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Is it too hard to make a profit?


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#1
M4matthew

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I just performed a little experiment in S1.

The goal was to make transatlantic (UK-US) flights profitable for only $240 / £150 return. This meant doing away with all the luxury my name is usually associated with and striping down to minimal service.

I got my self a 17 year old A333 and filled it with an AirAsiaX style 401 all Y seating configuration. The only IFE offered were 1* overhead TVs showing nothing but adverts... oh and newspapers available for $2.
1* and 2* snacks were available for $2 and $3 respectively.

I cut staff pay down to minimal, yet realistic, levels and started operations from Birmgham (BHX).

I knew that if I wanted to keep costs down, I had to avoid all the major airports entirely. So I started up a once weekly flight from Birmingham to Portsmouth, New Hampshire (PSM).

I lowered the fare down to $120, in order to meet my goal... Load factor was at 100%, however, I was still making a loss on the route of $12,000 a day!

http://www.dailymail...Fly-Usa-62.html

So much for the £124 / $199 return ticket (STN-PSM) SkyBus offered - I couldn't even make a profit with $240 return! Perhaps that's why SkyBus went bust? :P or is it just too hard to make a profit in AE?

Matt.

#2
M4matthew

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You're right, maybe I should have rephrased the title XD. It isn't hard to make a profit in AE, but the AE currency value isn't the same as the real world currency value.

If we could tweak the expenditures down, then we could lower the ticket prices as well to realistic levels. AE currency deflation FTW! :torch:

#3
violetQueen

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No offense... but since when was $120 realistic for TATL?

Did this airline actually enter service? for how long cause there was another "skybus" not long after in the USA? You do remember Laker went bankrupt, right?

I just performed a little experiment in S1.

The goal was to make transatlantic (UK-US) flights profitable for only $240 / £150 return. This meant doing away with all the luxury my name is usually associated with and striping down to minimal service.

I got my self a 17 year old A333 and filled it with an AirAsiaX style 401 all Y seating configuration. The only IFE offered were 1* overhead TVs showing nothing but adverts... oh and newspapers available for $2.
1* and 2* snacks were available for $2 and $3 respectively.

I cut staff pay down to minimal, yet realistic, levels and started operations from Birmgham (BHX).

I knew that if I wanted to keep costs down, I had to avoid all the major airports entirely. So I started up a once weekly flight from Birmingham to Portsmouth, New Hampshire (PSM).

I lowered the fare down to $120, in order to meet my goal... Load factor was at 100%, however, I was still making a loss on the route of $12,000 a day!

http://www.dailymail...Fly-Usa-62.html

So much for the £124 / $199 return ticket (STN-PSM) SkyBus offered - I couldn't even make a profit with $240 return! Perhaps that's why SkyBus went bust? :P or is it just too hard to make a profit in AE?

Matt.



Also, M4.. airlines like Sky-Bus don't sell EVERY seat for $199 return, they sell a handful and advertise it at that price, and then the less seats there are on the plane the higher the value until you end up paying $1990 for a return on the day of travel... that's how 99% of lcc's operate in the real world.


I liked TW and it's gone. NW, and it's gone. CO, and it's gone. Pray I don't like you.

"How sad it would be, should laughter disappear."
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#4
M4matthew

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No offense... but since when was $120 realistic for TATL?

Did this airline actually enter service? for how long cause there was another "skybus" not long after in the USA? You do remember Laker went bankrupt, right?

Also, M4.. airlines like Sky-Bus don't sell EVERY seat for $199 return, they sell a handful and advertise it at that price, and then the less seats there are on the plane the higher the value until you end up paying $1990 for a return on the day of travel... that's how 99% of lcc's operate in the real world.


In 2003, Skybus flew transatlantic from Luton to Portsmouth (USA) and Orlando using a 294 seat 767-300ER. Fares started from as little as £62 one way "Most people would buy a return flight at £124".

Unlike most LCC's, Skybux auctioned off it's tickets in the 24 hours prior to departure to ensure every plane left with a near 100% loadfactor.

#5
M4matthew

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Actually, after doing some research, this is a very odd case. It turns out the founder was arrested for child pornography in late 2002 and the airline never got off the ground :P

Having said that, I'll do some number crunching later and see how low flights could be if you cut out all the IFS and filled planes to the max - you'd be looking at at-least half the price of a BA flight...

#6
M4matthew

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I'm not talking about in-game any more :P I'm talking about real life... Whether you include IFS or not, it doesn't make it any more/less real! This is reality!

I'll post my findings after I'm done revising. I've come to realise just how much fuel AE planes use compared to reality... That might be the explanation for the AE currency inflation we discussed earlier.

#7
violetQueen

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In 2003, Skybus flew transatlantic from Luton to Portsmouth (USA) and Orlando using a 294 seat 767-300ER. Fares started from as little as £62 one way "Most people would buy a return flight at £124".

Unlike most LCC's, Skybux auctioned off it's tickets in the 24 hours prior to departure to ensure every plane left with a near 100% loadfactor.

Actually, after doing some research, this is a very odd case. It turns out the founder was arrested for child pornography in late 2002 and the airline never got off the ground :P

Having said that, I'll do some number crunching later and see how low flights could be if you cut out all the IFS and filled planes to the max - you'd be looking at at-least half the price of a BA flight...



Well... that kinda makes your statement about them flying TATL and auctioning tickets invalid because they never got off the ground... I don't think they'd have lasted 12 months even if they had.


I liked TW and it's gone. NW, and it's gone. CO, and it's gone. Pray I don't like you.

"How sad it would be, should laughter disappear."
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#8
M4matthew

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Well - the results, ladies and gentleman, are in. I highly doubt, as VQ has already stated, the airline would have ever made profit.

The following information is based on a return flight on a 428 seat A330-300, from London Stansted STN - Newark EWR.

Fuel @ £2.07 per gallon (current market price £1.93 per gallon) - £74,768
Landing and Gate Slots - £5,024
Crew (2 FC / 9 FA) - £8,850
Aircraft Lease - £15,068
Miscellaneous - £12,000

Total - £117,710

Per passenger cost, based on 100% load factor - £275 + £105 taxes and charges = £380 return.
Per Passenger cost, based on 76% load factor - £362 + £105 taxes and charges = £467 return.

Once you add in mark-up/profit on top of that you could be looking at £410 and £497 respectively. Of course, EWR is a surprisingly expensive airport - flying to a lesser known airport in the US would lower both the additional charges and the landing/gate expenditure.

It's still pretty good seeing as flights to the US are going for £800+ return on both the BA and Monarch websites for this August.




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