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Author Topic: Long-Haul Profitability  (Read 2830 times)

Pepsico8

  • Former member
Long-Haul Profitability
« on: March 18, 2012, 04:08:55 PM »
How can I make money on a long haul route? I'm based out of Shanghai, and I have a load factor of about 16% to Abu Dhabi on a brand new DC-7C. What am I doing wrong?

Offline swiftus27

  • Members
  • Posts: 4395
Re: Long-Haul Profitability
« Reply #1 on: March 18, 2012, 04:19:14 PM »
Company image, route image, seat type, takeoff/landing during 2300 to 0500, ticket price, transit time

Online mtnlion

  • Members
  • Posts: 479
Re: Long-Haul Profitability
« Reply #2 on: March 18, 2012, 04:25:21 PM »
I have had the same problem with the long hauls. It could also be that the pax doesn't like the long flight times. So I'm waiting until I get to try long haul with jets.

minerva

  • Former member
Re: Long-Haul Profitability
« Reply #3 on: March 18, 2012, 04:36:19 PM »
Your initial flight times start before 5:00 am and you are only flying 4 days a week with a CI of only 23.  The start times will always hurt your LF: if you can move them to after 5 you should see an immediate improvement.  However, you need more frequency / lots of time to get your RI on that route up -- I can't see that but I'm willing to bet it is still in the red (ie less than 30). Your load factors will be poor until you get that above 50 and that means time or more frequency. Moreover, you'll get practically no C or F class passengers until your CI is over 30.  The higher the CI the better your business and first class LF will be.
 

Pepsico8

  • Former member
Re: Long-Haul Profitability
« Reply #4 on: March 18, 2012, 04:39:26 PM »
Thank you for the help. What marketing campaigns should I  be doing to get my CI up?

minerva

  • Former member
Re: Long-Haul Profitability
« Reply #5 on: March 18, 2012, 04:49:39 PM »
Forget RI marketing, if you are doing any -- its a waste of money.  For CI it is all about the amount of money you spend. Where/how doesn't matter. Its the amount that counts. There is an upper limit to CI growth, so a good rule of thumb is to spend between 8 and 10% of your gross income on marketing. There are a number of invisible ceilings (30, 60, 90 for example), where you might find your CI stalls.  At that point you need to add more money to get over the hump.

Pepsico8

  • Former member
Re: Long-Haul Profitability
« Reply #6 on: March 18, 2012, 06:55:00 PM »
Thanks. I was spending about 3-4 % on marketing, now I changed that to about 9-10%.

highlander1715

  • Former member
Re: Long-Haul Profitability
« Reply #7 on: March 22, 2012, 08:09:38 AM »
I am also horrified by the load factor/profitability on long haul in this early times scenario.  I offer a flight from Glasgow to Johannesburg by Brittania 6 times a week with only one fuel stop departing Glasgow at 14.15 Sunday to Friday and arriving in Jo-burg just 20 hours and 35 minutes later at 08.30 in the morning an enormous improvement on the BOAC offering of the time at a fraction of the real world cost and my 77 seats in two classes dont even fulfil the so called demand of 100 people a day (from Glasgow alone) who claim to want to take that trip!

If I wanted to do the same journey by Brittania in two years time in 1958 I would have to fly
Glasgow
London Airport depart 12.00 noon have lunch
Rome arrive 16.20
Rome depart 17.05 have dinner
Khartoum arrive 01.10
Khartoum depart 01.55
Nairobi arrive 0705
Nairobi depart 0750 have breakfast
Salisbury (Rhodesia) arrive 10.55
Salisbury (Rhodesia) depart 11.40
Johannesburg arrive 13.50

here is the timetable http://www.timetableimages.com/ttimages/complete/ba58/ba58-10.jpg
and here is the pricing from Glasgow (bottom right hand corner) http://www.timetableimages.com/ttimages/complete/ba58/ba58-18.jpg
If we take the tourist class return price of 271 pounds and 16 shillings  and convert that to dollars at 1958 rates
http://fx.sauder.ubc.ca/etc/USDpages.pdf
of 0.35714 and divide by two we arrive at a leg cost of $761.60 divided by two of $381.80  Ecossair price 170 bucks one stop two thirds empty plane go figure
oh and the Business class (ok they are not sleeper seats as offered by BOAC) but that would be 387 pounds return $1084 divided by two $542 per leg Ecossair 459 and NO ONE is getting in those seats not even the civil servants who regularly travel back and forward at taxpayer expense.

