# Airline Volcano Losses **URL:** \ **Category:** Factual Questions\ **Created:** [April 19, 2010, 3:21pm UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629 "2010-04-19T15:21:31Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![IAmNotSpartacus](https://avatars.discourse-cdn.com/v4/letter/i/cc9497/32.png) [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)\ **Post date:** [April 20, 2010, 4:34pm UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/21 "2010-04-20T16:34:59Z")
> [@JoelUpchurch](#): > > 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. Technically speaking? I don’t think you quite understand how 90% federal matches work, or that gate fees don’t pay for air traffic control. > [@](#): > > 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. You have absolutely no idea what you are talking about. Let me break it down for you. [Direct cash handouts](http://www.dot.gov/affairs/carrierpayments.htm). Airports are generally built by municipal agencies. They are generally exempt from property tax. I’m not aware of any municipal airports paying property taxes, but they may be out there. People who do not use the airport are paying for its free ride. Small airports are heavily subsidized so as to bring “air travel to the small guy.” Did you know the DOT actually pays airlines to fly between rural airports, making the route profitable when the average passenger load is only 1/3 of the plane’s capacity (or less)? This is called [Essential Air Service](http://ostpxweb.dot.gov/aviation/x-50%20role_files/essentialairservice.htm). Feel free to [peruse](http://en.wikipedia.org/wiki/Essential_Air_Service#Subsidized_routes) the list of routes and their annual handout. $170,000,000+ last year, I’d say that’s a fair chunk of change, wouldn’t you? [Civil Reserve Air Fleet](http://en.wikipedia.org/wiki/Civil_Reserve_Air_Fleet). Airlines are paid for having these aircraft “at the ready” (which they would have at the ready anyway, since they are in active service) whether or not they actually ever get used. Federal exemption from anti-trust law. Most importantly, federal protection from foreign competition. Surely you realize there’s a reason that foreign airlines don’t fly domestic routes, right? Do you think this lack of competition somehow benefits consumers with lower prices or something? ---
**Author:** ![IAmNotSpartacus](https://avatars.discourse-cdn.com/v4/letter/i/cc9497/32.png) [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)\ **Post date:** [April 20, 2010, 4:36pm UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/22 "2010-04-20T16:36:01Z")
> [@Broomstick](#): > > 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. Really? Can you find me some trucking companies that receive direct cash payments from the government? Or loan guarantees? ---
**Author:** ![IAmNotSpartacus](https://avatars.discourse-cdn.com/v4/letter/i/cc9497/32.png) [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)\ **Post date:** [April 20, 2010, 4:50pm UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/23 "2010-04-20T16:50:29Z")
> [@Xema](#): > > 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. Let’s look at American Airlines income statement from last year, you will need to review the latest 10-K report filed with the SEC and then view the income statement. ~$20 billion in revenue. ~$6 billion in wages. ~$5.5 billion in fuel. ~$.5 billion in food expenses. By my math, 60% of the gross income went to non-fixed expenses, and that’s only with a 3 minute review of the income statement. So if you want an explanation of how the fixes costs shrink, I’ll tell you. They are not paying flight attendants or pilots when the planes on affected routes are not in the air. Obviously they are not buying the fuel for those routes, either. They are not serving food to the passengers that are not in the planes because the planes are not flying. Planes are not having as many flight hours put on them, that means less maintenance (both regular inspections based on flight hours and anomalous failures requiring immediate attention). They **do** need to make debt payments. They **do** need to pay for terminal rental and the like. Unless, of course, they get some more government subsidies, because of the “massive losses” they are suffering (again). ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [April 20, 2010, 4:55pm UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/24 "2010-04-20T16:55:29Z")
What pray tell does any of this US stuff have to do with European airline losses? If you all want to debate questions relative to subsidies in airlines, wouldn’t a proper thread be the place? ---
