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Author Topic: So, I'm tanking... now what?  (Read 4262 times)

Grimvisage

  • Former member
So, I'm tanking... now what?
« on: May 04, 2010, 01:28:57 AM »
Unfortunately, my mistakes have caught up to me, and I'm having to learn the hard way. I'm not sure I'll remain solvent after the C checks I've got next month. Even if I'm not forced to go bankrupt by my creditors, it would take me such a long time to get out of the red that my competitors will be way ahead of me. I'm wondering whether I couldn't do better if I cut my losses, started over, and didn't make the same mistakes. So, I'm faced with a choice. 1) I go bankrupt immediately and wait for decent a/c to show up on the used market and restart. 2) I go bankrupt immediately and order 2 new a/c from the start, then wait 3 months in game time to start over. 3) I wait to go bankrupt until I see good used a/c on the market, then try to go through the process really fast and get the a/c before others do. What do you guys think? Which is the best idea? Or is there a better one?
« Last Edit: May 04, 2010, 01:38:06 AM by Grimvisage »

Offline LemonButt

  • Members
  • Posts: 1895
Re: So, I'm tanking... now what?
« Reply #1 on: May 04, 2010, 01:38:46 AM »
Leasing a new aircraft from the start is a good strategy because you get a brand new plane, pay nothing to reconfig when purchasing, and you can lock in a lower-than-used lease rate for 7 years without worrying about the D-check.  3 months of waiting is worth it when you consider you can get an aircraft for ~100k/month cheaper than used.  The Dash-8 just got certified also, which is a great aircraft to have due to the low costs.

Grimvisage

  • Former member
Re: So, I'm tanking... now what?
« Reply #2 on: May 04, 2010, 01:46:46 AM »
Sounds very logical, though I'm not sure about the Dash 8. It looks like something best suited to nabbing those smaller regional airports after you've already filled up high demand routes.

auerbacs

  • Former member
Re: So, I'm tanking... now what?
« Reply #3 on: May 04, 2010, 02:32:10 AM »
I had a similar story starting off. I tried to run one 767-300ER, but the lease was so expensive that it barely made money and my growth stalled. I started again and this time I'm going to lease new planes. I made a bit of a bizarre decision in deciding to get Tupolev Tu-204. It's turnaround time is a bit long and it uses a little more gas than it should. Also maintenance is usually more expensive with Soviet planes. But, if you look at how many passengers they carry for the price they cost, they're incredible. They're kind of like s***ty 757s for half the price. The benefit of this is I can start out with 3 of them! The first one will be here in a month. So I'd suggest considering the Tupolev Tu-204.

Offline LemonButt

  • Members
  • Posts: 1895
Re: So, I'm tanking... now what?
« Reply #4 on: May 04, 2010, 02:51:58 AM »
Not the worst strategy I've ever heard, but make sure you get rid of the Tupolevs before gas prices spike or you'll be bankrupt in no time :)

auerbacs

  • Former member
Re: So, I'm tanking... now what?
« Reply #5 on: May 04, 2010, 02:56:40 AM »
That's okay, when gas gets expensive, Tupolevs, like their pilots, fly on vodka  ;D

Dookz

  • Former member
Re: So, I'm tanking... now what?
« Reply #6 on: May 04, 2010, 03:07:50 AM »
A new 767-300ER lease is alot more expensive than a used one. I'm currently leasing one of them in decent condition. Profits are not impressive mainly because my airline is very new. But it's starting to pick up slowly.

EDIT: It's weekly revenue is 212,806 USD. Avg LF is 49.4% and a 20.3 hr fleet utilization.
« Last Edit: May 04, 2010, 03:14:40 AM by mini airbus »

Offline carrisi

  • Members
  • Posts: 770
Re: So, I'm tanking... now what?
« Reply #7 on: May 04, 2010, 07:09:06 AM »

I see you have started again.
1) Good choice of acft.
2) Stick with one fleet until you have about 5-8 aircraft in it - the fixed overheads are huge
3) Borrow as much money as you can when it lets you

IN reality there are very few good acft to lease now, so ordering a new one or two may make sense now...

Grimvisage

  • Former member
Re: So, I'm tanking... now what?
« Reply #8 on: May 04, 2010, 06:35:33 PM »
Glad to hear someone say that I made a good decision. Unfortunately, my fixed costs and loan payments are probably going to put me in the red before I get the MD-90s. I suppose I should've tried to go with a cheaper jet, but this type seemed like a good compromise. I fired all non-essential personnel, but that might not be quite enough. I guess before I hit the red, assuming it's within 2 weeks til the planes arrive and can use them, I'll buy the slots I need and just start flying from negative cash. Hopefully I'll make a profit soon after that and start to come out of it. :( Bummer. Hope I don't have to restart again, assuming I still feel like it by then.

