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Author Topic: Airlines "Brick Wall"  (Read 1247 times)

albinobedbug

  • Former member
Airlines "Brick Wall"
« on: October 03, 2010, 12:27:46 AM »
Hey all,

I aspire to create a somewhat........at least a minor successful airline but i'm always stopped short for some reason by what i suppose is the Brick Wall. I usually start with a successful aircraft (737, MD80, F100) with a monopoly on a route with good demand and price cuts usually in the 20-25% range resulting in good LF but it seems like i am just flat STUCK with one airplane and about a mil in the bank which quickly goes away with each passing maintenance pass. I am turning profits but as i said they are just enough to get me through a heavy maintenance check.

Also I increase profits on a fairly spaced pace to keep LF somewhat in the green.

Does anyone have any tips to help bust through the wall and help me grow?

ANY HELP WILL BE APPRECIATED!!!

Thanks,
-J

ucfknightryan

  • Former member
Re: Airlines "Brick Wall"
« Reply #1 on: October 03, 2010, 12:34:13 AM »
I would take the pricing back up to default standard.  The only time I discount are for flights that take off between 00:00 and 04:55.  As your route image builds you should have no trouble keeping a plane full at standard pricing, esp with no competition.

-Ryan

Offline Sigma

  • Members
  • Posts: 1920
Re: Airlines "Brick Wall"
« Reply #2 on: October 03, 2010, 12:56:23 AM »
In the real-world, most airlines margins are only 5% in a good year.  Even in AWS, though some can make 40%, even the good ones only do about 15-25%. 

So you can imagine if you cut your prices by 20-25% like you state what that means.  It means you're giving away all your profit.  Hence the "Brick Wall".

Bump that pricing back up to Standard, leave your pricing there, and you'll make plenty of money.

Yes, on your very first routes when your CI and RI are both 0, standard pricing yields a pretty low LF.  But then cutting price doesn't help a whole lot either.  You still net about the same revenue if you just leave pricing be.  And you'll net a whole lot more as CI and RI grow.

albinobedbug

  • Former member
Re: Airlines "Brick Wall"
« Reply #3 on: October 03, 2010, 01:26:19 AM »

AAAAAAAAAAAHHHHHHH I was under the impression the routes had to be heavily discounted until you get to be a bigshot!

I'll give that a shot, thanks guys!

-J

Offline schro

  • Members
  • Posts: 3068
Re: Airlines "Brick Wall"
« Reply #4 on: October 03, 2010, 03:36:37 AM »
You've also got to get some momentum going and get into more than one plane as fast as possible.

For your first leased plane (and every one thereafter), you have 4 months where you don't have to make lease payments. This allows you to roll the profits of the first plane into another leased plane after about a month, and just snowball it from there. If you don't have a few planes flying by the time you start paying the monthly lease on your first plane, then you'll slam into the wall and burst into flames (due to not being able to cover all of the fixed costs associated with simply opening the airline).

Also, early on, it makes a huge difference when you schedule yoru fleet - paying staff costs for your second plane for the 2 weeks prior to delivery hurts pretty bad. Setting up your routes on the Tuesday afternoon just before its delivery is the best time (since you don't have to pay staffing costs).

Its all about getting the momentum going...

 

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