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Author Topic: Is small turboprop profitable now?  (Read 1412 times)

CX717

  • Former member
Is small turboprop profitable now?
« on: July 24, 2012, 10:15:55 AM »
I was away for quite long,I am not sure if anything has changed..
small mean seats <40
thanks~!  ;D

Offline Maarten Otto

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Re: Is small turboprop profitable now?
« Reply #1 on: July 24, 2012, 10:22:26 AM »
I currently have 2 EMB120's in the air, a third one is due in two weeks. I think that operating them can proof profitable now prices can be increased above advisd levels as long as you offer quality and have no competition.

Offline Troxartas86

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Re: Is small turboprop profitable now?
« Reply #2 on: July 24, 2012, 11:37:52 AM »
I've always had good luck with the EMB-120s in any scenario. Hoping to make them the backbone of my airline for a 2nd time in the middle of nowhere.

brique

  • Former member
Re: Is small turboprop profitable now?
« Reply #3 on: July 24, 2012, 01:43:47 PM »
Just what I was thinking : losing the 'death cliff' effect on price rises should make smaller planes on thin local routes much more profitable : so I'm going with a domestic-only small-plane outfit in Japan to see if that is so.

Offline Runner

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Re: Is small turboprop profitable now?
« Reply #4 on: July 24, 2012, 02:18:41 PM »
Same problem here CX717! Haven't played in about a year and really wondering what has changed... So far, I'm doing allright though, in MT7.

How many players from back then are still playing, apart from swiftus, Who I have already spotted ;)

Online Sami

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Re: Is small turboprop profitable now?
« Reply #5 on: July 24, 2012, 02:32:28 PM »
One "known" issue (staff numbers for small airlines) have not been updated so far. But the pricing update should allow you to bring in more bucks, as mentioned.

CX717

  • Former member
Re: Is small turboprop profitable now?
« Reply #6 on: July 24, 2012, 03:33:56 PM »
well,guess I will give it a go when I have sufficient cash then :P

CX717

  • Former member
Re: Is small turboprop profitable now?
« Reply #7 on: July 24, 2012, 03:48:30 PM »
Same problem here CX717! Haven't played in about a year and really wondering what has changed... So far, I'm doing allright though, in MT7.

How many players from back then are still playing, apart from swiftus, Who I have already spotted ;)
I am not sure,since the airlines list are so loong now.

Offline Troxartas86

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Re: Is small turboprop profitable now?
« Reply #8 on: July 25, 2012, 03:47:58 AM »
It definitely is taking much longer to build up LF as we were warned with it more directly tied to RI. This is probably an early benefit for turboprop airlines however as our expenses are much lower so our necessary LF to make a profit is also much lower. I'm already starting to see some profitability since last week. Adding a 4th plane then holding off for a while.

CX717

  • Former member
Re: Is small turboprop profitable now?
« Reply #9 on: July 26, 2012, 04:09:57 AM »
It definitely is taking much longer to build up LF as we were warned with it more directly tied to RI. This is probably an early benefit for turboprop airlines however as our expenses are much lower so our necessary LF to make a profit is also much lower. I'm already starting to see some profitability since last week. Adding a 4th plane then holding off for a while.
just bought in 2 Saab 340,indeed the LF build up very slow and start from very low LF too,most of the route LF start below 20%,but after 12 hrs the LF grow steadily to 40~60%.
I will bring in the 19 seats commuter later,see if it works as well.

brique

  • Former member
Re: Is small turboprop profitable now?
« Reply #10 on: July 27, 2012, 06:26:32 PM »
So far, I would say building a <40 seat small airline is very possible : but there do seem to be 'new rules' on doing so : avoid competition on routes where possible, go for the unfilled demand first and take advantage of the RI@0 still = 20% of demand 'knows' you are there : do not go for the frequency benefit of too many flights early on, it dont work as well anymore, I'm finding that deliberately under-supplying routes is bringing in good early LF's : even with RI in the 20's I'm seeing 90%+ LF's on some routes, 80%+ on most, and that's after a default+10% price hike on the 90%-ers, which are holding up still. New 'thin' routes are coming in at about LF30% or so but seem to build quickly, esp. with a first month -10% price cut.

It still holds that you have to watch your out-goings and not spend too much on marketing, but again, even with minimal spends, both CI and RI are ticking on up : be interesting to see where the sticking point's are for CI (and how much it matters if you stay at that level) and when its time to bump the spend a bit more:

I have found its cheaper to order in new plane's rather than take the over-priced dregs in the market (took 2 to get started on 1-yr leases), and with delivery times for small aircraft at a month or so with 2-week intervals on multi-orders, not much longer to wait either; and new means long c/d checks and all the benefits of new for pax preference and reliability (tech delays/cancelations now minimal).

