Give them an inch and they take $773 million
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Give them an inch and they take $773 million
1–10 of 112 posts
Re: Give them an inch and they take $773 million
#2>implying the flights stayed 80% full after new seats were added
>implying decreased customer satisfaction didn't hurt their revenue
>implying their systems didn't need to scale because of increased customers
>implying their R&D on smaller legroom didn't cost anything
>implying upgrading planes didn't cost anything
>implying more customers on planes didn't have an impact on maintenance costs
>implying revenue means anything when you don't know the profit margins
Re: Give them an inch and they take $773 million
#3Nice! When you account simple changes like this, it's amazing just due to the massive improvement. I could just imagine the saving for Walmart if they followed Ikea's model with doing away with plastic bags.
Re: Give them an inch and they take $773 million
#4I've been underestimating the size of the airline industry. I have a hard time reconciling the fact that the airlines always seem to be on the verge of bankruptcy with numbers this big -- $90+ billion a year in just passenger revenue.
Re: Give them an inch and they take $773 million
#5Not quite. The extra seats only provide additional revenue when the flights would have otherwise been full. From the article, the average flight is only 80% full, which means those six extra seats aren't providing any additional revenue.
To determine the actual revenue increase from those six extra seats, we would have to know how frequently flights have less than 6 empty seats.
Re: Give them an inch and they take $773 million
#6If flights are at 80% capacity adding 6 extra seats just means an extra 6 empty seats on every flight. The $733 million number is meaningless - what is actually needed is to know how many post-reconfiguration flights had 5 or fewer free seats, since that is the only situation in which the extra capacity is being used.
Re: Give them an inch and they take $773 million
#7I've been underestimating the size of the airline industry. I have a hard time reconciling the fact that the airlines always seem to be on the verge of bankruptcy with numbers this big -- $90+ billion a year in just passenger revenue.
The issue here is probably their margins, not their volume, though? It doesn't matter how much passenger revenue they bring in if the expenses (safety, security, regulation conformance, equipment maintenance, fuel, staff pay...) outweigh it.
Re: Give them an inch and they take $773 million
#8>implying the flights stayed 80% full after new seats were added >implying decreased customer satisfaction didn't hurt their revenue >implying their systems didn't need to scale because of increased customers >implying their R&D on smaller legroom didn't cost anything >implying upgrading planes didn't cost anything >implying more customers on planes didn't have an impact on maintenance costs >implying revenue means a…
The prevailing theory among air carriers is that demand for flights is totally exogenous to the industry and allocation of flights between carriers in the industry is, for most customers (e.g. not frequent business travelers, who are price insensitive and care about mileage), dependent pretty much solely on price. Accordingly, minor decreases in comfort which add capacity are pretty much an auto-win.
Many people dislike this conclusion and dispute it's factual accuracy because they don't want to believe that they'll predictably increase their own agony to shave $5 off a ticket. But, well, non-experts opinion of their own behavior often does not have 1 to 1 correspondence with reality which is tractable to measurement with numbers.
Re: Give them an inch and they take $773 million
#9Not quite. The extra seats only provide additional revenue when the flights would have otherwise been full. From the article, the average flight is only 80% full, which means those six extra seats aren't providing any additional revenue. To determine the actual revenue increase from those six extra seats, we would have to know how frequently flights have less than 6 empty seats.
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Re: Give them an inch and they take $773 million
#10Being 6'5, my knees hate these numbers.