Whats up with all the large bankruptcies?
schro:
I've noticed over the past couple of game years that there's been a significant number of large airlines failing (i.e. in ORD and SFO, and more recently in JFK, LAS, AMS, ATL, and probably soon in PHL) with hundreds of planes that go out in a bang.
Is this simply from a lack of attention, or perhaps a cost structure that doesn't fare well with $900-1000 fuel prices? I'm rapidly and profitably growing, so I'm curious what has caused the downfall of others...
hybridace101:
Maybe you can share how you managed to be profitable. Yes, fuel appears to be a major factor. In my other game world for instance where I get my fuel for less than $200, all my flights in themselves were profitable. Now however, with fuel at over $1100 and considering that I have quite a number of flights 3-4 hours long, fuel costs alone are larger than revenues despite a load factor of around 60%. I'm a start-up airline by the way (2+ game weeks old).
Sigma:
When you're new your airline is always going to have low load factors because people don't know you. You've got to stick it out for a few game-months to get your LFs up. Once that happens you should be making plenty of cash unless you're doing other things wrong.
If fuel prices alone are more than your revenue you're probably doing something else wrong, as even a much higher LF is unlikely to bring you to profitability if your costs are that high. Either you're running planes with deplorable fuel efficiency or you're simply not getting enough turns per day out of them to get your ticket revenue high enough (or you're simply charging too little for a ticket).
Attached is a sample of one of my planes. Note that my Revenue on that single plane is about 5 times fuel cost. And that was taken right now with fuel north of $900. Even my little regional jets (F100s) are making 5 times their fuel costs in revenue and netting about $800K/week in profit. When fuel prices are lower you can imagine the profit these planes make.
Overall I still net a 15-20% net profit margin company-wide with fuel prices this high, putting north of $50M/week into the bank. I was nearly an astonishing unrealistic 40% net margin when fuel prices were low.
hybridace101:
Quote from: Sigma on January 16, 2010, 07:26:43 AM
When you're new your airline is always going to have low load factors because people don't know you. You've got to stick it out for a few game-months to get your LFs up. Once that happens you should be making plenty of cash unless you're doing other things wrong.
If fuel prices alone are more than your revenue you're probably doing something else wrong, as even a much higher LF is unlikely to bring you to profitability if your costs are that high. Either you're running planes with deplorable fuel efficiency or you're simply not getting enough turns per day out of them to get your ticket revenue high enough (or you're simply charging too little for a ticket).
Attached is a sample of one of my planes. Note that my Revenue on that single plane is about 5 times fuel cost. And that was taken right now with fuel north of $900. Even my little regional jets (F100s) are making 5 times their fuel costs in revenue and netting about $800K/week in profit. When fuel prices are lower you can imagine the profit these planes make.
Overall I still net a 15-20% net profit margin company-wide with fuel prices this high, putting north of $50M/week into the bank. I was nearly an astonishing unrealistic 40% net margin when fuel prices were low.
Would you mean my flights are too long for a particular aircraft thus eating-up much needed time? For instance, my 734s in this game are deployed to destinations at least 2 hours away from the base city (some even reach 4 hours) and turn-around time for that particular aircraft is 70 mins. The suggested price for that Y route is around $245-250 but I set it at $225 as the manual suggested start-up aircraft do. The 734 is the only aircraft that comprises my fleet.
By the way, would you consider the 734 a fuel-efficient aircraft?
For now, I consider 60% a fairly respectable LF since the airline has been operating for a month.
In business/economics, there is a concept called fixed costs and variable costs. However, I know the key is to determine the variable costs with respect to each passenger flown and the only cost I know that varies with respect to the passenger flown is the passenger fees charged by the airports. Fuel is a function of miles or hours the aircraft is flying and not a function of how many passengers are flying. Maintenance is a function of how many aircraft (and engines per aircraft) and aircraft families are in the fleet.
schro:
This thread is getting a bit derailed from its original intent - I was hoping to get a post-mortem on some of the larger bankruptcies to gain an understanding of the risks/quirks that are out there for large airlines.
Sigma - Thanks for sharing on the successful airline side - I'm mostly around 4x fuel cost for my revenue levels, and from what it sounds like, an airline configured for success with fuel at $200 isn't going to do so well at $1000. When I started, fuel was $500-600ish, so I've never really had super wild profits. What type of plane is that a screenshot of?
The other thing that I think might cause the large airlines to fall is setting C/D checks to not automatically perform, then being away from the game for a while. I saw pax count gradually fall at Locke in KLAS over the course of about a game year, then in a last ditch effort to save the airline, I saw many of his planes on the market in poor condition lacking C and D checks. I think this may also be happening to Sharpe in PHL right now.
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