Leasing costs of aircraft + depreciation

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1

So this is my general feeling, and has been for a considerable time, I've been playing ALS since late 2012, and every time I leave for a period of a few months it's always due to the same reason - the seemingly near impossible task of running a reasonably profitable airline, the only profitable airline i've ever been able to run so far made $125,000 per week, now frankly that's terrible, at that rate it's going to be two weeks before I can afford to lease the next mid-sized jet.

My airline was started on the 18th October, it's now 2 days in and I've made just under $20,000 profit, however there's depreciation to pay, which takes me to -$195,000, plus leasing costs at the end of the week, another $720,000 for 4 Embraer 195LR's........ my main point is, how is that at all realistic?

$180,000 per WEEK?

I've done some research, and as from the attached photo, the average leasing cost for an Embraer 195LR in December 2014, was $216,000 per MONTH, where were the in-game costs taken from, and are they even ever updated?

Obviously there is quite a significant difference, I'm amazed it's even possible to be hugely profitable on this game like i've seen some airlines be.....

With those ridiculously high leasing costs, and with only a startup capital of $10 million how can it even be done?

Assuming I fill all 108 seats on my plane, the most profit I make is about $2,500, if I don't fill the plane the about 70-80% capacity, then I lose thousands....

Personally, I do very much like this simulation, but frankly it's a pity that it seems stupidly hard to even make a profit that's worthwhile, and won't involving waiting real life weeks/months just to be able to afford to lease another aircraft.

Note: The image was taken from here: http://www.aviaam.com/Average-lease-rates

Any advice or suggestions?

Thanks for your time.

2

I don’t have time for massive reply but two points to note…

  1. the currency used in AS is AS$, not $. The AS$ bears zero resemblance to any real world currency

  2. to speed things up and make things more fun generally AS works on time compression, this is achieved by multiplying all profits, and costs, by 4. Therefore 1 week actually equals 4 weeks. In the real world you would not pay weekly, but monthly. So despite point one it would suggest according to your research prices are too cheap

If you would like to tell me your game world and airline I will happily look at it and suggest how to make it profitable.

Ian

3

Indeed, costs are multiplied in the game, and so are profits. This multiplication allows airlines to grow in a reasonable time. If the costs and profits were like in real life, you'd have to wait several years instead of months before your airline would make any real progress. If anything, leasing costs are too cheap, it's the credit rate that's ridiculously high compared to real life (which explains why 99% of planes in the game are leased rather than bought).

By the way, if it's just been 2 days then you shouldn't have to pay anything yet for the plane, as the first leasing charge is only after a week. So if anything is showing under "depreciation", what that probably means is you didn't remove the option to assign seats automatically in the settings, so when you leased the plane the game automatically assigned seats for it, then you changed the seating configuration yourself, which means you had to pay twice for the same seats.

Your first week is the toughest one, unless you've been here before and know how to get an airline going from the start, on the first week you are almost certainly going to make a loss. On the second week you might break even or at most have a small profit. So don't spend your whole 10 million right at the start, leave enough for one or two weeks of expenses. 

And if your plane keeps getting only 70% filled ratio, then you need to improve your chances with a combination of better seats, better service and/or lower price. If that doesn't work, try using a smaller plane. But you need at least 3 full days of bookings before you realise the route's potential, the first 2 days tell you nothing.

4

I usually have a profit margin of over 45%. My first week with my current flagship airline Asian Airways on Stapleton (in February 2015) I made a profit of 2 million the first week and 3 the next week (62% and 56% profit margin). There is a possibility to be VERY profitable but you need to know how and you need to develop your formula of success which can take years.

5

So don't spend your whole 10 million right at the start, leave enough for one or two weeks of expenses. 

I disagree completely. In order for high profits and quick growth you should spend ALL your startup capital in the first week (usually for 5 new E195s) then next week 1 more, second week 2 more and third week 3 more. I would say that you should at least get 50% more profits every week within the first months of an airline in AS, then you reach a stage when you do not know what to do with the money :).

6

I disagree completely. In order for high profits and quick growth you should spend ALL your startup capital in the first week (usually for 5 new E195s) then next week 1 more, second week 2 more and third week 3 more. I would say that you should at least get 50% more profits every week within the first months of an airline in AS, then you reach a stage when you do not know what to do with the money :).

Yes, that is true if you've already been successful before and know how the game works and how to get instant success. I am already profiting in my first week on Quimby, for instance, though likely not as much as veteran players.

But for someone who's still in the process of learning the game, I think it's best to count on a loss on the first week just in case.

7

Even a loss in the first week is fine. After 3-4 weeks the airline should run on a high margin range (+35%). Then you have found the right way.

But in order to advice you, you should give us more informations. Which airline, which server etc. There are dozens of reasons why you are loosing money (or not earning money), service profile, cabin configuration etc. etc. etc. But if you are playing since 2012, you should already know these elements of the game?

