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Author Topic: Project Portugal  (Read 2957 times)

Offline Sanabas

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Project Portugal
« on: August 11, 2012, 12:22:49 PM »
There's been a bit of discussion in the past couple of weeks about the impossibility of building a successful airline without spending a lot of time online, without going into negative cash for slots, without forcing yourself into a tiny airport, etc. I've been fairly vocal about this being wrong, that it is very possible to be successful. Now, I'm going to put my money (and credits) where my mouth is.

Lisbon currently has a dominant airline. 60% of marketshare, lots of slots, 100+ planes, nearly 1 billion company value, and bases in 2 other portugese airports. I am going to start an airline there, and see if I can survive. There's also a curfew, just to make life even trickier.

The rules:

I can spend a couple of hours over the first few days doing some planning, but after that, I will be logged into & playing DOTM for no more than 1 hour/day. If I log in to take screenies, etc for this thread, I won't touch the airline.

I will not use existing, bigger airlines as a source of cheap planes.

I will not join the alliance I normally do. However, if I'm invited/apply for one of the other, smaller alliances, I'm happy to join them.

No deliberately going into negative cash. Much less possible now, of course, thanks to the slot buying changes. But no doing it with new plane orders, etc.

Will I BK? Will I survive? Will I prosper? Will I manage to overtake a billion dollar airline, or even end up with them BKing? Stay tuned and find out....

brique

  • Former member
Re: Project Portugal
« Reply #1 on: August 11, 2012, 12:42:49 PM »
I like your style and wish you well : Go for it!


Offline Sanabas

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Re: Project Portugal
« Reply #2 on: August 11, 2012, 01:07:52 PM »
Anyone with other suggestions for rules I should follow, stuff you want me to report on, etc, please chime in.

So, have just started. 8 million cash to start, all loan. Not a single empty 100+ pax route under 1100 NM that I can find. Quite a few empty 50 pax routes though.

Not a lot of demand inside 500 NM, so I won't be flying turboprops. All the really good stuff is missing from the used market, as per normal. And new production lines for 737, a320, etc are full for years. So, I'm going to fly BACs for now. Seem to be a reasonable number used, and the production line is still open, so I can order new ones later.

They cost about 600-700k each to lease, so I can grab 5 in the first two days, and still have plenty of cash. So I've done that, and scheduled the first 2 planes Unfortunately, they needed B-checks straight away. I'll now do a bit of research in the next couple of hours, write up my notepad file full of routes, grab 2 or 3 more BACs, and schedule all 5 or 6 planes. That should leave me close to 0 cash, and then it's down to 1 hour/day.

Income statement partway through day 2, after the 5th plane was ordered, is attached.

Offline Sanabas

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Re: Project Portugal
« Reply #3 on: August 11, 2012, 02:42:43 PM »
OK, I've spent exactly 1 hour doing BAC planning, listed every route I might fly under 1600 NM, with round trip times for the more important ones. In ~3 hours time, I'll log in briefly, schedule 3 planes due soon, and see what it costs. Then order 1-3 more used, and schedule those straight away. Then leave it untouched for a while. Can't attach a text file, but have taken a pair of screenies. Having this masterlist means I can schedule a plane in just 5 minutes or less.

Once I'm beyond 20 BACs, then I'll start having a quick look at what sort of planes I may be able to get for longer, 1600-3000 NM routes, and what I might have available as a LH plane.

Offline Sanabas

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Re: Project Portugal
« Reply #4 on: August 11, 2012, 05:54:05 PM »
OK, I logged in for half an hour. Scheduled planes, looked like I'd have enough to get all 3 planes for this week. Grabbed 2 and scheduled them, definitely had enough. Let the day tick over, got my 3rd plane of the week, and even had enough cash to put in some C-seats (90/8 config). Dropped down below 500k cash, but no danger of going negative thanks to staff. I'll log in again tomorrow, see where we're at, grab some more BACs if I have the cash.

