Hello Everybody!
With my airline in the Jet Age becoming too big to be fun, I decided to have a challenge, using a fleet of only CRJ 100 & 200. I am currently based out of Omaha/Eppley in DOTM, Primrose Airlines. See my subsequent posts for info.
Day 1 from Founding
Today was the founding date of my airline. I am running CRJ 100s out of Omaha/Eppley in 1995.
Because there was a lack of used CRJs, I ordered 3 CR1 STDs new, due to be delivered in a Nov-Dec. I gave myself a $0 salary, and I started a state-wide marketing campaign in newspapers in billboards.
STATS:
Cash - $335,150
Wk Profit - $0
CI - 5
Routes - None
Current Aircraft - None
Aircraft on Order - 3
Fuel - $392
We'll see what happens!
Day 60 from Founding
Well, I received my 1st CRJ1 last week. I put it on a 5x rotational schedule (4x on Sat), with 4x daily KOMA-KSTL, and 6x weekly KOMA-KFSD. No competition on either of the routes, and I fill both to capacity. Doing OK, but should improve soon.
STATS:
Cash - $136,096
Wk Profit - $21,405
CI - 14
Routes - STL, FSD
Load Factor - 59.5%
Current Aircraft - 1
Aircraft on Order - 2
Fuel - $439
Just ask if anyone wants further data!
Day 91 from Founding
Have now received all 3 CRJ1s. The first is making 160k/week, and just starting to overall turn a profit. I have made an excel chart with which I will keep track of the finer details of my routes. Attached is a screenshot of it.
STATS:
Cash - $482,179
Wk Profit - $52,857
CI - 18
Routes - (see below)
Load Factor - 75.0%
Current Aircraft - 3
Aircraft on Order - 0
Fuel - $471
EDIT: screenshot coming later
Day 212 from Founding
Making a steady profit of $100-200k per week. Finally got enough money to order another CRJ in the form of an ex-LLL CRJ-100LR on lease. Since I have a wimpy marketing department, CI is not doing fantastic, but that's OK. I am surprised how well I'm doing though.
STATS:
Cash - $701,708
Wk Profit - $189,885
CI - 15
Routes - (see below)
Load Factor - 77.3%
Current Aircraft - 3
Aircraft on Order - 1
Fuel - $492
Quote from: RushmoreAir on March 30, 2011, 09:07:58 PMCI is not doing fantastic, but that's OK.
No it isn't, it is dropping quite badly. Increase in CI = increase in profits. Especially with low margin CRJ's, your CI should be way higher than 15.
Quote from: Quinoky on March 30, 2011, 09:18:51 PM
No it isn't, it is dropping quite badly. Increase in CI = increase in profits. Especially with low margin CRJ's, your CI should be way higher than 15.
It dropped because of my flight delays.
But I have no plans to compete against big wigs, load factors are pretty good, and CI has stabilized, I have no plans to invest additional money in marketing.
Quote from: RushmoreAir on March 30, 2011, 09:26:22 PM
It dropped because of my flight delays.
But I have no plans to compete against big wigs, load factors are pretty good, and CI has stabilized, I have no plans to invest additional money in marketing.
smart call. why spend triple to get 5% more lf?
Good luck opening new routes then. That's all I have to say.
Quote from: RushmoreAir on March 30, 2011, 09:07:58 PM
order another CRJ in the form of an ex-LLL CRJ-100LR on lease.
Well, these were never operated by me, just leased away, because I don't bother about planes that size ;D
everyone knows about their story, so I am not going to retell it :P
hoping the best for you :)
btw. I might get back the one or the other every once in a while, so if you wish [in regard to the result of the experiment] I could offer them to you even cheaper :)
Jona L.
Quote from: Jona L. on March 30, 2011, 09:56:47 PM
Well, these were never operated by me, just leased away, because I don't bother about planes that size ;D
everyone knows about their story, so I am not going to retell it :P
hoping the best for you :)
btw. I might get back the one or the other every once in a while, so if you wish [in regard to the result of the experiment] I could offer them to you even cheaper :)
Jona L.
I don't think that would make this a realistic experiment. He needs to acquire them at the normal price, and not extra cheap because otherwise he might not survive...
