News says that Airlines have losses of 1 Billion Dollars. But, it doesn’t say anything about Gains from not using fuel. What say ye about that?
? The airlines don’t gain anything from not using fuel.
I’d say that the observation is irrelevant as losses announced are doubtless net losses, and the minor gains relative to fuel non-use are clearly going to be swamped by fixed costs such as maintenance, salaries, interest and principal payments on equipment, etc. etc. etc.
Yes, but in a spot of good news on the cloudy horizon, boat fares have doubled.
Sure they do, they gain the benefit of not having to spend the money.
For example, it’s been said that here in LA County, if the bus drivers went on strike, that it would save the County $20 million a day. Of course, that’s American public transit, where the concept of “profit” through “farebox recovery” is a pipe dream, but since none of the major airlines have made much money in the last couple years, I think the point stands.
Does any public transit operate entirely through fares, without government subsidy?
One main benifit may be that people in the States will most likely want to vaction closer to home this summer rather than risk making plans to go to Europe, providing a boom for local routes.
The benefit is not spending money on ONE variable factor. There are a good bloody number of fixed costs (and to an extent variable costs not easily change in near term if one wishes to be ready to start up in short term) that definitely counter-weigh fuel savings. And of course no revenues.
A public transport system is not a good analogy at all.
What airlines operate without government subsidies? Especially here in the US? Are you under the impression that the airlines pay for traffic control, airports, etc? Are we forgetting the handouts the airlines got a few years ago when they pretty much all went bankrupt (again)?
There are some profitable systems in Japan, Hong Kong and India, but I don’t know of any in North America or Europe.
Yes, see this thread for more info: http://boards.straightdope.com/sdmb/showthread.php?t=551561&highlight=farebox+recovery
ETA: Just not in the US…
Technically speaking the passengers pay for these things with the fees added on to their tickets. Ultimately all the costs come from passengers, since their fares also pay the landings fees and fuel taxes. They buy the over priced food and merchandise and parking from the airport concessions.
Airlines aren’t being heavily subsidized by the non-flying public in the United States. It may be different in other countries where the government owns the airline.
I’d say any airline worth flying on is probably not buying fuel on the spot market, but instead buys fuel futures at a reduced (usually) rate, and is thus locked in to a certain minimum fuel purchase. I’d hazard a guess that they aren’t really gaining anything by having a bunch fo fuel inventory they are unable to use.
If they are sophisticated enough to buy their needed fuel on the futures market, they are probably sophisticated enough to sell their surplus fuel on the spot market, and make a profit at it.
Tris
Almost no business that is unable to operate at full capacity is making money, the fixed costs for loans, buildings, ancillary personell, etc still exist and they depend on the income from customers to cost justify their existence.
For comparison, on a more personal level, its kind of like saying its like getting suspended from work without pay, and someone pointing out how you are saving on gas and wear & tear on your brand new car from not going to work, the car you still have to make payments on.
I’m definitely under the impression that they pay significantly for airports, through landing and terminal-use fees, taxes on fuel, etc.
As others have noted, for this to be the case, their fixed costs would somehow have to shrink during this volcanic ash no-fly period. Since these continue, and to them are in some cases added such things as paying for the accommodations of stranded passengers, the point fails to stand.
To whom?
I’m going to suspect that you’ve never worked in a futures driven industry. I once worked for a natural gas supplier, who purchased based on weather trends. The biggest fear they had was a warm day, where their loaded pipeline supply would be in excess. If their customers didn’t need the gas, other potential buyers would also be using less, leading to a surplus on the spot market, driving prices lower. Often MUCH lower than they had purchased it. They had no choice but to sell it, at whatever price they could get.
In this case, the other consumers of jet fuel, are also experiencing problems, and are unable to fly to Northern Europe, and have the same problem. They aren’t using fuel, so don’t need what they have scheduled for delivery, and won’t buy your surplus. I think the only one who could make out is someone with very empty tanks, or excess storage capacity… something that is generally lacking, due to the costs of maintaining excess capacity in the first place.
The US government does not directly subsidize airliners any more than it directly subsidizes trucking companies. However, the government (on levels from local to Federal) does subsidize quite a bit of the infrastructure required for the airlines to operate. Fees added to tickets do cover some costs of air commerce, but by no means all of them.
In the US the Federal government (by and large) pays for air traffic control (there are some private ATC towers, but I don’t want to get bogged down in minutiae). The funds for that come from everyone’s taxes, so in that sense yes, the non-flying public DOES “subsidize” the airlines. However, virtually everyone benefits from air commerce. Even if you don’t fly personally, if anything you use travels by air freight you do benefit. That’s the same reasoning why road maintenance comes out of a general fund, because even if you don’t drive yourself you benefit from the existence of roads.
Not all airports have landing fees. That is a local decision. Local municipalities may choose to support an airport and not charge such fees in hopes of attracting more business.
As for the handouts “a few years ago” - that was in reaction to the post-9/11 airspace shutdown. If it had not been down major carriers would have ceased operation, further disrupting air commerce. The rational was that, overall, it would be cheaper to bail out the airlines than to deal with the economic hit that would occur if those airlines were permitted to go under for an event entirely out of their control. That same rationale is being used by European airlines right now, asking governments to help them weather this business disruption.