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Author Topic: New challenge  (Read 2219 times)

munipandita

  • Former member
New challenge
« on: May 09, 2010, 12:45:15 AM »
Hi all

I am trying a new challenge: to open a company with only small aircrafts, flying from and to small airports.. And create a spider web inside the US.

Has anyone tried this before?

I m using 1 EMB-120 Brasilia and a Fokker F.27, see which is better and start using only one type.

Offline Daveos

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Re: New challenge
« Reply #1 on: May 09, 2010, 12:52:08 AM »
I formed an all EMB-120 airline in DOTM form Caracas and it worked very well with low competition.  Patience was the key and I ended up with around 35 of the type and a value of 40 million in 4 years.

I also attempted to form an all Dash 8 fleet in the latest ATB in Norway, but I found that starting with small aircraft was futile with the new tweaks to CI in v1.2.  Even with no competition on any route and only 6 year old aircraft, I was unable to make a profit.  I had 4x Dash 8s and a CI of 13 when my demise became inevitable.

Offline swiftus27

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Re: New challenge
« Reply #2 on: May 09, 2010, 12:53:50 AM »
Lots of people, including myself, have tried to make commuter airlines.  You can search for the many threads people have made regarding the subject.

In all honesty, they are very tough to make successful.  The smaller A/C dont seem to be able to generate enough gross profit to cover the expenses of the company.

I think Sami should have a non-linear scale of hiring VPs and other higher level employees.  Small and Medium ac should need fewer of these people.

I always say that small planes are a great supplement but not a good backbone for an airline

munipandita

  • Former member
Re: New challenge
« Reply #3 on: May 09, 2010, 12:59:04 AM »
so what aircraft do you recomend?

BAE 146 family.. or the BAE ATP?


jest

  • Former member
Re: New challenge
« Reply #4 on: May 09, 2010, 01:11:12 AM »
so what aircraft do you recomend?

BAE 146 family.. or the BAE ATP?



Go for the 146 family. Very nice aircraft cara  :)

Offline Daveos

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Re: New challenge
« Reply #5 on: May 09, 2010, 01:13:55 AM »
Please advise your passengers that rows 5-8 aren't allowed handluggage if you choose the 146.  The wings eat into the over head lockers! :)

Absolute nightmare for ground staff :D

munipandita

  • Former member
Re: New challenge
« Reply #6 on: May 09, 2010, 01:43:00 AM »
Absolute nightmare for ground staff :D

so bad for them

Offline Daveos

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Re: New challenge
« Reply #7 on: May 09, 2010, 01:52:01 AM »
so bad for them
It's not much fun telling 20 people they have to check their bag on a full flight. It's a big issue with the aircraft and really affects passenger satisfaction in real life :)
« Last Edit: May 09, 2010, 10:15:12 AM by Daveos »

Offline Sigma

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Re: New challenge
« Reply #8 on: May 09, 2010, 04:22:59 AM »
Lesson #1, and the only lesson you really need to learn, give up on Marketing expense.  Spend only what you need to maintain a minimal CI and forget all RI spending (if you do any of that anyway, it's always a waste no matter your size).  The marketing expense needed to acheive any appreciable CI will cost you WAY (as in many TIMES) more per route that you operate than you'll actually be getting off that route.  You're not going to be seeing competition so it doesn't matter anyway.

If you cut out the Marketing expenses it's really not that hard to make it work.  There's no penalty for running 2 aircraft types anyway, so run 2 of them if you want, that way you can get the planes you need without having to wait 1 month between them as you will have to if you only use 1 type.

munipandita

  • Former member
Re: New challenge
« Reply #9 on: May 09, 2010, 04:14:00 PM »
Well.. About marketing, i noticed that just now.. hahah My income was 180 000... and the marketing expenses: 188 000...

So i cut all of them and now i have only one local marketing on newspaper. 5 000 / week..

And i ordered a BAE 146-200, because there are some routes with 80 pax / day.. And will stay with the Brasilia also.

Lets see what hapens

Offline alexgv1

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Re: New challenge
« Reply #10 on: May 09, 2010, 06:17:30 PM »
...
So i cut all of them and now i have only one local marketing on newspaper. 5 000 / week..

...

Just don't forget that that figure will increase as you expand your route network and aircraft fleet.
CEO of South Where Airlines (SWA|WH)

ban2

  • Former member
Re: New challenge
« Reply #11 on: May 09, 2010, 09:48:27 PM »
so what aircraft do you recomend?

BAE 146 family.. or the BAE ATP?



ATP every time, look at the fuel costs for each, i'm afraid if you go for a small commuter line you must rule by your head and not your heart.

ecerywhere where you can save money you must take it.   turn around times(can you squeese an extra route in), maintainance costs and everything basically,  get your airline right and you can take on anything,  good luck

best regards
 ban2

suorodolam

  • Former member
Re: New challenge
« Reply #12 on: May 09, 2010, 10:56:49 PM »
I'm currently running 9 Brasilias and just got my first delivery of the ATP. These are all brand new aircraft and my profit is somewhere around 35-40% of my total ticket revenue (compared to some miserable starts trying to fly jet aircraft in this game world without being able to break even). Both of these aircraft offer decent range for their size class and a low operating cost and make excellent choices.

