Regional Jets using Strategy or Embraer profits (E170 In example)

[pasterya]

HI everyone!) Need some more help)
Look, It's a lot hear about small plains and their profits. I started to use Embraer E170, and have some problems.
The problem is less profit on medium routes then on short routes. Fuel costs E170 are similar (near 10$ per NM). It's the same on short (500 NM) and medium (1400).
BUT price changes not so big. Ticket price 177 (short) to 247 (medium).
So short route gives 13-15 K. Medium 10K only (lower standard price on 1 NM). But medium routes have much more length (leasing costs)
So how to operate 1000NM-2000Nm routes with RJ?
Tasks for my regional jets:
1.   Fly low demand short (to 1000NM) routes – it's ok
2.   Fly competitive short routes with medium demand – it's good done
3.   Fly low demand medium routes (1000-2000 NM) – it's bad, because profits are the same as on short routes. But it's takes more a/c time
4.   Fly competitive medium routes with medium demand – very bad. Routes are non profitable at all
What is the problem?
1.   I use bad plain? Bombardier would be better? E 140? Props? But props on medium routes a non-effective?
2.   Penalty in demand is too high? Why Embraer can fly 2400 NM but game put LF down? Is the penalty so big? How it's effect on empty route? On competitive routes?
3.   I wrong in prices? Marketing?
4.   It s impossible? What is the exit, how to operate low demand medium routes? And medium competitive routes? The only idea take a large boeing (120 seaters) make it with more comfort seats and higher price for 40%? Will it works on low demand medium routes? On competitive routes? I'am tring to test ot with 2 my plaines now.
I herd hear that Embraer can generate 150K per week. In my airline 70K max in case of 3 flights a day (1 medium, 2 shorts)  And specially I think I lost on medium routes (both low demand and competitive)
Waiting for your experience. ))))

[Amelie090904]

Hi there,

This is a typical case of: Only because a plane can fly far, it does not mean you should actually fly so far. The Embraer are a perfect example for that. Another one would be the 737-700ER. Or also the Viscount 700D (for older aircrafts).

My tip: Don't fly EMB170 on routes longer than let's say 1000NM. As for prop aircraft, the limit is even bigger (maximum 800NM maybe). The Q400 is quite good and you could probably fly it on longer routes, but it's obviously best used on shorter routes.

I tend to not fly 50 seats above 800NM and 100 seats above 1500NM. There is no fix, it's just game mechanics. In the past, I have used said Viscount 700D on flights up to 1250NM (with 50 seats if I remember correctly) and it worked - but only due to night flights and because there was no other way of operating out of Greece between 1950-1990. Jets were too fast for night flights (and too large). So there may be times when it actually makes sense to use the given range...but usually not.

[pasterya]

So, there are no way to fly routes with 40-80 pax/day with 1000-2000 NM range?

[gazzz0x2z]

This is a typical case of: Only because a plane can fly far, it does not mean you should actually fly so far. The Embraer are a perfect example for that. Another one would be the 737-700ER. Or also the Viscount 700D (for older aircrafts).

Or, at least, don't fly those routes first. The can be a diversification at best. If you look at my company in Algeria, you'll see A148Es flying up to 2200NM. But it's only the last lines I opened, out of lack of anything else openable. When opening a new company, you need to find routes as short as possible, as the shorter the routen the lower the RI needed for making money.

737-700ER used to be playable, but at the extreme limit, and barely profitable when fuel is above 1000$, but still playable. I was doing 7-7 schedules with them, for 7 destinations between 3500NM & 4500NM. They were doing 400k$ apparent weekly profit. Take off 250k$ of staff & misc shared costs, and suddenly, you know it's not really worth it for 130M$ machines. It's more a diversification that builds up RI and keeps the spot occupied for waiting 20 years, demand growth, and then setting up a real wide-body on the line. You can't build your company upon such routes. Worse, since the advent of cargo, pax ticket prices have been severly reduced, making this tactics even less profitable. I won't try it again.

Back to A148s : if you look at this route, Dammam - Mohamed Boudiaf, you know I'll never make money there. First, A148s become drunkards beyond 1800NM(a lesson that did cost me a lot of money to learn), and when fuel is above 850$, they just cannot make any money in this area. Fuel is at 1150$. Second, demand is barely 45 there. So for me, it's just a prestige route, that also helped me close a 7-7 schedule. But don't do it because you see a profitable, successful player(me doing that). Do what I did in the early game : focus on short range routes first. Ideally, in the "initial growth" phase of the game, one should limit RJs to 500NM, Single aisle to 1200NM(besides red eyes flights to close the schedules), and widebodies to 5500NM. Only later, when you can afford to wait 8/10 months before having your first apparent profit, the longer range can be attacked with smaller airframes.