Screenie of income statement & schedule below.

This is after ~45 minutes to open the airline, 1 hour planning time, and another 30 minutes play.

Offline Andre

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Re: Project Portugal
« Reply #5 on: August 11, 2012, 08:11:43 PM »
Very interesting project!  :) Good luck!

Offline LemonButt

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Re: Project Portugal
« Reply #6 on: August 12, 2012, 06:04:24 PM »
I know part of the reason you're doing this is based on my comments, and I admire your initiative.  A few comments though:

First off is that you are starting 10yrs in on DOTM with 326 airlines, which is significantly less challenging than the start of MT with 650 airlines.  For one, the used market isn't nearly as abundant--you'd be hard pressed to get 8 of the same aircraft in the first week of MT, especially efficient ones (you can play with BAC 1-11 the entire game world in DOTM).  The overhead costs on a per plane basis are much higher when you are only able to get 2 aircraft instead of 8.  You also don't have to worry about tons of competitors opening new routes on top of you as most of the expansion by competitors is established already unless someone opens a base in Libson and starts opening routes on top of you.

Fuel is also relatively cheap in DOTM.  The spikes in MT seem to be much more painful based on my experience.

Also, if I'm not mistaken, the DOTM world running is using the old pax algorithm and MT is currently using the new algorithm, which is why starting money was boosted since routes would be unprofitable for many months until RI was sufficiently high.  This means that going down to $400k would surely put you in negative cash for several weeks/months until things got profitable.  If you needed to adjust an aircraft's schedule due to new competition etc, this would be impossible with the new rule in place.

I also mentioned tax liability--the point isn't that you dodge taxes every single month, it's that you get a tax return at the end of the year by balancing revenues and expenses on an annual basis.  There will always be tax paid in many months during the year, but it is impossible to incur the expenses on an annual basis.  Using Portugal's 28% tax rate, if you saved up the entire year and spent all your profits in December, you would have $10 million in profits with $2.8 million going in monthly taxes leaving you with $7.2 million in cash.  If you spend $7.2 million in December, you still have a $2.8 million profit on the books, which means your annual liability will be $2.8 million * 28% = $784k and the absolute best you could do would be getting a $2 million tax return.  So essentially, if you spent every dollar of profit you could, there is always a 7.84% tax override that you cannot avoid paying.  So if you earn $100 million in profits in a year, you automatically lose $7.84 million to the taxman in nonrefundable taxes.

I have no doubt you'll be successful in running this airline, but the problem isn't one of the best players in the game running a small airline, it's the average player. Another (simple) rule to use on this project would be a CI > 30 with the target being 50+ and posting a screenshot of your statistics page as that shows a lot more than just cashflow.  When you're 10%+ on marketing for a healthy CI, it makes things more difficult.

Offline Sanabas

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Re: Project Portugal
« Reply #7 on: August 12, 2012, 06:56:07 PM »
I know part of the reason you're doing this is based on my comments, and I admire your initiative.  A few comments though:

First off is that you are starting 10yrs in on DOTM with 326 airlines, which is significantly less challenging than the start of MT with 650 airlines.  For one, the used market isn't nearly as abundant--you'd be hard pressed to get 8 of the same aircraft in the first week of MT, especially efficient ones (you can play with BAC 1-11 the entire game world in DOTM).  The overhead costs on a per plane basis are much higher when you are only able to get 2 aircraft instead of 8.  You also don't have to worry about tons of competitors opening new routes on top of you as most of the expansion by competitors is established already unless someone opens a base in Libson and starts opening routes on top of you.

Fuel is also relatively cheap in DOTM.  The spikes in MT seem to be much more painful based on my experience.

Sure. But since I'm already busy in MT, I can't do it there.

Your comments prompted me to actually decide to do it (instead of just thinking about it), along with the fact I had a DOTM airline that I was about to BK anyway. But a lot of it was also arguments before MT started, on the impossibility of being successful unless you were frequently online.

