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Author Topic: small airline experiment, take 2  (Read 6008 times)

Offline Sanabas

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small airline experiment, take 2
« on: July 28, 2013, 01:15:16 AM »
A link to the first one: http://www.airwaysim.com/forum/index.php/topic,44955.0.html

And a link to Swiftus' previous version: http://www.airwaysim.com/forum/index.php/topic,27374.0.html

It was possible, though boring, to run an airline using only small planes. But anything beyond ~200 NM was not cost-effective to fly. Some of those issues have now been addressed, in particular the high ground handling/landing fees. So time to do it again, see what sort of profit is required from a route, and see what sort of routes can achieve it. I will fly nothing larger than 20 seats, I will see just how many I can get.

Last attempt was Vanuatu, this time I'll try the Phillipines and/or the Caribbean.

mar88

  • Former member
Re: small airline experiment, take 2
« Reply #1 on: July 28, 2013, 01:46:44 AM »
I look forward to your results, wonder what the changes will do. Best of luck.

Offline Sanabas

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Re: small airline experiment, take 2
« Reply #2 on: July 28, 2013, 01:52:00 AM »
Started in Mactan-Cebu in the Phillipines. Roughly in the middle, so should have plenty of shorter routes. Size 4 might be too big, we'll see. On the plus side, as the 2nd biggest airport in the country it's more likely to have one of the two manila based airlines move in after 18 months, to see how I go with comp. And it's got a curfew. :(

Started with 1 fairchild metro, 1 Beechcraft. Would go 100% Metro, but there are only 10 of them in the game, only one on the market. So I'll have to order new once I'm up & running.

Not bothering to plan the first two planes, mostly because I'm in a hurry, just filling from 6am. 7 routes for the fairchild, 5 for the beechcraft. The 10 minute shorter turn makes a big difference, that's an extra 2 hours flight time. 87 staff for 36 seats, and will now see what happens.

alathas

  • Former member
Re: small airline experiment, take 2
« Reply #3 on: July 28, 2013, 11:01:37 PM »
I am flying a bunch of small airplane in Jet age 8 (From Manila Cebu and Davao). In general the route are earning well (10-20K per week per plane with no competition) with a plane of 12 Pax. Though I noticed that when I opened Davao base and started to fly my new routes my marketing went up quite a lot. (I guess from 500K to 625K a week).
It did go up so much that I doubt the route are profitable in reality. My CI was constant at 95.

Offline Sanabas

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Re: small airline experiment, take 2
« Reply #4 on: July 28, 2013, 11:22:29 PM »
Just making profit on the route isn't automatically enough. You need to pay the staff, maintenance, etc, etc. You're obviously profitable overall, but a fleet of 27 DC-6s and having Manila to yourself helps a lot with that.

alathas

  • Former member
Re: small airline experiment, take 2
« Reply #5 on: July 28, 2013, 11:27:37 PM »
I know but I was just wondering if that steep rise in marketing was making sense.

exchlbg

  • Former member
Re: small airline experiment, take 2
« Reply #6 on: July 29, 2013, 06:11:22 AM »
Sure the higher marketing costs are making sense, since you have to pay a lot more newspapers, wall ads or whatever in every town you´re serving.Question is, if your small plane offer makes sense.
To get roughly the point you should add all costst that are not already mentioned in the plane financial reports and divide the general numbers by number of planes you run. The sum you get has to be smaller than the individual aircraft profit, otherwise you lose.

alathas

  • Former member
Re: small airline experiment, take 2
« Reply #7 on: July 30, 2013, 04:23:11 AM »
I still think that the marketing (general campaign) went up kind of lot vs the potential of the routes(Aka small city) that were served. In general those route now served by the Heron (17 Pax) are generating a small profit including all the rest of the cost.

Offline Sanabas

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Re: small airline experiment, take 2
« Reply #8 on: July 31, 2013, 06:24:03 AM »
This looks to be much easier now. No less boring, but much more viable.

I've not touched the airline since day 1, other than to order 5 new Metros and leave them idle. I've done zero marketing, so CI is hovering around 5. RIs are all up to 63. LFs are in the high 80s. And there is plenty of profit, as the pic shows. The most recent week was 85k profit on 170k revenue, which includes paying leases on the two planes actually flying.

My route with most raw profit has near 100% loads, resulting in $2376 in revenue. Fuel costs $44. Other costs are just $171. So $2161 in profit, $864/hour on a 119 NM route. That's in DOTM $, and the best I could manage in MT was $771/hour. That was a plane half the size, but the default revenue from a full MT 9 seater was 9 x 192 = 1728. The default revenue from a full DOTM Metro is 19 x 65 = $1235. So even with $400/hr less revenue, I'm still generating nearly $100/hr more profit.

The worst route only sells 14 tickets each way, $1776 revenue, $35 fuel, $143 ground/nav/etc, $1598 profit, $738/hr.