Oh and by the way if you want to get to South Africa by plane from the UK right now I am your only option so my prices should be WAAAAY higher and I should be turning people away at the loading steps (beating them back with sticks)
« Last Edit: March 22, 2012, 08:24:05 AM by highlander1715 »

highlander1715

  • Former member
Re: Long-Haul Profitability
« Reply #8 on: March 22, 2012, 08:21:08 AM »
I should mention that my 77 seats from  Glasgow fulfill a current UK wide demand for transportation to Johannesburg of

EGLL 690 a day
EGKK 160 a day
EGCC 70 a day
EGBB 100 a day
EGWW 60 a day
EGPF 120 a day
Other UK aiports about 280 a day total
so there is a demand from about 1400 people a day who want to get to South Africa from the United Kingdom I offer connections to all the major airports with onward travel to South Africa of just 77 seats a day - how are they getting there right now - walking and swimming I guess

The modelling of passenger demand from New York to Los Angeles or Fukuoka to Tokyo may be spot on but in my experience in these early scenarios the modelling of demand from the UK to the far flung corners of Empire/Commonwealth leaves a lot to be desired.
« Last Edit: March 22, 2012, 08:35:11 AM by highlander1715 »

minerva

  • Former member
Re: Long-Haul Profitability
« Reply #9 on: March 22, 2012, 01:38:50 PM »
You know already, of course, the answers to the questions/problems you are posing.  The AWS long haul model does not pool demand through hubs the way the real world does.  It is not just JA that is unrealistic in this regard.  500 Pax a day may want to fly long haul from point A to point B, and in AWS airlines can and often do serve that connection directly.  IRL that doesn't always happen, because the airline in question sets up a long haul hub at point C and feeds its passengers from point A and B through it.  So its not just the Commonwealth...

highlander1715

  • Former member
Re: Long-Haul Profitability
« Reply #10 on: March 22, 2012, 05:53:22 PM »
Its not just this scenario I tried to set up VC10s with two stops at the end of JA5 from Glasgow to Sydney 6 times a week using stop distances similar to those of real life at that time Karachi/Singapore and could not get close to profitability.

And back to the example below I am 100% on time in well maintained planes and I am getting 31% to 37% LFs in Y and O% in C Just one person has bought a business class seat on this service talk about totally unrealistic.
« Last Edit: March 22, 2012, 06:44:54 PM by highlander1715 »

Offline alexgv1

  • Members
  • Posts: 2184
Re: Long-Haul Profitability
« Reply #11 on: March 22, 2012, 08:14:24 PM »
C/F class load factors are linked heavily in game to CI (read marketing) just like real life.
CEO of South Where Airlines (SWA|WH)

Miller11

  • Former member
Re: Long-Haul Profitability
« Reply #12 on: March 22, 2012, 10:23:38 PM »
C/F class load factors are linked heavily in game to CI (read marketing) just like real life.

Alex is right I have some connies on my LHR route 5699nm, only started that route a few days ago, and im already at 40+% L/F. but my CI is in the top 20 at 79.

Miller11

highlander1715

  • Former member
Re: Long-Haul Profitability
« Reply #13 on: March 23, 2012, 08:31:25 AM »
C/F class load factors are linked heavily in game to CI (read marketing) just like real life.

Yes and a first year business student will tell you marketing means squat if you have a friggin monopoly.

And its funny that my long hauls to North America have no problem in gaining 70% share its just the one unhistorical for the period stop flight that cant get a damned passenger on it just admit the model is not entirely accurate for once instead of defending with the same tired arguments

Offline alexgv1

  • Members
  • Posts: 2184
Re: Long-Haul Profitability
« Reply #14 on: March 23, 2012, 09:14:51 AM »
Do you ever see BA advertising economy class? Rarely. All the adverts I see for them and other airlines such as Singapore Airlines and Qatar are for First/Business because they are why make the money. Im afraid first year of a degree means diddly squat. Maybe come back when you graduate. You don't see first year doctors doing open heart surgery.