In the first 2 weeks of MT, it would have been relatively easy to grab 8 722s or 732s, or use turboprops. Could have got 722s here in DOTM, too. But they're not as good a plane for where I am, which is small routes, everything over 60 pax and under 1600 NM having comp.

Quote
Also, if I'm not mistaken, the DOTM world running is using the old pax algorithm and MT is currently using the new algorithm, which is why starting money was boosted since routes would be unprofitable for many months until RI was sufficiently high.  This means that going down to $400k would surely put you in negative cash for several weeks/months until things got profitable.  If you needed to adjust an aircraft's schedule due to new competition etc, this would be impossible with the new rule in place.

Yeah, DOTM has old system, so it's easier. I disagree I'd have been in that much trouble in MT, but I may be wrong. Since planes 6-8 were only ordered when I had an idea of the first week profits, if they were lower, I'd have left it at 5. And the principle of the new slot system slowing overexpansion still applies here, too. I got 8 planes, and spent 1.8 million on slot fees. Without the restriction, I'd have grabbed 3 more planes with that 1.8 million, then gone to -3 million scheduling those 6 planes, and then logged off for 24 hours with 11 planes to earn me money. I haven't logged back in to DOTM yet to look, will be interested to see how much profit those 8 planes have made.

Quote
I also mentioned tax liability--the point isn't that you dodge taxes every single month, it's that you get a tax return at the end of the year by balancing revenues and expenses on an annual basis.  There will always be tax paid in many months during the year, but it is impossible to incur the expenses on an annual basis.  Using Portugal's 28% tax rate, if you saved up the entire year and spent all your profits in December, you would have $10 million in profits with $2.8 million going in monthly taxes leaving you with $7.2 million in cash.  If you spend $7.2 million in December, you still have a $2.8 million profit on the books, which means your annual liability will be $2.8 million * 28% = $784k and the absolute best you could do would be getting a $2 million tax return.  So essentially, if you spent every dollar of profit you could, there is always a 7.84% tax override that you cannot avoid paying.  So if you earn $100 million in profits in a year, you automatically lose $7.84 million to the taxman in nonrefundable taxes.

I thought your main objection was month to month taxes. Sorry. I have no doubt they'll annoy me in this game, because I'm unable to do month to month micromanagement. I fully expect to not pay more than a tiny amount of tax for at least the first 2 years here in DOTM though. As I get a bit bigger and up to a B credit rating, I get more loan access. That's all I really need to avoid yearly taxes.

Quote
I have no doubt you'll be successful in running this airline, but the problem isn't one of the best players in the game running a small airline, it's the average player.

I also picked an airport that while big and having a $billion competitor with 120+ planes, has a not very efficient $billion competitor. Would be different moving into ATL, for example. Though I reckon I could still survive, I just wouldn't get big. I think for this game I'll actually end up #1 for Portugese marketshare, possibly overtake my competition in CV, and possibly send him BK. I'm interested to see.

I'm not doing anything the average player can't do. Sure, it only took me an hour to do that route planning. But it's a simple concept, and anyone else, even brand new, could do the same by spending a couple of hours on it on a weekend. (and if anyone wants more explanation of what those notes to myself mean, just yell.) Other than that, I'm only doing 2 simple things that many newer players don't: I'm sticking to 3 or less fleet groups, and I'm making my schedules efficient. To me, efficient scheduling is one of the most important & underused concepts in the game. But most BW airlines I've looked at as a mentor, their schedules have short turn times, they have very long (or very short) turn times at their HQ, they leave big white gaps all over their schedule.

And while it's different having me do this vs having someone who just signed up do this, I think it's still good to do, so that when people say 'This is impossible. I can't succeed unless I'm online all the time, and big airlines are free to kill me', I can point at this, and say that it is possible, if you are smart about it.

