22 replies to this topic

[justindw199]

Okay, so I've come to a bit of a crossroads and not quite sure what to do. I'm currently running a LCC in the US and having a really good amount of success. I've got an entirely new aircraft fleet, and I'm expanding faster than Boeing can offer delivery slots for the 737. I've got a lot of surplus cash laying around, and I'm not quite sure what to do with it at this point. I'm trying to stay with one aircraft type for maintenance purposes so I can be more efficient, but Boeing can't keep up with my expansion.

I just can't decide if I should just sit on my money right now or maybe branch out to Airbus and expand into a mixed aircraft fleet in the same seat range.

Also a note: I'm trying to stay with the 737-600 and -700 so I can easily transition to the CSeries when it comes available.

Thanks in advance.

[justindw199]

Another thought, should I focus on building terminals instead?

[MoeKitsune]

How much profit are you making every year? And what are you doing instead of building terminals?

[N664US]

Considering that you have a hub in Boston and occupy 13 gates, I personally would begin to consider building a terminal but hold some reservations. 

 

Building a terminal is very cost effective: the amount you spend on gate leasing fees is dramatically reduced (instead of like $300k per gate, it's about $150-200k in total times the number of expansions you've made). 

 

I'll provide my hub of Minneapolis as an example: I used to have 25 gates leased, with a total monthly leasing cost of about $20 million / month. I replaced it with a 28-gate terminal for about $115 million upfront, and my cost of operation went down to $160,000. I've expanded it twice, so I'm paying about $480,000 / month now ($160,000 times 3 total expansions/buildings), but overall I'm still saving a lot.

 

The problem arises when you are a smaller airline — sure, a terminal will reduce the amount of money you spend per month, but there's a large upfront cost that will take some airlines many weeks, months, or even years to collect, especially if operating out of a large airport like Boston. Leasing gates can also provide for more flexibility, in which you don't have to build a costly expansion everytime you need more slots. I'd personally recommend that you wait until you occupy around 20 gates, then build a terminal with around 25 to allow for some more expansion. Note that there is a flat expansion cost added to the number of gates you want to add — try to have as few gate expansions as possible. 

[justindw199]

Considering that you have a hub in Boston and occupy 13 gates, I personally would begin to consider building a terminal but hold some reservations. 

 

Building a terminal is very cost effective: the amount you spend on gate leasing fees is dramatically reduced (instead of like $300k per gate, it's about $150-200k in total times the number of expansions you've made). 

 

I'll provide my hub of Minneapolis as an example: I used to have 25 gates leased, with a total monthly leasing cost of about $20 million / month. I replaced it with a 28-gate terminal for about $115 million upfront, and my cost of operation went down to $160,000. I've expanded it twice, so I'm paying about $480,000 / month now ($160,000 times 3 total expansions/buildings), but overall I'm still saving a lot.

 

The problem arises when you are a smaller airline — sure, a terminal will reduce the amount of money you spend per month, but there's a large upfront cost that will take some airlines many weeks, months, or even years to collect, especially if operating out of a large airport like Boston. Leasing gates can also provide for more flexibility, in which you don't have to build a costly expansion everytime you need more slots. I'd personally recommend that you wait until you occupy around 20 gates, then build a terminal with around 25 to allow for some more expansion. Note that there is a flat expansion cost added to the number of gates you want to add — try to have as few gate expansions as possible. 

Yeah, I just built the terminal in Boston, holy cow that is a massive cost saving.

But should I still consider making an order with Airbus for sooner delivery spots than what Boeing can give?

[RCFLYER86]

You could order some Airbus aircraft, probably A320 or 321s for extra seat capacity to make it worthwhile for a change in aircraft type. You could also try ordering some regional jets/turboprops as they usually have fast delivery dates and will help you expand your route network size as well as getting a higher amount of connecting pax.

[justindw199]

You could order some Airbus aircraft, probably A320 or 321s for extra seat capacity to make it worthwhile for a change in aircraft type. You could also try ordering some regional jets/turboprops as they usually have fast delivery dates and will help you expand your route network size as well as getting a higher amount of connecting pax.

If you read above I'm not trying to change A/C types, just adding another. Also I don't want to go after smaller jets as I'm trying to keep my maintenance down as much as possible so I can charge less on routes. I'd be interested in order the A321 for trans-atlantic routes in the future maybe, but I don't really want to go larger than the A319

[N664US]

If you read above I'm not trying to change A/C types, just adding another. Also I don't want to go after smaller jets as I'm trying to keep my maintenance down as much as possible so I can charge less on routes. I'd be interested in order the A321 for trans-atlantic routes in the future maybe, but I don't really want to go larger than the A319

 

You seem to be really focused on the 100- to 130-seat market, and in your game, it is fall 2000. If you're adamant about avoiding the Airbus A320 family because of its size, but don't want regional jets, I'd recommend the 717-200. It has a max capacity of 134 (around that of the 737-600), and it has a shorter turnaround time, less runway use, and a much lower price and roughly the same fuel flow (depending on which engines you pick). It ends production in 2007, but for now, it should be a good aircraft with less of a maintenance cost.

[justindw199]

You seem to be really focused on the 100- to 130-seat market, and in your game, it is fall 2000. If you're adamant about avoiding the Airbus A320 family because of its size, but don't want regional jets, I'd recommend the 717-200. It has a max capacity of 134 (around that of the 737-600), and it has a shorter turnaround time, less runway use, and a much lower price and roughly the same fuel flow (depending on which engines you pick). It ends production in 2007, but for now, it should be a good aircraft with less of a maintenance cost.