**Author:** ![IAmNotSpartacus](https://avatars.discourse-cdn.com/v4/letter/i/cc9497/32.png) [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)\ **Post date:** [April 20, 2010, 5:07pm UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/25 "2010-04-20T17:07:32Z")
> [@wmfellows](#): > > What pray tell does any of this US stuff have to do with European airline losses? If you all want to debate questions relative to subsidies in airlines, wouldn’t a proper thread be the place? Well, just so you’re up to speed, US airlines do fly to and from Europe. ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [April 20, 2010, 5:15pm UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/26 "2010-04-20T17:15:15Z")
> [@IAmNotSpartacus](#): > > Well, just so you’re up to speed, US airlines do fly to and from Europe. Quite aware of that mate, when I want to fly a crappy flight, I fly American over the Atlantic. Hardly a reason to hijack the question with reams of purely American wanking. And re variable costs, in Europe you can bloody well expect that the airlines do have to pay salary when grounded. Not an easily compressible cost that. ---
**Author:** ![OldGuy](https://avatars.discourse-cdn.com/v4/letter/o/3bc359/32.png) [@OldGuy](https://boards.straightdope.com/u/OldGuy)\ **Post date:** [April 20, 2010, 6:10pm UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/27 "2010-04-20T18:10:04Z")
> [@wmfellows](#): > > What pray tell does any of this US stuff have to do with European airline losses? If you all want to debate questions relative to subsidies in airlines, wouldn’t a proper thread be the place? The OP didn’t, at least directly, mention **European** airline losses. Now it may be that the figure cited is just for European airlines rather than all airlines, but you can’t tell that from the post. ---
**Author:** ![IAmNotSpartacus](https://avatars.discourse-cdn.com/v4/letter/i/cc9497/32.png) [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)\ **Post date:** [April 20, 2010, 6:29pm UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/28 "2010-04-20T18:29:21Z")
> [@wmfellows](#): > > And re variable costs, in Europe you can bloody well expect that the airlines do have to pay salary when grounded. Not an easily compressible cost that. Do you have a cite for this? ---
**Author:** ![Xema](https://avatars.discourse-cdn.com/v4/letter/x/9de053/32.png) [@Xema](https://boards.straightdope.com/u/Xema)\ **Post date:** [April 21, 2010, 7:17pm UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/29 "2010-04-21T19:17:27Z")
> [@IAmNotSpartacus](#): > > Let’s look at American Airlines income statement from last year… > ~$20 billion in revenue. > ~ **$6 billion in wages**. > ~5.5 billion in fuel. ~.5 billion in food expenses. > By my math, 60% of the gross income went to non-fixed expenses Is it your theory that the moment planes are grounded by volcanic ash, wages cease? ---
**Author:** ![Fake\_Tales\_of\_San\_Francisco](https://avatars.discourse-cdn.com/v4/letter/f/8491ac/32.png) [@Fake\_Tales\_of\_San\_Francisco](https://boards.straightdope.com/u/Fake_Tales_of_San_Francisco)\ **Post date:** [April 21, 2010, 7:32pm UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/30 "2010-04-21T19:32:25Z")
> [@IAmNotSpartacus](#): > > Do you have a cite for this? No idea what the official sites would be for this, but [this](http://www.jobsite.co.uk/insider/volcano-ash-4513/) is the best I can find and corresponds with what I already thought I knew about wages law in UK/Europe. As the article says, you generally have to get paid since you’re capable of working, but there may be a clause in your contract relieving your employer of this responsibility in the case of freak occurrences such as this. ---
**Author:** ![Tim\_T-Bonham.net](https://avatars.discourse-cdn.com/v4/letter/t/46a35a/32.png) [@Tim\_T-Bonham.net](https://boards.straightdope.com/u/Tim_T-Bonham.net)\ **Post date:** [April 22, 2010, 12:16am UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/31 "2010-04-22T00:16:02Z")
> [@robcaro](#): > > News says that Airlines have losses of 1 Billion Dollars. I generally distrust such figures, since they are usually computed by just calculating the value of ticket sales on canceled flights. But this does not take into consideration the fact that most of these lost ticket sales are made up when the planes start flying again. After all, the stranded passengers aren’t going to stay there forever – they will buy tickets home as soon as they can. Some of them may be lost within Europe, as they take trains or buses rather than wait for the planes to fly again, but not very many. Especially the international passengers – very few will switch to a week-long voyage on a trans-Atlantic liner to get home. ---
**Author:** ![Candyman74](https://avatars.discourse-cdn.com/v4/letter/c/ad7895/32.png) [@Candyman74](https://boards.straightdope.com/u/Candyman74)\ **Post date:** [April 22, 2010, 12:19am UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/32 "2010-04-22T00:19:48Z")
> [@robcaro](#): > > 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? If there was a net gain from saving fuel by not flying planes, all the airlines would maintain fleets of grounded planes instead of flying passengers. They don’t. They fly passengers. Why do you think that is? Why on earth would anyone maintain a working airline if not doing so made them more money? What a bizarre question. ---
