TravelAir-conomics of Scale

Air-conomics of Scale

Although now it seems like looking back on another time entirely, Thursday 5th March was a sad day for both the Channel Islands and the travel industry when Flybe, which launched back in 1979 as Jersey European, succumbed to administration and ceased flying. Their purple planes were a common sight in both Islands, and I’m sure most of us have some happy memories of flying off on holiday on a Q400.

The loss of an airline which had provided 61% of flights from Jersey and 46% from Guernsey unsurprisingly left a gaping hole in our departure boards which local operators Blue Islands and Aurigny scrabbled to fill, ensuring that our lifeline links to the UK remained intact. 

As an employee of the local travel industry I know how hard these airlines work to keep our islands moving in challenging circumstances, so I was saddened to go online and witness the outpouring of negativity from the general public with regards the cost of their flights.  From ‘They’re cashing in’ to ‘We’re being ripped off’ and worse that we couldn’t possibly print in a family magazine, the atmosphere wasn’t pretty.

Clearly all of these people are experts on the economics of running airlines. Or perhaps they’re not. Did nobody stop for a second to think that part of the reason that poor old Flybe folded is because they were forced into a spiral of low fares by a public not willing to pay what a service actually costs, and competition from airlines working on a very different scale?

It’s beyond me why anyone would expect to fly to a convenient place, at a convenient time, in a costly to maintain, multi-million pound piece of highly complex equipment, piloted and crewed by highly trained professionals, for less than it costs to buy lunch at the airport.

‘But Easyjet & Ryanair charge a tenner to Alicante’ I hear them cry. So let’s look at the facts. Easyjet carry nearly 100 million passengers a year across their European routes, and Ryanair nearly half of that again. These high volume budget carriers are experts at maximising their sales through in-demand routes, well timed slots, and a culture of up-selling add-ons. They each operate on a load factor (that’s how many seats on each flight are occupied, to you and me) of well over 90%, against an international airline industry average of around 80%. They manage their seat prices with precision, so if you’ve bagged a £29.99 fare to Tromso, know that someone else, perhaps on some other flight, has paid £299.

But here’s the kicker. The average profit per passenger that each of these big boys makes is less than £10. Significantly less, in fact. And that’s after they’ve sold you some checked baggage, an allocated seat and a couple of beers on board. Now if you’re selling to 150 million passengers a year then £5 each is a great total profit, stupendous in fact, well done you. But when the figure is much closer to 200,000 passengers than 2 million and your aircraft can each carry 78 people in comparison to 156, despite costing a similar amount to get in the air, then we’re looking at a totally different ball game.

Like any sector of business, travel works on scale. In much the same way that our small population could never feasibly support the immense running costs of an indoor ski slope or a Disney-style theme park, and that our small retailers can’t compete with the gigantic bulk-orders made by Amazon, we have to accept that while our beautiful little islands have it better in some ways, we suffer in others.

As soon as the fog rolls in or a flight goes tech, displaced passengers demand meal vouchers, accommodation, taxi fares and compensation, usually totalling far more than the price of their ticket. Plus, of course, they want a seat on the flight if and when it operates – or a full refund. This money all has to come from somewhere.

So paying £200 for a return flight from Jersey to London does not constitute being ‘screwed over’, disgruntled member of a local Facebook page. It means that the airline is making the money they need to operate, allowing for flights that are not fully booked, paying for the best pilots and crew and their frequent training, maintaining their aircraft (we all know that’s important), keeping a contingency fund for the unexpected, covering their day-to-day expenses and making a profit. Because they’re businesses after all.

Of course it’s frustrating for us islanders; we all need to get off the rock now and again, our options are limited and our travel costs are more than our neighbours on the mainland. So when the current Covid-19 crisis has cleared and you check a flight price with one of our small airlines – for a hen-do or a holiday – maybe take a minute to think about how much that service costs to supply and how valuable it is to us as a link to our family, friends and the rest of the world, before you hop online to moan.

Because if we don’t support them, we’ll lose them, and I can almost promise that Easyjet will not be waiting to step in to take on any route that isn’t 100% booked day in, day out. Anyway that’s my rant over. Let’s just all think of the bigger picture, eh? And above all, Be Kind.

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Russ Atkinson
Russ Atkinson
Russ joined Factory having completed his degree in Graphic Design at The Arts Institute at Bournemouth. Handling the rare combination of a mastery of both words and images, Russ lends his writing skills to his overarching responsibility for design and production scheduling. Russ loves building BMWs of both the 2 and 4 wheel variety.

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