Running the Numbers at 35000 Feet

I've been on the road this week for the Samwick family sorta-annual trip to the Bay area. The trip out here, originally scheduled for a Boston to San Francisco nonstop, would read like one of those Fortunately/Unfortunately stories we remember from childhood. It is amazing that the airline industry survives in any form with fuel costs as high as they are and fares as low as they are.

Let's run the numbers:

4 seats x 2700 miles/segment x 2 segments = 21600 seat-miles

21600 seat-miles / 60 seat miles per gallon (here or here) = 360 gallons

360 gallons x $2.60 per gallon (here) = $936

That's about 60% of the total cost of the tickets, leaving no more than $600 (including the taxes) for anything but the fuel tank in getting the four of us to and from our destination. All of the people, all of the airport services, ... everything. If you are feeling pretty frustrated about air travel these days, perhaps you are getting what you are paying for.

For an earlier run of the numbers, with an eye toward implications for reducing CO2 emissions, see this earlier post.

Airlines running on fumes

This is why a number of smaller carriers have recently declared bankruptcy. Also explains why Delta and Northwest are rushing to merge. Look for more layoffs as a result -- more and more downsizing in this industry as margins are slim to nonexistent. Government bailouts coming for them? And when will we build the high speed trains for regional travel? Europe, Japan, etc. are way ahead of us on that.

Flying is a real bargain these days.

But, we get what we pay for. In the 1930s, cross country round trip was about $275, and that was on a fuel sipping prop plane that maybe went half as fast as a modern jet. (R/T by train was just a bit cheaper). Sometimes I'm amazed by modern pricing. We pay 6.5 cents per KWh. My sister pays 15 cents. It cost about 6 cents back in the 1930s, so I'm paying the same rates as my grandparents. Meanwhile, the entire Roaring 20s stock market and real estate booms and busts were run on a money supply of about $15,000,000,000. Bill Gates could finance the whole decade out of pocket, including the speakeasies. When you look at things day by day, it seems that nothing ever changes. When you add up all the changes over the decades, it's a whole different world.

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