**Author:** ![IAmNotSpartacus](https://avatars.discourse-cdn.com/v4/letter/i/cc9497/32.png) [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)\ **Post date:** [April 22, 2010, 12:25am UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/33 "2010-04-22T00:25:59Z")
> [@Xema](#): > > Is it your theory that the moment planes are grounded by volcanic ash, wages cease? Since flight attendants and pilots are only paid when the planes are in the air, and grounded planes don’t need cleaning or fixing.. yeah, I am. Are you suggesting airline work rules have changed in the last month? ---
**Author:** ![IAmNotSpartacus](https://avatars.discourse-cdn.com/v4/letter/i/cc9497/32.png) [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)\ **Post date:** [April 22, 2010, 12:27am UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/34 "2010-04-22T00:27:32Z")
> [@Fake\_Tales\_of\_San\_Francisco](#): > > No idea what the official sites would be for this, but [this](http://www.jobsite.co.uk/insider/volcano-ash-4513/) is the best I can find and corresponds with what I already thought I knew about wages law in UK/Europe. As the article says, you generally have to get paid since you’re capable of working, but there may be a clause in your contract relieving your employer of this responsibility in the case of freak occurrences such as this. I am not aware of any major airlines that do not have a contractual agreement with their major trade employees. Certainly not here in the US, Europe may be different. ---
**Author:** ![Richard\_Pearse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/richard_pearse/32/13144_2.png) [@Richard\_Pearse](https://boards.straightdope.com/u/Richard_Pearse)\ **Post date:** [April 22, 2010, 12:49am UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/35 "2010-04-22T00:49:08Z")
> [@IAmNotSpartacus](#): > > Since flight attendants and pilots are only paid when the planes are in the air, and grounded planes don’t need cleaning or fixing.. yeah, I am. > > Are you suggesting airline work rules have changed in the last month? That’s not true. Pilots are often paid per hour but they are guaranteed a certain number of hours per month. They get paid for these hours regardless of whether or not they actualy fly them. Any additional hours flown are extra. They are essentially paying salaries plus overtime. Australian airlines dispense with the hourly pay farce altogether and pay a salary plus overtime. Also don’t forget that all of the crews stranded overseas are getting hundreds of dollars a day in allowances and the airline is paying for hotels. ---
**Author:** ![alphaboi867](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alphaboi867/32/3898_2.png) [@alphaboi867](https://boards.straightdope.com/u/alphaboi867)\ **Post date:** [April 22, 2010, 1:38am UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/36 "2010-04-22T01:38:10Z")
> [@t-bonham@scc.net](#): > > …Especially the international passengers – very few will switch to a week-long voyage on a trans-Atlantic liner to get home. Almost none will. The Queen Mary 2 is the _only_ ocean liner in regular trans-Atlantic service. Getting a stateroom (even a cheapo inside one) at short notice is going to cost a small fortune. It’s much easier to make ones way to Portugal or Spain and then fly across the Atlantic. ---
**Author:** ![IAmNotSpartacus](https://avatars.discourse-cdn.com/v4/letter/i/cc9497/32.png) [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)\ **Post date:** [April 22, 2010, 4:48am UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/37 "2010-04-22T04:48:06Z")
> [@Richard\_Pearse](#): > > That’s not true. Pilots are often paid per hour but they are guaranteed a certain number of hours per month. They get paid for these hours regardless of whether or not they actualy fly them. Any additional hours flown are extra. They are essentially paying salaries plus overtime. The guarantee will depend on the airline, here in the US it’s around 60-70 hours for legacy carriers that fly internationally. From perusing airline pilot forums I get the idea that pilots tend to average 80-90 hours per month. I will assume that flight attendants do not enjoy the same work rules as pilots, but that information isn’t as readily available as it is for pilots. With planes back in the sky and passengers traveling, I’m sure now that the point is moot, the airlines will have the employees make up those hours in the next 10 days as they try to clear the backlog. > [@](#): > > Australian airlines dispense with the hourly pay farce altogether and pay a salary plus overtime. OK. Do many Australian airlines fly to Europe? Is the Australian model common in Europe? Because Australia is a pretty small market, relatively speaking. > [@](#): > > Also