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Author Topic: The Risks Of Being Too Eager With The A380...  (Read 5028 times)

Offline Jackson

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The Risks Of Being Too Eager With The A380...
« on: September 02, 2011, 02:36:57 PM »
...did come to mind. For such a small airline as mine, i believed that it was essential to keep my fleet up to date as newer airliners burned less fuel for the number of PAX it carries. Between the years of 2005 and 2006, I ordered brand new B737-800's and 900's and placed them on SH-International routes from Trinidad, Piarco to the US and South American destinations. Great move as the more I acquired, the more my profit increased.

Not realizing the critical developments within the MT5 game such as extremely high lease prices and the costs to terminate them, I initially bought 4 DC-10ER's to operate the European routes. My mistake was to request long lease terms. So when it came time to replace these A/C with A340-500/600, A380-800 and B787-9, the asking charge for termination was $55,000,000 for each DC-10.

So I was stuck with them until 2019...............unless, I can generate a larger income/profit to deal with that situation.

So my options were to either; lease more B737's with greater range (B737-700ER and B737-900ER), then order a few B787-9's to take over Europe and high PAX demanding US routes, then leave the A380 and A340 till last or to order the A380's (as they were due to hit production soon and compete for Europe before heading for Asian, Arab and Orient destinations...

...what did I do...what was I thinking? Althought the A380 burns approx 8400 kg/hr, it carries a hell of alot of PAX. Plus what made me think this was the better direction to go was the fact that on my LFPG route, Air Republique dominated on average 40% with one plane a day while I attained the other 60% with two DC-10's. So If I were to battle using one BRAND, SPANKIN, NEW A380 against two A310's on the EDDF route and against one A340-600 on the FAJS route...I should be well equipped to kill off competition and hone the PAX all to myself right?

WRONG!

I am now facing BANKRUPTCY! It is hard enought to buy a B737 when making under $3,000,000 a week in profit with up and coming competition.

Was I too eager? Is there a last ditch solution? Can I overcome this with a new strategy?

My attempt for help and I am open to positive criticism.

HELP!!! :(

Offline Dutch

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Re: The Risks Of Being Too Eager With The A380...
« Reply #1 on: September 02, 2011, 04:29:17 PM »
Hi,

I've never had any A380, but from what I heard from other airlines I would suggest that you don't buy it, unless you have routes with huge demand and no competition. For LH the best aircraft seem to be B767-400ER, A330-300 and A340-600.

Good luck with your airline


Offline Dasha

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Re: The Risks Of Being Too Eager With The A380...
« Reply #2 on: September 02, 2011, 08:58:29 PM »
Get a 747.

It looks better, it's more practical. It's not build in France. It's better in ANY way. :)
The people who cast the votes decide nothing. The people who count the votes, decide everything

Offline swiftus27

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Re: The Risks Of Being Too Eager With The A380...
« Reply #3 on: September 02, 2011, 09:24:44 PM »
The A380 burns more fuel/pax than many other a/c on the market.  ONLY use them where there is additional demand but no capacity at the airport.   

Secondly, the frequency bump will help any competition who will fly 2-3x 764s against you. 

castelino009

  • Former member
Re: The Risks Of Being Too Eager With The A380...
« Reply #4 on: September 02, 2011, 11:15:09 PM »
You should own your A380 (most people forget that part). Its expensive and should be used only where needed. Lease it when you can use it wisely and where its feasible (slots/demand/ less or no competition, etc etc) not coz you have money and you can afford to lease it.

Same accounts for brand new A340-500/600, they cost a fortune but they are good. Stick to older A330's your a winner (try to own them as soon as you can)


cheers
VJC

Offline Jackson

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Re: The Risks Of Being Too Eager With The A380...
« Reply #5 on: September 03, 2011, 01:10:29 AM »
Hi,

I've never had any A380, but from what I heard from other airlines I would suggest that you don't buy it, unless you have routes with huge demand and no competition. For LH the best aircraft seem to be B767-400ER, A330-300 and A340-600.

Good luck with your airline

Thans mate. i will definately keep that in mind. I still love that a/c though. Its a shame.

Offline Jackson

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Re: The Risks Of Being Too Eager With The A380...
« Reply #6 on: September 03, 2011, 01:11:50 AM »
Get a 747.

It looks better, it's more practical. It's not build in France. It's better in ANY way. :)

Lol. True. The great jumbo does look better but it is pretty thisty though dont you think?

