Has anyone calculated the size of the
benefit that Qantas conferred to the Costello family when three of the
Treasurer’s children were upgraded to business class on a January
flight from LA to Melbourne?
A legal eagle has kindly done the numbers for us and takes up the story:
I went to the Qantas site and searched for the lowest Qantas business
class fares for return flights from Melbourne to London (competitive
route) and Melbourne to Los Angeles (non-competitive route). I picked
flights departing on 1 November 2006 and returning on 21 November 2006
because those dates were not school holidays, were sufficiently
advanced to get the cheapest advance fares and the period away was
sufficiently long to also ensure the cheapest flights were available.
cheapest Qantas business class fare on the Melbourne-London route was
$10,981, for LA it was $11,322. Where it gets really interesting is
when you look up the air distances to those two cities – 16,939km to
London, 12,791km to LA and then convert those fares into cents per km:
Melbourne – London return business class: 32.4 cents per kilometre
Melbourne – LA return business class: 44.3 cents per kilometre
That’s a very nice 36.7% premium passengers pay to fly the
non-competitive Melbourne-LA route which goes straight to Qantas
profits. In those circumstances a few upgrades for the Treasurer and
his family seem a very good investment.
In terms of the benefit conferred to the Costello family, we’re talking almost $15,000. The Qantas website
is currently offering an economy return flight from Melbourne to LA for
$1448 if you’re flying between April 4 and April 23. That makes a
one-way leg worth $724, far below the implied one way price of $5490.50
as calculated by our legal eagle.
Therefore, out Treasurer benefited to the tune of $4766 for each of his three children, or a total of $14,298. Nice.
It would have been so easy to decline the upgrade and leave the kids in
cattle class but at least the Treasurer didn’t accept the upgrade and
then fail to disclose it, as so many have done before.
However, if Singapore Airlines was competing on the route, the Costello
family might have been able to afford to pay the extra $10,000 or so to
upgrade the kids. Ah yes, the benefits of competition.