Rob,

Right you are. I did make some assumptions that may appear unintentionally misleading.

I assumed that most people would look for a bargain rate and choose a date two weeks in advance which would give them the best possible weekday price. Also, I based my pricing on a one-way discounted “Freedom” ticket, the most expensive one for the date.

If you use the $917 or $ $968, next- day, non-discounted fares and the 30% load Bombardier break-even claim, Porter can make a profit with 3 passengers. The $917 X 3 passengers easily cover the $2,500 Bombardier break-even claim. If the industry were only that simple.

Perhaps, as you suggest, a median price would give a more accurate picture but perhaps not. As I have subsequently discovered, other factors are at play.

As indicated above, Bombardier’s Q400 breaks even with a 35%, or 25 passengers, load factor for a 300 nm flight at $100 a ticket according to their stats.

Several years ago a former WestJet employee stated that when Bombardier was flogging the Q400 to the company, WestJet calculated the load factor somewhere north of 55%, or 39 passengers, when indirect costs were accounted for.

Island Air, a Hawaiian airline, calculates a load factor of 55% for the Q400 to break even.

A U.K. study, Cost comparison of network, low-cost and charter airlines, citing 2005/06 figures, shows low-cost, short-haul U.K. carrier FlyBe with a load factor around 62% to break even. FlyBe uses 58 Q400s and 14 Embraer E-195s.

Given the divergent numbers on what it takes to break even, using a Q400, calculating Porter’s profitability becomes more complicated.

As Joe pointed out in an earlier post, it is the yield that matters. The site http://www.aa.com/i18n/amrcorp/corporateInformation/facts/measurements.jsp points out that yield is a relatively simple matter.

For the Toronto-Chicago flight at 441 miles (383 nautical miles), obviously, the more $968 seats sold than $239 seats (before applicable discounts), the greater the yield. For the 441-mile flight, the yield would vary between a high of $0.285 and a low of $0.075.

Porter’s 18%, or 13-passenger, load at those prices would generate either $12,584 or $3,107.

The question remains. Can 13 passengers generate a high enough yield for a profitable flight?

Consider the costs that go into running an airline http://www.airlines.org/economics/finance/CostIndexDefinitions.htm. Clearly, with free food and booze and computer use, Porter is not running a low-cost operation. Then there are the full-page ads in the dailies. Consider also the likelihood that not all 13 passengers are paying the full price.

When I consider these factors, I have difficulty seeing how Porter can be profitable running 13 passengers to Chicago. If anyone knows how it may be done, please explain it.

Bob Kotyk