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I read an interesting article from Wired magazine recently which basically stated that on a typical London to Barcelona flight it costs Ryanair $70 per seat. (This is the cost to the airline NOT the price of the ticket).
So I got to thinking about this and wondered about the economics.
The plane used on that flight will probably be the B737-800 which has 180 seats. At $70 per seat the cost of the flight is $12600. The flight lasts somewhere in the region of 2 hours therefore the cost per hour to Ryanair is $6300.
Within that $6300 the following has to be included:
Let's take the head office overhead and the profit out of there so as not to confuse matters too much.
Now let's look at some figures we know: A Gulfstream IV aircraft carries up to 13 passengers over 4500 miles at a time. It has two small engines and can be leased for around $5200 per hour
Commercial aircraft leasors will lease an Airbus A320 (similar to a Boeing 737) on an
ACMI (Aircraft, Crew, Maintenance & Insurance model) (i.e without fuel and other costs) for $2750 per hour On top of that the airline will have to pay for items such as:
So we know so far that we are looking at approx ($2400 + $2750 = $5150) just for the aircraft and fuel The landing charge at Barcelona is approx €6 per tonne which would equate to approx €250 for the plane or €125 per hour. This doesn't include any of the salaries for the crew, nor any of the additional costs listed above. Flight crew earn less than $72 per hour (which equates to $145 per hour for the two flight crew) Cabin crew are on considerably less than that (say $20 per hour * 4 = $80.
While these figures are only approximate (and the result of some investigative digging on the internet), it does prove a couple of things
1) Ryanair are not good staff payers
2) The margins are very thin
3) Somewhere cuts must be being made to ensure the costs are kept down. Remember in the remaining $100 per hour Ryanair must pay for ALL the maintenance costs, and insurance as well as those costs detailed in the list above
How do they do it? Are my figures inaccurate? Can anyone with inside information let me know please?
So I got to thinking about this and wondered about the economics.
The plane used on that flight will probably be the B737-800 which has 180 seats. At $70 per seat the cost of the flight is $12600. The flight lasts somewhere in the region of 2 hours therefore the cost per hour to Ryanair is $6300.
Within that $6300 the following has to be included:
- Fuel for 1 hours flight on a medium sized 2 engine commercial airliner
- Half the landing fee for the destination airport
- 1 hours salary for a pilot and co-pilot
- 1 hours salary for 4 cabin staff
- Maintenance costs for 1 hours flight
- Aircraft leasing costs for 1 hours flight
- 50% of the handling fees for the baggage at the destination.
- Salary of the check-in staff at the departure airport
- A proportion of head-office overhead fees
- Profit.
Let's take the head office overhead and the profit out of there so as not to confuse matters too much.
Now let's look at some figures we know: A Gulfstream IV aircraft carries up to 13 passengers over 4500 miles at a time. It has two small engines and can be leased for around $5200 per hour
Commercial aircraft leasors will lease an Airbus A320 (similar to a Boeing 737) on an
ACMI (Aircraft, Crew, Maintenance & Insurance model) (i.e without fuel and other costs) for $2750 per hour On top of that the airline will have to pay for items such as:
- fuel and oil;
- aircraft landing, handling, navigation and terminal charges;
- passenger and cargo handling;
- airport taxes, all passenger related taxes and security taxes;
- aircraft parking and ground security;
- ramp services including towing, push-back, de-icing, nitrogen and oxygen services;
- all dry goods, including but not limited to head rest covers, airsickness bags, blankets and pillows;
- ATC fees and all international route charges;
- cabin cleaning and water services;
- aircraft interior deep cleaning and exterior cleaning;
- airport security passes and permits, if required;
- over-flight permits;
- custom taxes, immigration and inspection fees, import and export duty's;
- landing and traffic permit and slots;
- office space including telephone, fax, email;
- spare parts facilities (storage) including air conditioning;
- one van for transportation of mechanics and parts;
- insurance - passengers, baggage, mail, cargo and war risk insurance;
- any additional cost reference to insurance coverage will be on Lessee's account;
- any and all other reasonable direct operating costs, incurred in the performance of the flights whether or not listed above.
So we know so far that we are looking at approx ($2400 + $2750 = $5150) just for the aircraft and fuel The landing charge at Barcelona is approx €6 per tonne which would equate to approx €250 for the plane or €125 per hour. This doesn't include any of the salaries for the crew, nor any of the additional costs listed above. Flight crew earn less than $72 per hour (which equates to $145 per hour for the two flight crew) Cabin crew are on considerably less than that (say $20 per hour * 4 = $80.
While these figures are only approximate (and the result of some investigative digging on the internet), it does prove a couple of things
1) Ryanair are not good staff payers
2) The margins are very thin
3) Somewhere cuts must be being made to ensure the costs are kept down. Remember in the remaining $100 per hour Ryanair must pay for ALL the maintenance costs, and insurance as well as those costs detailed in the list above
How do they do it? Are my figures inaccurate? Can anyone with inside information let me know please?
Ryanair are paid to fly into destinations. In Southern Spain they were paid
ReplyDelete175,000€ yearly by the regional government and 175,000€ by the local government, to continue operating from Granada. I don't have figures for other airports, but I am sure Mr. O'Leary will have worked his magic everywhere they land an aircraft.
Ryanair made over 500 million from ancillary revenue this year. This includes baggage and debit card fees. Overpriced on board food etc. Sales on car rental hotels etc. Ryanair own their own planes and have much of the cleaning etc done by staff. I'm sure they also boost revenue heavily in holiday months when fares are ridiculous.!
ReplyDeleteMost of RyanAir routes are subsidized by governments, they don't make much money on flights, if at all. In fact they make money of you not being on the flight as they don't refund most people money for Fees and Taxes.
ReplyDelete