L1011fan

  • Former member
Re: So, I'm tanking... now what?
« Reply #9 on: May 04, 2010, 07:13:57 PM »
God forbid I should have to restart, but its always a possibilty. Are there still any open base airports,LOL?! :laugh:

auerbacs

  • Former member
Re: So, I'm tanking... now what?
« Reply #10 on: May 04, 2010, 09:26:05 PM »
Two things grimvisage:

1) I'm not sure that it's wise to fire staff even though you're not using them. I thought that firing staff lowered their morale which is a huge pain in the ass. It might be better to just keep them around in general (at least that's what I did).

2) Don't worry about the red. It's not that big of a deal. You're income is far more important than that small amount of negative cash, and if those two plane you bought bring in good income, there won't be any issues. Also, you can still open routes (and buy slots) when you're in the red in cash. This may seem weird, but it's true. So there's no need to open the routes early if you don't want.

Good luck... I'm interested to see how it works for you, especially because I'm in a similar situation except that I picked Tupolevs instead of MDs.

Auerbacs

Grimvisage

  • Former member
Re: So, I'm tanking... now what?
« Reply #11 on: May 04, 2010, 09:43:30 PM »
1) I'm not sure that it's wise to fire staff even though you're not using them. I thought that firing staff lowered their morale which is a huge pain in the ass. It might be better to just keep them around in general (at least that's what I did).

Yes, I wondered about the morale, too, but I don't seem to be suffering any ill effects at the moment. I'm not sure how important it is or how difficult it will be to raise eventually. I guess I'll find out. :)

2) Don't worry about the red. It's not that big of a deal. You're income is far more important than that small amount of negative cash, and if those two plane you bought bring in good income, there won't be any issues. Also, you can still open routes (and buy slots) when you're in the red in cash. This may seem weird, but it's true. So there's no need to open the routes early if you don't want.

Ok, good to know about the route situation. Good luck with those Tupolevs. ;)

Dookz

  • Former member
Re: So, I'm tanking... now what?
« Reply #12 on: May 05, 2010, 06:22:23 AM »
auebarcs, please let us know how you do with those Tupeluvs.

As for me, my situation isn't much different. I have less than 2 months left before the free ride is over. I start paying 1.3mil in monthly leases and right now my 767 is making a 280k revenue and I'm pocketing 160k profit. I'm hoping my plane makes atleast 400k revenue just to get through the leases. It might not have been a good idea to fly longhauls 5x a week. I saw another airline that started off flying 767 less than 1000nm away 2x a day and is doing fairly well, which I thought was an odd strategy but it works!  :laugh:

auerbacs

  • Former member
Re: So, I'm tanking... now what?
« Reply #13 on: May 06, 2010, 02:18:56 AM »
so far it's going very well... I have three Tu-204s running twice daily all on the same route (Auckland to Brisbane). I'm spending a pile on marketing (my CI is already above 30, which is very high given I just started) and I'm still making good money. Granted, my leases won't kick in for another couple of months, but I'm already flying at 70% LFs with a 33 RI, even against good competition (my route is oversupplied). In other words, I'm stunned by how well it's going, and given that their leases aren't too bad, I don't think they'll sting when the 5 month grace period ends.

The problem is that I share my airport with a very strong competitor who did well on his first effort and is therefore much bigger than I am. If gas prices stay low, I'll have the advantage with my Tupolevs and their favorable leases. If they go up, his 737s, with their higher leases but lower consumption will kill me. It's going to be a very exciting conflict.

The only other issue I've come across is that the Tupolev's need too much runway for several domestic routes in New Zealand. So I'm planning to attack the Tasman with them and then to look at smaller planes to attack the domestic market. If my competitor wasn't already doing so well, I would be very optimistic. As it is, I give myself a fighting chance.

I was really disappointed that the 767 long-haul strategy failed so miserably in this game. The game certainly appears to have had a short-haul bias in the early going. Anybody who go their hands on decent used 737s did much better than those who shelled out for 767s like several of us in this thread.

Good luck to you all (except Southern Skies, my dastardly competitor).

Offline swiftus27

  • Members
  • Posts: 4395
Re: So, I'm tanking... now what?
« Reply #14 on: May 06, 2010, 02:59:13 AM »
this game doesnt have short range bias at all.... long range planes make the most money per capita. 

Lets go back to ask this to Magic Carpet.

