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Author Topic: How to survive the fuel spike?  (Read 437 times)

Offline Andre090904

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How to survive the fuel spike?
« on: May 27, 2016, 04:03:59 PM »
Hi there,

Okay, the fuel spike is nothing new and we have seen lots of big airlines going down recently including Masata, Atlas Airways, Europa, Espana, etc.

So the question is: How to survive the fuel spike? I am especially concerned as my very own profits are shrinking. See here: http://www.airwaysim.com/game/Info/Airline/View/1001/189/

Some quick facts:
- I only use 2 fleet types
- I own 100% of my aircraft
- Around 2/3 are efficient prop aircraft
- I regularly increase prices for LF > 90%
- I minimized marketing spending
- I do not have any competitors at my bases

What else can I do?
« Last Edit: May 27, 2016, 04:07:45 PM by Andre090904 »

Online JumboShrimp

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Re: How to survive the fuel spike?
« Reply #1 on: May 27, 2016, 04:13:54 PM »
I guess the profits are shrinking for many airlines.  As long as you are still in black, there is nothing to worry about, just wait it out.

Offline Andre090904

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Re: How to survive the fuel spike?
« Reply #2 on: May 27, 2016, 04:17:24 PM »
In fact, many airlines seem to have more profits since the last quarter. No idea how that's possible unless a local competitor is gone. ;D

Online JumboShrimp

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Re: How to survive the fuel spike?
« Reply #3 on: May 27, 2016, 04:41:06 PM »
There were quite a few big bankruptcies.  My LFs have increased slightly, but since my airline is so LH oriented, fuel has eaten away those gains.

But if the airline has mostly SH. and there a large BK, it is quite conceivable that the profits would go up.

Offline schro

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Re: How to survive the fuel spike?
« Reply #4 on: May 27, 2016, 05:44:58 PM »
What fuel spike? I seem to be doing fine with a ~20% operating profit margin at 49% loads....

The airlines you listed had a variety of fatal flaws with each of them, which was the true cause of their demise - the so-called fuel spike you mention may have only accelerated things a little bit.

As for your airline, your issue is primarily your props with a hint of scheduling issues and oversupply.

Specifically, with respect to props, because they are so slow, it takes significantly more of them to run the same schedule compared to jets. This means that all of your overhead (especially staff) can be 50%+ higher than it would be with jets. Viscounts also require 3 pilots versus the 2 that comparable jets require (so you've probably got 200% more pilots employed for Viscounts compared to say, a BAC operator). You also have a good bit of overhead from having level 3 bases instead of level 2 bases, especially considering your fleet's size (basically, your level 3 bases are likely not even paying for the increase in overhead related to said base through the profits generated by those planes).

Offline Andre090904

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Re: How to survive the fuel spike?
« Reply #5 on: May 27, 2016, 06:06:20 PM »
Interesting insights, highly appreciated!

Please allow some questions/comments:

1) Regarding props/jets: I see that jets are faster and thus need less staff and less aircrafts in total which saves costs. Still, fuel consumption would still be higher (around 30%). 2 Viscounts need ~1800kg/h, 1 DC9 needs ~3000kg/h. So I think the difference would not be that much. Yes, I need more staff and maintenance, but I also save some fuel. The main problem is the demand, which is mostly around 50-70. Jet's still do not make sense for many routes I am flying (either too big or too short range). Where possible, I am using DC9 instead of Viscounts (e.g. when demand increases or competition is gone). I'll use Q400 or Dash8 later on to save some more costs (e.g. 2 pilots, more speed, less fuel).

2) Oversupply: I am not sure which oversupply you'd mean. Except for a few exceptions (e.g. Istanbul), I am always trying to fulfill the exact demand (not caring for competition). So if a route has 120 demand, I schedule 2 Viscounts at 59 seats each. Or 2 DC-9-21 for a route of 140 demand etc. I prefer Viscounts on routes where competition is tough to have a higher market share through higher frequency (e.g. 4 Viscounts for 200 demand instead of 2x DC-9-34).

