I have reached the stage in my airline to start looking at long haul, and for that I have leased 2 A330's.
Now my loads for passengers is going well, but I am having real trouble with the cargo element. The A330's I have, have a capacity of 97 units, and even though I have reduced the price to way under the average the loss on the cargo wipes out any profit from the passengers.
Can anyone help me out with some suggestions please?
First question that pops in my head is why the A330? If it is a route that is over 7200km or so, the Boeing 787 is going to have a lot better fuel efficiency than the A330, and is going to be cheaper as well. If it is under 7200km, then you might want to look at something like a 737-900 HGW.
What route(s) are you flying with your A330s? Do you have interlining with strong cargo carriers at your long-haul connections?
the loss on the cargo wipes out any profit from the passengers.
This is a common misconception that low cargo revenue "wipes out" profits from passengers.
Actually, cargo is a bonus. The flight should make the profits with passengers only. It is how the system displays costs that show them as "cargo part" of costs. But the costs are there per flight, regardless if you carry 1 single passenger or 1 single unit of cargo.
There is a fixed cost per flight (fuel, leasing, route fees, landing charges, crew fees, and maintenance) and then there is a variable cost per flight (onboard service and cargo handling). This variable cost (very minimal portion of the whole per-flight cost) varies depending by the number of passengers or cargo onboard. But the remainder of the costs does not vary.
It is how AS flight costing display chooses to "prorate" cost on per-service basis, but you have to think beyond what your eyes see, and understand the fact, that the fixed cost is there regardless if you have pax or cargo. You must look on the total fixed cost per flight, that is what matters. After you understand this, you will understand that it is not that cargo is wiping your passenger profits, but rather that your route is unprofitable on average. You should change seats and/or better the onboard service to improve loads, lower rates on current seats to improve loads, or a combination of changing price (upwards) and bettering the seats (to more exclusive).
Ok I think I understand. I will have a look at the 787 and concentrate on passenger profits.
The majority of my fleet consists of E195/190s so they don't carry any cargo between my domestic flights. So I started a subsidiary just for feeding my long hauls with cargo. That seems to fill up most of the cargo for my long hauls. Otherwise, maybe find a good interline partner that have a lot of cargo capacity in your destinations.