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I imagine they meant the airline as a whole is losing out on the $10s of thousands due to lost loyalty resulting from removing convenience. Not just the 1%, bu

I imagine they meant the airline as a whole is losing out on the $10s of thousands due to lost loyalty resulting from removing convenience. Not just the 1%, but the whole spend is lost.

lotsofpulp 3y ago
In that case, airlines have sub 5% profit margins, so $10,000 / 0.05 = $200k spend on flights before the airline comes close to earning $10k in profit.
- listenallyall 3y ago
  Airlines have large fixed capital costs. The marginal profit of an individual ticket purchase is very high, certainly a lot higher than 5%.
  - lotsofpulp 3y ago
    That is true, but this also comes into play: > especially now that all the competition is minimal except on the most popular routes. I guess airlines are betting sufficient passengers have no better option, and I would bet that too. I cannot remember the last time I got to pick an airline without heavily inconveniencing myself and wasting tons of hours with extra stops. Even a busy airport like Newark, you are basically flying United for 90% of destinations if you want to get there in the shortest amount of time with the fewest stops.
    - listenallyall 3y ago
      You're generalizing to the overall population, but "tw04" already said he was leaving the airline, so I guess he's determined that alternatives do exist and aren't that inconvenient.
- brewdad 3y ago
  True but moreso than your average business, airlines are dependent on the revenues from the customers at the margins. In the short term, the plane needs to fly whether it's full or not. Even the lowest fare customer brings in more revenues than the added costs of flying them. It's the fixed costs that need to be spread across a plane full of passengers in order to make it all profitable. An airline like Delta will adjust but there will be pain for them in the short term and pain for customers in the medium and long term with fewer, more expensive flights. All of this assumes these changes actually lead to customers changing their behavior rather than simply saying they will.
- tw04 3y ago
  Huh? Citation? Delta's profit margin last quarter was 12%, and that's a horrible way to calculate per-ticket profit. When I'm spending $1200 on a ticket to fly 500 miles round trip on a flight that's packed, they're making a LOT more than 12% on that ticket.
  - lotsofpulp 3y ago
    This is every major US airline. https://www.macrotrends.net/stocks/charts/DAL/delta-air-lines/net-profit-margin https://www.macrotrends.net/stocks/charts/DAL/delta-air-line... https://www.macrotrends.net/stocks/charts/UAL/united-airlines-holdings-inc/profit-margins https://www.macrotrends.net/stocks/charts/UAL/united-airline... https://www.macrotrends.net/stocks/charts/AAL/american-airlines-group/profit-margins https://www.macrotrends.net/stocks/charts/AAL/american-airli... https://www.macrotrends.net/stocks/charts/ALK/alaska-air/profit-margins https://www.macrotrends.net/stocks/charts/ALK/alaska-air/pro... https://www.macrotrends.net/stocks/charts/LUV/southwest-airlines/profit-margins https://www.macrotrends.net/stocks/charts/LUV/southwest-airl... https://www.macrotrends.net/stocks/charts/HA/hawaiian-holdings/profit-margins https://www.macrotrends.net/stocks/charts/HA/hawaiian-holdin... https://www.macrotrends.net/stocks/charts/JBLU/jetblue-airways/profit-margins https://www.macrotrends.net/stocks/charts/JBLU/jetblue-airwa...
    - tw04 3y ago
      Did you actually bother to verify those links? They're wildly inaccurate. It claims Delta is making $50B/quarter??? They make roughly $13B/quarter. Your very first link claims Delta's profit margin 6/20/23 is 5.36% - it was 11.72% per their earnings report. 12/31/22 - claims 2.61%, it was 6.17%. Garbage in, garbage out. https://www.google.com/finance/quote/DAL:NYSE https://www.google.com/finance/quote/DAL:NYSE And again, that doesn't address the fact their net profit margin has literally 0 relation to their profit margin on MY TICKET which is CONSIDERABLY higher than 11.72% on average.
      - lotsofpulp 3y ago
        Macrotrends has been pretty reliable in my experience. I am trying to verify the annual numbers: https://s2.q4cdn.com/181345880/files/doc_financials/2022/q4/DAL-12.31.2022-10K-2.10.23.pdf https://s2.q4cdn.com/181345880/files/doc_financials/2022/q4/... And page 63/64, it seems like Macrotrends is using “net income/loss” row and the “total operating income” row, and Google is also using the same, so not sure why the quarterly figures are different. Macrotrends does look erroneous here. >And again, that doesn't address the fact their net profit margin has literally 0 relation to their profit margin on MY TICKET which is CONSIDERABLY higher than 11.72% on average. Yes, the delta bosses are not considering the profit margin from your specific flights, but assuming the vast majority of their business is flights where their airline miles come into play, then I figured it is a good assumption that, on average, losing a flight costs them the around the same profit margin. Of course it is possible they lose so many flights that it cuts into their fixed costs, but I assume they are smart enough to make those calculations.