Offline ekaneti

  • Members
  • Posts: 844
Re: So, I'm tanking... now what?
« Reply #15 on: May 06, 2010, 03:53:53 AM »
"I was really disappointed that the 767 long-haul strategy failed so miserably in this game""


I tried flying a 767-200ER from NAN-LAX and it did really poorly. Made a small profit but not enough once the lease kicked in. I have slated the plane for retirement when the lease runs out. Right now it is on NAN-BNE and NAN-AKL. AKL is doing real well even with competition but BNE is poor with no competition >:(

I have a 737-300 flying NAN-MEL and it is doing ok.

Dookz

  • Former member
Re: So, I'm tanking... now what?
« Reply #16 on: May 06, 2010, 04:17:26 AM »
so far it's going very well... I have three Tu-204s running twice daily all on the same route (Auckland to Brisbane). I'm spending a pile on marketing (my CI is already above 30, which is very high given I just started) and I'm still making good money. Granted, my leases won't kick in for another couple of months, but I'm already flying at 70% LFs with a 33 RI, even against good competition (my route is oversupplied). In other words, I'm stunned by how well it's going, and given that their leases aren't too bad, I don't think they'll sting when the 5 month grace period ends.

The problem is that I share my airport with a very strong competitor who did well on his first effort and is therefore much bigger than I am. If gas prices stay low, I'll have the advantage with my Tupolevs and their favorable leases. If they go up, his 737s, with their higher leases but lower consumption will kill me. It's going to be a very exciting conflict.

The only other issue I've come across is that the Tupolev's need too much runway for several domestic routes in New Zealand. So I'm planning to attack the Tasman with them and then to look at smaller planes to attack the domestic market. If my competitor wasn't already doing so well, I would be very optimistic. As it is, I give myself a fighting chance.

I was really disappointed that the 767 long-haul strategy failed so miserably in this game. The game certainly appears to have had a short-haul bias in the early going. Anybody who go their hands on decent used 737s did much better than those who shelled out for 767s like several of us in this thread.

Good luck to you all (except Southern Skies, my dastardly competitor).
I think its just the 767 being used in really long hauls is the concern. I am observing this is happening to other airlines also. And airlines that started off with a 767 flying very long hauls is either spiraling downhill or growth is extremely slow, unless someone who is playing ATB can come forward and correct me but that is what I am seeing. But if you were lucky enough to get the DC-10 they are perfect for the job (not very long hauls). Can fly 7x a week around 3300nm, more passengers and most importantly leasing is half that of a 767-300ER. The A330/A340 are good alternatives also but they are rare gems. A300s, 757 are pretty good too.

I am in my fourth month flying 767, outlook is still unknown if I will make it through this first hurdle... and I know a few other airlines that started the same way as me. It makes me wonder if something changed that flying 2 days less frequency has much more impact than ever before, it will slow you down considerably.


EDIT: Well I'm so happy. I didnt save enough to lease a 2nd used 767 but just exact to afford a new 120 seater lease  before the first monthly fees starts hitting me ;D
« Last Edit: May 06, 2010, 05:30:07 AM by mini airbus »

Offline JonnyAngel

  • Members
  • Posts: 179
Re: So, I'm tanking... now what?
« Reply #17 on: May 06, 2010, 08:16:17 AM »
So I'm kind of in a similiar situation. I have profitable routes, and am competing well, but the high slot cost at YYZ has left me with a bit of a deficit, and I am skipping a C Check presently because I have to earn all the money I spent on slots back, and still flying the plane because I can't afford to have it sit idle.

Any pointers on how I get through this rough patch. In previous game worlds I would have been able to negotiate a loan, but looks like the economic model in this game world is locked up tight. I can't get a new loan, so I can get any bridge financing and definitely need the funds in order to ride this out.

Strategy pointers would be appreciated...
 :-\

Talentz

  • Former member
Re: So, I'm tanking... now what?
« Reply #18 on: May 06, 2010, 09:08:54 AM »
so far it's going very well... I have three Tu-204s running twice daily all on the same route (Auckland to Brisbane). I'm spending a pile on marketing (my CI is already above 30, which is very high given I just started) and I'm still making good money. Granted, my leases won't kick in for another couple of months, but I'm already flying at 70% LFs with a 33 RI, even against good competition (my route is oversupplied). In other words, I'm stunned by how well it's going, and given that their leases aren't too bad, I don't think they'll sting when the 5 month grace period ends.

The problem is that I share my airport with a very strong competitor who did well on his first effort and is therefore much bigger than I am. If gas prices stay low, I'll have the advantage with my Tupolevs and their favorable leases. If they go up, his 737s, with their higher leases but lower consumption will kill me. It's going to be a very exciting conflict.

