So, how much would it cost to get more nonstops from Winnipeg Airport?

Europe's Ryanair is known for its low fares, its frugality, and its strange sense of humour.

Europe’s Ryanair is known for its low fares, its frugality, and its strange sense of humour. (Click for source)

Calling for more airlines and cheaper fares at Winnipeg’s James Richardson International Airport is a favourite preoccupation of Winnipeggers. So much so that one mayoral candidate a few days ago pledged to work, if he is elected, to bring a true discount airline to the city — though even he personally was unsure how this could be done.

But airlines are no longer a political tool as they were in the days when many were government-owned, but now for-profit enterprises engaged in, as former American Airlines CEO Bob Crandall once put it, “a nasty, rotten business”. If they are to start service to a city, they will want reassurance that the new route stands favourable odds of being profitable.

This means more than just having people show up for flights. Not all passengers are created equal: the business traveler in seat 23A who paid $800 for a last-minute round trip to Toronto is certainly more valuable to the airline than the holidaymaker next to her in seat 23B who booked well in advance and paid just $500 for the same round-trip.

Thus, the more seats that are likely to be filled by the $800 passengers, the more impressed an airline will be with a city’s potential. Revenue, not just headcount, is critical to a route’s survival.

How much revenue does a flight need to break even? One rough way of estimating this is to look for a key figure in the airlines’ annual reports or news releases: cost per available seat mile (CASM) or, in the metrically minded countries, cost per available seat kilometre (CASK).

This can be as little as eight cents per seat per mile for an ultra low-cost airline like Europe’s Ryanair, which crams the seats in tight and has even mused about installing pay toilets on its fleet, or as high as 23 cents on Swiss, which tends to be a little more generous with passengers and actually uses well-paid Swiss-resident crews. (This is significant: Norwegian, an international low-cost airline, has faced criticism on both sides of the Atlantic for hiring American and Asian crew members because this is cheaper than hiring actual Norwegians.)

Multiply the cost per seat mile figure by the number of seats on the smallest aircraft capable of doing the job — sorry, but you can’t fly a Regional Jet from Canada to France — and the number of miles to the destination of choice, and you have a rough estimate of the minimum revenue each flight will need to bring in to be considered worth operating.

In Winnipeg’s case, the least demanding route to aim for would be a 50-seat American Envoy regional jet service to the American Airlines/Oneworld hub in Chicago. With operating costs averaging out to about 17 cents per seat-mile, American’s regional feeder service could be considered a break-even proposition at about $6,200 in revenue per flight. (This would include fares, ancillary revenues and cargo, but exclude taxes and surcharges collected from passengers.)

With impressively low costs in the nine cent per seat mile range, Delta Connection would also be able to break even at relatively low revenues on, for example, a flight to Delta’s New York JFK hub. (This would draw business away from Delta’s own Minneapolis/St. Paul hub, however, so the airline might not be keen on such a route.)

Air Service Costs 1

At the high end of the scale, long-haul flights have the highest revenue hurdles to get over. Icelandair, with costs equal to 17 cents per seat mile, would need reassurance that each flight would earn $87,000 in revenues to justify the Winnipeg-to-Iceland Boeing 757 flight that has been talked about for years.

And we can probably rule out Virgin Atlantic ever starting wide-body service between Winnipeg and London: with 314 seats to fill for 3,943 miles at 15 cents per mile, each flight would have to pull in nearly $186,000 in revenue to be considered worthwhile.

Longer flights not surprisingly require higher average revenues per passenger to break even. Even if a “dirt cheap” carrier such as Spirit Airlines — with low costs of about 11 cents per seat-mile — were to hypothetically start a 1,880-mile Winnipeg-Fort Lauderdale service using its 145-seat Airbus A319s, revenues on a fully loaded flight would need to average out to $207 per passenger each way to break even.

Air Service Costs 2

 

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About theviewfromseven
A lone wolf and a bit of a contrarian who sometimes has something to share.

2 Responses to So, how much would it cost to get more nonstops from Winnipeg Airport?

  1. I love your travel related posts, really appreciate the time and effort that goes into them. I would happily pay $1200 for a round trip ticket to London on Virgin Atlantic; I have big dreams of one day flying their club class but alas have no real way of earning their points right now (so that I can fly club class for freeeeeeeeeeeee!)

  2. theviewfromseven says:

    Thanks! 🙂

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