How much of your ticket cost goes to the plane's fuel cost?

Before you read the answer below, take this one-question test:

Assume that you have a round-trip ticket from New York to San Francisco on nonstop flights. About how much will the airline spend on your share of the fuel needed to get you to SFO and back? $50? $100? $200? More?

The Wall Street Journal answered the question this morning. The author used readily available info that the airlines file with the Department of Transportation as to how much fuel various jets use for a specific flight and what the passenger loads are for various flights. He then multiplied the fuel usage for specific NY-SF flights, multiplied that by today's jet fuel cost of around $4 per gallon and divided that by the average number of passengers on an airline's NY-SF routes, resulting in an average per-passenger cost per flight.

The conclusion was that such a round trip would cost the airline about three hundred dollars per passenger! If you fly on UA or AA, the fuel cost per round trip is about five hundred dollars!

Although some airfares are up quite a bit over the past year, it's still occasionally possible to buy a round trip transcontinental ticket for less than the cost of the just the fuel!

It's no wonder the airlines are losing a ton of money!

I think somebody's numbers are off.

Using the Seattlepi numbers found here:

"But few guessed that the cost of crude oil would have gone this high. A standard Boeing 737 holds 6,707 gallons of fuel at full capacity. How much jet fuel a plane burns depends greatly on how it is flown, but a coast-to-coast flight would typically use more than 3,000 gallons."

http://seattlepi.nwsource.com/business/270977_airfare20.html

A 737 holds 149 passengers so each passenger would use a little more than 20 gallons for a full flight. They'd have to be flying almost empty to push that up to $300.

Robnsunny said:

I think somebody's numbers are off.

Using the Seattlepi numbers found here:

"But few guessed that the cost of crude oil would have gone this high. A standard Boeing 737 holds 6,707 gallons of fuel at full capacity. How much jet fuel a plane burns depends greatly on how it is flown, but a coast-to-coast flight would typically use more than 3,000 gallons."

http://seattlepi.nwsource.com/business/270977_airfare20.html

A 737 holds 149 passengers so each passenger would use a little more than 20 gallons for a full flight. They'd have to be flying almost empty to push that up to $300.

Click to expand...

Also note that the amount of fuel consumed per passenger is much lower on an airplane than if people drove their cars.

It's been so many years since air travel deregulation that many people don't remember what it was like when air fares were regulated by the CAB. Prior to deregulation you could almost always drive wherever you wanted to go for less cost than flying. The big attraction of flying was saving time.

Under deregulation all of that changed - for trips of any distance flying became close to the same price - or even cheaper - than driving. A big part of that is the savings in fuel for flying (in a reasonably full airplane) as compared with driving.

The driving scenario also depends on how many folks are in the car. Driving from Maryland to Orlando with 7 people in our SUV is far less expensive than buying 7 round trip tickets.

Charles

PS - not to mention the cost of Orlando car rentals.

Robnsunny said:

I think somebody's numbers are off.

Click to expand...

Yours?

The average plane, even today, isn't full. The industry average is somewhere around 80%, as I recall, still an all-time high. It just seems that every flight is full, because most of us fly when everyone else does: Fridays, Saturday mornings, Sundays and Monday mornings. Also, 737s are rarely used by major airlines for transcon flights. Further, your calculation was apparently for a one-way flight, not the round trip in my post and the article and that would be appropriate for comparing to a round trip ticket price.

Here is a sample calculation:

AA typically flies 767-200s with a capacity (according to SeatGuru.com) of only 158 seats on the JFK-SFO route. According to AA's filings with the DOT, that plane will use an average of 15,982 gallons for that round trip. Assuming those flights average about the same as AA's domestic average load of 79% (as reported to DOT) and that fuel costs $4 per gallon, the math for the round trip is as follows:

(15,982 X $4) / (158 X 79%) = $512.

The author's calculation came to $488. I can't explain the difference, but we're in the same ballpark.

Obviously, shorter flights, flights that hold or enplane more passengers, flights that are full or flights on more economic fuel-burning planes will use less fuel. But the author's calculations were based on planes typically used by five different airlines (AA, CO, DL JetBlue and UA) on that route.

Dave M said:

Yours?

Click to expand...

Could be.

I fly the discount airlines though. AA has a lot of first class and business class seats that is reducing their capacity.

Southwest flys 737s exclusively.

I can get Airtran (just checked) for $418 round trip Dulles to SFO for July (including a weekend and a weekday). Are they losing money on that flight? Probably, when you count depreciation, labor etc.

Are they charging below fuel costs? I doubt it.

Airtran seems to fly mostly 717s.

Fuel cost is undoubtedly putting pressure on the airlines. But maybe the major's business model is what's broke.

I flew Airtran to the Gulf coast last month (flights were full midweek) to Pensacola. The cost was half of what Delta and Continental wanted to Mobile. I rented a car from Pensacola and still saved a bundle.

Don't overlook what else is flying in the belly of the plane.. The US Mail pays well. I also recall tropical fish from Miami paying the way to Detroit via BNA for SWA.