The only other issue I've come across is that the Tupolev's need too much runway for several domestic routes in New Zealand. So I'm planning to attack the Tasman with them and then to look at smaller planes to attack the domestic market. If my competitor wasn't already doing so well, I would be very optimistic. As it is, I give myself a fighting chance.

I was really disappointed that the 767 long-haul strategy failed so miserably in this game. The game certainly appears to have had a short-haul bias in the early going. Anybody who go their hands on decent used 737s did much better than those who shelled out for 767s like several of us in this thread.

Good luck to you all (except Southern Skies, my dastardly competitor).
I think its just the 767 being used in really long hauls is the concern. I am observing this is happening to other airlines also. And airlines that started off with a 767 flying very long hauls is either spiraling downhill or growth is extremely slow, unless someone who is playing ATB can come forward and correct me but that is what I am seeing. But if you were lucky enough to get the DC-10 they are perfect for the job (not very long hauls). Can fly 7x a week around 3300nm, more passengers and most importantly leasing is half that of a 767-300ER. The A330/A340 are good alternatives also but they are rare gems. A300s, 757 are pretty good too.

I am in my fourth month flying 767, outlook is still unknown if I will make it through this first hurdle... and I know a few other airlines that started the same way as me. It makes me wonder if something changed that flying 2 days less frequency has much more impact than ever before, it will slow you down considerably.


EDIT: Well I'm so happy. I didnt save enough to lease a 2nd used 767 but just exact to afford a new 120 seater lease  before the first monthly fees starts hitting me ;D


Hmm 767 problems eh? What routes were you flying? The rule of thumb for LH flights are: 2800-3300nm 7x weekly/1x daily. This is the most profitable route in AWS. Although 5x 200nm routes can pull in nearly as much.

I've always felt 767s were niche aircraft. Typical load is kinda low for a widebody. You say a DC-10 works better (within its range of course)

Well.. have you asked yourself "Why is that?". Once you compare the two aircraft.. its sort of obvious.




So the DC-10-40 carries almost 60 more pax then the 763 @ slight increase in crew costs and roughly 25% more fuel costs. You don't think that 60 more pax will pay for that fuel costs and slightly increase in staff?  ;)

When selecting an aircraft at the start, you have to consider many different things: Types of routes, range, speed, LH or SH... one of the most important yet overlooked stats is profit potential. Will the aircraft produce enough revenue on a wider range of routes?.

LHR-JFK: Who will make more money on the route... 763 v DC10-40? How about 742 v 10-10? 744 v 743?  <--- That's a tough one  ;)

Bigger is generally better. More seats = more revenue. That's not to say the 767 sucks.. its designed for a smaller market. On a 200 daily market... which aircraft will be better suited? 763 or 10-10?

Plus, you shouldn't really be flying an ER aircraft on a sub 3000nm route. If I had a 763ER.. I would rather put it on a 6000nm route 4x weekly then fly it 1x daily sub 3000nm. The aircraft was designed to fly long rang, not to mention your pay a "higher" price because its an -ER performance.


Hopefully this will give everyone an insight to which aircraft are best suited for different routes. Choices, choices, choices... so many of them!



Talentz


Dookz

  • Former member
Re: So, I'm tanking... now what?
« Reply #19 on: May 06, 2010, 04:14:06 PM »
Appreciate your response, Talentz :). My hub is in RPLL in the Philippines. Most of its international demand are 5500nm+ to NA and Europe. The route I was flying MNL-AMS (5619nm) has 40,000+ demand. 767-300ER (10 yrs old 90%+ condition) is being used to fly this route 5x/week. I had thought of the DC-10 but it lacked range and there were only a few routes that had about 18,000 demand in the 4600nm range and I would only be able to fly them 5x daily as well.  In 2800-3300nm, there are some airports that have 8,000 demand but is too thin for a DC-10. In TMT2 I flew a DC-10 7x daily from NRT-HNL, it made the most sense, it flies 7x a week and enough demand so you can build on that single route for a while and that is what I was hoping to do here  except that it would be 5x frequency on a very long flight.

I think I did my best to optimize my schedule timewise too (my lowest LF route has both inbound and outbound leg either arriving or departing between 5am-22pm. My avg LF for Y Class  is 70%+ and climbing, 47% in C Class and climbing slowly ( I wasn't skimpy on marketing  ;)) and made small adjustments to prices as it grew. The aircraft makes about 166,000 USD/week now that the weekly leasing costs kicks in.








« Last Edit: May 06, 2010, 04:22:03 PM by mini airbus »

 

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