how to schedule for expensive lease airframes

[paddk989]

At present I lease used market 737-400s which are very old, but the lease prices are modest. When scheduling for the fleet, I respected the not to takeoff before 0600 hours, and not to land after 2300 hours. I want to replace the fleet with new airframes, but the lease costs will be 4 times the average lease payments of the 737-400s. My airline operates in the continental United States only, no intercontinental trips. I am aware it is possible to use 7 day scheduling, but have never tried that. My question is, can I adopt a scheduling method, that will be more efficient, to offset the very high lease costs of obtaining new airframes. Thanks for all replies

[Amelie090904]

Well, of course 7-day-scheduling makes your aircraft fly more in the end. So that is a clear yes. Though it's a rather time-consuming process.

The real question here is your aircraft choice. Normally, you never lease new aircrafts and never buy old aircrafts. Leasing new aircrafts is just too expensive and buying old ones rarely makes sense as you won't use them for too long. Both does not pay off really. So if you want new aircrafts in your fleet, you should buy them, not lease them. The alternative would be to lease other older aircrafts again.

[paddk989]

Thanks Andre, that does in fact answer my question. Thanks for your time

[schro]

The other consideration will depend on the age of the 737 classics that you speak of.

Older planes have higher maintenance costs, period. Thus, in many cases, you may see parity in your overall operations costs when you're looking at leasing a 0-5 year old plane versus leasing a 20-22 year old plane when you add lease + maint together.

[Amelie090904]

Yes, that gets very important indeed...even more so at 25 years (or more). In the regional challenges I always went for the cheapest (=oldest) option to allow the fastest possible expansion.

In the North American Challenge I used stone-age 737-300 in the 2010's.
In the Regional Challenge I used old Q400 in the 2010's.
In the Long Haul Challenge I did the same with A310.

Perfect for quick expansion when the game end is just a few years away. I didnt care at all about fleet age or maintenance costs. Many of my aircrafts were 30 years old (or older). I wanted a possibly high yeary passenger figure to get the 100 million / year achievement. But this tactic is not suitable for longer game worlds. I would choose something to lease that is not too old and not too young either. Let's say "second hand aircrafts" (8+ years) with recent D check for 7.5 years. That should do usually. Up to 20 years is fine. Just pay attention when the D-Check is due.

[gazzz0x2z]

As Andre said. If your company is not huge, take freshly D-Checked airplanes for 7.5 years, and plan for their replacement before the next D-Check. You'll have a mix of 10-yo and 18-yo airframes in your fleet, but it's a steady and sustainable model.....up to a certain size. When you are too big, you need new planes for keeping them 23.5 years. Unless going for cheap models(that have their own drawbacks), it means you have to buy them to stay competitive.

The 7.5 model is probably what I'll do in current GW2, BTW, as models in the 50s are evolving rapidly. Just, I'll lease them new, because there is no choice, the used market is drier than the Sahara. Still, within 6-7 years, far superior models will be available, and I'll let go my airframes. Rinse and repeat until more stability is possible. I can do that because I do play in Warsaw, a not-that-big airport. In Atlanta, you need to grow huge to survive, and can't afford to replace your airframes that often.

[paddk989]

Gazzz, can I ask 2 questions about your thoughts with the long GW2 which started in game year 1950. Firstly you mention the airframes improve markedly in the 50s. Is it worth buying, as apposed to leasing, a non jet airframe, and operating it for around 20 years, when jets are in the skies. Secondly, at what sort of time period, 1950s or 1960s, would you personally consider buying an airframe type, and operating it for as long as 20 years.

[Amelie090904]

I hope you allow also opinions from someone else. 

I personally think it's not so much a matter of the era, but rather the size of your airline. Usually, new airlines never buy aircrafts as they simply don't have the funds to do so. It is recommended to lease all aircraft until you reach a moment when you have enough money to actually buy aircrafts.

Now regarding your other question, I think it really depends on your goals. You may, for example, buy dozens of Super Connies in the 50's/60's or DC-6 and be really successful with them up until the 70's or so. In the last GW2 I had a small regional airline in Greece with more than 200 Viscount 700D which I used until the 1990's. They were just perfect for me. 59 passengers, more than 1000NM range, "middle" sized aircraft, low fuel consumption, cheap and fast to get. In our small regional alliance we actually kept the manufacture line open until 1997 or so I believe (by then the Q400 and ATR were simply better). The aircraft was launched in the late 50's/early 60's! We used it for some 40 years! Someone actually used the Viscounts in the very end in the late 2020's (one of the very last ever produced). So that was basically one of the starter aircrafts that still existed up to the end 60-70 years later!

