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Author Topic: Why can't I make a profit?  (Read 6400 times)

Offline Icelandair0416

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Why can't I make a profit?
« on: August 05, 2009, 09:18:05 PM »
I seem to be having a little bit of trouble making a profit for my airline. I have tried cutting costs, increased ticket prices, and things like that but still can't make a profit! I have already bankrupted twice because of this issue. If someone could give some advice it would be greatly appreciated!

Kontio

  • Former member
Re: Why can't I make a profit?
« Reply #1 on: August 05, 2009, 09:30:01 PM »
What did you do the times you bankrupted? Where did you hub, which aircraft, which routes, how much advertising?

What I have done in both NAC and ATB2 is hub at a relatively large airport, start a general worldwide marketing campaign in all media, and decide on an aircraft type. In NAC I decided on a short/medium haul type and started routes <1000NM from my hub, no second-leg routes. In ATB2 I decided on a long-range aircraft and started longer routes with short routes in between to maximize aircraft utilization, no second-leg routes. Then I accidentally acquired a second fleet type for short-range operations, which has been surprisingly successful so far.

Generally I am trying to look for routes that are not already served over capacity, ideally I would be the only airline on the route but usually that situation will not last for long. I have not changed my ticket prices at all from the default pricing and otherwise I am also pretty much running on automatic/default settings. It takes some effort to acquire new aircraft, I have not figured out if there is a pattern when the used aircraft market is replenished so I check the market regularly while doing other things on the computer or even doing something else at home.

I have taken out several loans as needed in order to be able to expand fairly aggressively, as I think it is important to gain new routes, reserve slots, and generally be bigger than your competition early. Patience has been mentioned as a key factor in succeeding in this game. To me it means sticking to your initial plans, as in waiting patiently for the right aircraft to come along instead of just leasing anything in a panic. It also means that sometimes, when you are reasonably sure you are making money, it is best to just log out and let the cash accumulate.
« Last Edit: August 05, 2009, 09:41:00 PM by Kontio »

Offline Icelandair0416

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Re: Why can't I make a profit?
« Reply #2 on: August 05, 2009, 09:40:44 PM »
My hub was and still is Minneapolis, i currently use 2 737-200ADV and 1 727-200ADV. I cuurently fly to Phoenix, Chicago Midway, Dulles, Reagan National, Madison, and La Guardia. I have a countrywide adcvertyising in all media. I also have about 65% load factors and a CI of 32 and growing. Thanks for the advice!

luke3

  • Former member
Re: Why can't I make a profit?
« Reply #3 on: August 05, 2009, 09:41:49 PM »
Make sure you are not running routes with heavy competition, at this point it would only mean suicide. Also, i see you have two fleet types with 3 airplanes. Early in the game, fleet commonality is an important thing to maintain if you want to make a profit. There's always time later on to expand operations with a new type in service. You could seriously cut costs if you swapped that 727 for anothr 737-200, eliminating an aircraft type from the commonality costs and lowering the ones for the 737. Also two engines are cheaper than three so you would also save in fuel costs. I remember in the previous game my 727s hade huge maintainence and fuel costs, i think you would do better focusing on the 732 and chosing routes wisely.

Kontio

  • Former member
Re: Why can't I make a profit?
« Reply #4 on: August 05, 2009, 09:59:07 PM »
My hub was and still is Minneapolis, i currently use 2 737-200ADV and 1 727-200ADV. I cuurently fly to Phoenix, Chicago Midway, Dulles, Reagan National, Madison, and La Guardia. I have a countrywide adcvertyising in all media. I also have about 65% load factors and a CI of 32 and growing. Thanks for the advice!