Offline Jackson

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Re: The Risks Of Being Too Eager With The A380...
« Reply #7 on: September 03, 2011, 01:13:05 AM »
The A380 burns more fuel/pax than many other a/c on the market.  ONLY use them where there is additional demand but no capacity at the airport.   

Secondly, the frequency bump will help any competition who will fly 2-3x 764s against you. 

EXACTLY. I saw that too late. I will know for next time

Offline Jackson

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Re: The Risks Of Being Too Eager With The A380...
« Reply #8 on: September 03, 2011, 01:15:00 AM »
You should own your A380 (most people forget that part). Its expensive and should be used only where needed. Lease it when you can use it wisely and where its feasible (slots/demand/ less or no competition, etc etc) not coz you have money and you can afford to lease it.

Same accounts for brand new A340-500/600, they cost a fortune but they are good. Stick to older A330's your a winner (try to own them as soon as you can)


cheers
VJC

That is what I am doing now. A330-300 RR then I will purchase some B787's to replace. That seems to be very wise. thanks!

castelino009

  • Former member
Re: The Risks Of Being Too Eager With The A380...
« Reply #9 on: September 03, 2011, 01:25:21 AM »
That is what I am doing now. A330-300 RR then I will purchase some B787's to replace. That seems to be very wise. thanks!

Be careful on the 787's too, they cost a fortune too, I know it looks good to have A350XWB, B787 & A380 in our fleets but are they worth it? (thats the million dollar question) mostly it's not, as the forst 4 months they look fab ( leases prepaid) then the reality sinks in (by then there will be similar equipment joined the fleet).

I have learnt my lessons (hard way). Some planes may not look glossy but as long as they make money don't get rid of them (keep a eye on the age & maint costs - C & D checks)


cheers
VJC

Ansettaddict123

  • Former member
Re: The Risks Of Being Too Eager With The A380...
« Reply #10 on: September 03, 2011, 02:14:40 AM »
Get a 747.

It looks better, it's more practical. It's not build in France. It's better in ANY way. :)

....

I respectfully disagree there.
Give me an A380 anyday. The 747 may very well be more practical with its smaller size, however you neglect to mention the outrageously high fuel burn/ pax it has.
Nothing is wrong with Airbus products, AT ALL. That said, Boeing also produces an array of very successful commercial jets. The 747 was once one of those, but face it- its days are numbered.

To the OP,
The A380 is in its element on ULH routes which have a high demand and little chance of competition.
I operated 28 of them in MT#3 to complement my A330/40 fleet and they worked really well. They never lost me money- even on leases (with fuel at >$1200).

That said, dont even consider them if you will be using them against competition, or on shorter international routes. If youre looking at routes under 5500NM, the a330/ 767 series can make that distance- so you will be obliterated by the frequency advantage they offer. As they say, if you cant beat 'em- join 'em  ;)

Cheers,

Mitch

Offline Dasha

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Re: The Risks Of Being Too Eager With The A380...
« Reply #11 on: September 03, 2011, 06:25:34 PM »
If the A380 is so good, how come no airline in America has got one or ordered one? That means it's good for posh airlines on very long routes. I'm sure it works for behemoth airlines like LH, Emirates, SQ and AF, who can suffer a loss and would never admit the plane is not doing what they expected of it. Qantas makes it work because of the distances. The moment China Southern or BA makes it work, then I'll be impressed, untill that I would not call the A380 a success or better than the 747.

It's a fat ugly whale desperately trying to be a dolphin but so far it's not worked yet.

I'm waiting to be impressed though.
The people who cast the votes decide nothing. The people who count the votes, decide everything

Offline Brockster

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Re: The Risks Of Being Too Eager With The A380...
« Reply #12 on: September 04, 2011, 03:50:38 AM »
If the A380 is so good, how come no airline in America has got one or ordered one? That means it's good for posh airlines on very long routes. I'm sure it works for behemoth airlines like LH, Emirates, SQ and AF, who can suffer a loss and would never admit the plane is not doing what they expected of it. Qantas makes it work because of the distances. The moment China Southern or BA makes it work, then I'll be impressed, untill that I would not call the A380 a success or better than the 747.

It's a fat ugly whale desperately trying to be a dolphin but so far it's not worked yet.

I'm waiting to be impressed though.

