"We can't raise aircrew wages, the company would go broke/become noncompetitive." Says regional management.

But seriously, how big a proportion of total costs are aircrew wages? They are, in fact, a relatively small portion of total costs. Let's consider one cost that most people don't even think about - the cost of capital.

Capital cost can be thought of as - well, opportunity cost really. What does it cost me just to OWN that piece of equipment? That can be a difficult question to nail down with precision, but decent estimates are pretty easy to make.

An Embraer-175 lists for $40 million, but I doubt anyone actually spends that much for one. Advertised prices are deeply discounted, especially for quantity buys. Republic just agreed to buy 100 of them and I'd be surprised if they paid a whole lot more than $30 million a unit, so that's a pretty good approximation of the cost of one. Even so, Republic didn't just write a check for $3 Billion to Embraer. Almost certainly they financed the purchase, either by getting loans or by selling bonds. So OK, how much does THAT cost? Well, that varies by industry, but there are people who keep track of that.

Cost of Capital

For the airline transport industry, currently, the cost of capital is about 6% annually.

What that means is that the $30 million E-175 sitting out on the ramp is costing the company about $1.8 million a year - just to sit there. Now during that year, the aircraft will probably fly about 5000 hours, basically a thousand hours each for every five FOs and five Captains.

It's weighted average cost of capital (WACC) is going to be about $1,800,000 annually or right at $360 a flight hour. Even if the crew is making $150 a flight hour ($100 for the captain and $50 for the FO), the contribution of the crew salaries to the cost of a flying hour is not even near the capital cost.

And capital cost per hour is sort of trivial in comparison to per hour costs of capital amortization, fuel, maintenance, insurance, gate fees, etc.

Yes, aircrew salaries ARE an expense item, but don't let anyone kid you that they are the major driver in the balance sheet at least unless they are too LOW.

Because if you can't fill those two seats up front, you sure can't fill any if the seats that actually generate revenue to pay any of those other expenses and some of those costs, like WACC, go on even if the aircraft is just sitting.