3) Scheduling: I have a fleet utilization of 16.2h which is pretty good I think. Especially the Viscounts have a high utilization as they fly day/night (thanks for their low speed). I let them fly from 22:00 local time to the middle east or UK where they arrive at 06:00. DC-9 are faster and cannot have night flights unfortunately without having bad arr/dep times.

4) Level 3 bases: Please correct me if I'm wrong, but I cannot operate DC9 from level 2 bases. And those DC9 are my most profitable aircrafts. I see that BACs are considered "Medium" aircraft. But the range is not sufficient enough for my needs (2000NM). Would be a different story if I were in the heart of Europe, but Greece is quite in the middle between Europe/Middle East and I need medium haul for either direction. So unfortunately I cannot save costs by shrinking the base sizes either.


Offline schro

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Re: How to survive the fuel spike?
« Reply #6 on: May 27, 2016, 08:18:47 PM »
1. You did not consider that fuel is provided as a function of time and not as a function of distance traveled. If a DC-9 can do a route in half the time of a viscount, then it's fuel burn on a per-trip basis of one "viscount hour" would be lower than the Viscount....

2. I did not dig into your scheduling in great detail, so I could be mistaken. I suppose it's also the erratic 7 day scheduling that I see that messes up the seats offered on the return trip being the bigger issue. Regardless, this is low priority compared to having too many props....

3. For the average length of your flights, a 16.2 hour utilization number is far too high. That's indicative of an airline that flies primarily long haul and not of one that flies routes up to about 1000-1500nm. It really has no bearing on how well your airline is run, it's moreso indicative of whether you run props or jets, and whether you run short or long haul (or if you have a ton of unscheduled/poorly scheduled planes). You may want to note that my airline's utilization is 7.9 hours.

4. You are correct. I'm simply pointing out that some of your lack of profitability is because of that reason, not that you need to do anything differently as it's still not as big of a deal as your props are.

At the end of the day, the Viscounts are going to end up killing you, especially if you get any more meaningful competition. The focus on the fuel burn metric is keeping you from seeing the real problem of your high overhead costs related to keeping too many props too late in the game.

Online JumboShrimp

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Re: How to survive the fuel spike?
« Reply #7 on: May 27, 2016, 09:08:00 PM »
I think one of the points schro was trying to make regarding bases, each base has an overhead (as some percentage of HQ size).  Many bases mean multiple times this overhead.

One way to keep the overhead under control if you have a lot of bases is the bases to size 2.  Size 2 is cheap, Size 3 is very expensive.  I don't have the exact numbers in front of me, but say Size 2 has a cost of x.  Size 3 has a cost of 5x, Size 4 has a cost of 6x.

So there is a huge jump in cost from size 2 to size 3.  Limiting yourself to Medium aircraft means you may not be able to fly certain destinations now, but by reducing this overhead, your entire airline will be more profitable.

If you are going to put 100-200+ large aircraft in a base, it does make sense to have Size 3, but if you are only going to have 10-20, it does not pay.

Offline [ATA] Sunbao

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Re: How to survive the fuel spike?
« Reply #8 on: May 27, 2016, 09:47:27 PM »
As they other says your Vickers is your problem, as thumb rule never fly props over 600nm

Online saetta

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Re: How to survive the fuel spike?
« Reply #9 on: May 27, 2016, 10:13:33 PM »
I chip in !
All of you have informative and valid points. I have a ton of Viscounts (840 only) and they have been very good to me BUT I agree at a certain point they can turn on you and kill you. Being aware of that I started reducing my Viscount fleet quite a while back , but the transition got very costly so I had to slow it down. Yes it is very dangerous to have an enormous fleet of (relatively) slow turbo props. The trick is to fine tune the transition to a fuel efficient jet (BAC 475/500) it also helps that it is a medium plane . That transition has to be done as fast as possible without self destruction . I would rather watch the self destruction in others ...(as I have many times) that jump into inefficient jets early on and put them on silly routes. In conclusion, in my opinion timing is almost everything and neither jets or props are a cure all...Patience ..waiting for the others to self destroy and thinking very very long run has worked the best for me !

