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Author Topic: 70 Seat Class Jet Cost Comparison  (Read 2156 times)

jwriteclub

  • Former member
70 Seat Class Jet Cost Comparison
« on: November 04, 2012, 03:43:05 AM »
I'm currently running a fleet of Fokker 70s, and even with the current fuel prices I'm doing OK, however, with the probability of higher fuel prices on the horizon and a very aging fleet, I've been considering another option for planes going forward.

While my average sector length on these is about 700 nm, I want any replacement aircraft to be capable of at least 1500 nm range. There's now a wide range of aircraft on the market which fit this mission (8, to be precise). In order to help with these calculations, I've created a spreedsheet calculator which accepts amortization time, pilot monthly salary, crew salary, fuel cost and average utilization per day and calculates total monthly cost as well as seat mile cost.

You can see the spreadsheet here https://docs.google.com/spreadsheet/ccc?key=0AgbDWLq_3trAdFJ6S0tYR21UTHk4T0V6U2I5Rk50U3c

As I suspected, the old Fokker 70 design is the most expensive option (and the used market will probably only get smaller as the years go by). The AN-148 is a very attractive option, as the low initial cost significantly offsets operating cost, even over long amortization periods. However, I'm very reluctant to go with the AN-148 as there's no 90-100 seat version (and even at the moment, I could use a few 90-100 seat aircraft).

The very low fuel consumption on the Mitsubishi really shines, especially at fuel prices 1.5-2x the current prices, but it's not available for a number of years. As has been stated in previous threads, the E-Series jets are good all around performers, but the production lines are booked for several years to come.

Anybody have any experience or thoughts on these types that they feel like sharing.

Offline LemonButt

  • Members
  • Posts: 1895
Re: 70 Seat Class Jet Cost Comparison
« Reply #1 on: November 04, 2012, 04:10:49 AM »
My suggestion is none of the above.  Use CRJ1000, which are cheaper to operate than the CRJ700 and have more seats.  You also have lots of options when it comes to the fleet type, such as the CRJ200 with 52 seats that you can use on those short 50-200nm flights, the CRJ700 and the CRJ900.  I ran an all-CRJ airline very successfully in North America Challenge, even with four bases.  Also, seat miles is a terrible metric for these aircraft.  A CRJ200 flying 6 flights/day with be have very low seat miles compared to a CRJ1000 flying 2 flights/day, but the CRJ200 will be much more profitable due to the way ticket pricing works.  A better way to measure it using the spreadsheet would be having a constant for seats sold.  Whether you have a 68 or 72 seat aircraft, you're going to virtually sell the same number of seats--likely somewhere between 55-65 per flight.  If you're looking at ~700nm flights then you should also plug in the default ticket price for a 700nm route to calculate your gross profit margin.  In doing this you'll see that flying more than 10x the seats gets uneconomically very quickly.  For example, a rule of thumb is you don't fly a 70 seater more than 700 miles, a 50 seater more than 500 miles, etc.  The fuel costs going the extra distance are just too high when you look at the diminishing ticket prices.

jwriteclub

  • Former member
Re: 70 Seat Class Jet Cost Comparison
« Reply #2 on: November 04, 2012, 04:38:44 AM »
I'm reluctant to contradict someone of your experience, but my current plan to to fly nothing under 500-600 with a jet. As the fuel prices climb, there are several turboprop aircraft that get me into that range with 2 pilots, 2 crew and fuel burn of 1/2 to 1/3 of the smaller jets.

On the other hand, I'm based at a relatively small airport, which means that most of my mid-length (sub 1500 nm) routes top out at between 60-130 demand. 2x70 seat on the bigger routes and one on the smaller work well. Plus, being based on the US West Coast, I can actually do red-eye turns to Texas and the midwest with the 70 seat aircraft to keep them flying 2300 to 0500. At the moment, I have only two types in my fleet (Fokker 50 and Fokker 70) and they're all performing quite well. My plan would be to replace the Fokker 70s with something and then upgaguge to either the 100 seat version of that plane or 737/A320 for transcontinental flights, as money allows.

