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Air companies are process-based businesses, like chemical processing plants. They have an expensive infrastructure that costs money every day simply to exist, w
by swombat 17y ago
Air companies are process-based businesses, like chemical processing plants. They have an expensive infrastructure that costs money every day simply to exist, whether or not it is being used.
It costs less money if no planes are flying at all (just like a chemical plant presumably costs less if you shut it down), but there are still ongoing costs to meet: salaries, administrative overheads, maintenance costs, regular check-ups, etc. If you count just these, the loss is already substantial.
Then of course there's the opportunity cost. Every day that they're not flying planes, they're not earning fees from passengers. As the costs are, presumably, just a bit lower than the revenues (hopefully), this more than doubles the previous number.
Also, they are actually paying back tickets (at least EasyJet is).
- gaius 17y agoAnd just like a chemical plant costs more than it's normal operating costs to start back up after a shutdown, an airline in a situation like this will have a major repositioning exercise to go through. Planes, people, baggage, freight, all are in the wrong places.
- j-g-faustus 17y agoAnd Europe has 22,000 daily flights normally, 17,000 of them were cancelled Saturday. 17k flights times average number of passengers (100?) times average ticket cost ($100?) - it adds up to a lot of lost income. And as mentioned, the airlines were barely profitable as it were, and most of their costs are the same whether they are flying or not. Analysts are saying that many/most of the airlines in Europe will be bankrupt in a couple of weeks if nothing changes, some think we will be seeing the first bankruptcies within a few days.