Quote
Another (simple) rule to use on this project would be a CI > 30 with the target being 50+ and posting a screenshot of your statistics page as that shows a lot more than just cashflow.  When you're 10%+ on marketing for a healthy CI, it makes things more difficult.

OK. I won't let CI stagnate until it hits at least 50 (if it moves higher, great) in my initial expansion, and I'll aim to have it moving towards 80 within 4 years. For comparison, my MT airline went to 60 and sat there, and I've only recently increased marketing to get it moving for 90. I'm happy to post screenies of anything people want to see, and give detailed reports. That includes income statements, marketing budgets, detailed week to week changes, anything else you want.

I agree this would be a bit harder in MT. However, I think I could start an MT airline now, under similar rules, and be successful. Even if people reading it went on the attack, opened a base in my airport, anything else like that. Starting 12 months ago, I definitely could have, the ATR production line was close to empty, and that's what I'd use.

Would people be interested in a step-by-step guide to starting up an airline in MT, using the new system, under similar conditions as I've given myself now? Could be a good resource for beginners. If it was possible to give me a 2nd login set up solely for doing that, if I was trusted to not collude with myself, I'd be happy to do it. Would also be happy for others to set the challenge for me, give me a choice of some starting airports, and have me pick one. I think anywhere size 4 or 5 that wasn't too huge/overcrowded (LHR, FRA, HND, SYD, etc) and wasn't too isolated (middle east, africa, etc) would be fine. Minimal login time, goal would simply to be profitable, survive to the end of the gameworld, see what happens, and make it an in-depth tutorial for new players to look at later. If there are interested people, and sami can be persuaded/is ok with an extra login (maybe a feature request), we could do it with this MT. Otherwise, it's something I might do for a future gameworld, though it would be hard for me to participate in MT without spending more time there, aiming to be huge.
« Last Edit: August 12, 2012, 07:00:49 PM by Sanabas »

Offline Sanabas

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Re: Project Portugal
« Reply #8 on: August 12, 2012, 09:31:18 PM »
OK, when I logged out, it was May 22, I had 460k in the bank on a Sunday. Logging back in now...

It's July 7, I have 3.38 million in the bank. LFs are 47.7% in Y, my handful of C seats have LFs of 54%.

I've already climbed up above 5% of Lisbon's marketshare. The existing airline (Portugal Air Transport, aka PAT) is down to 56.55%

Revenue is ~2.4 million. Marketing is 104k, so about 5%. CI is up to 16 and climbing. Profit for the last 3 weeks is 700k, 660k, 550k (B-check week). All looks ok. Will grab 2 more BACs, schedule them, see how much I have left, and if I have enough for a third after the day changes.

hmm, only 4 BAC500s left less than 15 years old. 2 for me, 2 left behind. Might be running low when I log in next.

first plane: redeye to Warsaw is possible, and I'll use a 2nd Ponta Delgada flight. 515 left, check the plan, Murcia fits perfectly. Only 40-50 pax, and has a single PAT F28 flight. I'll only get 20-25 pax, but so will he, so I'll still fly it, with Saturdays off for maintenance.

2nd plane: I need 7+ hours to fit an overnight flight, or use something shorter with a longer turn. I see Cork is empty according to notes, so I'll fly that as an overnight, hope I get most of them still. Oran & Porto Santo are also empty. 525 left, so Bilbao. Notes think it has a flight, but it's empty too. Even better.

Slot fees for the two planes: 650k. So if I leave 500k for slots, I can get a third plane. 1.4 mill in the bank, so I will. 2 younger planes are too expensive for me. There's a cheap, privately listed one, but I'd need 4 million for the expired D-check. Cheapest one is only 110k/month, but I'd need 900k for a C-check in 5.5 months, as it's very old. But as I'm at 500k weekly profit already, I think it's worth the risk, I'll just pay attention. 1.5 year lease, so I'll plan to end the lease just before it gets C-checked in 18 months. Luton, Nice, Birmingham for this one adds up to 2355, 2 are ones I want to fly quickly, Birmingham less so. Let's go and look... All 3 are ones to fly now. I must have done Birmingham in a hurry. All ~100 pax, all a single PAT flight.

