Hello everyone,
I would like to start a discussion on what is an excaptable profit margin for a starting airline based on your personal opinions. I am not talking of a new world, or a young world. I am talking about a world that has been in existence for over 1 year now with very well established airlines and HUBS.
A new airline comes in, starts up it's operations in that setting. What would be a good profit margin that it should aim for? 10%? 20%? 30%? 40%?
Opinions? :)
Week end closing profit margin (including wages), or general profit margin (as shown on income statement)?
Don’t want to state a number here, but you can compare with stock listed companies which are approximately the same size. However, it does not take into account the competition situation.
Hi,
in theory I would aim at 25% to 30% for a new airline, and 35% to 40% for an established airline.
In reality you have to settle for the best possible result :-)
A new airline doesn't have a network that provides a lot of transfer passengers, so quite often seat loads are not optimal. Interlining can help, but also eats a big chunk of your profits if you only have a few planes that provide an income.
It helps a lot if you find one or two good routes, where you can sell your tickets slightly more expensive and still get fully booked planes. Looking for cheaper than standard leases also helps. A lot depends on the circumstances...
Jan
Week end closing profit margin (including wages), or general profit margin (as shown on income statement)?
Yeah, talking of the week-end closing profit margin after wages have been applied
Hi,
in theory I would aim at 25% to 30% for a new airline, and 35% to 40% for an established airline.
In reality you have to settle for the best possible result :-)
A new airline doesn't have a network that provides a lot of transfer passengers, so quite often seat loads are not optimal. Interlining can help, but also eats a big chunk of your profits if you only have a few planes that provide an income.
It helps a lot if you find one or two good routes, where you can sell your tickets slightly more expensive and still get fully booked planes. Looking for cheaper than standard leases also helps. A lot depends on the circumstances...
Jan
My closing profit margin is of only 21% :( so it doesn't fit at all in your numbers!
But wouldn't it be difficult for established airlines to get 35 to 40% final profit margin?
It all depends on the model you're running your airline.... if you go for capacity, naturally your margin will be smaller even you're making huge profits, and vice versa.
Also the more aircraft you own the higher your margin will be naturally.
Also the more aircraft you own the higher your margin will be naturally.
exactly
For what it is worth I always end up with right around 25%. That seems to be pretty average, but I tend to keep fleet sizes under 100 aircraft (I don’t like managing big airlines). Hope that helps.
While the subject is up, i’m curious as to what the really large airlines margins run at? I suppose by “really large” I mean… say 500 aircraft, the more the better though.
Keep in mind that a profit margin is the same for big or small, so if you only make 100KAS$ profit while another person makes 23mil AS$ your profits margins will be the same : 25%.
... say 500 aircraft, the more the better though.
Hi,
the biggest airline on Tempelhof is on the stock market, so you can check its net weekly profit. That airline is Air Orange. It operates a fleet of (just under) 2000 aircraft and made a net profit of 195 million this week.
And Abdul is right. Profit margins are very similar if you use the same business model, regardless of the size... as long as you manage your airline well.
My Lebanese subsidiary operates 100 planes and made a profit of 39 million (40%) after salaries.
My Chinese airline operates 470 planes and made a profit of 261 million (42%) after salaries.
The difference in absolute figures is due to the fact that half of my Lebanese airline consists of smaller regional jets, while the Chinese airline operates mostly 737's.
And owned aircraft bring in more cash, but return on investment is much lower. Airlines do not make a lot of profit because they buy planes. Airlines buy planes because they make a lot of profit ;-)
Jan
Generally, a company (operating in this thing we call the real world) hopes for profits of between 20-30%. The most profitable companies tend to run at 25-30%, maybe upwards to about 33%. There are, of course, exceptions to this guideline. A good margin to shoot for on AS is the 25-35% range, regardless of whether you are using a new, relatively new, or old server.
