Quote:
Originally Posted by Ash W
Dave I disagree to an extent.
If lets say it costs $10,000 in fixed (sunk) costs (including labour fee's etc) to not fly clearly with $0 in income for that flight and it cost $20,000 to fly with an income of $25,000. How can it be cheaper to stay on the ground? Even flying at a loss with say an income of $15,000 is still $5000 cheaper than staying on the ground.
Bottom line is so long as the income exceeds the costs inccoured by actually flying it is cheaper to fly than stay on the ground.
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Ash
If you stay on the ground you spend $10k and receive nothing - agreed.
If you fly and receive $25k income for $20k marginal cost (fuel etc) - yes it is better to fly as you are contributing (25-20) = $5k towards your $10k sunk cost.
If however you get income of say $15k and the marginal cost of flying is $20k your net spend is $5k on top of your sunk costs (i.e more expensive than staying on the ground).
cheers
Dave