White Star Line's business plan

[Charles B. Weeks Jr.]

I'm looking for information on how the White Star Line planned to make money with these ships. I've heard that it was the 3rd Class revenues that made it go. What did they figure as a return on investment? How much would it cost per day, or per mile. How did they figure depreciation? Any thoughts, I'm all ears.
Regards,
Charlie Weeks

 

[Michael H. Standart]

Hi Charles, and welcome aboard. I don't know the specifics of any of the lines business plan, but I do know that the immigrant trade was literally the bread and butter of the transatlantic shipping lines. Enough so that it caused some real problems for them when the United States passed restrictions and quotas on immigration post-World War I.

I don't have the numbers, but I'll bet somebody here does. Should be interesting to see where this goes. If you wish to see what the 3rd Class passengers on Titanic paid, you may wish to click on the High Detail passenger list for 3rd Class at https://www.encyclopedia-titanica.org/listings/passenger_list_3rd_high.shtml

 

[Daniel Klistorner]

I don't have the numbers off hand, but they can be found in the Eaton and Haas TTT book. According to actual money received by the White Star Line from ticket sales, the 1st class sales raked in more dough than 3rd class. With cabins that went for over 500 pounds for just 4 people, this was enough to pay for about 65 3rd class passengers! I don't see how the 3rd class passengers provided a greater revenue when 1st class made so much more money!

With some 709 3rd class passengers and only 324 first class, the 1st class ticket sales produced far more money. The cheapest 1st class ticket cost three times as much as a 3rd clas ticket. Is this just a one off voyage, or would this have been characteristic for most transatlantic liners?

Daniel.

 

[Pat Cook]

Just a thought here but since she (sorry, Lloyds) was the Royal Mail Ship Titanic, my guess is she made some revenue from mail and cargo shipments.

As with Daniel and Michael, tho', I don't have any exact numbers.

Hope this is of some help.

Best regards,
Cook

 

[Erik Wood]

This looks to be a very interesting debate. After having spent some time mulling this over (I had advanced notice of this thread) I have a couple of things to just throw out there.

While the immigrant trade was a good source of money ships. It wasn't for Titanic or the Olympic class liners. The pricing sceem to me says that what was more important was the 1st and 2nd class. As Daniel pointed out the difference in money.

So at first look it would be as though the Olympic class boats where there to please the middle and upper class, while supplementing the rest with the immigration trade. It almost appears as though White Star had advanced notice of the coming changes.

Just a thought,

 

[Brian Hawley]

Pat, I seem to remember from the inquires that Ismay stated the mail subsidy was based on a formula that included ship tonnage and number of trips made. However there was a maximum figure and I believe White Star did maximum out ever year receiving something like 70-80 thousand pounds. While this was not a huge amount and White Star did not turn it down they were also not getting rich off hauling the mail. Certainly Olympic was profitable in the pre and post war period. These ships were built to make money. Mark will point out that Olympic was also quite a bit more efficient than some of her competition.


Brian

 

[Michael H. Standart]

From Day 11 of Ismay's testimony befor the U.S. Senate Inquiry;

Senator BOURNE. Are any of your ships receiving a mail subsidy from the British Government?

Mr. ISMAY. We receive £70,000 a year for carrying the mails. That is the maximum sum we can receive from the Government.

Senator BOURNE. Had the Titanic survived, how large a subsidy would she have received per year?

Mr. ISMAY. The £70,000 which we received would be divided amongst the three or four ships.

Senator BOURNE. On a tonnage basis?

Mr. ISMAY. No, sir. We could apportion that any way we saw fit.

Senator BOURNE. The company gets the gross amount for the contract, and then you make your own apportionment or allotment? It is simply a matter of bookkeeping?

Mr. ISMAY. Absolutely. We get paid by the British Government on a poundage basis; but as soon as the payments have reached £70,000 we have to carry the mails for the balance of the year for nothing. That is the maximum payment we receive.

Hope this clearifies things a bit.

 

[Charles B. Weeks Jr.]

Thanks for all the input. I'll be off for a couple of days, during which time I'll digest it.
In the mean time any more info, please send it along. I'll check Eaton & Haas, as soon as I can get to a copy. It would seem to me that sources of income were limited to: Cargo revenue, passenger revenue,& mail subsidy. Possibly some revenue from concessions, barber, radio, store, & bar, but I'am not sure of these.
Regards
Charlie

 

[Kris Muhvic]

Hello- just a little thought here: I understand the Titanic was not booked to capacity (off-season sort of thing), but I'm not sure which staterooms(class) were underbooked. I could see a possibility of 1st and 2nd class bookings not maxed out; but what of 3rd? Maybe 3rd passage, although not raking in the big bucks, was a consistant source of income, i.e: reliable. Any company needs an "anchor line".

Take care-
Kris

 

[Daniel Klistorner]

Kris,

The cheapest 1st class ticket for one person could have paid for three times as many 3rd class passengers (i.e. 3). If Titanic had 300 passengers all booked under the cheapest tickets, that would still be the same as accommodating 900 steerage.

Regarding other sources of income, on board expediture was one of them. The B deck Restaurant raked in quite a bit of pounds, depending on how many passengers were booked. The 3 or 5 pound refund, (one Olympic passenger remarked) was far from sufficient to cover all the meals taken in the restaurant. I can't remember the quote exactly, but I think that would only suffice for one meal. Think of several hundred passengers taking three-meals-a-day in the Restaurant, could amount for a pleasing sum. There were other places such as the pool, turkish baths, gym, drinks, extra food etc. Whilst these would have been small amounts individually (once again depending on the amount of passengers) could amount do decent sums per voyage.

Regards,

Daniel.

 

[Kris Muhvic]

Daniel-

I understand the point about the price differences between passage bookings, I guess I was grasping at straws trying to figure out where this "3rd class-bread & butter" concept came from.

I do know that the on board expences can accumulate! Just getting back from a cruise myself, it was rather surprising to see the bill at the end before we disembarked (wha...!). Still, not as much as the trip itself, but good chunk of change nonetheless! Like you said, it adds up.

Take care-
Kris

 

[Erik Wood]

One might ask Parks Stephenson on the concessions on ships of today. However, the ships of yester year I think kept everything in house. For the most part I don't think that the concessions where contracted like they are today. Ships make most of there money on booze, excusions and nik nacks today.

For the most part I find it intriguing how the companies haven't really changed there frame of mind. Big boats to haul lot of people that meet standard of today doesn't always equal safety or competent business practice.

Like I said before I think that the rich crowd was White Stars aim with the Olympic Class ships. The economy was starting to boom. Just a guess.

 

[Charles B. Weeks Jr.]

I'm still looking for a citation on WSL's business plan. I've checked my Eaton & Haas book,"Destination Disaster" not much there, I have several other books that have bits and pieces. I just got Eaton and Haas "Triumph & Tragedy" will check it out, also Liners of the Past, Olympic & Titanic. Barring that it will be calculations based on number of berths each class. Price per berth per trip. Crew, fuel and stores costs per trip. Freight revenues, and a lot of conjecture.
I know that somewhere I've seen a comment in print about the 3rd class paying the freight, I've just got to remember where. If anyone has any more suggestions on this I'd appreciate hearing them.
Regards,
Charlie

 

[Michael H. Standart]

Charlie, it sounds to me like you have the basis for an excellant research paper. I hope you follow up on it, and perhaps publish here on ET.

 

[Charles B. Weeks Jr.]

I've spent five years now trying to convince students to do this. All they want to do is recite what we all know happened. So maybe I'll have to bite the bullet.
Regards,
Charlie