8

Found on quimby...so some points...

  1. Your airline only started two days ago, you don't appear to be active anywhere else
  2. Network - Connections are king here. Stick to one airport as a hub, and build connections, you don't appear to have any hub or the ability for any connections
  3. You are using the E195LR? Why not the E195? it is cheaper to lease and cheaper fuel burn?
  4. You have squeezed Y108 seats in the E195. Why no business class? Also you have just gone for the worse seat possible
  5. As all your routes seem to be to major airports thats going to mean more competition. You have the worst seats therefore why would passengers fly with you?
9

Found on quimby...so some points...

  1. Your airline only started two days ago, you don't appear to be active anywhere else
  2. Network - Connections are king here. Stick to one airport as a hub, and build connections, you don't appear to have any hub or the ability for any connections
  3. You are using the E195LR? Why not the E195? it is cheaper to lease and cheaper fuel burn?
  4. You have squeezed Y108 seats in the E195. Why no business class? Also you have just gone for the worse seat possible
  5. As all your routes seem to be to major airports thats going to mean more competition. You have the worst seats therefore why would passengers fly with you?

1) Not sure what you mean by "Active anywhere else".... I've come back to ALS from a long period of not playing it.

2) Ok, advice taken onboard (Excuse the pun :P )

3) I chose the LR due to the improved range, unless I mis-read.

4) Why no business class, the reason for this is that in my experience business class is not as cost effective or efficient as economy, it's something I'll give another go though.

5) I've chosen the major airports for obvious higher demand in comparison to the smaller airports, whilst I'm aware that gives the PAX more choice, I feel that it is reflected in my route prices, furthermore I haven't chosen the worst seat at all, I've chosen the Leisure plus seat, which If I recall is 3 up from the "Worst".

Obviously i'm not going to be giving Economy fare passengers a business class seat, when they aren't paying a premium price increase for it.

As for one of the posters who posted on here, you making 2 million a week on week 2 and 3 million a week week 3, I find astounding, I don't doubt it's true, but I've never experienced anything close to that, i've tried many combinations of airlines, low cost carriers, international airlines, "premium" or higher quality and higher cost airlines, but none of them bar 1 seem to be able to turn a profit, even over the space of a real life month.

I'll look at some of the suggestions made here, and try them out.

Two questions, I have just over $2,100,000 AS$ in the bank left, would you suggest leasing another E195, or sticking with that to see me through the next couple of months hopefully?

Finally, I'm a tad doubtful that upgrading the seat from Leisure Plus to something better will get the full load on the majority of flights I need, but I am prepared to give it a go, what seat would you suggest gives a good balance of space but passenger comfort also?

Thanks for all your suggestions.

10

Obviously i'm not going to be giving Economy fare passengers a business class seat, when they aren't paying a premium price increase for it.

PAX are paying a premium price for better seats. I use (on Aspern) Comfort Plus seats for eco and even Flat-Lie 140 seats for business (not for longhaul but even for shorthaul).

As for one of the posters who posted on here, you making 2 million a week on week 2 and 3 million a week week 3, I find astounding, I don't doubt it's true, but I've never experienced anything close to that, i've tried many combinations of airlines, low cost carriers, international airlines, "premium" or higher quality and higher cost airlines, but none of them bar 1 seem to be able to turn a profit, even over the space of a real life month.

This is possible if you have a good strategy for your airline in mind. But if you are working with an airline as low cost carrier, you will not succeed here in AS in the begin of your airline. That is for sure. Again, PAX here are paying more for good service and then your planes will be full after a couple of days. And especially on a new server (still don't know exactly where you have opened your airline on Quimby), the flights should be fully booked on known routes.

Two questions, I have just over $2,100,000 AS$ in the bank left, would you suggest leasing another E195, or sticking with that to see me through the next couple of months hopefully?

I would spend the money for another plane, super Service profile and very good cabin configuration. If the E195 is the right choice, I cannot tell as I don't know your setup of your airline.

11

PAX are paying a premium price for better seats. I use (on Aspern) Comfort Plus seats for eco and even Flat-Lie 140 seats for business (not for longhaul but even for shorthaul).

This is possible if you have a good strategy for your airline in mind. But if you are working with an airline as low cost carrier, you will not succeed here in AS in the begin of your airline. That is for sure. Again, PAX here are paying more for good service and then your planes will be full after a couple of days. And especially on a new server (still don't know exactly where you have opened your airline on Quimby), the flights should be fully booked on known routes.

I would spend the money for another plane, super Service profile and very good cabin configuration. If the E195 is the right choice, I cannot tell as I don't know your setup of your airline.

So I have replaced the seating configuration in my E195's from Leisure Plus (108 seats) to Recliner Shorthaul (74 seats).