I agree -- it's a bloated flying whale! The 747 is so much more aesthetic and graceful. :)

Surely BA would be able to make their A380s work? LHR has some of the highest premium demand of any airport so you'd have to think they'd have an advantage there. I wonder how Emirates makes and will make their A380 work. They have way too many on order but considering their profits and exponential growth they seem to know what they're doing.

Ansettaddict123

  • Former member
Re: The Risks Of Being Too Eager With The A380...
« Reply #13 on: September 04, 2011, 05:54:17 AM »
It's a fat ugly whale desperately trying to be a dolphin but so far it's not worked yet.

I agree -- it's a bloated flying whale! The 747 is so much more aesthetic and graceful. :)

I thought we were in the business of managing airlines, not selecting aircraft based on aesthetics?  :laugh:
I dont give a sh*t what the aircraft looks like, and neither do 99.9% of passengers provided it gets them to their destination in one piece.
The reality is that although the A380 has superior operating costs, its very much a niche aircraft for long haul, high demand routes into slot constrained airports.

how come no american airline has ordered one has nothing to do with it. America isnt the be all and end all of markets. The a380 is gaining significant penetration in Asia (SQ, MH, EK etc)- the fastest growing aviation market in the world (and will be for years to come). Its like the argument about America double dipping and bringing the entire world with it. Whats more important to world growth, 1.4 billion Chinese and 1.2 Billion Indians moving up in the world or 310 Million Americans becoming more frugal? (and yes, there is a right answer)
Smaller aircraft offering more frequency is what will win you trans Atlantic, not high capacity aircraft operating less frequently (as is the same in AWS).

who can suffer a loss and would never admit the plane is not doing what they expected of it.

Airlines are businesses. if they didnt believe that a justifiable return on their investment could be made, they wouldnt make the investment to begin with. I wont pursue you any further on that completely farcical point.

I wonder how Emirates makes and will make their A380 work. They have way too many on order but considering their profits and exponential growth they seem to know what they're doing.

As you said, its Emirates. They'll make it work  ;)

wtdawg

  • Former member
Re: The Risks Of Being Too Eager With The A380...
« Reply #14 on: September 04, 2011, 06:16:31 AM »
Whats more important to world growth, 1.4 billion Chinese and 1.2 Billion Indians moving up in the world or 310 Million Americans becoming more frugal? (and yes, there is a right answer)

The Americans.  Obviously.

Offline Brockster

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Re: The Risks Of Being Too Eager With The A380...
« Reply #15 on: September 04, 2011, 06:24:51 AM »
I thought we were in the business of managing airlines, not selecting aircraft based on aesthetics?  :laugh:
I dont give a sh*t what the aircraft looks like, and neither do 99.9% of passengers provided it gets them to their destination in one piece.

From an airplane enthusiast's perspective, yes, aesthetics DO matter. ;)

flightsimer

  • Former member
Re: The Risks Of Being Too Eager With The A380...
« Reply #16 on: September 04, 2011, 06:57:17 AM »
Airlines are businesses. if they didnt believe that a justifiable return on their investment could be made, they wouldnt make the investment to begin with. I wont pursue you any further on that completely farcical point.
which is why there are multiple airlines that wish they hadnt ordered theirs. They were caught up in the well X airline is buying them, so we need to too.

Offline Dasha

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Re: The Risks Of Being Too Eager With The A380...
« Reply #17 on: September 04, 2011, 08:19:15 AM »
All I was saying is that for me the A380 still has to proof itself. Yes it's succesful for LH, SQ and Emirates but let's be honest, they could make a potatoecrate work with all the money they spend on it.

Untill any normal airline will make it work, I'll remain where I stand.
The people who cast the votes decide nothing. The people who count the votes, decide everything

Offline Brockster

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Re: The Risks Of Being Too Eager With The A380...
« Reply #18 on: September 04, 2011, 08:29:02 AM »
All I was saying is that for me the A380 still has to proof itself. Yes it's succesful for LH, SQ and Emirates but let's be honest, they could make a potatoecrate work with all the money they spend on it.

Untill any normal airline will make it work, I'll remain where I stand.

Does MH count as normal? I'm not even sure what the status is of their A380s... They don't seem to be very optimistic about the plane.  :-\

Offline Dasha

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Re: The Risks Of Being Too Eager With The A380...
« Reply #19 on: September 04, 2011, 08:57:08 AM »
They keep delaying their deliveries. Not sure why though. Could be financial situation or maybe they just don't need it and got them because Korean, SQ and some Chinese got them.
The people who cast the votes decide nothing. The people who count the votes, decide everything

 

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