23 replies to this topic

[Sheepy]

I recently decided to find out what a/c is better, profit wise, of the Boeing 737-400, 737-800 and the A320-200. All of these are popular 180-190 seat aircraft, with the exact numbers being
A320-200: 180 seats,
B737-400: 188 seats
B737-800: 189 seats.
Luckily, I was able to start the test almost immediately, because AE7 just happens to be in 1998, the year that all of these aircraft are available.
First of all, lets look at the ordering of the aircraft. I am going to use leasing as the method of purchase on all three aircraft, as it is easier to work out the monthly profit this way. I will also be using 10 year leases for 1 aircraft.

SOURCES
http://world7.airlin....php?aircraft=6
http://world7.airlin...php?aircraft=21
http://world7.airlin...php?aircraft=25

Replace the world number number in the address bar with which world you play in.

ORDER PRICE

I ordered one A320-200 with CFM56-5A1 engines, the most fuel efficient A320 engines. Each month, I would be paying $464,496 in leasing costs for my A320, with a down payment of $2,786,973.

Next, I ordered one Boeing 737-400 with CFM56-3B2 engines, the most fuel efficient 737-400 engines. Each month, I would be paying $467,267 in leasing costs for my 737-400, with a down payment of $2,803,600.

Finally, I ordered one Boeing 737-800 with CFM56-7B24 engines, again, the most fuel efficient engines for a 737-800. I decided to add winglets on this aircraft. Each month, I would be paying $579,258 in leasing costs for my 737-800, with a down payment of $3,475,547, which includes the winglets. If my calculations are correct, the winglets reduce the price by $1. (579,258*6=$3,475,548)

So, to summarise...
A320-200: $464,496 p/month, $2,786,973 down payment.
B737-400: $467,267 p/month, $2,803,600 down payment.
B737-800: $579,258 p/month, $3,475,547 down payment.

A320-200 wins... but then I decided to work out the per seat cost per month.

A320-200: $464,496 lease divided by 180 seats is $2580.53333
B737-400: $467,267 lease divided by 188 seats is $2485.46276
B737-800: $579,258 lease divided by 189 seats is $3064.85714

Half a point each to the B737-400 and A320. Both pretty similar.

SPEED
This is a simple point.
A320-200: 454mph, turn time, 35 mins.
B737-400: 435mph, turn time, 30 mins.
B737-800: 446mph, turn time, 35 mins.

A320 wins, but it's really too close to call. Occasionally the A320 might be able to fit in an extra weekly flight, but it's so rare it's not really worth a full point, and the B734 has a 30 minute turn time, so on very short routes, this would be more useful than the extra speed, thus... No points are awarded. Also, on a 2300 mile flight, all turned up with one-way block times of within 7 minutes of each other.

RANGE
Another simple point...
A320-200: 3,585 miles
B737-400: 2,550 miles
B737-800: 3,397 miles

This is a tricky section to judge, as the 737-400 is much worse than either the 737-800 or the A320... so I think I'll go for the good old half-points.
Half a point to the A320-200
Half a point to the B737-800

TAKE OFF DISTANCE
At small airports, or city airports, such as London City, take off length is an important factor.
A320-200 5,015ft
B737-400 6,248ft
B737-800 6,248ft

1 point awarded to the A320. For the record, if one orders different engines to the ones I installed, an A320 can take off at London City.

ROUTE PROFITABILITY

The way I decided to do this was find the profit using each aircraft between two cities, and seeing which made the most... so... here are the results...
Firstly, URC (West China) to TPE (Taiwan), 2,258 miles apart. Has a Y class demand of 369 pax. Each a/c will be going 12 times a week, the maximum possible.

Airbus A320-200
Ticket Revenue $334,488
Fuel Costs -$74,592
Crew Costs -$17,184
Daily Profit $242,712
309Y pax daily @ $542 a ticket. (100% load factor)

Boeing 737-400
Ticket Revenue $349,368
Fuel Costs -$81,864
Crew Costs -$18,744
Daily Profit $248,760
322Y pax daily @ $542 a ticket. (100% load factor)

Boeing 737-800
Ticket Revenue $351,216
Fuel Costs -$79,488
Crew Costs -$18,360
Daily Profit $253,344
324Y pax daily @ $542 a ticket. (100% load factor)

Boeing 737-800 wins... but...
I decided to find the profit per seat.
A320-200: $242,712 divided by 180 seats = $1348.40 per seat, per day.
B737-400: $248,760 divided by 188 seats = $1323.19 per seat, per day.
B737-800: $253,344 divided by 189 seats = $1340.44 per seat, per day.

