I really want to use a heavier plane in my fleet, but im always afraid that it will broke me. How can i minimize the chance about getting lower than 60% routes? What should i check? How much domestic routes should i have?
Is this in regards to Nueces Airlines on Elinikon?
If the world is already established I would say that you should have atleast 1500 weekly departures with a well functioning wave system for flying wide bodies. Even at that point I can’t guarantee success but with good partners and having your networks interconnected with your partners there might be success. I think that when you reach 1000 weekly departures and you have a great wave system you could get a couple of A319LRs or 737ERs and try flights to the US, and if they work then continue your expansion but if not end them immediately end longhaul. After that your US flight work then try to Europe.
Ironically it seems I will have to say the same thing about 1500 departures 1500 times, LOL.
Be aware that some of the markets have less international profit than others, and certain routes have more profit than others. I don't know too much about Chile, but starting with widebodies right the way might be rather risky, if you define widebodies as heavier planes.
If the company is Nueces Airlines then I would start to get rid of one aircraft type (now with 5 planes 4 maintenance categories) and create a domestic network which is not possible with only 5 planes (Chilean domestic market is not the biggest but not bad). Then as suggested by CBE, send some planes to the US but also to other countries in South America. And in the end with more than 2000 departures from SCL, you can start European flights - unless you have a strong partner over there, then you could start earlier.
Thinking about longhaul with 5 planes and not connecting all domestic cities is not the best choice.
Thank you guys.
Yes it is Nueces Airlines. I have one of the biggest airline of europe as an IL partner. I also lead the bigger domestic airports in market share. I thought about 340 or 330 to somewhere in the USA where nobody has a route to
Well currently i have 139 deps in SCL station. I have to expand it a bit i guess
Before you even consider ANOTHER aircraft type you will want to consider cutting your aircraft types down. You can have 3 aircraft types paying normal maintenance, as soon as you add a 4th you 15% more, 5th...thats another 15% more. So considering an aircraft that is going to cost your company 30% more on what other airlines pay for maintenance is crazy.
So ideally focus on 2 families on what you have at the moment, maybe A318-A321 and ATR? Get rid of Tupolev and Saab. If you are really going to do the crazy thing (and I mean crazy) and launch long haul then try with minimum risk. Use a long haul A319-321, give it slightly nicer seats and see if you can fill that first.
But once again as you've been told you need far more connections than 139. Closer 2000...maybe consider it...
I see. I would rather drop the atr as the tupolev is a milk cow at moment. I didnt know about that maintenance thing, thanks for that. The thing is ots harder to expand domestically or regionally. I tried before to brazil, peru etc and the seats were only 10-20% taken.
Forget about the long haul in the first months, You should concentrate in creating a good domestic network first, then a continental network before adventuring in the long haul market. It takes several weeks. Right now you only have eight destinations. A long range route without connections will drag you to bankruptcy in a few days and You already received a rescue loan after two weeks of operations, this means that there are pretty big flaws in Your business model. About the financial planning, make sure that at the week closing, you always have the money to pay the leasing rates and the salaries, don't spend more than what you have. If you received a rescue loan, you probably spent a bit too much than what you earnt.
There are interlinings in place with airlines that do not even fly to SCL, while there are no interlinings with any of the argentinian airlines. It might be that they already have an agreement with some other Chilean airline, but You should focus on building an interlining network in the neighbouring countries rather than sign interlining agreements which are pretty useless.
Cut all the unprofitable flights, immediately.
You're not in the best financial position, so You should improve your profitability with the planes that You have right now and later on, when the cash flow has improved, drop some planes. Removing planes means that the seats will be lost, and for a TU204 this could cost around 150k AS$, remove the turboprops from any flight longer than two hours, switch them on the SCL-LSC route for example, which is pretty short adding frequencies on that route. It's basically a matter of using the right equipment for the route. An A320 will generate higher revenues on a SCL-ANF run, rather than on an LSC run, You're using a Saab 340 on the Bamaceda route, where an A32S or the TU204 will generate a lot more revenues and passengers.
About the plane standarization, when your cash flow has improved, You should drop the Tupolev and the Saab, You've got two similar planes doing the same thing and just adding additional costs for crew and maintenance. The passenger popularity of the Saab isn't really good, and You're using it on long flights, not the best thing, any flight longer than an hour on a Saab 340 should be considered a violation of the human rights :P :P
You should standardize on the 320 series and ATRs, adjusting the capacity according to the demand is easy because both families of aircrafts have different capacities with 319-320-321, and ATR42 or 72. You'll then have only two maintenance categories, which will save at least 15% of maintenance costs.The 204 can be substituted by an A321 if you need the capacity of the 204, with a significantly lower cost per seat.