I'm going to schedule the 5 new planes, dump the beechcraft, then see what the overhead looks like, what the breakeven point is for a route, and what profit my routes actually make, etc, etc. But looks like using 100% sub 20 seaters is now quite viable.

Offline SHAGRATHI

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Re: small airline experiment, take 2
« Reply #9 on: July 31, 2013, 09:41:26 PM »
how do you get the 864/hr out of the 2161 profit?

Offline Sanabas

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Re: small airline experiment, take 2
« Reply #10 on: August 01, 2013, 05:23:56 AM »
The round trip, including a 25 minute turn after it lands, is 2:30. So that flight takes off at 10:00, the next flight takes off at 12:30. 2161/2.5 = 864.4

I think profit/hr tells you a lot more about profitability than any of the existing stats, and it allows routes to be directly comparable.

Offline Sanabas

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Re: small airline experiment, take 2
« Reply #11 on: August 05, 2013, 06:20:49 AM »
My fleet now consists of 6 Fairchild Metros. They've got 250 NM range with the default 19 seats, but that only drops to 15 at 600 NM, then drops steeply after that. 2 more are on order to finish off (almost) all my viable routes inside 600 NM. I'll be flying to 34 destinations, with only 4 of them having more than one flight per day. Longest route is Basco, 619 NM with capacity limited to 12 pax. Might not be a viable route, but doing it to check. 627 NM to Brunei, only 11 pax, might get flown too if there's enough space left. The only route I don't have near capacity is Manila, as that's ~600 daily pax, 30+ daily flights to fill.

Staff numbers progression:

2 planes: 88 staff (44 each)
3: 143 (+55)
4: 225 (+82)
5: 323 (+98)
6: 383 (+60)

Maintenance costs for small planes now look roughly like: C check = 55 x A check, B check = 3.05 x A-check. Each year there are roughly 40 A-check, 11 B, 1 C = 128.6 A-checks, which is the number I remember using before.

My total overhead, on a per plane basis:

Marketing: 20.7k/month, 3.5k/plane
Staff: 185k/month, 31k/plane
Leases: 30k/plane
Insurance: 28k/month, 4.6k/plane
Fleet commonality: 52.8k/month, 8.8k/plane
Engine commonality: 41.7k/month, 7k/plane
Regular maintenance: 4.6k/plane

Interesting, regular line maintenance + C-checks are less than 1/3 the cost of fleet + engine commonality costs.

That adds up to roughly 90k/plane/month in overhead, or just 60k if I owned them.

That means my break even point is roughly 3k/plane/day in route profit.

Each plane flies ~17 hours/day thanks to the curfew, so my breakeven point is ~$180/hr in profit.

I have some routes with RI at 100, some have just flown for the first time, some will fly for the first time tomorrow after the B-check finishes.

Most raw profit:

Davao: $718/hr (215 NM, 3:25, 100% load, $2698 revenue, $66 fuel, $212 fees, $2420 profit. RPK/ASK both 17.84)

Manila: $503/hr (100% load on the first day  ;D $2628 revenue, $94 fuel, $269 fees, $2265 profit. RPK/ASK both 12.87)

Highest RPK/ASK:

Bacolod: $949/hr (65 NM, 2:15, 98% loads, $2349 revenue, $33 fuel, $181 fees, $2135 profit, RPK 52.5, ASK 51.5)

Best overall route (I think, without checking every one):

Tacloban: $1002/hr (83 NM, 2:10, 98% loads, $2377 revenue, $35 fuel, $171 fees, $2171 profit, RPK 41.6, ASK 40.6)

So despite Tacloban being 20% lower on RPK/ASK, there's more raw profit, more profit/hr. RPK/ASK are not good ways to compare routes.

Crappiest new route by profit/hr:

Jolo: $111/hr (310 NM, 4:00, 18 seats supplied vs 18 demand, 4.5 seats sold, $657 revenue, $80 fuel, $134 fees, $443 profit)

Even worse route I missed on the first look:

Laoag: $83.5/hr (513 NM, 5:40, 15 seats supplied v 22 demand, 5 sold, $770 revenue, $128 fuel, $169 fees, $473 profit)

Lowest raw profit:

Tandag: $146/hr (149 NM, 2:45, 4 seats sold, $560 revenue, $48 fuel, $111 fees, $401 profit)


So, a short route selling just 4 seats, a 21.1% LF, is above my break even point if I owned my planes, and should be above it even with leases at a LF under 30. A route 20% longer than my nominal range, with 25% LF, is almost right on the owned break even point. A route double the length of my nominal max range only needs about 60% LF, 9 seats sold, to break even. The 11 or 12 seat, 6:30 round trip flights might even reach break even if they're full.

Not sure how staff costs in the Phillipines compare to the US, but even if the US costs are 4 times as much, I'd be looking at 120k/plane/month for staff, 60k for the rest, so 180k/month/plane, about $350/hr. Which all my 100 RI routes are comfortably beating.

