(Disclaimer ; HostingPics being about to close, I have to upload the images directly at the end of the post. Sorry for the inconvenience)
Expenses analysisFor improving the profitability of a company, you can increase income, or decrease expenses. For decreasing expenses, you have to know where are your weaknesses. Some expenses are tough to fight, others are levers for improvements.
For illustrating the various expenses we have to pay, Let me analyze my two current companies, in GW2 & GW3. For getting the relevant chart, go to "Office - income statement", and click on the small chart button just left from "Total operating expenses"
It give you two charts. The important one is on the right. Expenses during the week are not linear, therefore, the left chart, while accurate for the current week, is misleading. The right chart, concerning the previous week, is accurate, and allows deep analysis.
Here is my chart for my current company in Warsaw & Katowice, GW2. It's early in the game, 1953, with old crap flying all around. I've got B377s, CV240s and IL12s. Let's see the main expenses :
(first image WAW1953)
Staff salary 16.4% : that's not much. Despite the high number of pilots required by my flying stuff, I a blessed with low Polish salaries.
Fuel 17% : It's a lot for the era, mainly linked to poor fleet choices. I went IL12 because I did need the speed immediatly, but they are real drunkards. That's something that needs to be acted upon - as soon as I'll catch better airframes.
Fuel Contract 0,37% : Those ones are secondary. You can save a little bit on petrol with those, but they won't make or unmake your company.
Staff training 7% : I've got 3 fleet groups, for mere 69 planes. It's too much. You should not go beyond 2 fleet groups before reaching 80/100 aircraft in terms of fleet size.
Maintenance 13.5% : that's very bad. It's pushed up by commonality, like staff training, but also by the insane maintenance costs of flying soviet steel.
Aircraft Lease 15.5% : that's good, actually. It means I've been able to secure B377s at a relatively acceptable price, and as well order CV240s before prices went nuts.
Aircraft insurance 3.3% : not something you have direct control on. It just goes down when owning aircraft instead of leasing them, and flying cheaper airframes.
Passenger fees 4.9% : basically, linked to your income. The more seats you sell, the lower. Which means that selling 60 seats at 80$ is better than selling 80 seats at 60$. Unless you need to starve an opponent.....
Other fees : linked to the aircraft weight. A parameter most players overlook. Still, Russian steel is penalized here, too.
Depreciation 0.63% : that's because I own my IL12s, as well as a few CV240s. Rule of a thumb : usually one third of leasing the same plane. Had I leased them, I'd have something like 17.3% of lease costs.
Marketing 10.5% : ideally between 5% and 10%, I'm rather aggressive, there. As new planes arrive and my company grows, it should get better.
Office rent 0.8% : something you have no control about.
Alliance fees 1.83% : that's high, but a good alliance gives you an invisible bonus in terms of Company Image. Plus being part of a good alliance eases plane trades. Your call.
So, in conclusion, my main problem here is my fleet choice, that has been driven by availability, not by costs mastery. It's a trade-off. I could wait more CV240s for two more years, or send IL12s right now.
Later in that game, I'll have to take care of those, and rationalize my fleet choices.
And here is my vastly different chart for my huge company(921 flying things at screenshot time, plenty more to come) in 2020, Charles de Gaulle, Alicante, Orly, Warsaw, GW3. I've got A330s being replaced by neos, 737s being replaced by MAXs, and MRJs beginning to arrive.
(second image, CDG2020)
Staff Salary 29.3% : French salaries are killers, compared to polish ones. Not something I can do anything about.
Fuel 24.45% : It's a lot, despite flying efficient aircraft. I need to go one with replacing A330s by neos, and stick to efficient fleet groups. I also am paying my long-range 737 flights, but that's a choice I accept the consequences.
Fuel Contract 0,29% : same as above
Staff training 1.53% : 3 fleet groups for a huge company is so much better than for a small one.....
Maintenance 4.9% : That's just good. Will be even better with fleet renewal and younger airframes.
Aircraft Lease : no more
I just replaced my last leased aircraft.
Aircraft insurance 1.73% : owned aircraft are less costly, there.
Various fees : same as above.
Depreciation 8.2% : it would mean I'd have more than 24% of expenses in leased aircraft. It's already 2020, planes are getting very costly, and stuff that does not drink a lot of petrol is expensive.
That's the reason why the advice is generally to lease old(for reducing lease costs) or buy new(for reducing fuel costs while not being killed by lease costs).
Marketing 2.5% : I'm at 100% company image with that, the privilege of being huge...
Office rent 0.66% : same as above.
Alliance fees 1.28% : that's high, but a good alliance gives you an invisible bonus in terms of Company Image. Plus being part of a good alliance eases plane trades. Your call.
In conclusion, the only part I can improve here is having newer, better airplanes, for reducing maintenance and fuel costs. And stay at 3 fleet groups or less at all costs.
NB : my margin is 37% in Poland, only 16% in France. That's because of the era, and also because GW3 is more mature. My french company is actually far better than my polish one, just fuel and owning costs in the late game are far higher, and do not allow for the same levels of profitability than in the early years.
Main conclusion : slashing costs is an important thing to do. It shall not prevent you from conquering markets. By finely analyzing your costs, you can meet problems, that you might be able to identify weaknesses in your management.
The biggest cost driver is fleet choice. Too many fleet groups, or bad ones, might kill you. Leasing brand new shiny aircraft is a frequent problem, also. Too many bases for not enough aircraft may be a killer too, especially for large & very large sizes. All the interest of the game is finding the right choices. Finding the right fleet, big enough to fill the demand, small enough to reduce costs and allow outpacing opponents, is a challenge. Parameters are moving quickly, and it's choices that stay for years, often decades. That is fun. I do hope this little tutorial wil help you understanding the costs side better.
It's often worth, early in the game, to bite higher costs in exchange for conquering the territory and increasing income. You see the consequences in my polish costs. Later in the game, when demand is mostly met, cost control becomes strategic, and my french game did reach a very good level there, though there is still room for improvement.
Of course, I'd be happy to answer any question on the topic, or add any additional topic relevant anyone might bring in.
Topic: Gazzz's tutorials : Costs (Read 7664 times)