Quote from: Ilyushin on March 31, 2011, 05:41:24 AM
I don't think that would make this a realistic experiment. He needs to acquire them at the normal price, and not extra cheap because otherwise he might not survive...
The CRJ100/200 economics are so poor, he's doomed at any lease price ;D :laugh: :P
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Quote from: schro on March 31, 2011, 01:26:59 PM
The CRJ100/200 economics are so poor, he's doomed at any lease price ;D :laugh: :P
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Comair out of CVG (Cincinnati) used to be the largest commuter airline in the US with ~100 CRJs--the fact that CVG was Delta's #2 hub after ATL didn't hurt. My stepfather used to work for them and when things hit the fan at Delta in ~2005 with the downturn in traffic after 9/11 etc, Comair was the only profitable part of Delta due to the fact they weren't flying 150 seat aircraft on routes with only 50 pax demand now.
Alas, CVG went way downhill when Delta reduced their emphasis on CVG as a hub and Comair went down with it (they actually closed concourse C which was 80 gates and 100% dedicated to Comair flights), but nonetheless you can turn a profit in the real world with CRJs, but diminishing marginal costs certainly are a big factor. Now that you have 3 CRJs, #4 should be marginally cheaper to operate, #5 even cheaper, etc etc. I have 50 CRJs right now with a total fleet commonality cost of only ~$3 million ($60k/aircraft/month). Yes, I realize fuel costs are the main issue, but regardless $60k/month is pretty darn good--my 46 ATRs cost ~$4.5 million/month in commonality costs.
Quote from: LemonButt on March 31, 2011, 04:31:58 PM
Comair out of CVG (Cincinnati) used to be the largest commuter airline in the US with ~100 CRJs--the fact that CVG was Delta's #2 hub after ATL didn't hurt. My stepfather used to work for them and when things hit the fan at Delta in ~2005 with the downturn in traffic after 9/11 etc, Comair was the only profitable part of Delta due to the fact they weren't flying 150 seat aircraft on routes with only 50 pax demand now.
Alas, CVG went way downhill when Delta reduced their emphasis on CVG as a hub and Comair went down with it (they actually closed concourse C which was 80 gates and 100% dedicated to Comair flights), but nonetheless you can turn a profit in the real world with CRJs, but diminishing marginal costs certainly are a big factor. Now that you have 3 CRJs, #4 should be marginally cheaper to operate, #5 even cheaper, etc etc. I have 50 CRJs right now with a total fleet commonality cost of only ~$3 million ($60k/aircraft/month). Yes, I realize fuel costs are the main issue, but regardless $60k/month is pretty darn good--my 46 ATRs cost ~$4.5 million/month in commonality costs.
If you're only paying 2005 fuel prices, then CRJs are quite profitable, however, you've got to look at differences between how they are deployed and used in the real world versus in AWS. In the real world, CRJ's were originally used as a competitive advantage to claim that an "all jet" fleet was in use when props could have done the job just as well. They typically have a high CASM, but on the routes they are deployed to (i.e. the middle of nowhere), a fairly high RASM is commanded for the load. So when you have something like CID-CVG and stock a 50 seater full of business travellers paying out the ying yang, the economics look far better. Those feeder flights also allow for connections to the high yield international flights and the profitability of such can be allocated based on a beancounter's judgement.
So how does the AWS model differ? Well, the cost model is very realistic - small regional jets are dogs to the income statement. However, on the revenue side, they make the same "average" fare as any other plane given a stage length. There's no revenue multiplier for serving lower demand markets where many of the regular fliers are business travellers that routinely buy more expensive fares. There's no uplift effect modeled into your international or connecting flights where the extra feed can help the S curve in your base(s).
The other thing to keep in mind is that Comair operates on a fee for flight basis, typically ex-fuel (i.e. its provided for them by the hiring airline). In this model, Comair has
no business risk to flying empty flights. They negotiate a price per segment/blockhour/whatever and get paid the same regardless of load. When you take this into account, Delta can get hammered in its overall earnings while Comair appears to be making bank due to how the agreement is structured, but at the end of the day, the consolidated airline (including Comair) was losing its shirt.
