Archive for the ‘ratio’ Category:
Is Air Transport Pricing Deliberately Confusing?
Until we can price all air transportation correctly, we will not be able to price any air transportation correctly.
Social Flights is the premier air transportation company that sells private jet service on a per seat basis. This is important because there is no other way to compare the time-value of a private jet against the time-value of a commercial jet unless they are priced in the same manner.
Unfortunately, highly competitive markets determine the price of a seat on a commercial airline, not necessarily distance of the flight. This does not make very much sense – for nearly any other product, you pay for how much you consume. If only commercial airlines were priced like private aircraft: by the mile.
Why does an airline ticket need to be 400 dollars 6 weeks prior to departure and 600 dollars 2 weeks prior to departure, except to maximize profit? Nothing else changes except as a proportion to distance traveled. But think of all the accountants, marketing personnel, and strategic planners constantly manipulating price inputs that have nothing to do with passenger satisfaction.
Every airline use essentially the same types of aircraft, they pay the same cost in fuel, and they have similar direct costs in labor, landing fees and gate contracts. You would think that a 3000-mile trip would cost X amount more than a 1500-mile trip… all day long, for each and every airline.
- Calculation of fuel burn per 200 lb payload
This chart shows the actual fuel cost to carry a 200 lb payload 1750 miles between DFW and LAX for various types of commercial aircraft assuming jet fuel price is about 3 dollars per gallon (at the time that this industry study was published).
I did some back o’ the napkin calculations and concluded that a Lear 35 burns 5 times more fuel per 200 lb passenger than an MD-80. A Phenom 300 is about half of that, or 2.5 times that of the MD-80. The average would be around 3.3 times the commercial jet.
The Golden Ratio
This is a terribly difficult calculation to make so bear with my assumptions here. But suppose all things being equal, we can say generally that a private aircraft cost is 3 -5 times greater than the commercial airplane while the door-to-door time is 1/3 – 1/5 the time of the commercial flight. The factor of 3 – 5 (depending on the comparable averages) puts the cost of the traveler time in parity with the cost of the airline time.
Why does this matter?
Now, some honest comparative market analysis can take place by simply adding and subtracting time and money from both parts of the Golden Ratio to account for various attributes of the trip. For example: shorter drive to smaller airports, no long lines, non-stop flights can be added or subtracted from the “time” part of the ratio. Meanwhile; the cost of parking, airport taxes, cost of food, cost of lodging, and the cost of traveling to your final destination, etc., can be added or subtracted from the cost side of the ratio.
The Data will set us free
To liberate this information is to empower the traveler, the operators, the community and the hospitality industry to make rational decisions. Communities can design rational incentives for tourism. Corporations can make rational decisions for employee travel, and economic planners can make rational investments in intermodal transportation.