That is, of course, usually not the case. Now I will definitely go for the Viscount 700D again as I loved it last time. In that case it really makes sense to buy them (given you can afford it), because you will use them easily for 20 years. It's worth to buy them. If you prefer the jets that come in the 70's, then probably it does not make sense to buy aircrafts in the 60's (or maybe if you sell them once you go for jets).

It's a matter of strategy. Let me explain that with my beloved Viscount 700D. I used them from the 60's up to the 90's and never had any trouble. I actually made various competitors go bankrupt who used BAC 1-11, DC9 or other jet aircraft. Why? My Viscount was cheaper and faster to get. It is a "middle" sized aircraft unlike the DC9 which is "large" (more costly). It uses less fuel. It has a faster turn-around time. It had quite a good speed for its age (280 kts I believe). So my competitors went for modern jets, spent tons of money on them, new schedules, "large" bases etc. while I just kept going with my little Viscount 700D. Due to their rather small size (59 passengers) it was easy for me to have 2-3 full daily flights to each destination while my competitor had 2-3 daily flights with half-empty DC9. It took them some time to realize that (usually up to the next fleet modernization), but by then it was too late and they went bankrupt.

To answer your question: If you think you can be successful with your fleet choice, stick to it until you see something better coming along. Nobody forces you to modernize your fleet choice. It can work. Maybe it doesn't. Depends on your goals and your competitors.

[gazzz0x2z]

Andre has an excellent answer for Short to medium range operations. For long range operations, the slowness of older airframes is quickly a killer, and you need jets. And they improve really, really quickly. The 707 is an absolute drunkard, and all along the 60s and 70s, you have better and better airframes arriving on the market. Later, you can stabilize. Once you've got the B767s, B777s, F100s or A320s, well, that's for decades.

In current GW2, various reasons will push me far from the Viscount, but had I been on a bigger market, I'd have jumped on them. And kept them until the A140 in the early 2000s. But I need smaller airframes(Poland is really a small market), and will go the CV240 route for my SR routes. Not sure what lies beyond.

[Amelie090904]

Yes, LH is a whole different level and honestly I don't have much LH experience other than the LH challenge that ended some weeks ago (where I still had 400 A310 or so and got the "800 very large aircraft achievement"  )

@Gazzz: If the Viscount is too big, I remember there were some 30 seaters in the 1960's. Something with "A". Don't remember their name, but they were quite popular until the 70's and even 80's because there are simply no new props in that era except Fokker maybe and that Japanese birdy. Maybe those will do later on for you? I remember the Fokker is actually even better than the Viscount (less staff needed), but has 48 seats only (which is still nice). Maybe a good option (also for me). 

[schro]

First consideration is that in the early days, the relative cost of aircraft (whether leasing or buying) compared to revenue is much much lower (same for all expenses - personnel, fuel, etc). As time goes on, lease/ownership costs increase relative to your revenue. Thus, it makes leasing a lot more economical in the early era. Generally, if you're going to fly a plane longer than 8 years, you're financially better off to buy it rather than lease it (for any era).

Second, plane advances happen rapidly starting in the 50's and 60's - many props or jets that appear in that era are quickly bested by newer planes that come along.

Third, as has been mentioned, the slowness of props increases your overall overhead - for example - A fleet of 400x DC6's can be fully replaced by about half that number of jets, which reduces all of your overhead costs as well as aggregate maintenance for flying the same number of seats. During the early eras (as mentioned in point 1) those economics will work just fine, but as the gap between costs and revenue closes over the years, it becomes impossible to maintain large prop fleets.

Fourth, maintenance costs get a bit nuts on the early era props. The DC6 for example, tends to go hockey stick around the 15-16 year mark. At that point, it becomes more expensive to do maintenance than it is to lease plane itself.

Andre - You're probably talking about the Accountant. It's a decent small plane that should be fine. If the props are in the small/medium category and used for fairly short haul routes, then you'll generally be fine. It's props being used in the large/very large category that turn into problems much faster...

[Amelie090904]

Signed. Thanks for the aircraft name, that was what I was looking for.

[knobbygb]

My question is, can I adopt a scheduling method, that will be more efficient, to offset the very high lease costs of obtaining new airframes. Thanks for all replies

Going back to the original question about scheduling - Because of the continental US being split over four time zones you should quite easily be able to find flights that satisfy your take off and landing time requirements, utilise each aircraft overnight AND be able to avoid 7-day scheduling.

