Company Image

[tdf42]

With 3 bases and 68 planes I spent over 1.9 million a week in marketing and hung around 50 for a rating. I have cut that spending in half (eliminating TV) and my rating has gone down to 43 and still slipping. Still making money, but should I worry in the long term?

[Andre090904]

Depends on your business model. If you fly mainly economy passengers, I made the experience that a CI of 30 is sufficient as long as you don't have much competition. Though, 50 is obviously better and gets you some business passengers if you have business seats (and the demand).

[tdf42]

I do have moderate business volume and plenty of competition so I guess I better pump it back up...thanks

[schro]

When you're starting out and growing, you'll want to aim to spend in the 8-10% of revenue range on advertising to keep it going up. Once you've got a few hundred planes, it shouldn't cost more than 5% of revenue to maintain 90-100 or so.

[gazzz0x2z]

When you're starting out and growing, you'll want to aim to spend in the 8-10% of revenue range on advertising to keep it going up. Once you've got a few hundred planes, it shouldn't cost more than 5% of revenue to maintain 90-100 or so.

This.

I've read the "stay between 5% & 10% of expenses in marketing" rules, applied it, and it never failed me. Curently flying around 850 birds, 5.24% of expenses in marketing, 100CI.

[knobbygb]

To be honest, 68 planes over three bases is not really ideal and may be what is causing your problem.  Your marketing costs will need to be significantly higher, to gain the same effect, than if you had those aircraft all at one base and serving fewer route pairs. I know it's sometimes impossible to expand much from a single base, especially in lowly populated parts of the world, but your bases are ALL Large (size 5) airports in the US. You really should concentrate more on growing at your headquarters before opening further bases. Your strategy is maybe more fun - and there's no problem with that, but it will cost you more money. You have no 'based' competition at your headquarters (RSW) and MANY un-served routes. At my quick 2 minutes evaluation, I would probably have based a further 150 to 200 aircraft there and saturated every possible route before even considering opening at those 2nd and 3rd airports.  Just my take on the situation.

[JumboShrimp]

To be honest, 68 planes over three bases is not really ideal and may be what is causing your problem.  Your marketing costs will need to be significantly higher, to gain the same effect, than if you had those aircraft all at one base and serving fewer route pairs

Actually, the cost is per destinations being flown, not route pair.  So 3 bases, some flying to the same destinations will cost a little less than 1 HQ base flying to more destination.

But that is just marketing, where you actually save some money with more bases.  With everything else, more bases means more expenses than 1 HQ base.

[gazzz0x2z]

(.../...)With everything else, more bases means more expenses than 1 HQ base.

Especially when you look at company profile. He now has 82 planes in operation, including 27 large aircraft(a mix of 737 & 757), and the 2 other bases are level 3. It's not much large aircraft to pay for all thos additional costs. 10 large aircraft are usually not enough to pay for all induced costs of raising a base from level 2 to level 3(HQ costs increase a lot, and those extra costs do not appear on the base costs, it's tricky to see).

That being said, he's still very profitable(30.5% margin), and is unopposed in his HQ. So his company image(now down to 40) problems are not really problems. He could do even better, but he's already really efficient(having only owned planes help a lot).

[tdf42]

To be honest, 68 planes over three bases is not really ideal and may be what is causing your problem.  Your marketing costs will need to be significantly higher, to gain the same effect, than if you had those aircraft all at one base and serving fewer route pairs. I know it's sometimes impossible to expand much from a single base, especially in lowly populated parts of the world, but your bases are ALL Large (size 5) airports in the US. You really should concentrate more on growing at your headquarters before opening further bases. Your strategy is maybe more fun - and there's no problem with that, but it will cost you more money. You have no 'based' competition at your headquarters (RSW) and MANY un-served routes. At my quick 2 minutes evaluation, I would probably have based a further 150 to 200 aircraft there and saturated every possible route before even considering opening at those 2nd and 3rd airports.  Just my take on the situation.

I came in game year 1978 so I have just now filled just about all all available routes and I dont believe in saturating if you mean flying with 2/3 load factor. I dont consider myself as having a problem but more trying to understand the relationship of my image which was 50 and now is 40 (its the same airline) just because I spend less now on marketing. I am running a good small airline...as someone mentioned I consistently have 30% profit margins.