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Author Topic: Fleet Commonality Discount - Simplified Approach  (Read 2405 times)

Offline EYguy

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #20 on: May 06, 2011, 01:24:56 AM »
I do accept Sigma critics because he rightfully pointed out that capital investments are different. But because I do realize that we're modelling a simplified world, I can assume that we're all using the same contracts, don't we? :)

My point on what you pointed out is that we do not have even the faintest idea of how could be considered an "acceptable behaviour" for those costs. If we agree to use all the same conditions I would agree, but I still would like to have some hard figures to base my calculations on. I could ask to two friends of mine (one works for Easyjet, the other one for Qantas) about "how cheaper is on average to add another a/c to your fleet" and then we could divide the whole thing between the four dimensional classes of the airframe in the game (VLA, LA, MA, SA).
Once we have an average data, we can set a standard for the game and everyone can play with the same conditions.

Upfront costs: I think it is the most urgent "feature" to request. I don't think it needs much programming, it's easy, gives everybody a good indicator for his/her business plan and is probably the first thing that airlines in real world look for when planning an expansion to their fleet. of course, costs can be adjusted for inflaction, but those kind of costs are actually "internal/transfer costs" so they should stay pretty much the same in a period of 5 yrs...

Let me know yours thoughts guys! :)

Edo

Offline RushmoreAir

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #21 on: May 06, 2011, 03:03:58 AM »
I'd just like to point out that the topic title has "Simplified Approach" in it.

The way this thread's going, we could just base fleet commonality on the curve formed by the inverse of the triple-integral of erf(x).
 :P :P

Offline BobTheCactus

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #22 on: May 06, 2011, 03:07:38 AM »
I'd just like to point out that the topic title has "Simplified Approach" in it.

The way this thread's going, we could just base fleet commonality on the curve formed by the inverse of the triple-integral of erf(x).
 :P :P


:D

Yes, very simple.
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Offline EYguy

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #23 on: May 06, 2011, 03:35:46 AM »
:D

Yes, very simple.

Again,

you just can't use a formula because you do not know if the behaviour of that curve is close or not to reality. Provided that we've already understood that NO ONE KNOW ANYTHING about how the costs vary, my idea is that we should just show the "out of pocket" costs for every a/c you add to the fleet.
I do accept the maint costs we already have (A, B, C and D checks): what most of the players do not realize is that we have not way at all to foresee the additional costs for every a/c we add to the fleet.
We have a set of fixed costs (i.e.: fleet/type manager/s and his/their salary/ies, manual updating costs, Civial Aviation Authorities admin fees, insurrance fees, crew salaries, etc...) All these expenses can be calculated quite easily for every a/c and do not need any easy/complicated formula to be represented. If you keep insisting with these formulas, we should do the same with the expenses for other bases, which is a shortsighted idea: if I choose to open a new base in a minor airport in order to operate smaller scale ops from there, I want to be able to have lower overhead costs in that apo.

The problem we're having here is basically that we want to simplify everything while giving up numbers, which are the base of every business plan.

Edo

Offline JumboShrimp

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #24 on: May 06, 2011, 03:45:51 AM »
I'd just like to point out that the topic title has "Simplified Approach" in it.

The way this thread's going, we could just base fleet commonality on the curve formed by the inverse of the triple-integral of erf(x).
 :P :P


LOL.

The "Simplified" in this thread means that each fleet stands on its own, it is independent of other fleets - their aircraft sizes, manufacturers etc of other fleets.

Each fleet would have its own upfront costs to get the first aircraft, and a discounts for getting a lot more planes in the same fleet type.

So if I am Southwest and I have 500 of 737s, if I buy a single Cesna and park it, the maintenance and training costs of 500 737s is not going to change by $100,000,000.

Well, most of the other Fleet Commonality threads would punish you twice, once for Cessna being different size, and 2nd time for being made by a different manufacturer, so maybe your maintenance cost of 500 737s would go by a 1/4 of a billion per year.

