2

market sizing: Avg price of flight ticket in a country? How to calculate?

2 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer

A few thoughts on this:

  • Price differs by airline: full service carrier vs. low cost airline
  • Price differs by flight duration: short flight vs. long-haul flight
  • Price differs by booking class: first class, business class, coach
  • Price is dependent from available alternatives (trains etc.) and geography
  • Price is connected to free disposable income and willingness-to-pay

Calculation scheme:

  • Let's assume any European country.
  • Price indicated as round-trip tickets.
  • European flights:
    • Coach:
      • 50 EUR for low-cost airlines (Ryanair)
      • 150 EUR for full service carriers (Lufthansa, BA)
    • Business:
      • Let's assume low-cost airlines do not have business class.
      • 300 EUR
    • No first class on European flights
  • Medium/long-haul flights:
    • Coach:
      • Low-cost airlines: 600 EUR
      • Full service carriers: 1,200 EUR
    • Business:
      • Full service carriers: 5,000 EUR
    • First:
      • Full service carriers: 10,000 EUR
  • Let's talk about proportions:
    • Percentages by Coach/business/first:
      • European flights: Assume an average jumbo jet has 40 rows, 5-6 rows are dedicated for business travellers. Which leads to:
        • Economy: 85%
        • Business 15%
        • First 0%
      • Medium flights:
        • same as above
      • Long-haul flights: Consider 777,787,A380: 600 passengeer seat capacity on average per flight. 40-60 passengers in the business class (10%). 5% in the first class. Which leads to:
        • Economy: 85%
        • Business 10%
        • First 5%
  • European flights are dominated by low-cost airlines, therefore:
    • Average coach price will slightly above the price for the low-cost airlines, e.g. 80 EUR
    • Low cost carriers provide no business class, therefore the business class ticket will cost on average 300 EUR
    • The average price on European flights will be therefore: 80 * 0.85 + 300 * 0.15 = 68 + 45 = 113 EUR
    • Sanity check: average price on German railways is between 50-200 EUR
  • Medium and long-term flights are more dominated by full service carriers
    • Average coach price will be somewhere between 600 and 1,200 EUR. More on the upper bound: 1000 EUR
    • Business class ticket will cost on average 5000 EUR
    • First class: 10000 EUR
    • Which leads to 1000 * 0.85 + 5000 * 0.1 + 10000* 0.05 = 850 + 500 + 500 = 1850 EUR
  • Consider now the split between European and medium/long-haul flights. Local flights have significantly higher frequency at the airports, therefore we assume 70% of flights are European flights. Which leads to 113 * 0.7 + 1850 * 0.3 = 79.1 + 555 = 634.1 EUR

A few thoughts on this:

  • Price differs by airline: full service carrier vs. low cost airline
  • Price differs by flight duration: short flight vs. long-haul flight
  • Price differs by booking class: first class, business class, coach
  • Price is dependent from available alternatives (trains etc.) and geography
  • Price is connected to free disposable income and willingness-to-pay

Calculation scheme:

  • Let's assume any European country.
  • Price indicated as round-trip tickets.
  • European flights:
    • Coach:
      • 50 EUR for low-cost airlines (Ryanair)
      • 150 EUR for full service carriers (Lufthansa, BA)
    • Business:
      • Let's assume low-cost airlines do not have business class.
      • 300 EUR
    • No first class on European flights
  • Medium/long-haul flights:
    • Coach:
      • Low-cost airlines: 600 EUR
      • Full service carriers: 1,200 EUR
    • Business:
      • Full service carriers: 5,000 EUR
    • First:
      • Full service carriers: 10,000 EUR
  • Let's talk about proportions:
    • Percentages by Coach/business/first:
      • European flights: Assume an average jumbo jet has 40 rows, 5-6 rows are dedicated for business travellers. Which leads to:
        • Economy: 85%
        • Business 15%
        • First 0%
      • Medium flights:
        • same as above
      • Long-haul flights: Consider 777,787,A380: 600 passengeer seat capacity on average per flight. 40-60 passengers in the business class (10%). 5% in the first class. Which leads to:
        • Economy: 85%
        • Business 10%
        • First 5%
  • European flights are dominated by low-cost airlines, therefore:
    • Average coach price will slightly above the price for the low-cost airlines, e.g. 80 EUR
    • Low cost carriers provide no business class, therefore the business class ticket will cost on average 300 EUR
    • The average price on European flights will be therefore: 80 * 0.85 + 300 * 0.15 = 68 + 45 = 113 EUR
    • Sanity check: average price on German railways is between 50-200 EUR
  • Medium and long-term flights are more dominated by full service carriers
    • Average coach price will be somewhere between 600 and 1,200 EUR. More on the upper bound: 1000 EUR
    • Business class ticket will cost on average 5000 EUR
    • First class: 10000 EUR
    • Which leads to 1000 * 0.85 + 5000 * 0.1 + 10000* 0.05 = 850 + 500 + 500 = 1850 EUR
  • Consider now the split between European and medium/long-haul flights. Local flights have significantly higher frequency at the airports, therefore we assume 70% of flights are European flights. Which leads to 113 * 0.7 + 1850 * 0.3 = 79.1 + 555 = 634.1 EUR

