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Online Airline Management Simulation
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Author Topic: How to minimize airline expenses?  (Read 738 times)

Offline fanglin

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How to minimize airline expenses?
« on: April 09, 2019, 04:13:00 PM »
Hi guys,

So I've been running an airline on beginner's world #1 since the opening of the world. I am currently top 3 in the game world in terms of score, and I have an expansive network. The issue is, is that airlines with similar operating revenues are making billions more than me, because of a smaller operating expense. I have tried my hardest to cut down on these expenses, but I can't seem to get them down enough.

I am based out of LAX with hubs at IAH and EWR

I operate a fleet of the following:
-737 (0/72)
-757 (62/21)
-777 (27/47)
-787 (0/28)
-CRJ (0/90)

All aircraft fleet groups have a common engine type

I have high fleet utilization

I constantly adjust prices for my routes, in order to get the highest load factor possible
I currently have around 80% for pax and 60% for cargo

I spend most of my money on buying my current leases

As of now, I only buy used aircraft, as new ones are crazy expensive

I have configured my aircraft to hold more than the suggested amount
(Example: My 777-200ERs have (330/32/0) instead of (250/25/10)

My Revenue is up at $6,000,000,000
But my net profit is only $850,000,000

For any of you more experienced players out there, are there any strategies that I am not using which help cut down on costs?
Is there a certain way I should further improve on my airline management?

Cheers, and thank you :)


Offline madflava13

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Re: How to minimize airline expenses?
« Reply #1 on: April 09, 2019, 05:29:42 PM »
Cut down your fleet types.  You're operating 5 right now.  Ideally you'd be at 3 or less. So pick one short range, one medium range, and one long range. 

Offline gazzz0x2z

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Re: How to minimize airline expenses?
« Reply #2 on: April 09, 2019, 07:08:31 PM »
(.../...)
I constantly adjust prices for my routes, in order to get the highest load factor possible
I currently have around 80% for pax and 60% for cargo(.../...)

The biggie is fleet commonality, as madflava13 said. But "highest loadfactor possible" is not a very good thing either. "best possible financial yield ismuch better". It requires some work, though, asdepending on the circumstances, the perfect Loaf factor is not the same. When I'm one against one on a given line, I like to have 48% of the market. It's often the sweetest spot in terms of money-making. Real load factor can vary a lot, depending on demand.

Offline Tha_Ape

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Re: How to minimize airline expenses?
« Reply #3 on: April 09, 2019, 07:16:39 PM »
Madflava is right, there is a built-in penalty for operating more than 3 fleet types (and more than 2 fleets when you're under 80 planes overall).
The size of the penalty vary greatly depending on your size: the bigger you are, the larger it will be. Count roughly 2 points of margin for every 100 planes you own.
This penalty exist so big airlines are mechanically prevented to occupy all the room, and thus there's space left for smaller/younger ones. It's sometimes boring, but it's here for a reason. So you got to think strategically, organize your fleet accordingly, decide where to make compromises, what you will be good at and what you won't fly.

Then, you might reconsider your pricing policy. You don't care about load factor. What is important is not how many passengers travel on your planes, but how much they pay. Thus, 60 milked pax are potentially more interesting than 80 discounted pax.

Seating: if you fill your 772ER with this special seating, then fine. However it might be more interesting in this case to use a 773/3ER: it seems strange that with so much Y demand you don't have more C and F demand. And in this case a 773ER might e better suited.

Buying: a BW is so short that buying isn't worth it. A plane usually pays for itself in 5 years or so (depending on the book price and performance once you own it). So in a 10 year BW: the first 5 years you usually don't have enough money, and the 5 last years it's not worth it anymore.

Hope this helps :)

Offline Infinity

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Re: How to minimize airline expenses?
« Reply #4 on: April 10, 2019, 10:10:35 PM »
The easiest ways really to minimize cost are:

# Operate no more than 3 fleet types, ever (no more than 2 if under 75 aircraft in total in fleet). Engine commonality is a side show, way less important.
# Disable automatic staff management (it overhires and grants too frequent raises over manual management)
# Spend only as much on marketing as your route profile requires - anything over company image 30 is a waste of resources unless you fly long haul

Ways to maximize revenue, on the other side of the equation:

# Use only standard seating and even HD seating on short hops
# Don't fly overly competitive routes
# Maximize prices, any route flying over 90% average loads you're leaving money on the table - if you have 80% average loads you likely have a lot of those routes in your portfolio - note that this is not valid for cargo because cargo demand does not fluctuate by weekday as does pax demand. Pax demand spikes on Mondays and Fridays meaning that if your average loads are > 90%, they are most likely 100% on those days hence you're losing out on revenue. The art is to JUST avoid this without reducing your yields too much on the lower end Wednesdays and Weekends.