I have also created a new airline, leasing 3 A320-200's, two will have all Eco cabin configuration (114 Recliner Short Haul), one will have 84 recliner short haul seats for Eco, and 12 160-Lie-Flat seats for Business class.

I'm just curious as to how much extra I should be charging to cover the costs and also try to profit, because there is quite a drastic reduction in seats, from 180 on the A320 to 114.... and from 108 on the E195 to 74.

I was thinking along the lines of Base price +10-20% minimum depending on route, would this seem reasonable?

12

I'm just curious as to how much extra I should be charging to cover the costs and also try to profit, because there is quite a drastic reduction in seats, from 180 on the A320 to 114.... and from 108 on the E195 to 74.

I was thinking along the lines of Base price +10-20% minimum depending on route, would this seem reasonable?

As I still don't know where you are flying I cannot guess the demand on your routes. But for the price level: just try +10, +15 and +20%.

Don't expect the flights to be full in a couple of hours. It will take some time until the PAX book your flights and you can rely to numbers after not less than 3 days.

By the way: you can easily find out how much your profit will be with your setup. Try "Operations" -> "Aircraft Type Evalulation", feed the tool with your fleet and seat configuration you will see the possible profit.

13
I'm just curious as to how much extra I should be charging to cover the costs and also try to profit, because there is quite a drastic reduction in seats, from 180 on the A320 to 114.... and from 108 on the E195 to 74.

I was thinking along the lines of Base price +10-20% minimum depending on route, would this seem reasonable?

Unfortunately I do not think anybody will tell you excatly how much you can charge ... that is a "confidentiality" part of business models of many players here. You will need to find it on your own, by trial and error. All I can tell you is that at the moment, premium service and seats warrant premium price, and there is logic in the corresponding equation.

14

Right. Trial and error is the system to use.

Now I have found you on Quimby. And I can see that your connections are not working if you want to use the Hub-and-stroke way as your transfer time is not too short for your passengers to catch a connecting flight. The minimum transfer time in your hub is 1:30 hours.

15

Hi everyone 

I just have a few questions , Airline is Novairlines on Deveu , flying out of JHB 

1. I have been running my airline on a lower cost then my competitors , because they are more established and very large fleets compared to mine. I want to expand to medium haul routes , so I run sum test fights , and i am barely getting 40 % capacity . My serives are good on these routes and prices are cheaper than that of my competitors . I can do with some advice here.

2. I have had 28% margin last week . Should this number be larger compared to the amount of time I have been playing (approx 3 months now)?

thanks in advance :)

16

Unfortunately I do not think anybody will tell you excatly how much you can charge ... that is a "confidentiality" part of business models of many players here. You will need to find it on your own, by trial and error. All I can tell you is that at the moment, premium service and seats warrant premium price, and there is logic in the corresponding equation.

Oh please, we are talking about a game, not the launch codes for nuclear missiles here.....

You can get up to a 50% markup with the config you have, depending on competition.  Look for at least 30%.

17

Hi everyone 

I just have a few questions , Airline is Novairlines on Deveu , flying out of JHB 

1. I have been running my airline on a lower cost then my competitors , because they are more established and very large fleets compared to mine. I want to expand to medium haul routes , so I run sum test fights , and i am barely getting 40 % capacity . My serives are good on these routes and prices are cheaper than that of my competitors . I can do with some advice here.

2. I have had 28% margin last week . Should this number be larger compared to the amount of time I have been playing (approx 3 months now)?

thanks in advance :)

1. You need a perfect wave system especially in Africa as it is crucial for your success.

2. That is quite good for not being that experienced and it actually is over average I think. Though you have been transporting a very small number of passengers during these 3 months which I find pretty strange (I think you should have been transporting at least 1 million passengers).

What is your equity?

18

1. You need a perfect wave system especially in Africa as it is crucial for your success.

2. That is quite good for not being that experienced and it actually is over average I think. Though you have been transporting a very small number of passengers during these 3 months which I find pretty strange (I think you should have been transporting at least 1 million passengers).

What is your equity?

At this time it is 18.7 million .

I have been operating CRJ so my seating capacity is not very large , but I will getting another A320 to increase my capacity on high demand routes.

19

Can someone give me a good example of a wave system. Mine is not working as good as I want it to . All help welcome.

20

Wave system works more or less like this (the planning part; how to make PAX transfer is another story):

Departure from your hub at f.e. 8 am - all planes are leaving at 8 am (to North and East let's say).

That means that all your incoming flights must arrive until 6:59 am (if your hub has a minimum transfer time of 1 hour).

Next wave would be f.e. 4 pm - all planes are leaving at 4 pm (this time routes to the South and the West of your territory).

That also means that all your incoming flights must arrive until 3:59 am (if your hub has a minimum transfer time of 1 hour).

If a third wave is possible, depends on the route length you are flying. In the beginning you will perhaps even fly 4 waves (with very short to short routes).

Hope this helps.