Minneapolis sounds like a nice hub, should have lots of traffic to other major cities in the US. Your destinations also look good. It's 1995 so the 727 is a bit outdated: it has 3 pilots, it uses too much fuel and has 3 engines. It would also be best to stick to just one fleet type (737) this early in the game. The 737 works well with shorter flight so you can make nice profits if you can fit at least four daily return flights in the schedule. I usually bring up the "Open new route" display and sort it by distance, trying to find destinations with nice passenger numbers near my hub. Doing this, I can see several short-range destinations that might be worthwhile with the 737 from MSP. It is also good to note the really short-range destinations because when you have you "major" destinations scheduled you may be left with a little flying time where you can fit a <200NM flight.

Talentz

  • Former member
Re: Why can't I make a profit?
« Reply #5 on: August 06, 2009, 05:44:43 AM »
Basically, what they said.  8)


Though I will point out that how you use your aircraft is just as important as choosing it. Sure, the 727 burns 30% more fuel, requires 2 more crew and has a bit higher maint cost, but a full 727 will always bring in more income then a 732. If you pack in the flights, it will be more profitable then any 737 could hope to be. That extra 50 pax per flight adds up at the end of the day. A 10% increase in income due to more pax could be the difference between making "just" enough to pay the bills and making enough pay the bills and expand as well.

The operating economics of an aircraft is only part of the equation to its overall profit potential.



You've had your lesson for today  :)



Talentz

Offline Trent900

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Re: Why can't I make a profit?
« Reply #6 on: August 06, 2009, 09:44:53 AM »
start a general worldwide marketing campaign in all media, and decide on an aircraft type.

Of course its only worth doing a wordwide campaign if your going to fly worldwide. My hub is in the uk and I'm only marketing around my hub (nearby cities etc) and route marketing for the routes I'm flying (obviously). For Europe I've found this is fine until you can afford an aggresive advertising spree. I'm averaging about 79% load factor.

I think aircraft choice is key. Try and stick to one, maybe two aircraft types otherwise maintenance and training costs will rocket. Im sticking to A320 family aircraft with the only drawback there is not many second hand aircraft so am having to lease from Airbus. I'm ordering 1 aircraft at a time when I can afford it leaving a good positive amount in the bank. Ordering this way means I've got a constant supply of aircraft for my expansion plans, 1 maybe 2 aircraft a month average for me is just rite.

Of course there are probably 1000 other ways to play the game. It all depends what you've got set in your mind.

D.
interworld - a proud member of the 'QualiTeam' alliance.

Kontio

  • Former member
Re: Why can't I make a profit?
« Reply #7 on: August 06, 2009, 09:55:25 AM »
Of course its only worth doing a wordwide campaign if your going to fly worldwide.

It does not work like that. All marketing campaigns are really worldwide as they boost you CI which is the same all over the world. A worldwide campaign just makes it go up faster than a regional campaign. It's just a matter of how important you think getting a high CI is and what you can afford.

Offline Maarten Otto

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Re: Why can't I make a profit?
« Reply #8 on: August 06, 2009, 02:23:14 PM »
I only advertise in my home city and nearby citys, my CI is around 50 and planes are at an average of 87% loaded. But I'm not going to tell how I manage that.

It's true that the 737 family is great, but you must be patient for them as there are others in the que.

Offline Trent900

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Re: Why can't I make a profit?
« Reply #9 on: August 06, 2009, 03:55:05 PM »
It does not work like that. All marketing campaigns are really worldwide as they boost you CI which is the same all over the world. A worldwide campaign just makes it go up faster than a regional campaign. It's just a matter of how important you think getting a high CI is and what you can afford.

A regional campaign is perfectly good as long as you've got route campaigns on the go.   I've got no problems with the company image or load factors.  Maybe it all depends on where your based?

D.
interworld - a proud member of the 'QualiTeam' alliance.

Kontio

  • Former member
Re: Why can't I make a profit?
« Reply #10 on: August 06, 2009, 04:04:30 PM »
A regional campaign is perfectly good as long as you've got route campaigns on the go.   I've got no problems with the company image or load factors.  Maybe it all depends on where your based?

