Calculating profit

[jxc]

Evening all

I am trying to get my hands on some form of spreadsheet that people use to calculate profit for a certain route

I am looking at throwing some money at starting a small regional airline (1 plane)
on ACMI putting figures on the back of a fag packet seem to work but thought one of you guys might have something more substantial to work with

I am working on 60% passenger load on each route does that seem low or high ?

Help ?

[desertopsguy]

Not sure if such a spread sheet exists but there is an excellent book by John Wensveen called 'wheels up'. It is worth the meagre investment and will give you a good grounding in airline business plan development.

You would have to take a look at the costs associated with the route.
-Gnd handling, landing, pax taxes at dept/arr
-Navigation fees
-Cost of fuel to operate the city pair(take into account fuel at dept/arr as the prices will be different most likely)
-What does 1 hr of flight time cost ? running the aircraft, crew flight pay, insurance, costs of maintenance.

There will be many sunk costs. There will be fixed and variable associated with running the operation.

These are just some of the main considerations, pprune probably not the place to be seeking advice am afraid.

Best of luck.

[boredcounter]

Aircraft type? Back-up plans when it needs an unscheduled enige cx? What fuel price are you using? Banking costs? % held back by bankers? J31 by chance? Back of a Fag packet.....................

[jxc]

Fuel cost should not come in to it if I am ACMI wet leasing the aircraft ?
I am not sure what what happens if an unexpected engine change is that not down to the company I lease from to sort out replacement aircraft ?
J31 ? are you talking about a Jetstream 31 ?
I was thinking of using a Saab 340

[5552N0426W]

Can't make money on J31 really regardless of route.

[Capetonian]

The book you need is by Rigas Doganis, I think it's called Airlne Operating Economics : Flying Off Track, or something similar, I have a copy at home (but am not at home now!)

On the basis of what I'm seeing, you'd be better off giving your money to a Nigerian scammer than trying to make money this way. It would be an interesting exercise though, and possibly enriching but not in the financial sense.

[jxc]

I never mentioned I want to use a jetstream 31

I understand the odds maybe similar to giving it to a Nigerian but still slightly better. I am working everything through first i'm not completely stupid not far off it though :eek:

We all need a bit risk and excitement

[boredcounter]

Sorry there, I made reference to the J31, you never did. It was a throw away comment regarding a certain individual in the UK and many a start up plan. No reference to you implied.

Call me old school, it has been 6 years since I worked passengers, I am now fully committed to freight and do not get involved in ACMI or wet leasing.

There still seems to me to be a big difference in ACMI and wet leasing. An ACMI wet lease?

(I know it is not what you are looking for, but my reference is to a 737-500, 6 years ago)

ACMI, GBP2000 per block hour. Applicable to all positioning sectors and live flying. Push back to brakes on. For that you pay GBP2000 per block hour for the Aircraft, Crew (additional charge may apply for second Crew), A fully insured hull, meeting the legal requirements and the maintenance reserve for said aircraft. Thats it.

As the SITA contract then spcified, All additional costs incured, including, but not limited to..... Fuel, Navigational and landing charges all the way down to oil uplifts and Crew per diems, transport and hotel costs. I.e you pay by the hour for the big four, everything, I mean everything else is down to you. The flight will operate on your flight numbers, permissions and credit facilities and agreements.

Wet lease, different kettle of fish. Pay a big deposit up front, all charges to the aircraft operator, maybe use the AOC too? EZY started like this I think so it can work too. Would be based, I think on a minimum PBH contract, maybe backed up by a clause relating to the serviceabilty of the leased aircraft and Crew!

Either way, default and the SAAB has gone. If you want to make a small fortune in aviation, seriously, go in with a big fortune mate.




Bored

[Captain Stravaigin]

Load Factor is a factor of Price (hence Demand) and Equipment capacity (hence supply).

To aim for 60% load factor seems risky to me, either your prices are too high or your planned aircraft is too big.

As for calculating Profitability this is an area of smoke and mirrors so a lot depends on who you are talking to. The taxman, your bank, an accountant or your wife.

Your wife may quite rightly ask whether you are making an Economic profit on your own time. This is a very important question and one that others will not be too interested in.

Bon Chance

[jxc]

Bored thanks for taking time to reply to me
I have been given a price for a Saab 340 acmi inc fuel 2 crews (4 pilots 2 cabin) and 2 engineers for 120BH pm 1100 Euro plus i have to pay 50 Euro per day per crew member as away from home
I know i have to pay landing and nav charges for the moment the routes i want to fly the airports are offering 12mth free landing etc to get new route working

I would love to look at freight but have even less of an idea on how to start that but see a way of incorporating it into my pax schedule

Capt :


I am trying to work on worst case so 60% load factor may seem low but if I look at 60% of 33 seats I am down to 20 bums on seats so maybe I should look at a Beech 1900 and have 100 % load but I know it doesn't work like that

How does one work out ticket cost on a route that is not done at the moment i am working on 1 hour flights brakes off - on where as driving by car on good day 4hrs and in winter could be horrendous

All i am trying to do is see if it is viable !
I know the old saying to make money in aviation is near on impossible but i am not afraid of a challenge


How reliable is a saab 340 ? some people say good as others say bad

[minigundiplomat]

As has been pointed out, 60% loadfactor is low, and though 100% is a little idealistic, you should be aiming for 80-85%. If you are not achieving this then you need to study the competition and adjust pricing. Spill modelling could also help you maximise loadfactors.

Pricing, frequency and capacity are really the only levers available, so you need to adjust accordingly.

As for your original question regarding spreadsheets, Excel should suffice for what you need.

It is unlikely you will be the only operator on the route, so it is important you figure out what your competitive advantage is, and where you feature in the market place: Great service? Low fares? or convenience?

Finally, you might find it doesn't work. If it doesn't - don't open the route and avoid one of the biggest pitfalls in aviation. You're not going to be Ryanair and won't create a sustainable market from scratch.

Hope this helps.

[jxc]

These routes i am looking at haven't been operated in years which could mean it is not profitable but everyone seems to try these routes with airbus's which I think are to big. I am not necessarily trying to be a real lowcost and definately trying not to take over Ryanair yet anyway :E

[minigundiplomat]

In which case, good luck to you sir.

[boredcounter]

It would help to know what route (s) you are lookiung at, but that is for you to say.

Search some airport sites and obtain the following costs:

Parking
Approach and ATC services
Arriving passenger levy
Departing passenger levy
Shared check in facilities levy
Security levy

Are all these waived as the landing fee?

You will also need ground and airside handling. What cost per flight?

De-ice in the winter? it aint cheap mate!

As you have said, other airlines have tried and pulled off with Airbus equipment, but I can think of one TP operator (with SF340s), with economy of scale, by your own posts are not interested.

Is the route designated PSO.

Don't forget the base price of the ticket starts at the APD and works up, add your DOCs and above where applicable, advertising (never under estimate), then additional salaries and costs.

Factor in a buffer for disruption, subbing in the odd aircraft when yours is not available, EU passenger charter compensation...............

Good luck, you may have found a 'niche market' but i doubt it's for long if it works.




Best regards,

Bored