The reason I went with $ / Available Seat Mile is because it allows me to very easily compare performance of my fleet replacement option with my current $/ASM as calculated by the game. I don't understand how anyone can be profitable with jets on routes less than 500 miles or so. For most of those my demand is about 50-70, so just about right for a turboprop (with very low fuel burn), but the time saved by having a jet on those routes doesn't make up for the extra fuel burn.

My current plan is to get to about 25-30 aircraft at this base and open a second base at a bigger airport, and try and compete with some of the bigger competitors.

I'll plug in some columns to calculate revenue based on a reasonable ticket price curve and see how that looks.

Offline Sanabas

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  • Posts: 2161
Re: 70 Seat Class Jet Cost Comparison
« Reply #3 on: November 04, 2012, 04:41:25 AM »
Actually, $/seat mile seems like a perfectly good way to look at operating costs for each plane in there. Have the same utilisation for each plane, and you can see at a glance which one costs the least, which one costs the most to operate. The spreadsheet makes no mention of revenue, and revenue is the place where shorter routes make a difference. But revenue will be near identical, regardless of which plane.

I've never bothered with any rule of thumb about how far I should fly. If it's in range and not ULH, I'll likely fly it, and expect to make some money. Shorter routes are more profitable (at least to the point that turnaround time gets in the way), but there are only so many short routes to be flown.

I'd suggest 12 hours utilisation is pretty low. Those planes mostly have 1 hour turn times. 4 legs/day, and you're looking at 16 hours in the air. I'd put in 15 or 16, and see how that looks. I'd also add in A-check x 40, and B-check x 11, because those probably total non-trivial amounts.

The other thing that might be illuminating is to put in some bigger planes, but assume they only seat 80. Like a 717, an a320, etc. If the operating costs are very similar, then you may as well use the bigger plane and just have empty seats on some routes. I *think* you'll find the f100 comes out very close to the f70, for instance.

Offline Sanabas

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Re: 70 Seat Class Jet Cost Comparison
« Reply #4 on: November 04, 2012, 04:46:55 AM »
The reason I went with $ / Available Seat Mile is because it allows me to very easily compare performance of my fleet replacement option with my current $/ASM as calculated by the game. I don't understand how anyone can be profitable with jets on routes less than 500 miles or so. For most of those my demand is about 50-70, so just about right for a turboprop (with very low fuel burn), but the time saved by having a jet on those routes doesn't make up for the extra fuel burn.

The jets will be more profitable flying 5 x 300 NM routes daily than they will flying 3 x 700. But they probably won't be as profitable as a good turboprop flying those same 5 x 300, where the speed makes much less difference. There's definitley a difference between 'will make a profit' and 'is the best option for that route'.

Offline LemonButt

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Re: 70 Seat Class Jet Cost Comparison
« Reply #5 on: November 04, 2012, 12:05:16 PM »
I *think* you'll find the f100 comes out very close to the f70, for instance.

If I'm not mistaken, the F100 and F70 have the same engines/fuel burn, but the F100 has 50% more seats.

Quote
The other thing that might be illuminating is to put in some bigger planes, but assume they only seat 80. Like a 717, an a320, etc. If the operating costs are very similar, then you may as well use the bigger plane and just have empty seats on some routes. I *think* you'll find the f100 comes out very close to the f70, for instance.

This is basically what I was trying to say with using a fixed number for pax :)

Also, while it may seem jets would be a waste on shorter routes, they also attract more passengers.  If you had the option of flying a noisy turboprop or a quieter jet, which would you take?  Business class pax also like the jets.  In regards to fuel burn, don't forget that props fly about half as fast as jets.  So a jet with 2000 kg/hr fuel burn is approximately the same as a prop flying 1000 kg/hr, although on shorter routes we're only talking about a matter of 5-15 minutes in flight time.