A320 wins, but the total profit is probably more important in this case.

OVERALL COST

This includes maintaining the aircraft, combined with the lease and their profit on the URC-TPE route.

A320-200
Profit from routes per month $5,825,088
Maintenance costs -$147,150
Leasing costs -$464,496
Profit per month =$5,213,442

Per seat =$28,963.56


B737-400
Profit from routes per month $5,970,240
Maintenance costs -$146,700
Leasing costs -$467,267
Profit per month =$5,356,273

Per seat =$28,490.81


B737-800
Profit from routes per month $6,080,296
Maintenance costs -$$183,000
Leasing costs -$$579,258
Profit per month =$5,317,998

Per seat =$28,137.55

Put in a nice table comparing all the aircraft clearly:

Overall Per seat
A320-200 $5,213,442 $28,963.56
B737-400 $5,356,273 $28,490.81
B737-800 $5,317,998 $28,137.55

CONCLUSIONS

First, I'll tally up the scores so far (excluding overall cost)
A320-200 2
B737-400 0.5
B737-800 0.5

A320 is winning with 2 points, with both 737s on 0.5 each.

Here, I am faced with a bit of a dilemma. I can declare the 737-400 the winner, as it has the best overall monthly profit, or the A320, as it had the best per seat profit.

And the winner, I'm sorry to say is the...

Spoiler

A320 WINS
The B737-800 is
with the B737-400 coming in

I shall now explain why I chose these aircraft...

The A320 came first because it already had two points, and it gives you the best return per seat, although you may need slightly higher frequencies on some routes.

The B737-800 comes second, because it's not far off the B737-400 as far as overall profit goes, and it has considerably better range.

The B737-400 comes last, because its range really hurts it. I may test a model with winglets in the future, but I doubt I'll bother.

If you spot an error in the maths, let me know and I'll correct it. Remember, there are 24 days in an AE month. The figures expressed for total monthly profit will not be correct when you attempt to use one of the specified aircraft, as which route and price play an important factor. Thanks for reading.

[conmanflyer]

on tht last bit there its only bigger because of less seats on tht flight

[Sheepy]

True, but the increased number of seats is a good thing, and I put the per seat costs in as well.

[Carzo]

Very informative! A lot of math is required to figure out which plane is the cheapest to operate long-term. Something to keep in mind is that some characteristics are very hard to calculate mathematically. For example, you won't be able to operate some of the larger 737's at airports with short runways. Generally this isn't an important factor, but every once in a while it becomes the deciding factor. When it comes down to choosing aircraft types, the solution is often a combination of operating costs, range, capacity, acquisition costs, commonality, and takeoff distances (and manufacturer preference if you're like me ). However, since fuel costs are high, operating efficiency is very important. Keep the numbers coming!

[Sheepy]

Updated. Now finished. If you beg my nicely I may be willing to compare some other aircraft.

[9M-TKS]

You've got the first fact wrong already. The 320 seats less than 180 in AE, and I'm puzzled why you think the 734 seats more.

[Sheepy]

Unless it has changed since when I started the topic, the facts are correct. See below. The A320 was recently given an extra seat.

http://world8.airlin....php?aircraft=6 (A320)
http://world8.airlin...php?aircraft=21 (B734)
http://world8.airlin...php?aircraft=25 (B738)

Although, I should probably make these sources clearer in the main post.

[bolli]

You've got the first fact wrong already. The 320 seats less than 180 in AE, and I'm puzzled why you think the 734 seats more.

because the 734 seats 188?

[mischkaffee]

thanks for your efforts 2007guy! an interesting read..I figured the A320 would take the cake on this one.

[txaggie]

because the 734 seats 188?

It actually is usually listed at maxing out at 168, including Boeing's website, although the FAA gave it a FAR exit limit at 188. (168 should make sense given its 10 feet shorter than the B737-800 and 4 shorter than the A320). AE just has the wrong capacity listed.