A couple things to keep in mind: First, even if you are at 1% margin, it means the company is still profitable. Not very much, but it's not losing money... which brings us to the second. The margin is going to fluctuate depending (in part) on the AGEX. If the AGEX is down, margins should be down. It might be normal to have 30% margins in a high AGEX situation, it might be normal to be closer to 15% in a low one.
Hello everyone,
I would like to start a discussion on what is an excaptable profit margin for a starting airline based on your personal opinions. I am not talking of a new world, or a young world. I am talking about a world that has been in existence for over 1 year now with very well established airlines and HUBS.
A new airline comes in, starts up it's operations in that setting. What would be a good profit margin that it should aim for? 10%? 20%? 30%? 40%?
Opinions? :)
Its only one thing is important
You must be in green, percent is not important
...
A couple things to keep in mind: First, even if you are at 1% margin, it means the company is still profitable. Not very much, but it's not losing money... ...
For a 100% leased fleet, yes.
With bought aircraft it's quite different - unless of course you really intend to either operate your equipment over the full amortization period as predefined by AS, or are certain to recoup the book value at any time.
I get only 12-16 % per week. Can't actually figure a way out to make more.
If you put your airline and server name, I am sure someone will be kind enough to give you some ideas.
Can someone look at JetBC on Idlewild and let me know if I'm doing okay? I'm trying to be vigilant and trim routes that lose money, but it's already starting to get complex with only 18 planes!
You have about an 88% seat load factor, which isn't bad. Personally, I would try to make it higher, but that's a function of mathematics that's a little too much to go into right now. It's okay for the moment.
Your flight ratings are pretty low. Part of that is you are using old 737s and Dash 8s. You need to increase service to get your flights filled but still, an 88% SLF isn't bad. I notice you only have a few flights into the USA. Cross-border flights between the US and Canada can be tricky. Vancouver has a lot of slots available, so if you are wanting to grow and be more than a regional airline, you are going to want to get planes and fly them into major western USA airports like Denver, San Francisco, Las Vegas... you already have a flight going into SLC and LAX, and that's good, but when you are playing on an older server like Idlewild, and you are running a regional airliner, you are going to want to either interline with airlines that fly larger jets into Vancouver, or do it yourself.
Trimming flights might seem like the way to go, but you can be cutting out internal transfer passengers, which can hurt other flights. I'm not sure what your money situation is, but I would look at getting some 737 NGs (600, 700 mainly) to replace your old 737s. Cost will go up, but your image will grow, which will increase your flight rating over the long term.
You have about an 88% seat load factor, which isn't bad. Personally, I would try to make it higher, but that's a function of mathematics that's a little too much to go into right now. It's okay for the moment.
Your flight ratings are pretty low. Part of that is you are using old 737s and Dash 8s. You need to increase service to get your flights filled but still, an 88% SLF isn't bad. I notice you only have a few flights into the USA. Cross-border flights between the US and Canada can be tricky. Vancouver has a lot of slots available, so if you are wanting to grow and be more than a regional airline, you are going to want to get planes and fly them into major western USA airports like Denver, San Francisco, Las Vegas... you already have a flight going into SLC and LAX, and that's good, but when you are playing on an older server like Idlewild, and you are running a regional airliner, you are going to want to either interline with airlines that fly larger jets into Vancouver, or do it yourself.
Trimming flights might seem like the way to go, but you can be cutting out internal transfer passengers, which can hurt other flights. I'm not sure what your money situation is, but I would look at getting some 737 NGs (600, 700 mainly) to replace your old 737s. Cost will go up, but your image will grow, which will increase your flight rating over the long term.
A lot of people say they easily make between 30 to 40 % margin. I will be very honest with you, the only way to know how to get that is if you have re-started many times. What gives you that 30 - 40 % margin is how you balance the amount of seats vs price ... I always manage to get 4 star on-board service(below 9$AS) for economy..but can't seem to understand how to optimize the seating config for my aircraft vs the price of the seat to be able to get that 40%
My best try is reducing my price and getting 25% prodift margin on a full plane. I have a strong HUB system that I have been developping..with that I have 30% transfer pax..hoping to raise that number to 90% in the next few months.