Would be good to have C-seats for that last plane, but forgot to buy them. So move a schedule to that new plane, put Nice/Luton/Birmingham on the old plane, and pay 250k to get it reconfigured. All done, spent about 20 minutes (actually 35 including going back & forth to this thread and typing stuff), I'm down to 350k again and will leave it there.

Attached screenie shows the stats of the airline I'm up against...

brique

  • Former member
Re: Project Portugal
« Reply #9 on: August 12, 2012, 10:16:14 PM »
It would be interesting to hear from your competitor (PAT) on the impact of your arrival. I guess they must feel a bit odd about this experiment, being cast in the role of 'opposition' ?

Offline Sanabas

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Re: Project Portugal
« Reply #10 on: August 12, 2012, 10:49:17 PM »
Yeah, I'd be curious about that, too. I don't know them, don't know any airline they've built before. I hope they don't end up feeling like I'm picking on them. I simply chose Lisbon because it was a size 5 airport with a good sized competitor, but looked like there was still room for another airline to grow. If puma (who runs PAT), or anyone else from Planet Alliance happens to notice this thread, would be interesting to hear what they think.

Offline Sanabas

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Re: Project Portugal
« Reply #11 on: August 14, 2012, 12:26:03 AM »
Silly RL (and MT  :P).

Only logging in now, it's Aug 23. 4.4 mill in bank, and it's tuesday night, so that's after staff. Grabbed 2 BACs without looking at anything else, as I wanted them before the day changes. Will grab a third and log out again. Down to 2 million. Elapsed time: 5 minutes. Will try and logon later today to schedule them.

Offline lunchbox

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Re: Project Portugal
« Reply #12 on: August 14, 2012, 12:29:52 AM »
I will have to post in our Alliance forum about this to see what he thinks.  :P

Offline Sanabas

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Re: Project Portugal
« Reply #13 on: August 14, 2012, 12:54:02 AM »
And now to actually look at how it's going, without touching anything.

CI is up to 24. Marketing is up to 145k (haven't touched campaigns), still ~5% of revenue. LFs are 46% in Y, 35% in C. Marketshare up to 7.7%. PAT has cracked the 1 billion mark for CV.

All 11 planes showing a weekly profit, 9 are between 105k and 160k, then there is a 205k and a 260k.

I have a single route to AMS making me 16k profit on 74% LF. One at 12.3, one at 11.1, and everything else below 11k. Only 2 routes in green LF (AMS 74%, FNC 65.5), 4 more above 58 (2 x FAO, 1 x FNC, 1 x AMS) Everything else is 57.1 or less.

8 routes down in the red, below 40% LF. 5 have middle of the night turns. Flight to Porto has ~200 pax, but 4 daily flights other than mine, 2 from PAT, 2 from a small Porto based airline. flight to Murcia was expected, as I'm sharing 40-50 pax with PAT. And the flight to Casablanca was good to create, but has had 3 daily F27 flights dropped on it by a Casablanca based airline since then, so there are now 5 daily flights for a little over 100 pax.

Since logging out last, I had 2 weeks of ~600k profits, and then planes 8-11 arrived, and that jumped to 3 weeks of ~950k. I also got whacked with a 750k tax deduction not long after logging out. And since I'm at ~400k profit for August after the plane leases, with ~12 days to go, I might get whacked with another one. Still 5 million down on the YTD, with 2 mill in bank. Even if I lose 3 million more to tax deductions between now & January, and don't get any loans, I'll only need to spend down to 3-4 million in the bank to avoid yearly tax.