That is a hard comparison, though, as it was built under completely different circumstances for a different kind of market than its larger brethern. I guess it depends on the timline and strategy of the individual AE user.

Anyhow, it is an interesting read, but the 738 and 322 at their best in AE, too, in slightly different markets and I think it's up for the individual route network to dictate which works best.

[Stevphfeniey]

Wow! This is really informative! I might use this to plan my fleet out next round

[rotaryspd]

I don't think the take-away from this case study is that the A320 is the best of the three...quite to the contrary, they are almost identical. There is a total spread of $146,000 per month (or $6,000 in DOP) when final costs are factored in per your example. This is against $5.2m in total profit...a whopping 2.8%. If we consider that the A320, supplying fewer seats could charge a higher ticket price, this gap grows, but only slightly.

There are dozens of situations that make the 738 more profitable overall:

- Less Competition. Higher ticket prices over the same distance route will favor the 737. The example given was for $542 over a 2,250 mile route. With only 180 seats, a ticket price of $850-1,000 could be achieved with 7x weekly flights (if no other competition). This would result in the 738 being about 2.5% more profitable than the A320 and the 734 being about equal. (A price of approximately $700 over TPE-URC gives us about equal numbers for the A320 and 738).

-Shorter route. The longer the route, the more it favors the A320's fuel efficiency, higher speed, and slightly smaller passenger numbers. The 2,250mi route was at the upper edge of the envelope in which these aircraft operate normally (by which I mean 80-90% of all A320 and 737 flights are less than 2,250 mi). It would be more reasonable to compare these aircraft on routes in the 800-1,500mi range.

-Connecting Traffic. If the airline's profits are predicated on large hubs with connecting traffic to fill in the gaps in a routes natural demand, the net daily difference in profit of $6,000 probably favors the extra 8 seats to fly the 738 (keep in mind this is 32 daily seats in the example above).

-Production Capacity. If your A320s are tied up on more profitable routes, the modest 2.8% relative "cost" to operate the 738 seems modest...especially when we consider that the lease cost alone reduces profits by ~20%. You could earn $4m per day with your fleet of 20 A320s or $7.9m per day with 20 A320s and 20 738s. I'm not about to complain that my 738 fleet only pulls in $3.9 million rather than the $4m I could earn if my A320s were delivered more quickly.

-Ownership. If you own the aircraft outright and do not lease, the modest cost of depreciation favors the 738 heavily. And, as the aircraft ages (and depreciation losses decrease), the larger 738 is favored moreso.

-Competition. In real life, my money is worth as much as the money Bill Gates spends (he just has more to spend); so the maximum profit on a route should be the best situation. AE is a game and everything is relative. If the route in question places you in direct competition with your rival (rankings-based rivalry...not market-based), you may be relatively better to take the slight hit to profits and deny 8 more seats to the competition. I won't elaborate on this because it's a method I employ competitively--but I can attest to it's value in the game.


I'll leave my list there...The above situations are even more pronounced if comparing other aircraft--for example the 747-400 and 767-300ER. If we employ the RB211 engine on each, we have an almost identical per seat cost, so much so that I would claim for the purposes of the game that the 763ER is half a 744 (and it's not far from that in reality).

This isn't to say I don't appreciate the value of 2007guy's research--in fact it is very informative; but it's not right to view it in the light of A320 > 737...far more important is that A320 = 737 and the nuances of individual routes and rules of the game are far more determinant in which aircraft is 'better' on a given route.

p.s. 2007guy, I think it would be great to see the 747-400 and 767-300ER compared as these aircraft were--comparing 2 technically similar aircraft of different size-class rather than 2 options within the same class.

[Sheepy]

You make some good points there, so I'll address them in order. Firstly...
- Less Competition
I think I see what you're saying there, but I left the prices as the default for the route, and maximum flights possible per week, to keep it simple.

-Shorter route
I may add a second shorter route at some point in the future

-Connecting Traffic
Agreed.

-Production Capacity
The cost is indeed small, and the 738 is basically a bigger, slightly worse A320. Neither is significantly worse than the other. You'll also note, that the total profit with a 738 is greater than that of an A320.