Another hint: there are 4 companies sharing the Chilean market (including your company), one of them in Argentina. Which is - next to Brasil and Peru and laater Colombia - your main market next to the domestic market. So you need more domestic traffic generated by many flights per day to the airports with more than 2 bars. Then you need IL partners in the neighbourhood countries and then you can expand. I played Chile on Pearls with in the end 250 planes but had about 80 planes only flying domestic and near stations like in Peru and Argentina before I considered any longhaul connection.
FLGroup already pointed out that you should improve your financial situation before drop of an airline type. Good point here.
I would think about a reset and start over again with better planes (I started with EMBs for domestic market) and an idea how I would let my airline grow in a healthy way.
Thank you for the answers.
Im not in a bad financial position. The rescue loan was a mistake. I bought the tupolev before the week end close. The loan is 17.000$ only.
I would drop the TU later, as it is the second profitable airplane.
Currently im thinking of dropping the saab and buying an 320 instead.
What about my ILs? Should i broke them?
And i said i tried peru and argentina, but i got only 10-20% loads
Don't buy aircraft. Lease them.
And you have to estimate if your IL is profitable or not. As a general rule: If the IL partner flies to your hub, or you fly to his hub, chances are that you get enough pax and that it's beneficial. If you both just connect at some airports in between (not being a hub) then I would generally be very careful.
If Peru and Argentina don't get full, then longer flights will have even worse results (in general, there are exceptions). Look at real world flights, and try those routes.
Thank you for the answers.
Im not in a bad financial position. The rescue loan was a mistake. I bought the tupolev before the week end close. The loan is 17.000$ only.
I would drop the TU later, as it is the second profitable airplane.
Currently im thinking of dropping the saab and buying an 320 instead.
What about my ILs? Should i broke them?
The fact that the loan is only 17k doesn't change a lot, you spent more than you earnt, it's a good thing to always have a cash reserve, you never know what might happen, and you gotta add that in AS you should be very careful with rescue loans. If I'm correct, immediately after the third consecutive rescue loan, the company will be automatically liquidated.
Obviously the TU204 is profitable, the bigger the better when there is a strong demand. I suppose that by "buying" you mean leasing, right?
I suggest you to drop the Saab, if you have enough money lease an additional 320, keeping in mind that You'll need to put seats in it, 140k AS$ on top of that. Otherwise go for another ATR and put it on a rotation shorter than two hours.
ILs, drop the useless ones, if the airline doesn't fly to SCL or you don't fly to its hub, there are no benefits at all, money wasted.
And i said i tried peru and argentina, but i got only 10-20% loads
I know, that's why I pointed out that maybe the argentinian airlines already have an IL in place with anoter chilean airline, but if there's no exclusive agreement, I'd suggest you to ask them to IL and try again. Generally, between SCL and Buenos Aires (both EZE and AEP) there's a lot of traffic even during low AGEX.
Without a partner in a foreign country and without a good domestic network, chanches of decent loads are very slim because there are no or very few connections at both ends.
Personal suggestion: build a domestic network, connect every domestic airport with at least three green bars with your hub in SCL with at least three daily flights (with the right plane, as I said in the previous post), then you could start to think about adding some flights to neighbouring countries. You gotta become an appealing interlining partner, other airlines should become interested in interlining with you. It takes several weeks to build a domestic and continental network, that's how AS works.
You could find some useful datas about Chilean market here: http://www.jac.gob.cl/estadisticas/estadisticas-historicas/
Just a hint. There is a domestic sweet spot in Chile that has not been served by Chilean Airline! The location is far enough to generate a really decent profit. With decent ORS rating, you shouldn't be having difficulties in driving off the Argentine counterpart.
Argentine airlines are usually subsidiaries of larger corporations, those guys have billions in their bank so driving them away is close to impossible for a start up. Focus on anything else than Argentina but get smaller aircraft to still serve Argentina so that you have an opportunity for connecting passengers.
Yeah I do agree. I am just referring to a Chilean domestic route not being served by Chilean airlines. Currently those poor passengers have to fly from SCL, transit in EZE, before proceeding to their final destination in Chile :(
Transferring through EZE to go back to Chile would most likely not happen because of the 2.5 max distance rule.
*sigh* if you guys don't know where I am talking about then forget about it.