Why Should We Stay?

[JS]

JS,

How then do you calculate the cost of transportation? My estimate is based on AVERAGE CASM....and it does work even though it's not exact. It provides you with a ROUGH idea. I never said it was exact, but it did make the point.

If you know so much, then how would you estimate the cost of a seat????

[post="260434"][/post]​

The only cost that exists down at the seat level (one passenger and one flight/trip) is the marginal cost of transporting one additional passenger. It's only 25 bucks or thereabouts, so that's not a very useful figure.

It's not a question of the accuracy of an estimate, but whether the thing you are looking for exists at all. The total cost of transportation just doesn't exist down at the individual passenger level for a scheduled passenger airline. Most costs are at a higher level (training, wages, benefits, aircraft lease payments, fuel, gate leases, reservation systems, etc.)

It is akin to trying to solve the following problem:

f(x) = x^2 + 1

What is the real root of f?

It doesn't exist (there is one root but it is imaginary). However, that does not invalidate the fact that f(2) is 5 and f(-3) is 10.

 

[mweiss]

The only cost that exists down at the seat level ... is the marginal cost of transporting one additional passenger.

Correct.

It's only 25 bucks or thereabouts...

Not necessarily correct. Depending on a huge number of factors, it may well be significantly higher...or significantly lower.

An example of significantly higher:
A passenger buys the ticket through a travel agency, then calls the airline to get a better assigned seat. That passenger shows up at the airport with a bag to check, and the kiosk pukes on the reservation, requiring an agent to process the checkin. The passenger shows up at the gate, where the Barbie DreamJet awaits. He settles into his seat, not realizing that, due to weight considerations, his bag isn't going to make the flight with him. When he gets to his destination, he berates the baggage agent, who then has to spend the time tracking the bag. Eventually, the bag is found, still in PHL, of course. It is sent on a later flight, and delivered to the passenger.

An example of significantly lower:
A passenger buys the ticket on USAirways.com. He prints out his boarding pass at home, and takes himself (he has no luggage of any sort) to the airport, where he boards the 757 for a transcontinental flight in coach. He's tired, so he spends the entire flight sleeping, and doesn't eat or drink anything.

The total cost of transportation just doesn't exist down at the individual passenger level for a scheduled passenger airline.

Sure it does. There's a difference between knowing the value and having the value exist at all.

Most costs are at a higher level (training, wages, benefits, aircraft lease payments, fuel, gate leases, reservation systems, etc.)

And these get amortized over differing numbers of seats for different reasons.

 

[JS]

An example of significantly higher:
A passenger buys the ticket through a travel agency, then calls the airline to get a better assigned seat. That passenger shows up at the airport with a bag to check, and the kiosk pukes on the reservation, requiring an agent to process the checkin. The passenger shows up at the gate, where the Barbie DreamJet awaits. He settles into his seat, not realizing that, due to weight considerations, his bag isn't going to make the flight with him. When he gets to his destination, he berates the baggage agent, who then has to spend the time tracking the bag. Eventually, the bag is found, still in PHL, of course. It is sent on a later flight, and delivered to the passenger.

An example of significantly lower:
A passenger buys the ticket on USAirways.com. He prints out his boarding pass at home, and takes himself (he has no luggage of any sort) to the airport, where he boards the 757 for a transcontinental flight in coach. He's tired, so he spends the entire flight sleeping, and doesn't eat or drink anything.

We are talking about averages here. It's 25 bucks or thereabouts.

emphasis added:

Sure it does. There's a difference between knowing the value and having the value exist at all. ... And these get amortized over differing numbers of seats for different reasons.

[post="260580"][/post]​

Aha!!!! You said the magic word -- amortize. In other words, arbitrarily allocate. There are lots of different ways to allocate total costs down to the passenger level, all of which are correct (i.e., sum of cost for each passenger over all passengers equals the stated total cost). But none of them really mean very much.

Yes, it's useful if you are doing comparisons (e.g., US CASM versus WN CASM), but for one actual passenger flying from LGA to CLT, it means nothing. $58.40, $218.36, $26.35, or $112.15, whatever allocation method you chose, they're all basically "fake".