Offline raptorva

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Re: New challenge
« Reply #13 on: May 10, 2010, 04:12:21 AM »
My Fairchild Metro's are making very good profits for a small 19 seater aircraft. One of them last week made 87,000USD on its own and I have others making about the same.

Offline Sigma

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Re: New challenge
« Reply #14 on: May 10, 2010, 04:20:14 AM »
My Fairchild Metro's are making very good profits for a small 19 seater aircraft. One of them last week made 87,000USD on its own and I have others making about the same.

If you're investing in CI at any appreciable amount at all, there's no way that plane actually made a net profit.  It will have cost you way more than $87K between your CI Marketing and all the overhead staff and maintenance costs that aren't reflected in the Aircraft Profit costs.  Those figures are gross profits and reflect direct costs only, and small planes have very low direct costs (cheap lease, fuel, and pilot) but very high (relative to their size) indirect costs.

This is a general statement, but if you're shooting for a decent CI (say 75-90), if you want to figure out what that plane really makes, open up its' page and add up its' total costs.  Take that figure, multiply it by about 1.8, and that's the total costs of operating that plane.  See if it still makes a profit then.

For example, I've got an A300 pulling in $1.2M/week in revenue, has about $600K in direct costs, and so is making a gross profit of $600K.  But I've got millions of dollars in Marketing, (non-pilot and FA) Salaries, Interest, Rent, and Maintenance that's not counted into that.  Once you appropriate that money out, that plane's really costing me about $500K more in indirect costs to operate those routes. Do the simple math, and it's really making me more like just $100K after everything is taken into account.

An A300 has $600K worth of gross profit to spread those costs around.  A Fairchild has only $87K of gross profit -- and while it may not have much maintenance costs to take into account, it costs you just as much to market your airline per route and costs just as much to staff the airports (maybe more if you're flying to more destinations) that Fairchild fles to as I spend on that A300.
« Last Edit: May 10, 2010, 04:38:18 AM by Sigma »

Offline raptorva

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Re: New challenge
« Reply #15 on: May 10, 2010, 06:13:03 AM »
yeah, true. Then again, my CI is roughly 70, RI is 100, LF averages at 88% and I have alot of income from my 20x BAe-146 aircraft. I only have the metros to build up flights from my base until the Saab 2000 becomes available to replace them.

Online Sami

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    • AirwaySim - Are you the next Richard Branson?
Re: New challenge
« Reply #16 on: May 10, 2010, 02:31:30 PM »
FYI - the staff costs for small airlines will get an update at some point. Been on the wishlist for some time now.

L1011fan

  • Former member
Re: New challenge
« Reply #17 on: May 12, 2010, 05:54:55 PM »
Lesson #1, and the only lesson you really need to learn, give up on Marketing expense.  Spend only what you need to maintain a minimal CI and forget all RI spending (if you do any of that anyway, it's always a waste no matter your size).  The marketing expense needed to acheive any appreciable CI will cost you WAY (as in many TIMES) more per route that you operate than you'll actually be getting off that route.  You're not going to be seeing competition so it doesn't matter anyway.

If you cut out the Marketing expenses it's really not that hard to make it work.  There's no penalty for running 2 aircraft types anyway, so run 2 of them if you want, that way you can get the planes you need without having to wait 1 month between them as you will have to if you only use 1 type.
I've heard the opposite in many posts and to be careful of people forgetting that you exist. I guess it depends on the market. Sometimes I'll bolster a seemingly slumping route with a one month route specific campaign and sure enough it picks up without messing with prices. That may be only my experience, but its a good fallback if a route that was once doing well starts sagging.

Offline swiftus27

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Re: New challenge
« Reply #18 on: May 12, 2010, 06:08:58 PM »
I am spending 5 million per week on marketing.  All that just to keep a CI of 90

Offline Sigma

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Re: New challenge
« Reply #19 on: May 13, 2010, 03:57:36 AM »
I've heard the opposite in many posts and to be careful of people forgetting that you exist. I guess it depends on the market. Sometimes I'll bolster a seemingly slumping route with a one month route specific campaign and sure enough it picks up without messing with prices. That may be only my experience, but its a good fallback if a route that was once doing well starts sagging.

People cannot "forget" you exist in this game.  People's knowledge of you is precisely what RI is, and RI stays at 100 no matter what as long as you operate the route.  You can't get any higher than that.  Any blip you see is undoubtedly not connected and simply due to normal dynamics of a route, which can easily vary by +-20% on any given route on any given week, sometimes even more than that depending on the competitions maintenance schedule compared to your own.

Regardless, spending money on Route Marketing is outrageously worthless.  Advertising a single route will cost me 1 MILLION per week at the size my airline is, and at my peak once (since it scales by size) a single route would cost me almost $10M/week.  There's not a route in this game that's worth advertising at anything remotely close to those prices.

 

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