There is a reason why I always begin my GW3s with 2 single-aisle aircraft that can fly 4 times a day(when I can, in ALG, there was place only for one single aircraft scheduled like that, I had to go up to 3 from the second plane. Everywhere else, EDI, CDG, DTW, I could schedule 2*4 daily 734 flights from day one). In the long run, those very short range single aisle flights won't do good money, as regional aircraft are going to spam them violently. But for the first month of existence, before opposition spawns in insane numbers, they do good money quicker than anything else, which fuels growth on all other lines.

Of course, you play in russia, not in western Europe, and your typical distances are longer. So it's tough to fully respect the numbers I just gave you. Other areas are short-range averse as well, as Johannesburg, Fuerteventura, Buenos Aires. Still try to fill Short range first, as much as possible.

[Tha_Ape]

Currently playing in USSR with one of the plane André black-listed (the 700D), and flying it to its max, I think I could put my 2 cents.

Range in USSR / Russia is a major issue. Major. SH starts at 300nm and finishes around 1000nm. MH goes from 1000 to 2000 or 2500nm.
There's almost no thick routes below 1000nm either from Moscow or St Pete (Kiev and Moscow, then Frankfurt and Amsterdam are properly on the verge). So you don't really have a choice but to fly way longer than what you'd reasonably do in Western Europe or in the US or you'd end up with 2 dozens aircrafts in each base and that's all.

However, as Gazzz and André said, it can be quite tricky. Firstly, don't fly with them to start with, or only to fill in the nights. Then, you need to have control on those longer routes, to be all alone or almost, as this is what will allow you to increase prices quite a lot.
From this point of view, there's quite an advantage, so to say, as the European airlines are reluctant to fly so far, so the only persistent opposition you can generally expect (except on thick routes) is the one from your direct competitors inside Russia, ie submitted to the same constraints as you.

Moscow (and Russia in general) is quite low on LH and even on MH for an airport this size, but the compensation is a mega-hub for medium aircrafts. Quite a trap, as you don't want to fly past a certain distance, but have to, no matter what. But do this the later you can, as Gazzz recommended you. First consolidate your "short range" network for each plane category, then eventually you'll be able to go further.

You'll eventually enter in a race for range with your competitors, which is not good. Range + competition = losses. You can sustain this only once you're big and have sectors that bring profits while you fight on another front, but still try to avoid it. And if you're all alone, don't race with yourself.

I fly Viscounts until 1450nm. They used to be really profitable but aren't anymore - they just break even, pay for their maintenance and other costs. It was still a smart move as I was (still am) the king of the 1000-1500nm sector. But now I'm stuck with my choice and 350+ aircrafts, and I really really hope my renewal is gonna end well, and that my future fleet will be able to sustain such a policy. New RJs and props with long range will enter the market, but they are somewhat a trap: don't step on it (or assume it, like Algiers - Amman, but only for prestige and not for money; or be sure you can increase prices like crazy).

In times with relatively low fuel, those long routes could bring some nice money, but don't expect them to bring money all the time. Build an airline that can live without this money and you'll eventually be able to keep them. But if you're not, just don't fly them. Network shrinking is a pain, but sometimes has to be done to preserve overall profitability.

[alexgv1]

Don't fly the E-Jets more than 1000nm for best results. Just because you can fly a route doesn't mean you should. Long thin routes are generally not always viable. My rule of thumb for max operation of an aircraft is max capacity times ten for short haul and mid haul operations (not sure how this works with the most recent generation of aircraft).

[Tha_Ape]

Don't fly the E-Jets more than 1000nm for best results. Just because you can fly a route doesn't mean you should. Long thin routes are generally not always viable. My rule of thumb for max operation of an aircraft is max capacity times ten for short haul and mid haul operations (not sure how this works with the most recent generation of aircraft).

Your rule of thumb wouldn't work in USSR / Russia. Or to aim for an airline topping at 200-250 planes.
I'm at 700+, and still profitable. Not on every route, but on most of them. And didn't went in red during the first 2 fuel spikes.
From Moscow, you have:
- nothing below 250nm, absolutely nothing (6 routes totalizing 290 demand, yes, 290)
- few between 250 and 650
- the real stuff starts at 650/700.