So far, by my calculations, leases will be well-covered when they all kick-in, c-checks too : d-checks may be more difficult but they are all 7-8 years away... so, meh... worry then :)

First impressions are good, but longer-term, I think that its gonna be a tough haul, but achievable.


Offline Troxartas86

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Re: Is small turboprop profitable now?
« Reply #11 on: July 29, 2012, 05:51:51 AM »
Be careful of really low demand routes with lower demand than you have capacity on a single flight. My 4th plane with 30 seats has four routes with 15-21 demand and it was only making $1,100 a week with incredibly low LFs. The worst flight was only selling 5 tickets every day with peak demand at 17. I had to lower prices and start some route-based ad campaigns that have since more than doubled LF to make the plane somewhat profitable on its way to actually making money.

With prices across the board 5% BELOW default I am actually now bringing in the same revenue I was at the suggested 20% above. (three of four planes being at 100 RI) My best routes are only slightly less profitable at this setting (28K/wk instead of 33 on the best plane) which is offset by the unprofitable plane now carrying its own weight. Once I have the four remaining route pairs at 100 and pull the ads I will reset prices back to 15% above and let you know what happens.

For the record, CI is at 45 and still rising with two nationwide campaigns (billboard/newspaper and radio). I set up two campaigns in case one of them proved too expensive in the early running. If all goes well, I might take the money I'm now using on route ads and put it into a tv campaign, see how high I can get CI.

brique

  • Former member
Re: Is small turboprop profitable now?
« Reply #12 on: July 29, 2012, 06:35:07 AM »
yeah : its a odd balance between price and load : I think the key is in the demand/supply/RI triangle : how much each offsets the other : early experiments seem to show a big difference in effect between D+10% and D+20% prices, which fades away as RI climbs : but when you are talking about 30-seaters, one less or one extra passenger is -/+3.3% on the LF% so its a bit of an exaggerated effect.

I do see that over-supplying (which is also an effect of low RI - fewer of the demand 'see' the flight so its actually far lower than is shown) definitely needs price cuts to kick things along.

I'm keeping route marketing at a very low level: newspapers only in base country for first month on a new route : and it certainly gets you over the low-RI bump on new thinner routes quicker, but once the route has flown for a month, RI is taking care of itself.

CX717

  • Former member
Re: Is small turboprop profitable now?
« Reply #13 on: July 29, 2012, 08:02:03 AM »
my best Saab 340 are making 170k per week now,just sightly lower than my least profit 737-300!

brique

  • Former member
Re: Is small turboprop profitable now?
« Reply #14 on: August 04, 2012, 10:00:28 AM »
First year update:

Just to recap : Running an all E120 fleet covering domestic routes in PNG.

So, 12 aircraft flying (2 wholly owned), all new so first c-checks now kicking in, with D-checks well down the road.

Surprisingly successful with no major hiccups or problems, save the known high staff levels issue (55 staff per plane), but as PNG has low wages, its not been too bad and been cushioned by the fleets 90% average LF and resultant profitability. Thus wages seem to have settled at 25% or so of total costs. Marketing has also proved to be cheap, esp route specific, so have been able to kick along RI to 100 on all routes very quickly. 200k pw or so of general campaigns is keeping CI above 50 with a small rate of increase still occuring.

At default pricing, costs (inc leases) seem settled around the 60-65% of income mark (variation due to B-check weeks losing a days income). Supply/demand is pretty well balanced on all routes so further growth will be mainly adding flights/aircraft to meet organic demand growth.

No loans (initial 5mil loan was fully repaid on day1) have been reqd and cash position and income is ample to cover upcoming c-checks and the rolling lease buy-out programme.

The main irritation is a cancellation rate that keeps going over 2%.. almost all scheduling (even with all TA's set at ~1) related with occasional bursts of tech ones just before B-checks (odd, as all a/c are still at 89-90% then) and the delays attributed to tech problems stay at 0-2mins total for the entire fleet. Major delays cause is also due to scheduling : I guess PNG has lots of slooooow boarding passengers still wrangling their chickens and goats through check-in...

Conclusion : small 30-seat prop airlines can work in MT7 : but location does seem to be the key factor

Future plans : consolidate the cash position and aim to make the fleet fully-owned : experiment with pricing points now RI's are maxed so results can be relied upon to be price-related : Long-term : bite the bullet and open a new base and see if that is economically possible with the increased staff/commonality costs involved.

 

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