9 replies to this topic

[1coolblockhead]

Hey there AE community!

I'm wondering what a good profit margin is. I currently have about 10% or more each month. Is this good? If not, how could I fix it? If this is good, what should be my next step into becoming a larger airline?

[Mr Tree]

Honestly it might be worth it to have a member take shared control of one of your airlines and do an audit to provide you with tips and advice. I would if I could but I don't have the time

 

This is a comprehensive game and there is a lot that can be done. For instance focusing on second tier airports where rent and competition is lower, signing 10+ year leases to drive down lease costs and buying the aircraft when there is no cost to do so instead of shorter term leases, cutting salaries and marketing expenses, etc.

[zortan]

Honestly it might be worth it to have a member take shared control of one of your airlines and do an audit to provide you with tips and advice. I would if I could but I don't have the time

 

This is a comprehensive game and there is a lot that can be done. For instance focusing on second tier airports where rent and competition is lower, signing 10+ year leases to drive down lease costs and buying the aircraft when there is no cost to do so instead of shorter term leases, cutting salaries and marketing expenses, etc.

Yes - ask in the shared control so that someone can help you with all your questions. you'll get better answers and faster.

[Tesla]

Hey there AE community!

I'm wondering what a good profit margin is. I currently have about 10% or more each month. Is this good? If not, how could I fix it? If this is good, what should be my next step into becoming a larger airline?

Depending on the type of airline, it varies. 

​If this is a realistic fairly good service airline (basically anything other than a spamline or ULCC) then 10% is good going. My airline Blue Air (premium low fare short haul, premium full service long haul) averaged around 8% initially (average AC utilisation of around 11 hours daily). By the end of the world, it was averaging 19-22%. Average aircraft utilisation was around 12 for short haul planes and 14 for long haul ones. Long haul boosted margins significantly. For a primarily short haul airline, especially anything other than a spamline or ULCC, 10% is very good. Keep it up. 

 

I just looked at your airline (by the way, Norwegian isn't US based (yet). Norwegian is an odd airline that sets up subsidiaries of itself to get around traffic restrictions, often in odd places. But they don't have a US one just yet. With your aircraft utilisation figures, you should be scoring far higher than 10% profit margin. Obviously things are tough at the start, but once established, 10% is not good enough for this type of airline. A spamline typically acheives around 25-30% once they settle down a bit and are more established. 10 is good for alliance airlines running under severe realism restrictions. These make running profitably very challenging, but 10% is achievable in those circumstances. If as a spamline or genuinely not attempting to be realistic airline you are getting only 10%, you need to optimise, especially in wages, aircraft operations and gate payments

[Book Siberia]

flying shorter routes will generally boost your profit margins by a significant amount. [ as a general rule]

[Tesla]

flying shorter routes will generally boost your profit margins by a significant amount. [ as a general rule]

There are certain price breaks. 

50 miles

100 miles

500 miles

1000 miles

2500 miles

5000 miles

 

and likely others. 

 

Being just above a price break will make a route quite profitable usually. Being just under will make it tough. But that varies. 

 

Also, shorter routes are ​generally ​more competitive, as the barriers to entry are far lower. But that doesn't stop markets like LHR-JFK becoming massively overcrowded.I regularly find short routes priced down to 20 of their original market prices. Whereas longer routes tend to be more about clever manipulation if you know how the system works at all

[zortan]

flying shorter routes will generally boost your profit margins by a significant amount. [ as a general rule]

Personally the opposite is true with me, especially when you have a long-range plane. For example, with the 747, I make a lot more money flying JFK-NRT than I do flying JFK-LAX.

[Book Siberia]

Personally the opposite is true with me, especially when you have a long-range plane. For example, with the 747, I make a lot more money flying JFK-NRT than I do flying JFK-LAX.

 

not on a fare price per miles traveled basis, you don't.

 

And that's what counts most.  Also, consider that you will be able to put more flights for shorter routes, so the monthly  dop per plane will add up to more than for the long haul flights do.

[HanTseng]

not on a fare price per miles traveled basis, you don't.

 

And that's what counts most.  Also, consider that you will be able to put more flights for shorter routes, so the monthly  dop per plane will add up to more than for the long haul flights do.

Yes short haul planes do tend to earn more money, but don't make the routes too short, like JFK to EWR and LHR to LGW or something like that.

[Tesla]

Personally the opposite is true with me, especially when you have a long-range plane. For example, with the 747, I make a lot more money flying JFK-NRT than I do flying JFK-LAX.

JFK-NRT is ridiculously long though. It's way past all the price breaks. Although if you have the route to yourself and decent service you can charge a pretty penny for anyone flying.