Quote: Profit Analysis
When a quote is created and the aircraft being quoted has a contract and a completed owner cost section, the Feasibility & Tools > Profit Analysis provides the operation with an estimated Profit Percentage. The Profit Percentage is the % the operation will make on the quote. This guide will outline:
the calculations of the profit analysis
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PROFIT ANALYSIS CALCULATIONS:
Here is a detailed breakdown of how the profit analysis values are calculated based on the Contract, the Owner Cost regarding a specific quote situation.
In this example, the total POS (position) flight time is 0.4 and the total PAX (passenger) flight time is 6.6.
0.4 times $3200 (this value is from the owner cost) = $1,280
6.6 time $3200 = $21,120
Note: If operations have different rates and owner costs for PAX vs. POS, separating these calculations is ideal.
Example of the quote:
Profit Analysis Results:
Passenger Leg: 3.1 + 3.5 = 6.6 times the $3200 owner cost hourly rate = $21,120
6.6 times the $4000 retail rate = $26,400
$26,400 - $21,120 = $5,280
Positioning Leg: 0.2 + 0.2 = 0.4 times the $3200 owner cost hourly rate = $1,280
0.4 times the $4000 retail rate = $1,600
$1,600 - $1,280 = $320
Line Items: Set overhead on each line item, so the cost and profit can calculate. In this example, the 3 overnights have a $100 profit on each. The customer is being charged $600 times 3 and the cost (overhead) is $500 by 3, so the profit is $300 ($100 times 3) for the operator.
Flight Mins/Short Leg Fees:
Flight Mins: The owner is getting paid 50% of the Daily Minimums based on the Flight Time with the owner hourly rate of $3,200. 8 hours of daily minimums are required. Subtract 8 hours minus the 7 hour flight time = 1 hour. 1 hour times the $3200 = $3,200. 50% of $3,200 is $1,600. That is the cost for the operation to the owner.
Note: In the example, the Flight Min is based on Block Time, so the quantity is going to be less for the profit vs cost. BT is 7.8 vs FT 7.0, with an 8-hour requirement:
8 - 7.8 = .2 hours x $4000 (hourly rate) = $800.
With this scenario, the profit would be less than the cost: $800 - $1600 = -$800.
In this case, we selected Override in the Additional Charge for the daily min to be 1-hour quantity to equal the FT being calculated for the Owner.
1 hour x $4000 hourly rate = $4000. $4000 - $1600 = $2400
Short Leg Fees: In this example, there is a $400 in Short Leg Fees and the owner DOES NOT collect, so that is a profit for the operator.
$2400 + $400 = $2800 for the profit for Flight Mins/Short Leg fees for the operator.
Surcharge: $4,680 is the calculated Fuel Surcharge. 100% is set to go to the owner. That is a cost to the operator.
Block Charges: The owner is set to NOT collect the Block Charges. $3,200 goes to the operator. This is calculated by taking the BT (7.8) minus the FT (7.0) = 0.8 times the retail rate $4,000 = $3,200.
Quote price override: When the Override is set to YES on the total a new line appears in the profit analysis below the discount row called Override Difference. This field spans both Cost and Profit in one cell similar to the Discount. The difference between the calculated total and the overridden total displays. The Total that includes the Discount Profile line subtracts the Override Difference and displays the new total in the Profit column.
Profit Percentage: The percentage the operator is making in this quote scenario.
Example of the Contract and Owner Cost:
Ref: S-A03
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