Indirect costs

English Boards Community Support
1

Hi all…

I have a very serious doubt. When i go to the details of a certain flght, they show me the direct revenues the direct costs and the indirect costs. In the indirect costs they show for example the maintence costs which for example in a flight from London Heathrow to Edinburg with an BAE146-100 of 3.263$. Well the thing is that my aircraft is pretty full and my revenue without the indirect costs only the direct costs included is of 2.130$ (91% full - but i started this company yesterday so i believe it will get to 100%full when the route starts). But when i include the indirect costs it goes down to negative -1.854$ …

So does this mean that i am going to be bankrupt pretty fast or (and i hope it´s the case) that in only one flight i’ve paid the entire indirect costs for this route until the next week???

Thanks to all.

2

The money calculated after the direct cost is the actual profit of the flight, but the indirect cost is like management, leasing etc so this shows the profit the company may make on this flight other factors included.

3

Yes, this means: On the long run you will go bankrupt!

Every flight calculation shows only the costs for this single flight.

4

DAMN…So what can i do?! I think that if i raise my prices more i´ll lose too many passengers but i´ll try. I guess it´s my only option for now

5

Buy a more efficient aircraft. And use it more often, fill its schedule.

6

  1. The BAE146-100 is rather old. Use younger planes to increase attractiveness

  2. Younger planes have lower maintenance and fuel costs

  3. Try to get the maintenance ratio close to 100% to use every available minute of that aircraft for flying

  4. Fly longer routes

  5. Try to set up a hub system which creates demand for connecting flights

7

Try to have a wide range of aircraft. I operate 1 A318-100 medium, 2 ATR 72-600, 1 Dash8-Q400B and 2 LET 410UVP. My A318 alone makes about 15kAS$ per flight it does…currently it does 4 flights per day. My ATRs & Q400s make some money but usually only about 1.5k per flight. Those operate 6 times per day. My 2 LETs actually lose money(after indirect costs) are waged in. Why do i keep them?? Well…they insure that my bigger planes are full of passengers when they are departing. They serve as feeder planes. I have a HUB system which is rather well done as it allows my 6 planes to be in the air as often as possible.

In my case, if i had a full fleet of LETs, i would go bankrupt in a matter of weeks but because my other flights make tons of money, i’m able to cover the costs of the LETs and still operate at a profitable rate. If i wanted to try to make my LETs profitable after indirect costs, i would have to blast the prices off the roof just to do that.