don’t forget that all of the crews stranded overseas are getting hundreds of dollars a day in allowances and the airline is paying for hotels. According to [Legacy | AirlinePilotCentral.com](http://www.airlinepilotcentral.com/airlines/legacy.html) pilots get $2.20/hr per diem when they are overseas (less than $50 per day) and I’ll suspect the airlines have negotiated sweetheart deals with the hotels. What are these hundreds of dollars per day supposed to cover? Something more than 3 meals and a bed? Unsurprisingly, the [airlines](http://news.yahoo.com/s/afp/20100422/wl_afp/icelandvolcanoaviation_20100422024940) are already pleading poverty and sticking their hand out. They claim $1.7 billion in losses because of a week’s worth of canceled flights. I don’t know where they get that number from, but they’ve put a number on it and it seems pretty high. ---
**Author:** ![ShibbOleth](https://avatars.discourse-cdn.com/v4/letter/s/848f3c/32.png) [@ShibbOleth](https://boards.straightdope.com/u/ShibbOleth)\ **Post date:** [April 22, 2010, 5:40am UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/38 "2010-04-22T05:40:10Z")
> [@t-bonham@scc.net](#): > > But this does not take into consideration the fact that most of these lost ticket sales are made up when the planes start flying again. After all, the stranded passengers aren’t going to stay there forever – they will buy tickets home as soon as they can. Some of them may be lost within Europe, as they take trains or buses rather than wait for the planes to fly again, but not very many. Especially the international passengers – very few will switch to a week-long voyage on a trans-Atlantic liner to get home. Not some, many or most Europeans took trains, bus or hire cars to get somewhere else in Europe. Eurostar has been booked solid. DB trains have been packed. Hotels in the locations that people have been stranded have been jammed full. Also, bear in mind, on any given flight, only half of the people are returning. So the other half can just not go in the first place. I had a colleague fly Stuttgart - Milan yesterday on a plane that was less than 10% full. Demand for flight has been shunted to other transport modes. In Europe the main need for flights is into and off of the continent or the UK, where it’s difficult to substitute. For flights to Europe from North America, of course, it’s impractical for most people to take a boat, but vacations have been canceled already. People who might have flown late in the year are reconsidering. My suspicion is that once everyone is “home”, net demand will dip for a while until memories fade, similar to what occurred post 9/11. ---
**Author:** ![Richard\_Pearse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/richard_pearse/32/13144_2.png) [@Richard\_Pearse](https://boards.straightdope.com/u/Richard_Pearse)\ **Post date:** [April 22, 2010, 7:15am UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/39 "2010-04-22T07:15:43Z")
> [@IAmNotSpartacus](#): > > OK. Do many Australian airlines fly to Europe? Is the Australian model common in Europe? Because Australia is a pretty small market, relatively speaking. It doesn’t matter. The “Australian model” is the same as the guaranteed hours model under a different name. The point is that the airlines are still paying wages for all of their stranded crews. Whether any of them end up flying fewer hours over their roster period will depend on the specific circumstances of each employee. > [@](#): > > According to [Legacy | AirlinePilotCentral.com](http://www.airlinepilotcentral.com/airlines/legacy.html) pilots get $2.20/hr per diem when they are overseas (less than $50 per day) and I’ll suspect the airlines have negotiated sweetheart deals with the hotels. What are these hundreds of dollars per day supposed to cover? Something more than 3 meals and a bed? Ok, “hundreds” was overstating the case. I based that on the assumption that it’d better than the $100 I get as a turbo-prop pilot per day away from base. The basic point stands that having crews stranded costs money, it doesn’t save money. To make money out of an airline you want to have as few crews and aeroplanes as possible flying as many hours as possible. By closing Europe the opposite is happening, there are a lot of crews and aeroplanes sitting on the ground. The lost revenue may be somewhat offset by the lower operating costs but it is still a big net loss and a big drop in cash flow. ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [April 22, 2010, 7:18pm UTC](https://boards.straightdope.com/t/airline-volcano-losses/536629/40 "2010-04-22T19:18:55Z")
This came in an email today: [How One Airline Skirts the Ash Clouds](http://online.wsj.com/article/SB10001424052748704133804575198183757930998.html?KEYWORDS=airlines) [Previous page](https://boards.straightdope.com/t/airline-volcano-losses/536629.md?page=1) [Next page](https://boards.straightdope.com/t/airline-volcano-losses/536629.md?page=3)