Hello! What is the best way to get from Turkey to the UK? Of course, I am going to fly by plane, but which is the best airline to choose? Do I need a visa there? By the way, where is it better to stop? renting an apartment or book a hotel? in any case, I will need a <a href=https://postcodefinder.net/england/london>London postcode map</a>, can anyone advise me a good one?

Hello! What is the best way to get from Turkey to the UK? Of course, I am going to fly by plane, but which is the best airline to choose? Do I need a visa there? By the way, where is it better to stop? renting an apartment or book a hotel? in any case, I will need a <a href=https://postcodefinder.net/england/london>London postcode map</a>, can anyone advise me a good one?

(edited)

Related BootCamp article(s)

Important Facts

It's essential to know some key figures regarding geographies, population, economies for your case interviews. We summarized them for you here.

1 Q&A

Market Sizing

Market Sizing Questions are used to test your quantitative & reasoning skills. Learn more on how interviewers evaluate your given answer!

2 Q&As

Related case(s)

Oliver Wyman case: Full Electrons Ahead

Solved 79.8k times
Oliver Wyman case: Full Electrons Ahead Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise them on how to adjust the product offering.
4.6 5 5654
| Rating: (4.6 / 5.0)

Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise ... Open whole case

Bain Case: Old Winery

Solved 53.0k times
Bain Case: Old Winery You have inherited the “Old Winery” from your grandfather, a winery which has been family owned for five generations and can be dated back to the 16th century. Half of the eleven hectares are used to grow white grapes, the other half to grow red grapes. They are grown in the conventional way, i.e. they are not organically farmed and certified. The vine stocks are in a good condition regarding age and care. Overall, only ¼ of the harvest is made into wine by the winery itself; the rest is sold. Your grandfather never wanted to change the image of the winery and left the managerial and administrative task to a young and energetic wine-maker. Due to the not so well-known brand , the demand for the “Old Winery” wine is currently rather low. You do not intent to run the winery operatively, given your limited knowledge of wine making, but find the idea of owning a winery exciting. Your plan is to give the winery some fresh impetus.
4.4 5 1383
| Rating: (4.4 / 5.0)

You have inherited the “Old Winery” from your grandfather, a winery which has been family owned for five generations and can be dated back to the 16th century. Half of the eleven hectares are used to grow white grapes, the other half to grow red grapes. They are grown in the conventional way, i.e. ... Open whole case

Roland Berger Case: Onlinestar

Solved 35.5k times
Roland Berger Case: Onlinestar Onlinestar, an online retailer of furniture and garden products (core business), has grown significantly in recent years as a result of an expansion of its product portfolio. The company mainly imports goods from Chinese manufacturers but also operates its own production of cat lavatories (special business) in Eastern Europe. The company sells its goods via Amazon and ebay, and recently via an online shop on its website. Despite this development, the financial ratios have deteriorated in recent years. In particular, gross profit margin decreased significantly. Combined with a significant increase in shipping costs, this led to a negative result for the first time in the recently ended fiscal year and a resulting strained financial situation. Against the background of expected stagnating sales for the current financial year, short-term action is required. The board of Onlinestar asks you for an analysis of the reasons for the negative result as well as a derived recommendation for action. As a consultant, you should bring in your knowledge in online trading and develop solutions. In addition, the management board would like to receive a sales and gross profit plan from you for the current financial year.
4.3 5 748
| Rating: (4.3 / 5.0)

