4 ms·

But why? Passenger transport is already well catered for and extremely low margin. Also, passengers are annoying and generally not cardboard wrapped. They requi

But why? Passenger transport is already well catered for and extremely low margin. Also, passengers are annoying and generally not cardboard wrapped. They require seats and toilets and cabin attendants and pretzels and infant flotation devices. Cardboard boxes also don't videotape you when you offload them last minute to make room for something more valuable. And that's before accounting for scheduling. Freight flights are often late nights, because cardboard boxes don't have eyes that can go red.

doorbumper 9y ago
I'm not saying Amazon will switch to passenger transport, but you can imagine that their strategy would be to dominate the market by subsidizing ticket prices, then once they have the proper penetration, to raise ticket prices and be the first airline to increase margins in some time.
reaperducer 9y ago
> extremely low margin The airlines cry that it's low margin, then report billions in profits. Someone should call them out on it. AA, for example, reported $10 BILLION in profit in 2015 and 2016 combined. Yet legroom gets smaller because it can't make any money.
- tyingq 9y ago
  AA filed chapter 11 in 2011. They are doing well now, but they are very vulnerable to things they can't control well, like fuel prices, unions, etc. In fact, the bankruptcy is part of why they are doing well now. It allowed them a free pass to invalidate all union contracts and start over with lots of leverage.
- icebraining 9y ago
  https://static.seekingalpha.com/uploads/2017/10/1/saupload_g458038ex99_1s8g1.jpg https://static.seekingalpha.com/uploads/2017/10/1/saupload_g...
- mseebach 9y ago
  That $10B is a high number, certainly, but it's historically high. It's worth keeping context in mind here: this profit is earned on 446B passenger miles. Every time you fly a mile on AA, they profit a whopping 2.2 cents, and that's in historically good years. Even on a 7000 mile long-haul, that's just over $150 average per passenger. Devil's advocate says that smaller legroom is the reason they can turn a profit at all. I think that qualifies as low margin.
  - reaperducer 9y ago
    Low margin would be if they made $5. A $150 profit is pretty good since there are 200+ people in the plane. That's $30,000 a flight. And remember, we're talking profit here, not income. I can't think of a scenario where a business with millions of paying customers would sneer at merely making a profit of $150 off of each one.

doorbumper 9y ago

I'm not saying Amazon will switch to passenger transport, but you can imagine that their strategy would be to dominate the market by subsidizing ticket prices, then once they have the proper penetration, to raise ticket prices and be the first airline to increase margins in some time.

reaperducer 9y ago

> extremely low margin The airlines cry that it's low margin, then report billions in profits. Someone should call them out on it. AA, for example, reported $10 BILLION in profit in 2015 and 2016 combined. Yet legroom gets smaller because it can't make any money.

tyingq 9y ago
AA filed chapter 11 in 2011. They are doing well now, but they are very vulnerable to things they can't control well, like fuel prices, unions, etc. In fact, the bankruptcy is part of why they are doing well now. It allowed them a free pass to invalidate all union contracts and start over with lots of leverage.
icebraining 9y ago
https://static.seekingalpha.com/uploads/2017/10/1/saupload_g458038ex99_1s8g1.jpg https://static.seekingalpha.com/uploads/2017/10/1/saupload_g...
mseebach 9y ago
That $10B is a high number, certainly, but it's historically high. It's worth keeping context in mind here: this profit is earned on 446B passenger miles. Every time you fly a mile on AA, they profit a whopping 2.2 cents, and that's in historically good years. Even on a 7000 mile long-haul, that's just over $150 average per passenger. Devil's advocate says that smaller legroom is the reason they can turn a profit at all. I think that qualifies as low margin.
- reaperducer 9y ago
  Low margin would be if they made $5. A $150 profit is pretty good since there are 200+ people in the plane. That's $30,000 a flight. And remember, we're talking profit here, not income. I can't think of a scenario where a business with millions of paying customers would sneer at merely making a profit of $150 off of each one.