It's not at all obvious what the passengers share is.

One interesting effect of this is that the LCCs' structural advantage begins to narrow as fuel costs begin to dominate.

Unfortunately, that's bad news for most LCCs, as they primarily fly leisure routes (which are presumably more price-sensitive) and do not have significant business travel to help get them through a rough patch. I'm expecting some significant contraction in the LCC space.

Even southwest isn't immune to rising fuel costs: fuel hedging only works if prices eventually come back down. Otherwise, it only delays the inevitable.

Article on this topic

Here's a link to the WSJ article.

http://online.wsj.com/article/SB121304736426558641.html?mod=pj_main_hs_coll

Cheers

There's lots of problems with that article.

First, the base assumption is that the airlines loads on JFK-SFO routes are the same as their average loads.

Second, JFK-SFO and JFK-LAX is a route with a lot of premium traffic, which translates to people willing to pay higher prices for higher classes of service and higher prices for last minute tickets on those routes. That's why UA offers 3-class international-like service on those routes. Highly discounted coast-to-coast coach fares have always been relatively cheap compared to the cost per mile of transporting passengers. (Though I also think it's ridiculous that the airlines continue to offer discounted restricted fares in the $300+ range on these routes.)

Finally, it also ignores cargo.

If you want to take those numbers as a gross estimate (but not a good one) of what the average cost of transporting a passenger between JFK-SFO is, assuming that the average loads are the same on that route as all the other routes that airline flies, fine, but it doesn't come close to matching the airlines actual per pax fuel costs relative to the average ticket cost + cargo on that route.

-David

One problem I see is that airlines are not paying the same for gas as you do to fill up the tank in your car. Less than a month ago there was an article that indicated the contracts ailrines hold for fuel costs are considerably lower than what a drive pays at the pump.

The fuel cost is realitive. If it cost the ailrines $1.00/gallon just last year and it now costs them $2.75/gallon, it's still a 175% in increase in costs.

ATA says it's 40% - article from today's NYTimes

Published: June 11, 2008 - NYTimes:
The nation’s airlines are scrutinizing every step of their operations, from the tarmac to the sky, and from the nose to the tail of their planes, searching for new ways to cut their soaring fuel bills.


They are power-washing jet engines more often to get rid of grime, carrying less water for the bathroom faucets and toilets, and replacing passenger seats with lighter models.

The financial pain of higher fuel prices is particularly acute for airlines because it is their single biggest expense. Eight years ago, 15 percent of the price of an airplane ticket went to pay for jet fuel; now, it is 40 percent, according to the Air Transport Association, the industry’s trade group. If prices stay where they are, the nation’s airlines will collectively spend $61.2 billion this year on jet fuel — more than five times what they spent in 2002, when travel fell sharply after the September 2001 terrorist attacks.

[Edited to delete most of the article to comply with TUG policy on copyright laws. You can read the rest of the article at this NY Times link.]

Also overlooked: Unless there's some serious fuel price hedging going on, $4 won't buy much jet fuel. At our local airport Jet-A is $6.61 and LL-100 for your basic Cessna is $6.13 or so.

Jim Ricks

Passepartout said:

Also overlooked: Unless there's some serious fuel price hedging going on, $4 won't buy much jet fuel. At our local airport Jet-A is $6.43 and LL-100 for your basic Cessna is $6.13 or so.

Jim Ricks

Click to expand...

I don't have a clue what the airlines are paying but I'd assume that, with the large contracts and bulk buying, they're paying less than individual pilots with private aircraft or companies that have a few business jets.

I also wonder about that 40% figure. I'm guessing it's an average since the price to fly the same number of miles but from different airports can vary greatly.

Most of the airlines who are paying less than the going rate for jet fuel are doing so because they locked in prices on a long term contract. When those contracts end and they start paying $6 to $7 a gallon, the price of air fare will really go up. All airlines have jumped prices recently to compensate for higher fuel costs. When the true cost of jet fuel hits them, they will pass that cost on to us with air fare increases that will probably be worse than the increases we have seen recently.

Spot prices for jet fuel vary regionally. As of March, the average was around $3.20/gal.

http://www.atwonline.com/channels/dataAirlineEconomics/trends_0508.pdf

In March I was paying less than $3 a gallon for gas, I am now paying over $4 a gallon. I assume that jet fuel is much higher than $4 a gallon currently and don't doubt that it will be over $5 a gallon if it isn't already.

Now that the airlines have started charging for first bag, I saw a report on TV that said the airline allocates 220 lbs for the average passenger and their luggage. Don't be surprised the next time you fly if they ask you and your luggage to step on the scale and charge you accordingly! Airline regulation already allows them to charge you for an extra seat if you dunlap over your own seat.:ignore:

With the soaring cost of fuel, Jet Blue has actually lowered their price from San Diego to New York and return. We bought our 2 tickets for July a couple of months ago and the fare is now $40.00 cheaper per ticket.