Cheers from AVIACO

Online saetta

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Re: How to survive the fuel spike?
« Reply #10 on: May 27, 2016, 10:24:08 PM »
P.S. Spain has gotten  very nasty, way too many airlines chasing to few pax. The viscount has kept me relatively solidly waiting for may competitors to BK, and that process has finally started, and will become a blood bath soon! I plan to survive this and then make the Viscounts disappear fast. 

Offline Andre090904

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Re: How to survive the fuel spike?
« Reply #11 on: May 27, 2016, 11:49:53 PM »
Many lessons learnt today, thanks to all of you!

My conclusion / plan is:

1. Wait for cheaper fuel prices
2. Keep on replacing Viscounts with DC9 where possible (especially longer flights) to save staff/fuel/maintenance cost
3. Pay more attention to Medium/Large aircrafts in future game worlds (too late now I'm afraid) so that I won't need class 3 bases. This probably means using BAC instead of DC9.


Offline schro

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Re: How to survive the fuel spike?
« Reply #12 on: May 28, 2016, 12:20:30 AM »
Many lessons learnt today, thanks to all of you!

My conclusion / plan is:

1. Wait for cheaper fuel prices
2. Keep on replacing Viscounts with DC9 where possible (especially longer flights) to save staff/fuel/maintenance cost
3. Pay more attention to Medium/Large aircrafts in future game worlds (too late now I'm afraid) so that I won't need class 3 bases. This probably means using BAC instead of DC9.

It's not too late to adjust strategy. You have a spare fleet type, so I'd encourage you to look at the F70/F100 when they launch. They would be a great Viscount and DC-9 replacement. If I'm remembering right, the F70 will do about 2000nm while the F100 will do about 1650nm. There's also a nexgen that will come along later in the game for more fuel efficiency. It's also not too late to get on the BAC bandwagon if you want to make that change now (then that'd be your third type until the Viscounts are gone, leaving room for the F'ing 100's later in the 80's).

Offline Andre090904

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Re: How to survive the fuel spike?
« Reply #13 on: May 28, 2016, 12:30:12 AM »
Fokker is the way to go I think.

I have just stored 5-6 more Viscounts in the last hour or so. There is a lot to do.

Online saetta

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Re: How to survive the fuel spike?
« Reply #14 on: May 28, 2016, 03:37:48 AM »
your best bet down the line is to be a 737 300/400 and 767 airline ...don't get tempted with the 800/900 they much more expensive and marginally better. 2 types that can rule the world .Bac's are great stepping stones but be careful with the upcoming noise reg retrofitting hush  kits it's not much fun !
those are my plans 737 300/400 and 767 ER's

Offline Andre090904

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Re: How to survive the fuel spike?
« Reply #15 on: May 28, 2016, 03:12:49 PM »
I am afraid the 737 series is too big for my needs (let alone 767). The demand on my routes is between 50-100 mostly, rarely above 120. Biggest demand I saw this game world on one of my routes is around 300. So Fokker 70/100 is a much better fit in terms of capacity. Well, it could be that the demand is higher in ~10-20 years, but it's still borderline for a 737 fleet.

Offline gazzz0x2z

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Re: How to survive the fuel spike?
« Reply #16 on: May 28, 2016, 05:18:17 PM »
The F100 is one of the best planes of the game. It arrives in the mid 80s and is just beginning to feel slightly outdated in the 2020s - but at this stage, you can replace them by F120 in the same fleet group... The F70, OTOH, is not that good, and arrives later. That's my gripe against the Fokker family : only one part of the family really is cool.

But in this case, yes, it's probably the best choice. The difference between The F100 & previous generation jets(including the F28) is huge.

 

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