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Old 04-04-2008 | 10:54 AM
  #18  
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HSLD
APC co-founder
 
Joined: Feb 2005
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From: B777
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There is a context that one must understand when saying RJ's are not profitable - and that's how they are deployed under fee per departure agreements.

Consider that most RJ's are operated in fee-per-departure arrangements with fuel being a pass-through expense. This means that RJ operators get paid a set fee to operate the flight and don't pay for the gas.

For the purchaser (the UAL, NWA, DAL's of the world) the fee-per-departure model is a money loser when oil is at $100/barrel. RJ's are on the cost side of the balance sheet to be certain. The question is; what is the feed worth to the network?

For a network operator, an RJ flight might cost $4000 to operate (fee+fuel) but only yield $3000 in revenue (hypothetical round numbers). From a network operator's perspective RJ's are "unprofitable" with fuel at current levels and pass-through agreements.
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