From other large airports, you usually already have 10 or 20.000 demand below 250nm.

Context matters.

[alexgv1]

Then I would suggest one operates an aircraft appropriate to the length of routes available if you want to survive the fuel spikes. If there are some routes too small for the aircraft then don't fly them. Saves on fleet commonality costs that way as well. I've seen planty of airlines who have gotten to 200+ aircraft then bankrupted, so it depends if they're in it for the long run.

Having said that I've never played in Russia, but I do know that the E-Jets are not particularly economical when compared to the conventional narrow bodies.

[pasterya]

Thanks for your advices/. BUT I still have some questions)
So what is the situation: really in Russia (also in Turkey and some other countries) not so many routes to 500 NM. I am also want to start in Turkey in other GM and the problem is the same – medium routes with 70 pax demand
Of course I understand that first I have to fly other routes. Bigger and so on. But, it’s a problem of competition (topic fair competition) and everybody told – use smaller plains) ))) I did – and what?)))))) I also opened a new base and planned to use E170-190 to operate all the market)
I still do not understand what is the math of process? What is the purpose of non-profitable E170? Penalty or what? For me plain can fly so it should fly) If E170 range 1400 NM what is the purpose not fly by it? In real life on routes with no competition would be full maybe) BUT ok, it’s a game mechanic)

SO questions still are:
1.   Maybe E170 is not good? What’s about bombardier and so on? Maybe other medium size plain wills solute the problem? I also want to try to lease bombardier for 3 month just to try. Would it works?
2.   On 1000-2000 NM routes with 70 pax demand? What can I DO? Do not say nothing))))
a.   Use E190???
b.   Use E190 with comfort seats?
c.   Use b737 with comfort seats and prices +40%? Will It work on profit?
d.   Use E 170 and lower prices (if it’s a penalty for medium a/c)
3.   On routes 1000-2000 NM with 150-300 pax but with competition ?
a.   Use E190 or other medium jet?
b.   Use b737 with comfort seats? Could it be fully booked because of seats? Or it’s not important for AS customer?
For me it’s important background of using regional jets on 2000 NM. It 100% impossible?. I want to know. I mean possible with normal profits )))
Me experiment with b737 with comfort seat shows some results. Perhaps it’s better that fly standart)

[alexgv1]

SO questions still are:
1.   Maybe E170 is not good? What's about bombardier and so on? Maybe other medium size plain wills solute the problem? I also want to try to lease bombardier for 3 month just to try. Would it works?

2.   On 1000-2000 NM routes with 70 pax demand? What can I DO? Do not say nothing))))

3.   On routes 1000-2000 NM with 150-300 pax but with competition ?

I'll hope to try and answer your questions just from my opinion.

1) The E170 is great for short routes where it does not have long to burn fuel but if you look at the fuel burn per hour, it is similar to 737 or A320 but with more than half as many passengers. So you are at a disadvantage with fuel burn per seat. This is somewhat offset with lower airport and staff fees being a Medium Aircraft. It is also hit by the aircraft being too small for a certain route penalty. You will find similar problems with all other regional jets and turbo props on these long routes. If you lease a Bombardier for 3 months then the leasing costs will become disproportionately high as the period is for under a year (like wet leasing instead of dry leasing).

2) Basically my answer is nothing  It's not worth flying 70 people 2000NM. On long routes the yields (revenue per passenger kilometer) become smaller compared to short routes. Also you want to look at destinations you can fly to multiple times per day and this helps with costs such as marketing.

3) On these routes it is worth flying a 100-150 seat aircraft once or twice per day, depending on competition. If the route is empty then fly twice and take all the passengers. If the route is competed then fly one flight and you will still take half the passengers. If you flew twice with competition then you would see your load factors drop.

Like I said this is just my way of playing and I hope it helps.

I'll remember a wise saying I read about the aviation industry:

"If you want your airline to survive then do not chase market share but chase margin share"

It means fly at a good profit margin!

[Tha_Ape]

2.   On 1000-2000 NM routes with 70 pax demand? What can I DO? Do not say nothing))))

In USSR / Russia, you could fly them, because of the context. But 70 pax... Probably only until 1500nm, give them up above that.

As a general rule, do not use special seating. Ok, I do it sometimes, but marginally. +40% prices will not work, even on quality seating.