Under the "Simplified" approach, adding a single Cessna would, like in real life, have no material effect on the maintenance of the 500 737s.  The material effect (as in real life) would be the fact that you have 500(!!!) of the 737, which will translate into substantial savings.

Offline EYguy

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #25 on: May 06, 2011, 08:29:13 AM »
I was looking at my commonality costs and my first worry, even before understanding how my costs behave, would be to understand how much are my actual costs per a/c... Which would be a very easy thing to show up on an a/c chart before I lease/buy it... :)

Edo

Offline LemonButt

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #26 on: May 08, 2011, 01:25:49 PM »
I found this thesis that covers the math involved as it pertains to low cost carriers: http://arno.unimaas.nl/show.cgi?fid=16478

There are regression lines, coefficient of determination, confidence intervals, and pretty much any other mathematical metric you may want to know :)

Offline JumboShrimp

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #27 on: May 09, 2011, 06:39:23 AM »
I found this thesis that covers the math involved as it pertains to low cost carriers: http://arno.unimaas.nl/show.cgi?fid=16478

There are regression lines, coefficient of determination, confidence intervals, and pretty much any other mathematical metric you may want to know :)

Interesting article

Offline EYguy

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #28 on: May 09, 2011, 07:05:22 AM »
Interesting up to a point. We still do not have an indication of how much a player is going to pay for a single a/c added to his/her fleet. That paper just demonstrates how a LCC carrier squeezes its cost, not how its costs move adding an a/c to the fleet (provided that we all know that a new type brings more costs).

The problem here, and everybody keeps looking at the finger while I point at the moon, is that EVERYBODY WANTS TO KNOW HOW MUCH THEY WILL PAY FOR ADDING A32X IN THEIR FLEET, not how those costs move. Once you know how much you pay, then it is up to you to find a way to cover your costs. But if we keep fiddling with meaningless formulas while people want to know how much they will pay for the next a/c, well... Go ahead! ;)

Edo

Offline JumboShrimp

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #29 on: May 09, 2011, 07:33:12 AM »
Interesting up to a point. We still do not have an indication of how much a player is going to pay for a single a/c added to his/her fleet. That paper just demonstrates how a LCC carrier squeezes its cost, not how its costs move adding an a/c to the fleet (provided that we all know that a new type brings more costs).

The problem here, and everybody keeps looking at the finger while I point at the moon, is that EVERYBODY WANTS TO KNOW HOW MUCH THEY WILL PAY FOR ADDING A32X IN THEIR FLEET, not how those costs move. Once you know how much you pay, then it is up to you to find a way to cover your costs. But if we keep fiddling with meaningless formulas while people want to know how much they will pay for the next a/c, well... Go ahead! ;)

Edo

Well, we always start from the figures Sami has in the database.  So let's say the base maintenance cost he stores for A320 is X, adjusted by inflation and age of the aircraft.

Now, based on various scenarios above, it will be > X for first one (or first few), < X for subsequent aircraft.  That alone is an improvement over existing model, bringing it closer to real life.  As far as what these factors whould be, we just have to take an educated guess.  We will never find the perfect answer.

As far as presenting the player with some value - well, most people don't really know how to interpret the literal values.  So perhaps, 2 values should be presented: The current values, and a "Fleet Commonality Factor", which will tell the player how much (compared to normal) the aircraft will cost in maintenance - in percentage.  So for example, the first aircraft may have a Fleet Commonality factor of 500% , one of the subsequent aircraft may have a factor of 75%.  Or it could be expressed in terms of surcharge and discount vs. base.

Offline EYguy

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #30 on: May 09, 2011, 08:09:04 AM »
Jumbo, I probably did not explain myself very well, because I keep talking about figures per a/c added and you keep talking about general data.

So, let's do first things first.

Cost of the fleet (all monthly values): Total monthly cost = (Fixed Admin Cost Type + Admin costs* Na) + (Fixed Maint Cost + Main Cost * Na) + (Crew Training Cost * Nc) + (Fixed Maint Cost per Engine Type + Maint Cost * Ne).