It depends a lot on how much competition you are facing and to some extent on your strategy. If you are able to dominate your hub and key routes to other cities you don't have to worry about your CI that much as long as you are getting decent loadfactors. I expect to face fierce competition and want to be able to enter crowded routes so that's why I want to run an expensive advertising campaign to get my CI into the 90s.

But the original point was that it's really not a question of whether you fly worldwide or not, advertising in this game is not that sophisticated.

Yullover

  • Former member
Re: Why can't I make a profit?
« Reply #11 on: August 10, 2009, 03:58:26 AM »
You complain about not making profit, but you join a alliance....

i don't know if you see but flying with an alliance cost you money, 0,8% of your earning !!!!

Offline ekaneti

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Re: Why can't I make a profit?
« Reply #12 on: August 10, 2009, 10:17:20 AM »
Early on you should cut fares to raise income, not increase fares.

Dazwalsh

  • Former member
Re: Why can't I make a profit?
« Reply #13 on: August 10, 2009, 04:54:49 PM »
alliances will also boost your load factors though so you make back the 0.x profit loss

Offline Icelandair0416

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Re: Why can't I make a profit?
« Reply #14 on: August 11, 2009, 12:58:28 AM »
Thanks to everyone who took time to post some advice on how to make a profit! This was greatly appreciated by me, since I was having trouble making a profit. Once again many thanks everyone!

Offline Pai

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Re: Why can't I make a profit?
« Reply #15 on: August 13, 2009, 09:25:34 PM »
A regional campaign is perfectly good as long as you've got route campaigns on the go.   I've got no problems with the company image or load factors.  Maybe it all depends on where your based?

D.

Agree,

You can't afford national wide marketing when you have only 3 planes.

I started my national wide marketing after I received 100 planes...
Lunar Airways

Offline Unbornio

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Re: Why can't I make a profit?
« Reply #16 on: August 14, 2009, 08:51:59 AM »
Go buy some Tupolevs and Illushyins  ;D

Beta Tester

irelayer

  • Former member
Re: Why can't I make a profit?
« Reply #17 on: August 19, 2009, 03:51:10 AM »
I'm kind of dumbfounded at this point. I have two games going, and at first with only one plane I was making a profit in both (although, at a snails pace). I took out loans to lease as many planes as possible, and that truly killed me. Even though I am making a profit on all of my routes, at the end of the day (real game day) I lose about 2 million dollars. I'm down to -10 million. What is the extra cost I am incurring and how do I reverse this? The daily/weekly/monthly profits are only PER route or PER aircraft, so there is some operating cost that means I am truly not making any money per month.

-IR

ngaira

  • Former member
Re: Why can't I make a profit?
« Reply #18 on: September 19, 2009, 08:00:22 AM »
I am facing a similar situation as yours. Although I have no loans pending. But there is a huge chunk of monies that goes out especially on Wednesdays for me. I dont know why. I am averaging good LF and seem to be recording good daily profits when you look at the routes page. However, when one looks at particular aircrafts (most of them), they show that losses are being made. Dont know how!! Its as if the aircrafts do not fly the assigned routes on the other days.  The figure I normally see is for a day. What about the the average cumulative total for the 5 days? If for example an air aircraft makes $110,000 daily profit for 5  days in a week, surely its not possible for it to record a loss even if you include the other hidden costs. One will remain with at least a figure that keeps you in the green. So, what am I missing here?

Offline ukatlantic

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Re: Why can't I make a profit?
« Reply #19 on: September 19, 2009, 09:31:38 AM »
An aircraft will show as making a profit if the load factors are good what you need to look at is your ticket price- if fuel goes up say 20% or so then so should your ticket price.  Also aircraft may show they are still clearing a profit because they are, what they dont take into account is the non aircraft costs within the game like staff increases and wage increases and advertising - so a top tip if fuel prices increase say 20% from when you opened or last increases your ticket prices then increase them again - it may make the difference between weekly losses and weekly profits  ;)

 

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