Route economics to Routes Europe

Route economics to Routes Europe 15 April 2019

With a 85% load factor was our flight to Routes Europe profitable for Flybe? Andy Myers looks at the revenue side of the equation to find out.

Aviation Analytics’ Marc Watkins and Andy Myers have just returned from Routes Europe in Hannover. Our trip out involved a direct flight on a Flybe Q400 from Birmingham and we thought it would be fun to predict how profitable (or not) the Sunday night sector was for the LCC.

Boarding the flight, it appeared to be relatively full and a chat with one of the cabin crew confirmed it was operating at an 85% load factor with 66 of the aircraft’s 78 seats filled. So surely with such a good load the flight must be profitable? Well let’s have a look…BHX to HAJ graphThe graphic above shows our assumptions for calculating average fare as well as a run-down of the sector costs using our Route Economics App.  We booked the flights on 20 March, 18 days before departure and paid £43 for our one-way tickets excluding taxes and ancillary revenues.

Looking at the (somewhat erratic) booking profile and fare performance from last year on the route (both taken from Network Grandstand, our detailed LCC fare and performance tracking system), the booking date fare we think is slightly below the route average fare, but not much. Our estimate of the average fare for the route is £45 and once ancillary revenue is added on, we estimate this to rise to £58.50.

Based on this revenue and an 85% load factor, our route economics calculator estimates the flight to be losing around £8 per seat based on average airport fees paid by the carrier. This puts the route into the orange category of our Network Grandstand colour-coded performance rating system, which coincidentally is the same as the entire month of April last year.

This all goes to show how high load factors are not necessarily a good indicator of profitability and an understanding of fare levels is essential to accurately gain clarity on whether a route is performing well or not.

Birmingham base analysed

Looking at data for this week, Flybe is Birmingham’s second largest carrier, with 24,760 one-way seats, behind only Ryanair (27,216) but ahead of Jet2.com (17,830). However, given the high frequencies it flies on its domestic network from the airport, the UK LCC reigns in terms of weekly frequencies, providing 310, more than Ryanair (144) and Jet2.com (93) added together. Although when it comes to ASKs, Flybe slips to sixth spot, well behind Thomson Airways, Emirates, Jet2.com, Ryanair and Thomas Cook Airlines. Birmingham is the #2 base in terms of the LCC’s overall operations, sitting just behind Manchester, which offers 27,766 weekly one-way seats.

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