It's now easy to make money with small planes.

Offline Sanabas

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Re: small airline experiment, take 2
« Reply #12 on: August 05, 2013, 06:38:20 AM »
Next day has ended, so all the other new routes have flown. Most ambitious route is the one to Basco:

619 NM, 6:30 round trip, only seats 12, demand is ~18. Sold 4 seats the first day, enough for $251 in profit, only $38.60/hr. But if it was full, with the same costs, profit would be $1500, $230/hr. I only need $180, so even that one will be profitable overall. Without the range issues, when the MetroIII arrives, selling 18 seats, it'd be $300+.

I think I could build a 200+ (or 300+?) plane airline out of Metros and EMB-120s. Just need to find a really good airport for it...

Online Sami

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Re: small airline experiment, take 2
« Reply #13 on: August 05, 2013, 06:39:08 AM »
Screenshots of income sheet appreciated too

Offline Sanabas

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Re: small airline experiment, take 2
« Reply #14 on: August 05, 2013, 06:57:24 AM »
No worries.

Attached screenie is weekly income. The 3 previous weeks were with 7 planes leased and being paid for (6 x Metro, 1 x Beech), but only 1 Metro and 1 Beech flying. Forgot to check commonality before terminating the Beech's lease. The current week includes ordering 2 purchased Metros, and buying 40 sets of slots (31k for 7 at Manila, 70k for 173 everywhere else.  :laugh:) Also only started marketing this week, CI has been hovering anywhere from -1 to +5. Will let it run for tonight while I search for an airport, post profit/hr, income statement, etc again, and then restart somewhere and aim for 200+ small planes.

3rd week from the left is a B-check week. Revenue/fuel/fees drop, but maintenance doesn't spike, as 2 x B-checks was only ~3k, and most of the income statement's maintenance is actually from commonality costs.

Any other info you (or anybody else) wants to see, just ask and I'll post it. Likewise once I restart.

Offline Sanabas

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Re: small airline experiment, take 2
« Reply #15 on: August 06, 2013, 03:33:42 AM »
Shutting this down shortly. RIs are up to 17 on all the new routes.

Shortest of the new routes is Roxas, 95 NM, 19 pax vs 18 demand. 42% LFs, 8 seats sold, $1089 revenue, $935 profit, $400/hr.

Longest of them is Basco, 619 NM, 12 pax vs 21 demand, 52% LFs, 6 seats sold, $975 revenue, $617 profit, $95/hr.

Short route is comfortably making money already. Long route isn't there yet, but should once RI climbs. Interesting that even though Basco apparently has more demand, it is only selling 6 daily seats vs 8 for Roxas. There is no too small warning, and the flight time isn't over 3 hours.

Also interesting the notable difference made by RI. Pic of the Raxos route is attached. The week ending 28 Dec, a consistent 6 seats (31.6%). Next 2 weeks, consistent 7 seats (36.8 ). Current week, 9+ seats on mon/wed/thurs/fri. RI goes up every Monday.

Offline Sanabas

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Re: small airline experiment, take 2
« Reply #16 on: August 06, 2013, 03:39:50 AM »
And the income statement, profit margin is ~50% without B/C checks. 6 planes flying, 32 daily routes to 28 destinations, 19 with an RI of 17, 448 weekly flights.

Offline Sanabas

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Re: small airline experiment, take 2
« Reply #17 on: August 06, 2013, 03:42:59 AM »
Staff page, so I can see how big a jump I have in wages when I restart in a different country.

Offline Sanabas

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Re: small airline experiment, take 2
« Reply #18 on: August 06, 2013, 04:05:01 AM »
And now time to restart, and see how big I can grow. Options I considered:

PNG/Pacific Islands: Not enough volume. Easy to be successful, but hard to get many planes.

NE USA: Boring, plus I was there before with a turboprop airline. Might try it if the first attempt fails.

Phillipines: Also lacks volume. One of the better spots for routes under 300 NM, but there's relatively little in the 300-900 range.

UK: Seems like a few good choices of airport. If London City was already open, I'd HQ there.

Yugoslavia: End up in 4 different countries once it breaks apart. But there are only 3 good airports (Zagreb, Ljubljana, Belgrade). If I HQ in Zagreb, I'd have to wait until 2013 to use the rest of the EU for a base. Still very tempting.

France: Also seems like a few good choices. Slightly better than the UK, as being more central in Europe means more routes to fly under 1000 NM. Won the tiebreaker when I thought of the airline's name.  :laugh:

Offline Sanabas

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Re: small airline experiment, take 2
« Reply #19 on: August 06, 2013, 04:29:52 AM »
Napoleon Complex is now up & running.  ;D

The rules: nothing but small planes. Ever.

The aim: HQ + 3 bases eventually, and as many planes as possible. 100+, 200+, 300+, who knows?

The long term plan: EMB-120s, Fairchild Metros, and possibly a 3rd group of 9 seat Pipers.

 

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