it's ready for you to grab as you exit. No point lugging it into the flight and fighting for overused overhead space.

drc500free• 5 years ago

I don't understand why the cursory math of someone with no domain knowledge, business understanding, or access to accurate data is at all interesting.

tcskeptic• 5 years ago

I had the same reaction -- I don't follow the industry much but know that Business class accounts for an outside proportion of revenue and profit for the airlines... which doesn't seem to be addressed at all.

gist• 5 years ago

I don't understand why the cursory math of someone with no domain knowledge, business understanding, or access to accurate data is at all interesting

The post is similar to many things you read online (on HN or other places) it's really just 'infotainment' and it doesn't really matter if it's accurate anymore than a Netflix series might be.

Generally even articles by people that have domain knowledge can be just compounding of early errors or assumptions they make.

'Napkin math' though is always interesting because it would lead you to believe that if the numbers you are using don't make sense there is probably something you aren't considering that you need to think about.

_s• 5 years ago

This is fascinating!

A few comments have mentioned the cost to the airline for running the route - the author talks about revenue, not profit - but most, if not all the costs are calculated on time, not distance.

Nearly everything in an aircraft has a maintenance window / shelf life measured in minutes / hours / days / months / years. The JFK - LON route could be 7 hours, or 5 hours depending on prevailing winds.

That’s an extra 2 hours you have to pay the flight crew, run the engines, maybe even an extra meal for the passengers and so forth.

Weather has an astounding affect on how much a given flight will cost, and probably traffic is the next one - hence why landing / gate spots at busy airports are so expensive.

Crew are legally mandated to only work X hours in a given time frame (both active and standby), so if you’re held up in the air or on the ground, especially on a long haul flight - you might not be legally clear to make that flight!

There’s a whole field of dispatch operations for aviation that handles this, and for the finance folks - the financial model for aviation is just subtly different enough to cause a few headaches if you’re not aware.

csteubs4• 5 years ago

There's still money on the table for airline operators where routes are concerned. It sounds a bit fringe, but most of these flights take off and land at airports in large cities. International airports are often zoned around industrial centers that are typically set off away from the city core. Coupled with the high frequency of inbound and outbound traffic depending on the airport, commercial flights are excellent candidates for capturing high resolution aerial imagery in near-real time. In many cases, those images can be transmitted back down while the plane is in the air thanks to in-flight internet.

There have been past attempts to harness the passive residual capabilities of air travel for photography, but none have stuck based on the difficulty of scaling such a system. If successful, crowdsourced aerial photography for cartography could add a layer of temporal resolution we just can't achieve with fewer than 500 imaging satellites currently in orbit, and for 1/10,000th the cost of satellite-based imaging. Add on concerns about LEO crowding and the thousands of use cases near-real-time aerial imaging could provide at a fraction of the cost, it becomes an interesting problem to solve.

There are plenty of barriers to this kind of scheme, regulation in particular, that could keep airlines from participating; the first major carrier who does, however, may find themselves with a new multi-billion dollar revenue stream.

(Disclosure: Founder @ https://notasatellite.com)

flavius29663• 5 years ago

This is a fascinating idea, congrats. I see major issues with the existing planes: they do not seem designed to be retrofitted with down facing cameras.

Also, near real time HiRes images means a lot of bandwidth that you don't usually have in the air.

csteubs4• 5 years ago

Thank you! You're correct about (most) existing planes--from what I understand, there was a "gentleman's agreement" between cold war powers that kept manufacturers from pursuing those designs. Since 2000, many models have added onboard cameras on the belly and tail for pilot awareness and in-flight entertainment systems.

Our system is 100% internal which allows us to sidestep massive expense that comes with tunnel testing, retrofit, maintenance, etc. Customers using our Beta receive free in-flight wifi for recording out of their window seat for short increments during their flight. We cache the previous image and compare with the new image on the device itself, transmitting only the raw diff which dramatically lowers our bandwidth needs. All orthorectification and advance photogrammetry occurs on-ground, but we outsource a ton of that processing to the edge device.

We're also designing a physical hardware camera array that can be fixed to the window and is about the size of a headphone case. If you're interested in examples, our social media accounts are full of them: https://www.instagram.com/notasatellite/

lastofthemojito• 5 years ago

That's a neat idea, and something I'd never thought of before.

I'd imagine the customers here would be looking for a way to keep an eye on competitors? Ford would like daily overhead shots of GM's factories and parking lots, McDonalds would like to check on the length of average drive-through queue at competitors, etc? All in near-real time, without waiting for quarterly earnings.