So, rolling along ok. 950k profit on 3.1 million revenue each week, despite the low LFs. Of course, I'm not paying plane leases yet, as I'm still in the 4 month grace period. If all the leases were being paid, that'd be an extra 450k/week or so, roughly halving my profit, leaving the margin at maybe 15%. Need to keep growing to 20+ planes, if I stopped at 11 I'd be a bit fragile, extra comp and fuel doubling would push me from 500k/week profit to breaking even, and it'd be hard to build much of a cash cushion. Get up to 30 planes, and the cushion will build faster, and the overhead per plane for staff, etc will be lower. There were quite a lot of empty 40 pax routes, so should get 40% LFs from them, plenty of routes for 30 BACs. Will think about LH when I'm past 20 BACs, and have at least an hour to spare for some planning.

Offline Sanabas

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Re: Project Portugal
« Reply #14 on: August 14, 2012, 12:55:27 AM »
I will have to post in our Alliance forum about this to see what he thinks.  :P

Yay. Be interested to hear it, as well as what your alliance in general thinks.

Offline Sanabas

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Re: Project Portugal
« Reply #15 on: August 14, 2012, 09:11:19 AM »
Bah. Didn't log back in until Sept 7. 3.6 mill in bank, 2 planes arrived and are sitting idle, 3rd turns up today. 3.7 mill in bank, but as the month has ended, I'm going to get a ~500k tax deduction in the next week. Will schedule these 3 planes, see where I'm at...

2.4 mill in slot fees, down to 1.2 mill. 2 trips to CDG made it worse, that was 500k in slots. Could possibly afford a plane + the slots now, but might just run out of cash. And I'm about to log out with a 500k tax bill coming. So I'll leave the cash sitting there. That's another 15 minutes played, so a little under 3 hours total play. Schedule looks like this:

Online puma

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Re: Project Portugal
« Reply #16 on: August 14, 2012, 05:39:14 PM »
Hi iīm puma,

this is the 3rd game there i play and normally i will start in Lisbon, since this is a city that i like a lot. The big question is to know if itīs possible to run another airline in an airport with already a established airline, and in my opinion the answer is yes,
depending on several factors: fuel prices; available planes; and how big you want your airline to be; I think that right now the planes that exist on the market and the fuel prices itīs possible to run another airline specially if you find some routes without competition. The biggest problem in Lisbon it that is closed during the night, that is not a problem for long haul but for some european cities is not that good. Good luck
                                       

Offline Sanabas

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Re: Project Portugal
« Reply #17 on: August 16, 2012, 12:42:02 PM »
Have only logged on for 30 minutes over the last 2 days. Grabbed & scheduled 3 planes, so now have 17. Weekly profit is ~1.4 million, 11 million in the bank, will get on tomorrow in time to fix up tax for the year, hopefully. Credit rating is actually up to B, so I can get 3.5 million in unsecured loans on top of the existing start-loan. Doing this even though LFs are just 50%.

Offline Sanabas

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Re: Project Portugal
« Reply #18 on: August 17, 2012, 12:28:04 AM »
Logged in for 5 minutes, to see what I needed to spend for tax purposes. Answer is about 12 mill, between current profits and the final week of the year where I can expect another 1.5 or so. Over 13 mill in the bank, and I do like to have actual assets, so a single BAC purchase, with 60% upfront, fits the bill very nicely. My year end income statement should be a very small loss, meaning I get that 4 mill tax back. Just need to make sure I don't overspend before the end of Feb, so I can pay for the plane that arrives. But I've then got a $20 million asset to borrow against, which makes for a great safety-net.

Offline Sanabas

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Re: Project Portugal
« Reply #19 on: August 18, 2012, 02:51:23 PM »
Gotta be honest, running an airline this way is really, really boring to me. New BAC just arrived, and I grabbed 2 more used. Haven't scheduled any of the 3 though. Will do so tomorrow, and see if there's any non-terrible option for me for LH. DC10 far too big, a300-600R not enough range, 767 has monster queues.

 

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