3.   On routes 1000-2000 NM with 150-300 pax but with competition ?

150 demand: RJs until 1500nm if there is opposition, NBs if there is none. And NBs again beyond 1500nm.
300 demand: Std single aisle. Either Boeing, MDs, Airbus or Comac or whatever.

1.   Maybe E170 is not good? What's about bombardier and so on? Maybe other medium size plain wills solute the problem? I also want to try to lease bombardier for 3 month just to try. Would it works?

Answering the 1st question at the end. The problem might be here. You need patience. A lot of it. Initial losses are inevitable. Routes need time to build up.
But mostly, 3 months leases is just pure nonsense. If you were looking for a way not to make money, you just found it. Basically, every plane has its pros and cons. However, no matter what the pros are, if you're just overpaying a lease, you'll never see the money that plane could bring in.

If you're starting, lease cheap old junk. The price will be so cheap that it compensate for the "junk" aspect. Leasing recent state of the art aircrafts will not work, no matter how good you are. And the shorter a lease is, the more expensive it is.
Depending on what your plan and situation are, you could lease that junk for just one year or up to 5-6 years. But even junk on a 3-months lease would become expensive.

That might be the reason why you're not printing money. Not enough patience, going for short expensive leases that prevent any kind of profit.
3 months is not an experiment. For a real experiment, you need at least 2-3 years (with varying fuel prices).

[gazzz0x2z]

(.../...)
If you're starting, lease cheap old junk. The price will be so cheap that it compensate for the "junk" aspect. Leasing recent state of the art aircrafts will not work, no matter how good you are. (.../...)

This. This one thousand times. I'd just add that soviet steel, brand new, works as "old junk". My A148s are old junk that I will fly 23 years. 10/20% more fuel costs, double maintenance costs. But insanely low initial price. But real old junk work as well.

Let's do some maths take a A148E that flies something that looks like russian routes. The 7T-VAA, flying from Algiers to Aswan(1703NM) 7 days a week, and Tabuk(1752NM) 6 times a week. financials look like that :

Ticket revenue    484 787 USD
Cargo revenue    2 894 USD
Line maintenance (A+B)    -12 942 USD
Insurance    -4 772 USD
Fuel cost    -232 521 USD
Route fees (1)    -124 448 USD
Weekly depreciation    -7 250 USD
Total estimated    105 748 USD

Counting staff costs, as I'm in Algeria, I'm slightly profitable. In Western Europe, I would not be.

Now, replace it by a E170 similar in capacity. You'll spare 20% on fuel, at those distances, that's 50k$ per week. Not bad. Plus 6k$ in maintenance. OTOH, the E170 is 3 times costlier. So, if you can afford to buy it from scratch, it will cost you 15k$ more in depreciation. You're still winning, because you could afford to buy it.

But when you're a young company that tries to exist, you don't have those levels of cash. You have to rely on leases. And the story is completely different. Because the E170 will cost you 120k$ per week in lease costs, while the A158 will cost you only 45k$. Plus the insurance cost divided by three as well, and the A148, with two more seats, is actually cheaper to operate than the 170. Despite being a drunkard impossible to maintain. Old junk works the same : drinks more fuel, costs more in maintenance, but lease costs are trinkets.

There is also the time to market aspect. For the same initial capital, you can field 2/3 A148s for a single E170(actual numbers depend on slot costs). Which also helps growing much quicker. Later, when you're rich, you can afford the best tools money can buy, and go brazilian(or japanese, MRJs are insanely good little machines, if you don't mind their lower capacity). But not early. Capital costs are going to sink you and prevent you from growing.

That's why the usual wisdom is "buy new, lease old(or soviet)". And early in the game, you just can't buy. So lease old, or soviet. And SSJs, do not count as soviet, they are nearly to the level of capability(and price) of their western counterparts(fuselage designed by Boeing, half french engines, and 100% western avionics do play a role, as well as the recent mutation of the russian aviation industry).

[MikeS]

I still do not understand what is the math of process? What is the purpose of non-profitable E170? Penalty or what? For me plain can fly so it should fly) If E170 range 1400 NM what is the purpose not fly by it? In real life on routes with no competition would be full maybe) BUT ok, it's a game mechanic)

As a general rule: The smaller the plane, the more number of flights per day it has to fly in order to be profitable.
Think about it: The cost to operate  a 100 seater is not 50% of a 200 seater. All aircraft need pilots, cabin crew, ABCD Checks, commonality costs (aircraft/engines) and although they are cheaper on smaller aircraft they generally cannot make up for the loss of seats compared to bigger planes. So the strength of regional jets is their short turn around time. Try to fly them 3 times a day or more and they will be very good.