As for my all-CRJ airline, my longest route was ~800 miles on dense routes and I'd say 90%+ of my routes were under 500nm (routemap attached).  I had 151 CRJ at the end of the game with bases at CVG, STL, MCI, and MSP in that order.  My net profit margin with 4 bases was between 10-15%, which is strong.  The biggest downside was paying for so many damn slots.  If you go with 2x70 seats versus 1x100 seats on your routes, don't forget you are buying double the slots, which can cost many millions.

Speaking of slots, you should make sure you can convert your existing routes to whatever plane you end up with.  If you have to shift schedules then you'll end up paying AGAIN for slots, which can cost a pretty penny and you may also have to bump routes from your existing schedule depending on what kind of cushion you have built in.  One of the reasons I was so successful with my CRJ airline is I could swap out the schedules easily without extra slot costs.  I could start with a 50 seat CRJ, convert to a 70 seater, then a 90 seater without dealing with scheduling conflicts.  Thus, as demand grew over time and my route image went up, I could respond to the new market conditions rather easily by putting more seats on the route.  You have this flexibility with the F70/100, the CRJ fleet, and the E-jets.  Not so much with the others.

So long story short--you need to look beyond the spreadsheet to determine which aircraft is best for you :)  Flying regional jets is tough and every penny counts, especially if you are in a smaller airport with limited demand.
« Last Edit: November 04, 2012, 12:09:45 PM by LemonButt »

Offline swiftus27

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  • Posts: 4395
Re: 70 Seat Class Jet Cost Comparison
« Reply #6 on: November 05, 2012, 11:21:10 AM »
If there's anywhere to fly in the USA, this guy covers the eastern half. 

Offline ZombieSlayer

  • Members
  • Posts: 3921
Re: 70 Seat Class Jet Cost Comparison
« Reply #7 on: November 05, 2012, 02:58:06 PM »
I'm currently running a fleet of Fokker 70s, and even with the current fuel prices I'm doing OK, however, with the probability of higher fuel prices on the horizon and a very aging fleet, I've been considering another option for planes going forward.

While my average sector length on these is about 700 nm, I want any replacement aircraft to be capable of at least 1500 nm range. There's now a wide range of aircraft on the market which fit this mission (8, to be precise). In order to help with these calculations, I've created a spreedsheet calculator which accepts amortization time, pilot monthly salary, crew salary, fuel cost and average utilization per day and calculates total monthly cost as well as seat mile cost.

You can see the spreadsheet here https://docs.google.com/spreadsheet/ccc?key=0AgbDWLq_3trAdFJ6S0tYR21UTHk4T0V6U2I5Rk50U3c

As I suspected, the old Fokker 70 design is the most expensive option (and the used market will probably only get smaller as the years go by). The AN-148 is a very attractive option, as the low initial cost significantly offsets operating cost, even over long amortization periods. However, I'm very reluctant to go with the AN-148 as there's no 90-100 seat version (and even at the moment, I could use a few 90-100 seat aircraft).

The very low fuel consumption on the Mitsubishi really shines, especially at fuel prices 1.5-2x the current prices, but it's not available for a number of years. As has been stated in previous threads, the E-Series jets are good all around performers, but the production lines are booked for several years to come.

Anybody have any experience or thoughts on these types that they feel like sharing.

The AN-148 is a great little plane, operated them very successfully in MT3, I believe, in China. The AN-158 is on the horizon as well with a max capacity of 99, a 1330nm range, and commonality with the AN-148. Doesn't quite make the 100 seat mark you are looking for, but there is a stretch version that should be available ~2008.

Don
Co-Founder Elite Worldwide Alliance
CEO PacAir
Designated "Tier 1 Opponent"

jwriteclub

  • Former member
Re: 70 Seat Class Jet Cost Comparison
« Reply #8 on: November 08, 2012, 11:23:54 PM »
I didn't realize that the AN-158 was on the horizon, that changes my calculus somewhat.

Thanks.

 

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