I imagine they meant the airline as a whole is losing out on the $10s of thousands due to lost loyalty resulting from removing convenience. Not just the 1%, but the whole spend is lost.

lotsofpulp 3y ago

In that case, airlines have sub 5% profit margins, so $10,000 / 0.05 = $200k spend on flights before the airline comes close to earning $10k in profit.

listenallyall 3y ago
Airlines have large fixed capital costs. The marginal profit of an individual ticket purchase is very high, certainly a lot higher than 5%.
- lotsofpulp 3y ago
  That is true, but this also comes into play: > especially now that all the competition is minimal except on the most popular routes. I guess airlines are betting sufficient passengers have no better option, and I would bet that too. I cannot remember the last time I got to pick an airline without heavily inconveniencing myself and wasting tons of hours with extra stops. Even a busy airport like Newark, you are basically flying United for 90% of destinations if you want to get there in the shortest amount of time with the fewest stops.
  - listenallyall 3y ago
    You're generalizing to the overall population, but "tw04" already said he was leaving the airline, so I guess he's determined that alternatives do exist and aren't that inconvenient.
brewdad 3y ago
True but moreso than your average business, airlines are dependent on the revenues from the customers at the margins. In the short term, the plane needs to fly whether it's full or not. Even the lowest fare customer brings in more revenues than the added costs of flying them. It's the fixed costs that need to be spread across a plane full of passengers in order to make it all profitable. An airline like Delta will adjust but there will be pain for them in the short term and pain for customers in the medium and long term with fewer, more expensive flights. All of this assumes these changes actually lead to customers changing their behavior rather than simply saying they will.
tw04 3y ago
Huh? Citation? Delta's profit margin last quarter was 12%, and that's a horrible way to calculate per-ticket profit. When I'm spending $1200 on a ticket to fly 500 miles round trip on a flight that's packed, they're making a LOT more than 12% on that ticket.
- lotsofpulp 3y ago
  This is every major US airline. https://www.macrotrends.net/stocks/charts/DAL/delta-air-lines/net-profit-margin https://www.macrotrends.net/stocks/charts/DAL/delta-air-line... https://www.macrotrends.net/stocks/charts/UAL/united-airlines-holdings-inc/profit-margins https://www.macrotrends.net/stocks/charts/UAL/united-airline... https://www.macrotrends.net/stocks/charts/AAL/american-airlines-group/profit-margins https://www.macrotrends.net/stocks/charts/AAL/american-airli... https://www.macrotrends.net/stocks/charts/ALK/alaska-air/profit-margins https://www.macrotrends.net/stocks/charts/ALK/alaska-air/pro... https://www.macrotrends.net/stocks/charts/LUV/southwest-airlines/profit-margins https://www.macrotrends.net/stocks/charts/LUV/southwest-airl... https://www.macrotrends.net/stocks/charts/HA/hawaiian-holdings/profit-margins https://www.macrotrends.net/stocks/charts/HA/hawaiian-holdin... https://www.macrotrends.net/stocks/charts/JBLU/jetblue-airways/profit-margins https://www.macrotrends.net/stocks/charts/JBLU/jetblue-airwa...
  - tw04 3y ago
    Did you actually bother to verify those links? They're wildly inaccurate. It claims Delta is making $50B/quarter??? They make roughly $13B/quarter. Your very first link claims Delta's profit margin 6/20/23 is 5.36% - it was 11.72% per their earnings report. 12/31/22 - claims 2.61%, it was 6.17%. Garbage in, garbage out. https://www.google.com/finance/quote/DAL:NYSE https://www.google.com/finance/quote/DAL:NYSE And again, that doesn't address the fact their net profit margin has literally 0 relation to their profit margin on MY TICKET which is CONSIDERABLY higher than 11.72% on average.
    - lotsofpulp 3y ago
      Macrotrends has been pretty reliable in my experience. I am trying to verify the annual numbers: https://s2.q4cdn.com/181345880/files/doc_financials/2022/q4/DAL-12.31.2022-10K-2.10.23.pdf https://s2.q4cdn.com/181345880/files/doc_financials/2022/q4/... And page 63/64, it seems like Macrotrends is using “net income/loss” row and the “total operating income” row, and Google is also using the same, so not sure why the quarterly figures are different. Macrotrends does look erroneous here. >And again, that doesn't address the fact their net profit margin has literally 0 relation to their profit margin on MY TICKET which is CONSIDERABLY higher than 11.72% on average. Yes, the delta bosses are not considering the profit margin from your specific flights, but assuming the vast majority of their business is flights where their airline miles come into play, then I figured it is a good assumption that, on average, losing a flight costs them the around the same profit margin. Of course it is possible they lose so many flights that it cuts into their fixed costs, but I assume they are smart enough to make those calculations.