Just consider if you had to fly with some crappy scottish airline which nobody has heard of on a transatlantic, would you be willing to pay 5000 of your money with no assurances of the service you are getting.
CEO of South Where Airlines (SWA|WH)

ramsterdambo

  • Former member
Re: Long-Haul Profitability
« Reply #15 on: March 23, 2012, 11:40:32 AM »
I am also horrified by the load factor/profitability on long haul in this early times scenario.  I offer a flight from Glasgow to Johannesburg by Brittania 6 times a week with only one fuel stop departing Glasgow at 14.15 Sunday to Friday and arriving in Jo-burg just 20 hours and 35 minutes later at 08.30 in the morning an enormous improvement on the BOAC offering of the time at a fraction of the real world cost and my 77 seats in two classes dont even fulfil the so called demand of 100 people a day (from Glasgow alone) who claim to want to take that trip!

If I wanted to do the same journey by Brittania in two years time in 1958 I would have to fly
Glasgow
London Airport depart 12.00 noon have lunch
Rome arrive 16.20
Rome depart 17.05 have dinner
Khartoum arrive 01.10
Khartoum depart 01.55
Nairobi arrive 0705
Nairobi depart 0750 have breakfast
Salisbury (Rhodesia) arrive 10.55
Salisbury (Rhodesia) depart 11.40
Johannesburg arrive 13.50

here is the timetable http://www.timetableimages.com/ttimages/complete/ba58/ba58-10.jpg
and here is the pricing from Glasgow (bottom right hand corner) http://www.timetableimages.com/ttimages/complete/ba58/ba58-18.jpg
If we take the tourist class return price of 271 pounds and 16 shillings  and convert that to dollars at 1958 rates
http://fx.sauder.ubc.ca/etc/USDpages.pdf
of 0.35714 and divide by two we arrive at a leg cost of $761.60 divided by two of $381.80  Ecossair price 170 bucks one stop two thirds empty plane go figure
oh and the Business class (ok they are not sleeper seats as offered by BOAC) but that would be 387 pounds return $1084 divided by two $542 per leg Ecossair 459 and NO ONE is getting in those seats not even the civil servants who regularly travel back and forward at taxpayer expense.

Oh and by the way if you want to get to South Africa by plane from the UK right now I am your only option so my prices should be WAAAAY higher and I should be turning people away at the loading steps (beating them back with sticks)

Fly it 7 times per week. It's against most AWS passengers' religion to fly on an airline that doesn't serve a destination every day.

Miller11

  • Former member
Re: Long-Haul Profitability
« Reply #16 on: March 23, 2012, 04:11:15 PM »
Do you ever see BA advertising economy class? Rarely. All the adverts I see for them and other airlines such as Singapore Airlines and Qatar are for First/Business because they are why make the money. Im afraid first year of a degree means diddly squat. Maybe come back when you graduate. You don't see first year doctors doing open heart surgery.

Just consider if you had to fly with some crappy scottish airline which nobody has heard of on a transatlantic, would you be willing to pay 5000 of your money with no assurances of the service you are getting.

you should be a politician :laugh:

highlander1715

  • Former member
Re: Long-Haul Profitability
« Reply #17 on: March 23, 2012, 04:51:00 PM »
Fly it 7 times per week. It's against most AWS passengers' religion to fly on an airline that doesn't serve a destination every day.

It is 1956 go read a timetable for the period a lot of of long haul is historically served 2/3 times a week.

But let's just forget history and play the game like it's a low demand 1990 with older aeroplanes and cheaper fuel.
« Last Edit: March 23, 2012, 04:59:42 PM by highlander1715 »

Offline alexgv1

  • Members
  • Posts: 2184
Re: Long-Haul Profitability
« Reply #18 on: March 23, 2012, 04:54:50 PM »
you should be a politician :laugh:

That has the potential to be one of the most offensive things you can say to somebody :laugh:

I'll take it as a compliment though  8)
CEO of South Where Airlines (SWA|WH)

highlander1715

  • Former member
Re: Long-Haul Profitability
« Reply #19 on: March 23, 2012, 05:02:40 PM »
Do you ever see BA advertising economy class? Rarely. All the adverts I see for them and other airlines such as Singapore Airlines and Qatar are for First/Business because they are why make the money. Im afraid first year of a degree means diddly squat. Maybe come back when you graduate. You don't see first year doctors doing open heart surgery.

Just consider if you had to fly with some crappy scottish airline which nobody has heard of on a transatlantic, would you be willing to pay 5000 of your money with no assurances of the service you are getting.

Singapore and Qatar airlines did not exist in 1956 and where did I say I was a student?  I have been in business for 40 years and if I spoke to my paying customers as you do I would be looking for a new line of work

 

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