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Comment by riffraff | Hacker News Reader

I still don't get the 200M losses per day. They are not paying back tickets /natural causes), nor taking care of passengers (hei, no out fault!) and I somehow doubt most people are buying tickets two days before flying.

Can someone explain?

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They are paying care... they have to cover alternative travel or accomodation.

They are still paying for gates & slots in airports but are not recouping on those.

They are still paying for staff who now sit around.

They have an overhead of a communication system that is busy, combined with increasing demand for telephone support.

The only thing they're saving on is fuel, but everything else they're still covering and additionally they're covering the lowest amount they can get away with for the passengers who are stranded.

As for the passengers stranded, they have their only issues. Most would budget X on a trip that now will be rising substantially.

And that's before we touch businesses who really want their resources back earning good revenue.

Everyone is losing.

Except for some people. I live in West London and looking out and seeing a sky devoid of planes is a very very rare thing. And it's a beautiful day and I swear there are more birds than normal around. Quite lovely really.

It kinda explains this stuff here: http://news.bbc.co.uk/1/hi/uk/8624663.stm

[quote] The IATA said its estimate of a $200m daily loss of revenues was "initial and conservative". "In addition to lost revenues, airlines will incur added costs for re-routing of aircraft, care for stranded passengers and stranded aircraft at various ports," its director of corporate communications, Anthony Concil, said. KPMG was less conservative in its estimates, predicting a £200m loss in traffic revenues as a result of the UK shutdown, assuming that all ticket sales would have to be refunded to passengers. [/quote]

I'd say KPMG was rather silly, in that obviously passengers will need to get back and there's a bottle-neck at the channel tunnel and ferry ports. However as care is being paid they could actually end up paying out more than the cost of travel and make a loss even in the time after the skies open.

Air companies are process-based businesses, like chemical processing plants. They have an expensive infrastructure that costs money every day simply to exist, whether or not it is being used.

It costs less money if no planes are flying at all (just like a chemical plant presumably costs less if you shut it down), but there are still ongoing costs to meet: salaries, administrative overheads, maintenance costs, regular check-ups, etc. If you count just these, the loss is already substantial.

Then of course there's the opportunity cost. Every day that they're not flying planes, they're not earning fees from passengers. As the costs are, presumably, just a bit lower than the revenues (hopefully), this more than doubles the previous number.

Also, they are actually paying back tickets (at least EasyJet is).

And just like a chemical plant costs more than it's normal operating costs to start back up after a shutdown, an airline in a situation like this will have a major repositioning exercise to go through. Planes, people, baggage, freight, all are in the wrong places.

And Europe has 22,000 daily flights normally, 17,000 of them were cancelled Saturday. 17k flights times average number of passengers (100?) times average ticket cost ($100?) - it adds up to a lot of lost income. And as mentioned, the airlines were barely profitable as it were, and most of their costs are the same whether they are flying or not.

Analysts are saying that many/most of the airlines in Europe will be bankrupt in a couple of weeks if nothing changes, some think we will be seeing the first bankruptcies within a few days.

They are paying back tickets. They have to, at least that’s the case in Germany. I think they don’t have to pay your hotel bill because they are not to blame, but that seems to be about it.

They are repaying tickets, we were due to fly to Thailand yesterday for 2 & half weeks and weve been offered a full airline refund..tho thats only half of it with additional internal flights and hotels i now need to cancel and refund. Been planning it for months so its totally gutting.

They're still paying salaries, plus many other operational costs. And they're foregoing revenues from these days of travel (by refunding/rescheduling passengers). So it's bound to have some impact on the bottom line.

British Airways are refunding tickets.

Every plane on the ground is losing money. The only expense they are saving on is fuel, nearly everything else keeps on piling up. The losses aren't limited to airlines either, any company in the area with just in time inventory systems are in trouble.

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