AirKarp

Guess the airline

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Here's a profile of a mystery airline. Does it sound like a financial success?

Airline X has set a record for annual passengers carried in eight of the last nine years, with traffic up 5.1% year-over-year in its most recent full year and up 43.8% compared to 2000. Base flight ticket revenue is increasing at an even faster pace, rising 8.5% year-over-year in the most recent full year. Ticket revenue is up 73.4% compared to 2000. On the carrier's most important route, which comprises about one-third of its traffic and revenue, passengers rose 5.1% in the most recent full year and ticket revenue increased 9.4%. Business-class ticket revenue on the route heightened 11.7% year-over-year.

Airline X must be highly successful financially, or at the very least, must easily earn a profit, you say. What if I told you that, in addition, the country in which Airline X is based believes the carrier to be so vital that it supplements the airline's nearly $2 billion annual revenue with another $1.4 billion in subsidies yearly? This is fiction, you say, such an airline does not exist. And if it does, Airline X's executives must wake up daily with smiles on their faces; in the capricious air transport sector, they have found the perfect operating environment.

Airline X does not exist. But what I have described above is US rail line Amtrak's figures and circumstances. And despite the rising traffic, growing revenue and steady flow of government subsidies, Amtrak loses big year after year. Freakonomics recently posted an interesting collection of opinions on why Amtrak can't make money and whether it ever can.

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