-Ownership
I use leasing in the examples, because the smallest profit margins matter the most in the early stages of the game, when you're likely to be leasing aircraft.

-Competition
I think I see your point there.

I can't say I view the A320 to be significantly better than the 738, but it is slightly better in my view. Though, the extra range and runway length are very useful for the markets I usually fly to, so I am a bit biased. (Though, I also like Boeing better than Airbus ) essentially, the 738 is better in the right market, but the A320 is a bit more flexible, so I stand by my decision of it being first. Not that the 738 is bad. It only just missed out.

Regarding future comparisons, I'm setting up a poll with a few choices. I will compare the winner when I have time

[Conor]

If people would have listened to me in the first place .....

[rotaryspd]

-Ownership
I use leasing in the examples, because the smallest profit margins matter the most in the early stages of the game, when you're likely to be leasing aircraft.

I disagree with this, and I'll harp on it just because it's an interesting point.

The logic about smallest profit margins only matters to large airlines. Small airlines have the luxury of choosing and operating only the most profitable routes, while large airlines must accept diminishing returns with each additional flight added. Profit margins are highest among the smallest airlines. Also, if a player is starting at the beginning of a game world, profit margins are so high that the aircraft employed often doesn't matter and getting more aircraft in service is more important that minimizing the underlying costs. It's even conceivable that a 727-200 could be almost as profitable as a 738 for no other reason that it can make 1-2 addition flights per week on very profitable segments.

Furthermore, I think we can agree that anyone who is considering the comparison of these aircraft to the extent addressed here has a long-term view to the game. Anyone effectively considering the long-term will lease with intent to own eventually. (Now here's the nifty part) Because we get 50% of the total to date lease payments back on the aircraft when buying out the lease (against the depreciated value no less!) and deduct lease payments from the taxable income amount (effectively subsidizing a further 30% of the lease payments that were not collected in taxes), a whopping 80% of the total lease is recovered and applied against the depreciated value of the aircraft. On certain aircraft, it is actually more profitable to lease-to-own instead of buying outright, even when the discount is considered (Concorde and IL-86, for example, in small numbers where first year depreciation exceeds 20% of lease price). The lease costs should be factored in at only 20% of face value. Which makes the $484 gap between the A320 and 738 per seat only $121, (adding $363 per seat to the 738's final numbers, and $68,607 per day in the example)....this halves the difference between the two to a modest 1.6% of per seat profits and expands the 738's total lead.

In the end, what this comes down to is that an aircraft leased by a small airline should be more profitable than an aircraft owned by a large airline; and the comparison is moot because the A320 is better on a given route now than a 737-800 delivered the future and likewise a 738 is better on the route now than an A320 delivered in the future. It's also this logic that kept 727-200s in service up through 2002--it is no mystery that the global decrease in aircraft demand dropping to the A320 and 737NG production levels saw the aircraft's quick withdraw from mainline service--and why they're still profitable in the short-supplied cargo market. Isn't airline economics fun?

Edit: as a matter of intrigue, I did a spreadsheet of my 737-400s and A320s (excluding idle and aircraft losing money) the 737-400 averages $187,500 profit per day while the A320 averages $178,200. I operate about 165 of each, so it's a good size sampling. That is $997.34 per seat per day in the 737-400 and $990.00 per seat per day in the A320.

Edited by rotaryspd, 03 February 2011 - 01:42 AM.

[kenji]

What do people replace B734 with? I personally don't think B738 is any better except using on a longer range.

[bolli]

a320

[berubium]

What do people replace B734 with? I personally don't think B738 is any better except using on a longer range.

The 737-400s will not sell forever. When 1999 rolls around (the last year you can purchase these), you have to make a choice if you want 737-800s (which sell from 1998 to current) or A320s in its place. The 737-800 might not be any better, but it's doesn't seem to be any worse. I assume it was meant to be a slightly more fuel-efficient & more modern direct replacement.

I suppose if you wanted to keep getting new 737-400s after 1999, you could order a bunch in the last year of availability & then defer the delivery dates afterward...

[Sheepy]

Bump, so more people see.

[un1]

Bump, so more people see.

Are you John Leahy?