January 22, 2013 | In: Opinion

For Airlines to Be Profitable, They Must Stop Spending on Luxuries

I had a chat with a flight attendant the other day while on the plane back to Montreal. The flight attendant said that she loves the hotel that she stays in when her airline goes to Toronto. So I asked her, which hotel is it? She said it’s the Intercontinental Hotel. For those who don’t know the Intercontinental Hotel in Toronto is right behind the CN Tower (Toronto’s most important landmark: the CN tower is for Toronto what the pyramids are for Egypt) – needless to say, it’s one of the most expensive hotels out there. The night is about $300 + tax during the low season!

From what I understood from her, most airlines (especially those that are broke) go with the most expensive hotels for their staff. So I thought to myself, how much money would these airlines save if they go with cheaper hotels? Or better yet, how much money would they save if they buy a nice big villa that will host all their staff? If they are spending about $3,000/day then surely they can afford a nice flat (that will become part of their capital) or a villa in less expensive countries. Of course, having a dedicated place means that more staff is needed to clean, but really how much does it cost to hire a full time maid to attend to that flat and to the needs of the airline’s staff.

Agreeably, some companies do not have enough money to buy these large flats or villas, but do they not have the will to make a decision to go for a cheaper (yet still nice) hotel?

I agree that the job of a flight attendant is very hard (it is very hard, by the way, I’m not being sarcastic – imagine that they have to deal with mostly insane people all the time who think that they are entitled for a five star treatment for their $800 tickets), and s/he needs to have a good night sleep. But going for a cheaper hotel does not mean they won’t have that sleep.

So, how much would that airline save a year if they went for a $100/night hotel instead of the $300/night one? If they have a staff of 10, then it means a saving of $730,000.

And that’s only for one route…

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