Where:
Na=number of a/c in fleet
Nc=number of crew needed for the a/c
Ne=number of engine owned by the airline

If you split up these costs you'll see why formulas are limiting and also why my model works better (if nothing else, it is simpler). Moreover, all those figures can be fitted in an expanded chart for every a/c you buy (either new or used) so that "anyuser" can make his/her own calculations and get a rough estimate of how much money he/she's going to pay for that additional a/c in his/her fleet.

I would also like to point out that airlines suffer of very high overhead costs (as railroads, if Sigma is reading) and that:
Fixed Admin Costs Type: is often in the range of multiples of 100.000€/USD (the bigger the a/c, the higher the costs, but the increase is surprisingly quite flat) because you need to hire a fleet/type manager who is a licensed engineer, usually with seniority and needs some people working for him. They have to liase with the a/c manufacturer and keep the a/c tech docs updated and do all the peperwork that Civil Aviaiton Authorities need/ask. Much of this work is indipendent from the number of a/c you have in fleet. You only have additional work for updating the paperwork related to any single a/c of the type.
Fixed Maint Costs: we talk about the A, B, C and D checks plus all the wearing parts that will be used to keep a/c in airworthy condition. It also includes the HUGE COSTS for mantaining a warehouse with all the spare parts you need. This warehouse has a cost (the building itself) and must be manned by licensed technician, not by the first worker that walks in front of the building. These costs are around figures close to 1mln€/USD for a/c like A32X/B73NG. Usually these costs include spare engines.
Crew Training Costs: quite easy to calculate but are still pretty high, because of the number of crews involved and the costs of training structures and related staff.
Fixed Maint Costs Engine Type: high costs because the airline needs certified engineers and dedicated workshops. Plus the spare parts for every engine. (I'm not considering the spare engines).

All you wrote is nice, but in the end what people want to know are those few figures you can fit together with the price of line checks... Truste me. Nobody cares about nice indexes, percentages, etc... :)

Edo

Offline JumboShrimp

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #31 on: October 23, 2011, 12:09:07 AM »
Just trying to revive this thread.

Edo, yes, it would be a good idea to know for a player upfront how much adding a fleet would cost.  But it is a secondary consideration.  First, the model for fleet commonality needs to be fixed, so that it is what it implies:
- discount for adding aircraft to the existing fleet
- extra cost for adding aircraft to a new fleet

Adding fleets should follow a pattern, unlike the current model:
1 -> 2 small increase
2 -> 3 small increase
3 -> 4 huge increase
4 -> 5 small increase
5 -> n small increase

Further, if there is a percentage increase when adding a new fleet, that percentage increase should be the same whether you have total of 30, 100 or 500 aircraft.  Currently, the more aircraft you have, the greater the increases are.  If anything, adding a new fleet type to an airline with a large number of aircrft should have a lower percentage increase.

Once a better model is build, it is not that difficult to do a "what if" calculation to present to the user.

Offline Sanabas

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #32 on: October 23, 2011, 01:17:50 AM »
Agreed.

Current model desperately needs to be fixed. Making the fleets independent of each other is a very good idea.

Offline JumboShrimp

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #33 on: October 25, 2011, 01:00:03 PM »
Agreed.

Current model desperately needs to be fixed. Making the fleets independent of each other is a very good idea.

Sami's argument for increase in cost as fleet types are added is that there is cross-training of staff.  I think there is room for that.  For example 15% increase for each additional fleet type.  That would certainly be more in touch with reality that tiny increases followed by a 750% increase, followed by tiny increases.

And this cross-training increment should be applying per base, not per airline.  So that if an airline opens a base, and flies only 1 fleet type from that base, there should not be any cross-training increase.

Offline Sanabas

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Re: Fleet Commonality Discount - Simplified Approach
« Reply #34 on: October 25, 2011, 06:31:32 PM »
Yeah, there's also room for some extra increase for things like that. Though currently admin & fixed maintenance costs also go up, rather than just the staff training.

The increase certainly shouldn't exponentially grow with airline size.

 

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