Imagine if airplane tickets are only 1/10th of their current price – I would hop on a flight back home – right now! But of course…there’s fuel, there’s maintenance, insurance, personnels, services such as luggage and food, and most of all, there’s depreciation!

Big doesn’t always win

I used to make faces at the high costs of airline businesses – until I went through a 10-K form of WestJet, and saw their astonishing Depreciation & Amortization costs – heck, what a load of money that needs to be written off!!! In fact, if company A & B bought the same 747 planes, and company A thought the plane would last for 20 years whereas B thought it would last for 30 years, there would be a massive difference in the two company’s balance sheets. Of course, if Company B decided to go with Operating Leases, like Air Canada does, that would be a much better option; but WestJet doesn’t. How come?

It boils down to the type of businesses that airlines are in. WestJet does lots of domestic flying, which only needs small planes, making costs much lower than big cross-Pacific flights. So as you see, big doesn’t always win.