Difference between revisions of "Beginner tips for airline managers"
Revision as of 19:28, 30 August 2009
So, you want to be an Airline CEO? Well, before you set your sights on that stunning Boeing, let's talk about how this whole system works!
You have 25 million in your Bank account, provided you havn't spent any of it yet. What to do with that money? Well, you could buy a plane, but there's a better, more cost effective use for that cash. Leases. Yes, I know, ugly word, and you don't actually "own" the airplane, but let me explain to you the brilliance of using a lease for only 4 days. Suppose you want a nice 70-107 seat aircraft, like the Embraer 170, or the Fokker 100. You could purchase those planes, but the E170 will cost you 24 million, and the Fokker 100? It retails for 28 million, just out of your reach. Don't be discouraged though, in the leasing section, you can usually find good deals, A320s and Boeing 737s go for 18 million, for 90+ days! That means that while other new airlines have a 70 seat or less puddle jumper, you now have a modern narrowbody carrying 150+ passengers and a significant cash reserve left over in your airlines account! And those Fokker 100s? They go for a cool 8 million for 90 days. You could have 3 aircraft in your fleet, for the same price as buying a smaller aircraft!
Now the way your passenger load is calculated, is based on your reputation, which is at 80 at the beginning of the game, giving you an average load of 70% +/- on all your flights. So on your Fokker 100, you'll have 70 warm bodies paying you cold hard cash so that you can hurtle them through the stratosphere in a pressurized metal tube. Don't Long-Haul these passengers, with good route structure, flying technique, and fuel choices, you'll find that you can generate 9 million in profit on average every two flights. Now that's none too shabby! Consider this, the lease has payed for itself after two flights. All the money you generate after that goes into your bank account!
Now, operations, you'll note, the database has information on every airport you can fly to. Look closely at the Fuel Price section. 1.74 is bad, 1.06 is ridiculously good. A decent price is 1.34. Now how do you work this to your advantage. Let's say you fly from an airport with a price of gas of 1.12. You go to an airport with 1.74 listed as the price. Now which airport makes more sense to fill up at? RIght, the first one. Put a little bit extra in to your jet, not so much you'll crash it when you try to land overweight, but enough so that theres a fair amount in the tanks for the return trip. So when you top off at the second airport before you head for home, you don't need to put as much in, because that sweet, sweet JP4 is allready siting in your tanks... Of course, you should try to fly at optimums wherever possible, use a descent to your advantage, your engines can be at idle for over 15 minutes descending from a cruise to landing, all it takes is practice. Fly at a good altitude for efficient burning of fuel, this cannot be emphasized enough, the difference between a cruise at FL240 and FL370 is immense, get high, or your tanks will be dry. As well, think about the aircraft your buying, sure that 747 would be sweet to own, 500 passengers, but an A340 will sip fuel rather than gulp it... And fuel is always going to be your number one way to lose money, aside from crashing.
How about future aircraft purchases? I know your going to want to have your own aircraft pull up to the Jetways, but which one to choose? They look pretty pricey don't they. But what's this, their are older airframes, built as early as the 50's availible? Of course they're are, the 707 was a great plane, long range, around 140 people can be carried by it, and it's less than an A320? Sign me up for one of those! How about manufacturers other than Boeing or Airbus? Douglas built lots of good planes, and even more amazing, Ilyushins are available on the Market. 300 seats for half the price of the Boeings capable of doing that! That's what most would call a bargain. There are lots of other airlines on FLYNet, and they sell their planes too, check out the traders market, you just might find that 737 you really wanted for christmas with a price tag significantly lower than what Boeing would have you pay for it. And don't forget leases, you can always lease aircraft, even Boeings, for much, much less than you pay to buy them. When your done with your old aircraft (the Ilyushins and Cold War Boeings) you can even lease them out to new airlines, sure its helping the enemy, but your not using them, why not make a cool 5-15million every 10 days, with no effort on your part!
Now let's talk pricing your routes. Sure you could undercut another airline and get a few more people on your flight, but heres the thing, if you price the same, you get the same percentage of people, ie 70%. And thats not a split, if he has 400 seats, and you have 200, your flight will have 150 people, his, 300. It makes sense to not undercut other airlines, because its more money in your pocket! A good way to increase your money potential? Fly lots of short routes. The amount (percentage) of people you get on your aircraft is based upon your reputation. High reputations (100-120) will see 85 to 100% ridership on all their flights. By flying lots of short routes, (without crashing) your airlines reputation will go up. Then when your at about 110, you can start flying the long haul routes, with full planes, putting those all important benjamins where they beloong, in your wallet.
And Lastly, No matter how independent you want to be, the truth is, Airline's cooperate to make money. Their are several Alliances on FLYNet, check out the market place to see them. Some have strict entry requirements, others, not so much. Find one that suits you, and politely ask to be a memeber. When your airline is in an Alliance, other members will give you better deals on leases, you'll be offered planes to buy at lower prices, and, best of all, your Flights will have a 10% increase in passenger load, which, in monetary terms, is quite signifigant.
So to wrap up:
Try before you Buy, Leasing is a smart choice. Old and Busted, but cheap beats out New Hottness and burning hole in your ledger for new airlines. Buy Eastern Bloc, fly them for a bit, then lease them out to other airlines to earn even more money! Reputation is everything. Fly Smart, Plan Smart, and you'll be making more money than you know what to do with. Or you could just buy a lot of A340s. Respect other airlines prices, its good for both of you. Pricing wars just hurt everyone. Fly solo, it's a no go. Fly as an Allie, you're profits 'll be sky high! Lastly, Have Fun, and Don't be afraid to ask questions, the community loves to help!
Good aircraft to start with
Aircraft with models (Freeware) that have proven to have incredible returns (ie,they are cheap to buy, but generate a lot of money for you) These aircraft are all recommended heavily for startup VAs, they allow you to save cash, generate tons more cash, and then buy the newer aircraft you want for your fleet. You can usually find them on the Trader's market, at discounted prices (saving you even more money!)
DC-9: Even Northwest still uses them! The best workhorse on flynet, no other aircraft can come close to the DC-9 series in terms of intial investment vs return.
Il-86, a Widebody aircraft capable of carrying over 250 passengers, and it costs less to buy than a small 737. Undoubtedly one of the most valuable (and rare) airframes on flynet.
A300: The most modern Widebody jet. With a capacity for over 300 people, and a price point lower than some narrowbodies, the A300 is a smart choice for new airlines seeking to break into the Trans-Oceanic market.
B727: A Capable Performer for trun routes. Comparable capacity and economics to a 757-200, but over 60 million dollars cheaper. A wise investment.
DC10: Another excellent widebody. It allows for an increase in range over the A300 above. Again, a great aircraft, with a small pricetag.
Tu-154: A Russian Tri-Jet, the aircraft offers performance comparable to the 727, and at a low cost. It may burn a little more fuel, but the total amount per flight is recouped by the fact that you save over 50 million dollars on initial purchase of this jet. It can be the backbone of a new VA, allowing for growth, and then resold when the VA upgrades its fleet. (There is excellent freeware from Project Tupolev available as well)
Fokker 50: Don't count out turboprops, these aircraft can be just as fast as their jet counterparts, and they burn a lot less fuel, ie, more cash returns for you!
by Justin Martin