Onlinestar, an online retailer of furniture and garden products (core business), has grown significantly in recent years as a result of an expansion of its product portfolio. The company mainly imports goods from Chinese manufacturers but also operates its own production of cat lavatories (special b ... Open whole case

TKMC Case: Elevators

Solved 17.0k times
TKMC Case: Elevators Your customer is the market leader in the North American elevator service business. This is divided into the areas of elevator construction, elevator modernization and service. The customer has a particularly strong branch network in medium-sized cities and would now like to expand its business in bigger city centers. His next target is Manhattan and he wonders how big the potential is.
4.2 5 1261
| Rating: (4.2 / 5.0)

Your customer is the market leader in the North American elevator service business. This is divided into the areas of elevator construction, elevator modernization and service. The customer has a particularly strong branch network in medium-sized cities and would now like to expand its business in ... Open whole case

DB MC Case: Einstieg in das internationale Fernbusgeschäft

Solved 5.2k times
DB MC Case: Einstieg in das internationale Fernbusgeschäft Für Unternehmen ergeben sich durch die Digitalisierung neue Chancen und Risiken. Neue Märkte mit großem Potenzial können erschlossen werden – gleichzeitig erhöhen Wettbewerber den Konkurrenzdruck. KMUs, Start-ups und Konzerne bringen unterschiedliche Kompetenzen und finanzielle Möglichkeiten mit. Erst vor wenigen Jahren ist ein Start-up mit Know-how im Online-Vertrieb nach der Änderung des Personenbeförderungsgesetzes in den deutschen Fernbusmarkt eingetreten, welches schnell ein großes Netzwerk an Subunternehmen aufgebaut und damit große Marktanteile gewonnen hat. Dies hatte erheblichen Einfluss auf das Kerngeschäft der Deutschen Bahn. Mit dem Ziel Synergien zu nutzen und die Bedürfnisse des Kunden ganzheitlich zu erfüllen, konzentriert sich die Deutsche Bahn nicht allein auf ihre bisherigen Geschäftsmodelle, sondern kooperiert mit anderen „Mobility-Unternehmen“. Von Ihrem Kunden aus dem Topmanagement wurden Sie als Consultant von DB Management Consulting beauftragt, einen Business Case zu bewerten und zu prüfen, ob die Deutsche Bahn ihr bisheriges Geschäftsmodell öffnen sollte, um durch die Kooperation mit einem etablierten mittelständischen Busunternehmen in das internationale Fernbusgeschäft einzusteigen. Die Deutsche Bahn bietet bereits wenige internationale Verbindungen der Marke „IC Bus“ an, jedoch hat die DB-Tochter in der Vergangenheit große Marktanteile verloren. Im Rahmen der Einführung soll dem Kunden zunächst die Verbindung Hamburg – Lund (Schweden) ohne Zwischenstopp in 7 Stunden angeboten werden. Die Distanz zwischen Lund und Hamburg liegt bei 385 km. Bei erfolgreichem Start ist ein schnelles Roll-out auf andere internationale sowie deutschlandweite Strecken geplant. Im Fokus stehen die Erhöhung des Marktanteils, die Bewertung der Nachfrage des Kunden, der Kosten und Erlöse sowie das prognostizierbare Wachstum im Fernbusmarkt.
4.3 5 114
| Rating: (4.3 / 5.0)

Für Unternehmen ergeben sich durch die Digitalisierung neue Chancen und Risiken. Neue Märkte mit großem Potenzial können erschlossen werden – gleichzeitig erhöhen Wettbewerber den Konkurrenzdruck. KMUs, Start-ups und Konzerne bringen unterschiedliche Kompetenzen und finanzielle Möglichkeiten mit. Er ... Open whole case