Offline gazzz0x2z

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Re: How to minimize airline expenses?
« Reply #5 on: April 11, 2019, 06:28:42 AM »
Mostly agree with everything, though this :

(.../...)
# Spend only as much on marketing as your route profile requires - anything over company image 30 is a waste of resources unless you fly long haul
(.../...)

this is more complex than that. Even with regional-only companies, I had increases in profit after increasing my marketing. But, and that's a big but, only when I kept marketing expenses are reasonable levels - around 10% of expenses early in the game, around 5% later. The reality is probably even more complex than that. Marketing is a very subtle thing in this game, and there is no rule set in the stone that works for all situations.

Offline Tha_Ape

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Re: How to minimize airline expenses?
« Reply #6 on: April 11, 2019, 07:28:39 AM »
And be really careful about that one:

# Disable automatic staff management (it overhires and grants too frequent raises over manual management)

While it's true, if you don't log in quite frequently (at least once a day or every 2 days), better stay on "automated". The extra cost in salaries is still lower than the one of a strike.
« Last Edit: April 11, 2019, 07:38:18 AM by Tha_Ape »

Offline rntair

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Re: How to minimize airline expenses?
« Reply #7 on: April 11, 2019, 01:18:19 PM »
Taking a look at your airline in BW1 (which I am also in), I can see that you're leasing new planes. New planes are crazy expensive, yes, but leasing them is even worse. I run an airline that's also in the top rankings but I use older leased planes and purchased new planes. As for your fleet types, I'd say the 787 was probably a mistake. In the real world the 787 is lauded for its range, but in the game the range isn't as good as B77L or A345. The fuel efficiency is amazing and it can make 7000nm routes profitable but the high new leasing price offsets the fuel savings somewhat. The Boeing 777-200LR works quite well for long haul, but it too is expensive. I went the Airbus route and chose the A340-300E for longhaul, which has economics only slightly worse than the B77L.

As for engine commonality, don't worry about it for fleet types with 2/3 engines. Some models, such as the 762 or 763, have several engine types, and in that case you might want to keep track of your engine types.
"Check out my route map"

CEO of the Viva Group

Offline gazzz0x2z

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Re: How to minimize airline expenses?
« Reply #8 on: April 11, 2019, 01:42:25 PM »
rntair also highlight something important : buy new, lease old. There are exception s to this rule(notably the A140s & A148s that are so cheap than leasing them new is roughly as leasing a 16 years old ATR or J728), but for most known airframes, that's nearly always true. Leasing new is a company killer.

already told the story, but in my first game, I had CRJs. I could lease new CRJ700s, which would cost me 100k$ per week. Or I could buy new A148s, which would cost me 6k$ per week in depreciation. Plus more fuel, plus more other things, I was still sparing around 70k$ per frame, and would have still spared 50k$ per frame had I leased.

Brand new shining things, esxpecially in the 21st century, shall be owned, or ignored. Especially the best ones.

Offline rntair

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Re: How to minimize airline expenses?
« Reply #9 on: April 11, 2019, 01:56:03 PM »
What's very frustrating is in BW1/2 it's very common to see airlines at LHR or ORD, LAX, JFK, etc grow to a fleet of 500+ airframes in a span of 3/4 years using new leases. They operate about every fleet type in the book (including A380 of course) and make massive profits. This frustrates the efforts of players trying to manage a well-run airline, and pressures them into leasing new. A lot of times these players have low fleet utilization and LF's hovering in the low 70s or high 60s.

Another example of this is basing. These massive airlines open as many bases as possible to beat their opponents, especially in the American market. This also pressures players into opening new 4/4 bases that are unnecessary. It needs to be stressed to new players that leasing new is a terrible idea, as is having 3 or 4 very large bases with just 300 planes.
"Check out my route map"

CEO of the Viva Group

Online DanDan

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Re: How to minimize airline expenses?
« Reply #10 on: April 11, 2019, 02:13:44 PM »
What's very frustrating is in BW1/2...

i am afraid the BW are only useful for two things:
- for new players: finding out how AWS works
- for the others: researching things to see if they could work possibly in a GW

Offline mp81

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Re: How to minimize airline expenses?
« Reply #11 on: April 13, 2019, 04:10:49 AM »
stop union-busting you Frank Lorenzo wannabe!

 

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