The downsizing of the CVG hub has more to do with it being redundant to DTW which has more international O/D than CVG does, and Comair is the regional that has lost the most flying because they are the highest cost Delta Connection carrier that Delta does business with. The last numbers I saw showed them 30-40% higher ex fuel per block hour than ASA, SkyWest, Republic, etc. The high costs along with the Comair pilots strike in 2001 has led Delta to further diversify their regional flying rather than being dependant on a single provider, and since Comair can't compete on a cost basis with its competitors, its fairly obvious why it hasn't won more work and will continue to flounder.
Who wants to fly out of CVG when Continited is at CLE? Oh... for now, that is...
Day 469 from Founding
Since last time, I ordered a used -100ER from a leasing company and put it 5x daily OMA-MDW, making $160k/week. Profit slightly lower because of B-Checks, but otherwise hovers around $200k. With the fuel price a lot lower, hopefully I should get another aircraft soon.
STATS:
Cash - $1,646,815
Wk Profit - $66,678
CI - 30
Routes - (see below)
Load Factor - 78.7%
Current Aircraft - 5
Aircraft on Order - 0
Fuel - $264
I really appreciate you doing this test. You are proving what many of us fear. It is simply not possible to compete with these planes.
Perhaps we need games where the smallest plane is something like an F100 and all the size 1-2 airports are not in the game.
or perhaps have code shares and you can sell seats to the larger airline who does not want the another fleet type? which this would be very difficult to code and everything im sure. Or you could charge the large airline a flat monthly rate for seats so if they want to use 10 seats on your plane charge them the cost of the ticket x the number of seats they want x the days in the month or the days they want to provide service to the destination.
Quote from: Boiler Dweller on April 06, 2011, 07:57:15 PM
or perhaps have code shares and you can sell seats to the larger airline who does not want the another fleet type? which this would be very difficult to code and everything im sure. Or you could charge the large airline a flat monthly rate for seats so if they want to use 10 seats on your plane charge them the cost of the ticket x the number of seats they want x the days in the month or the days they want to provide service to the destination.
If an airline could run CRJs and sell seats via codeshare, they could save a boatload of money on marketing :)
Quote from: LemonButt on April 06, 2011, 09:54:30 PM
If an airline could run CRJs and sell seats via codeshare, they could save a boatload of money on marketing :)
which would exactly give them a fighting chance.
it seems that unless sami can make something like what's the regional airlines doing now (code share with bigger airlines and use their CI), an airline with only RJ is not possible to live for a long time
I've try to think about this and how can it be done......but this may lead to competition of slots in the same base airport? :-\
Day 706 from Founding
Since last time, I made enough money to order 3 brand-new CRJ-200s. Two of these have arrived, both going on the OMA-ORD sector with 4x daily + a 6x weekly on each. They both make $200k per week. The weekly profit is because of ORD slot costs, normally it is now $250k, as opposed to the $200k I was earning last time.
I have been doing this long enough to make a few conclusions about running a CRJ-only airline. More conclusions will come later.
1) Regional Aircraft are only marginally profitable, even in the best case scenario. No matter how you cut it, each aircraft is only marginally profitable.
2) Pack the schedule!!! The only way to make it even break-even with overhead is to make the schedule look like a barcode. This has been said before, but my SLC plane (3x daily SLC) only makes $75k/week while my MDW plane (5x daily MDW) makes 220k per week. Even putting it on 100 mile sectors with a 50% load factor is better than using it to the full extent of its range.
3) Slots are expensive. I never truly realized this before, but slots are extremely expensive for regional aircraft. Scheduling the O'Hare routes, I spent $250k per route for a week's worth of slots. And ORD had ~25 slots left when I wanted to get mine. That's really expensive for an airline only making $250k/week.
STATS:
Cash - $165,264
Wk Profit - $1,399,180
CI - 30
Routes - STL, FSD, ORD, MDW, DEN, PIR, DSM, MCI, SLC, MSP, DTW
Load Factor - 80.1%
Current Aircraft - 8
Aircraft on Order - 1
Fuel - $234
What ever happen to this test?
Quote from: Boiler Dweller on April 28, 2011, 12:18:15 AM
What ever happen to this test?
To be honest, I didn't spend the time scheduling a new batch of CRJs. I still have three to schedule.
The airline is just limping along, breaking even, but I didn't feel that it was a fair assessment of the experiment if I hadn't scheduled the planes. So I didn't bother posting. :-[
As soon as I get the planes scheduled, I can post some new info. :)