I'm not in your Game World so I can't see where you're based, but a typical schedule from the East coast for me would be a 12 hour 'redeye' to somewhere in the -7 or -8 zone, leaving mid-afternoon and arriving back at base early next morning, then filled up with any two shorter flights to give at least 17 or 18 hour utilisation. I think most of your 737s should have the range for this.  Set up all the longer flights first and then select the others. A bit of planning is required but not so much as setting up a 7-day schedule. 

This even works in the -6 timezoe (e.g. ORD) although you may have to be content with some early morning landings (4am to 6am).  In general an early landing brings far less of a penalty than taking off after midnight.  I schedule for takeoffs between 5am and midnight and landings between 4am and midnight and it seems to work quite well.

You should probably do this anyway - even if you continue to run "cheap" older aircraft but, if you DO decide to lease new aircraft then unilisation is the key - they MUST NOT be sat around on the ground any longer than is absolutely necessary. NEVER leave a leased aircraft on the ground overnight, even just from midnight to 5am. Aim for a 'perfect' 18 hours per day in the air, accept 17 hours and don't allow less than 16 hours.

[paddk989]

Thanks knobby for your comprehensive guidelines on scheduling. Appreciate your post.

[JohnGaleazza]

This stage of my airline has always sunk me.  Growing into long (er?) range trans-oceanic routes where flight times bring the aircraft back to home base later than the departure time which necessitates using at least 2 (optimally 3) aircraft.

7 day scheduling allows me to book flights to a second destination shortly after the aircraft returns from the first destination and maintain good aircraft utilization.  The caveat is that you would need 5-7 destinations to serve in this set up

[Maarten Otto]

Do not rule out the "it's not my competitor" option.

Ask larger airlines in another part of the world to invest for you. They order from the manufacturers and you lease the air frames for 14 years. This is giving them more income (via lease) then interest and allows you to operate new air frames at half the price. A win/win situation. But it does involve some negotiations and trust in each other. But if you succeed rapid expansion can be achieved at a fair price.

[gazzz0x2z]

(.../...).

Agree; that's the main reason to be in an alliance, BTW... But it's tough in current GW2 where averything that flies and is not completely obsolete has construction slots overbooked.

[paddk989]

Yesterday, I tried for the first time to compile a 7 day schedule, and it seemed to be successful, and I assigned the schedule to the 2 airplanes I have. However, this morning I received a message that the slots for the 5 days, for which I have no aircraft and are not flown, had been deleted.  Is it the case, when compiling the schedule, I should only have ticked the boxes for 2 days, and not all 7 days.
Also, I now have a $300.000 deficit with the bank. When does the bank take the decision to make a company bankrupt. Thanks for replying

[knobbygb]

Yes, you need to either wait until you have the required seven aircraft to operate all the routes or create the routes without slots and then just buy the slots as each aircraft arrives, otherwise you will lose them as you found. You can create all the routes at once to save time (tick all seven boxes at the top) but use the "Do not buy slots for this airport' tick-box (underneath where the slot prices are shown) so that you don't waste money on slots you don't need yet.

The problem with flying only once a week to, say, 13 or 14 different destinations when the first aircraft arrives is that the route image will build very slowly for each route and you will be flying at a loss for quite some time. Also, you'll end up hiring a lot more staff at the start, which won't be used efficiently until you fully fill out all seven days of the schedule - another unnecessary cost you can't afford.

If you have the time - and patience, and once you've mastered the basics of 7 day scheduling, try an approach like I do:  Build the whole schedule on 'paper' (a spreadsheet for me), and create all the routes WITHOUT BUYING any of the slots. Then when the first aircraft is available just add SOME of the routes to it (buying the slots at that time) but not necessarily the ones it will finally operate - try to add at least five or six trips a week to just a couple of destinations. You'll have to choose the ones that have the most suitable times so you don't actually have to edit the routes - probably the shorter ones. Keep doing this at least until the fifth aircraft has arrived and then remove them all and schedule them properly in the '7 day' fashion (but remember, still don't buy the slots for the last two aircraft you don't have yet).  This avoids flying to too many new destinations at once and will save some money by forcing the route image to build more quickly on the routes you fly more, while saving on staff. It's messy and takes longer but, as an advanced technique, it can be quite satisfying to squeeze every possible dollar from the situation.  Another minor advantage is that, if your competitors are watching, you won't give away right at the start ALL the destinations you will fly to. That probably doesn't matter too much but it's something else to consider.

[paddk989]

Thanks for your time knobby. Your reply is extremely helpful, and I will take on board the points you raise. Thank you