Good luck!
Mike

[wilian.souza2]

The type of aircraft you fly should be dictated by the supply and demand from your hub. There's no point in using large aircraft on places where demand within 1000 NM is mostly under 120 passengers or is heavily oversupplied; on the other hand, spamming thicker routes with tens of regional jet flights is not a good idea either. The ideal flight should take all the route demand in only one daily flight, so your goal is to make routes with the least frequency possible and with most profit per flight possible.

The problem with regional jets is that they aren't as fast as larger aircraft, can't take standard cargo from places where demand could fill the cargo holds of your plane and they get too small penalty in practically any route over 1000 NM in modern times. They are useful to conquer a good market share at your hub with relatively low overhead costs, but they won't make as much money as a large aircraft covering longer and/or busier routes.

[Zobelle]

Some airports, like my home base of AUS in GW2 don't warrant a large aircraft type. Is why I went with F28 for that base and carry over that plane for smaller eastern USA demand out of MIA.

[Tha_Ape]

In Russia, you won't be able to fly more than 3 times a day (bar a few exceptions), but still aim for this.

But one of the major advantage of Russia that could compensate is that (like Dubai) it's located between two continents, so you got plenty of time zones on one side and plenty of time zones on the other side, allowing a lot of possibilities for overnight flights. Something a player in France, Italy, China or Japan won't be able to take advantage of.

[gazzz0x2z]

In Russia, you won't be able to fly more than 3 times a day (bar a few exceptions), but still aim for this.

But one of the major advantage of Russia that could compensate is that (like Dubai) it's located between two continents, so you got plenty of time zones on one side and plenty of time zones on the other side, allowing a lot of possibilities for overnight flights. Something a player in France, Italy, China or Japan won't be able to take advantage of.

France is not that bad to that respect. Poland is far worse. Not even counting the Midwest. Nearly the only night flights I had from Memphis, last time I played there, were those money-losing MAX7 flights to Hawaii(a 7-7 schedule to the 7 Hawaiian airports, IIRC). UK is more to the edge of the continent, and therefore offers more opportunities.

[Amelie090904]

So what is the situation: really in Russia (also in Turkey and some other countries) not so many routes to 500 NM. I am also want to start in Turkey in other GM and the problem is the same – medium routes with 70 pax demand

Actually Turkey has quite decent domestic demand (nowhere near realistic demand, but still good enough to play with). In GW3 I have my HQ in Milas with other bases in Ankara and Istanbul.

I am using Antonov 140 for routes up to 600-700NM where demand is about 50-150 (50 seats).
For routes up to 1200NM (westwards to Europe that is) I am using Dornier Fairchild 928 (95 seats).
For routes up to 2500NM (UK, Ireland, Dubai, Saudi Arabia, etc.) I am using MD-83 (150 seats).

As you can see I am focussing heavily on short haul and medium haul. No long haul at all (although there is good demand from Istanbul). But since I joined very late (2004 or so) I needed to find a way to enter the Turkish market. This was only possible with regional aircraft (AN-140 and Dornier 928). The MD-83 are quite big for my needs already, but are very good to fill the vacuum left by bankrupt competitors.

[Talentz]

In Russia, you won't be able to fly more than 3 times a day (bar a few exceptions), but still aim for this.

But one of the major advantage of Russia that could compensate is that (like Dubai) it's located between two continents, so you got plenty of time zones on one side and plenty of time zones on the other side, allowing a lot of possibilities for overnight flights. Something a player in France, Italy, China or Japan won't be able to take advantage of.

While not all that related to the OPs thread...

While flying out of SVO/DME, you should be able to one hop a Lg freighter to the east coast. Think SVO-LGA via KEF. The 732C and 732F can take 11.5k cargo to 2000nm. KEF is only 1790nm. There's plenty destinations to hit on the east coast in its range as 12K cargo LH is more then enough to turn a profit.

Hope this helps.

Talentz

[48days]

I have some 700ERs in BW2 raking in between 500K and 700K weekly.  These are on YYZ to Europe routes that are too small for anything bigger.  However, the only reason I'm making okay money with these planes is because I got them cheap, between 20M and 40M, in anything other than a beginners world I'd never get them for that price.