On the other hand, weather might render this too unreliable for the needs of such customers - "how busy have the Bay Area Starbucks been since they've released their Pumpkin Spice Latte?" "Uhh, not sure boss, it's the 30th cloudy day in a row, we can't see anything".

csteubs4• 5 years ago

Exactly--one such example is Toyota's export lots sitting in the western approach path at PDX, and Liberty International sitting right next to the Port of Newark. We have a ton of examples on social media if you care to see more.

I've been trying not to get too in the weeds with use cases right now as we're building because they really are endless, but supply chain intelligence and insurance are massive categories based on those who have expressed interest.

Weather is certainly an issue, but one that is shared with optical imaging satellites. SAR definitely helps with clouds and night shots, but with 100k flights per day the odds of getting at least one usable shot from a plane is far greater than a satellite due to revisit rates in orbit not matching weather changes in the troposphere.

nradov2• 5 years ago

Most commercial flights operate in a small number of fairly narrow corridors. Is there really a billion dollar market for aerial imagery of those flight corridors? Seems unlikely.

csteubs4• 5 years ago

Maybe--time will tell. We run revisit estimates with FlightRadar so I can say that there's a good amount of deviation in routes generally, but I also think narrow corridors are the mechanisms that makes rapid revisit even more powerful. When you can achieve minute-level temporal resolution for heavily populated areas using smartphones (to start), the cost is more or less negligible compared to satellite imaging.

I know of one market-maker HQ'd in Manhattan that currently pays $16 million/year for two satellite images per day of the oil storage tanks in Cushing, OK. Analysts determine tank volume by looking at the shadows cast by the floating lids on the tanks and use that data to set oil futures prices. There are roughly 1,500 flights over the same area every day. We're very much a hypothesis-become-startup at the moment but I'm optimistic!

enahs-sf• 5 years ago

I wonder how route profitability comes into play with those airlines running older planes (old 737's, etc) that may break more frequently.

AOG (airplane on ground) is essentially a broken plane stuck at a gate getting fined massively by the airport because it is blocking a gate. In this situation, usually price elasticity of demand goes out the window with respect to airplane parts because what you'll pay in markup pales in comparison to what you'll pay in fines.

Is it more profitable to get new planes or run older ones into the ground? The answer to this question is beyond my depth.

Source: my first job out of school was SQL jockey for an airplane parts distributor running reports for the guys trying to predict which parts would be needed. The company had 4 guys and two vans on standby 24/7 to run parts to the airport. This was a very profitable business segment.

rtkwe3• 5 years ago

Broken at a gate should be extremely rare. In the outside case a plane can't move under it's own power there's still tons of tugs available to move the plane around.

otterley• 5 years ago

(2018)

hfjkdh790sn• 5 years ago

The author doesn’t know what he’s talking about.

Business class revenue is far more than economy revenue. Both by square footage and total absolute $. Then there’s cargo revenue.

The reason economy passengers get treated like crap is because economy passengers provide crap revenue.

splonk• 5 years ago

Not a particularly deep analysis. Note that while I'm not necessarily vouching for OAG's data, they are big players in the travel space and I trust them a lot more than this blog.

Here's the OAG report that's sketchily linked to a paywall in the article: https://www.oag.com/hubfs/Free_Reports/Busiest%20Routes/OAG%...

A more current snapshot from OAG: https://www.oag.com/busiest-routes-right-now

And finally, OAG's own blog post on billion dollar routes: https://www.oag.com/blog/billion-dollar-route-jewels-in-the-...

Basically it was only JFK-LHR before the pandemic. Most of the other high revenue routes are probably what you should expect, although I didn't expect SYD-MEL to be quite that high. I think maybe it's because the ranking is by airline and route and Qantas might dominate that route more than other airlines would dominate international routes.

airbreather• 5 years ago

A while ago I had to fly Perth to Kalgoorlie (return), a flight that normally takes a bit over an hour, but I have done in as little as 46 minutes.

On the same day I could have flown from Perth to Los Angeles return for $50 less.

It was rumoured that the two most profitable routes for Qantas in the world for nearly ten years were Perth to Port Hedland and Perth to Newman return, both Iron Ore mining hubs.

At one stage there were 6 flights a day to Newman 7 days a week for many years and never a spare seat.

Typical flight times 1 hour 20 minutes, cost of tickets around $1100 and nominal population of Newman is 4500 people...

Edit : these are all flights within the state of Western Australia

Billion-dollar airline routes

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