Well I just placed an order for 20 of them, so I hope they work out!

Also, it isn't as much that I'm focused on that market, but I just want to keep my aircraft types down to a minimum. I can compete on almost any US domestic route with these aircraft and still make a good amount of money in the process. When the CSeries comes around I'll have the most efficient aircraft on the market in my fleet.

[Jamesthomeson]

How about you lease a320s or 717s or other like aircraft from the used market, expand your route network and then replace them over time, as your 737s get delivered.

[dead pigeon?]

if you run your airline well, maintenance costs won't matter. although it might be tricky to make a profit in the US in R4, over time, ordering different aircraft families won't confer that large of an extra cost. the money that you COULD have made by ordering many different families is far greater than the money you save by just ordering one.

[jjack]

If you read above I'm not trying to change A/C types, just adding another. Also I don't want to go after smaller jets as I'm trying to keep my maintenance down as much as possible so I can charge less on routes. I'd be interested in order the A321 for trans-atlantic routes in the future maybe, but I don't really want to go larger than the A319

 

If you want to keep maintenance costs down and charge less on routes, and you're hitting the ~100-seat market, adding a regional jet/prop family to your lineup sounds like a way better option than duplicating your 737s with A320-family jets. Keep in mind that:

• The maintenance -- including the base "family" cost -- for a prop/regional jet family is going to be a fraction (1/2 or better, depending) of what the A320 family is; and
• Flying a medium-haul jet where a regional jet or prop is better suited is a waste of money. 

[dead pigeon?]

• Flying a medium-haul jet where a regional jet or prop is better suited is a waste of money. 

 

Sometimes, for high-demand routes to large airports, I feel like a medium-haul jet might save money because it's larger and requires possibly half as many or fewer gate slots. However, I wouldn't really know since I don't really monitor each route's profitability and cost.

[jjack]

Sometimes, for high-demand routes to large airports, I feel like a medium-haul jet might save money because it's larger and requires possibly half as many or fewer gate slots. However, I wouldn't really know since I don't really monitor each route's profitability and cost.

 

Yeah, I definitely think you could be onto something in that case. But all else being equal, say (for example) you've got a route with 140 daily pax, 600 miles, and you're not under any slot constraints -- I think it'd be more cost effective (and better for your rep) to fly an ATR-72 14x than fly a 737-600 7x.

 

And then there are people who are dropping an A319 daily on a 90-pax route...why?

[Jamesthomeson]

if you run your airline well, maintenance costs won't matter. although it might be tricky to make a profit in the US in R4, over time, ordering different aircraft families won't confer that large of an extra cost. the money that you COULD have made by ordering many different families is far greater than the money you save by just ordering one.

I don't think he cares about cost. He just wants to have an all 737 fleet.

[justindw199]

I don't think he cares about cost. He just wants to have an all 737 fleet.

Not true, I want to be as cost efficient as possible. I have dabled with turboprops and smaller aircraft than the 100-seat market, I didn't have nearly as much luck when running them. Having all 737s (and now 717s) is keeping my maintenance cost lower without introducing the A320 into my fleet and it's full maintenance cost.

[Marb1]

Not true, I want to be as cost efficient as possible. I have dabled with turboprops and smaller aircraft than the 100-seat market, I didn't have nearly as much luck when running them. Having all 737s (and now 717s) is keeping my maintenance cost lower without introducing the A320 into my fleet and it's full maintenance cost.

What about the A319?

[jjack]

Not true, I want to be as cost efficient as possible. I have dabled with turboprops and smaller aircraft than the 100-seat market, I didn't have nearly as much luck when running them. Having all 737s (and now 717s) is keeping my maintenance cost lower without introducing the A320 into my fleet and it's full maintenance cost.

 

That's interesting; more than half my fleet is composed of props and regional jets that support the mainline. To each their own; my style of play may not be your cup of tea and vice versa, but I've never had a financial problem with running it this way. On the contrary it's usually helped me get going in the early phases because the costs go start up are low.

 

Exceptions to this would be:

• Very small aircraft (~20 seats) never seem to make a profit, ever; and
• Regional planes eating up slots at big airports with very high gate fees. 

The 717 is kind of a "regional jet" and not a bad addition; that said, next time the game resets or you decide to modernize your fleet, you might consider the Avro RJ100 -- very similar in every spec except it has a lower fuel flow. 

[Hans.]

I use the B737 family and the BAe 146/Avro RJ family for my airlines. Both are efficient and not too costly to purchase. I replace the older 737s with newer versions as they age, and replace the BAe 146s with Avro RJs. When the Avro RJs start getting old, I replace those with E-Jets.

 

I would recommend the Avro RJ100 over the B717, but they're both pretty close in cost and performance.

[justindw199]

My main thing is a don't want an aircraft that has less than 130-seats, but not more than 160-seats. Having a 130-seat and a 160-seat airplanes makes selecting a type for a route so much simpler. I try to keep the 160-seats (149 in the case of the 737-700) on at least 15 flights a week on any given routes, and the 130-seat aircraft on whatever routes the 737-700 can't fly 15 flights a week on, but a minimum of 5 flights a week for any given route. It seems to me adding another larger aircraft makes it more difficult to allocate which aircraft go on what route.