Profitability of aircraft types

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Wolfhound
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Profitability of aircraft types

Post by Wolfhound » Sun Jan 09, 2022 7:23 pm

Hi

I talked to a few ppl already and many of them said that, in general, since the package system was introduced, big cargo aircraft make a ton of money compared to their operating and acquisition costs. Passenger aircraft a little less. But clearly, the lowest when it comes to the relation between buying and operating them and the income goes to bizjets.

As a really hard example, flying a CJ4 over 1500nm (to do that I can only take 5pax), you make less than 2000$ profit. The aircraft cost 8Mio to buy.
Flying 1700nm in a Boeing 767-300F only with standard cargo (no Packages!!) makes 73077$ profit. The aircraft cost 160Mio to buy.

So for every million of acquisition cost, for every 1000 nautical miles you fly, in the 767 you make 268.6$ Profit, while the same number in the CJ4 is only 8.3$.

How to solve it?
Two ideas:
- IRL, Bizjet operators don't sell tickets for a charter route. They charter the whole aircraft. It think it would be the best idea to set a fixed hour price for each aircraft charter, at a fair rate so that you can make a reasonable profit running these small jets.

- Less work for development might be to create a special "class" of seat for Bizjets that net First class seat income, but only need business class seat space, and limit that to aircraft in the "Light" wake category class. That would at least increase ticket prices by a factor of 1.5 and alleviate the issues a little.
- Additionally, make it possible to adjust ticket pricing for charter routes by a fixed multiplier.

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Cat
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Re: Profitability of aircraft types

Post by Cat » Sun Jan 09, 2022 11:45 pm

Business and regional jet operators have always had a long haul to profits compared to normal passenger jets and the FSAirines cargo package thing just turned the cargo business into a big video game that causes big ego participants to argue over who's cheating who when this format never ever had a "high score" like typical video games to begin with.

Our VA has tried over our 10 years in FSAirlines to run business and regional jets and the AVERAGE time to payoff for a typical executive jet can be anywhere from 150 flights or more (at 25x standard multiplier). This is why instead of buying very expensive Cessna Citation X's or Gulfstreams or Challengers, we found the good old Bombardier CRJ200 and CRJ700 with seating reset to all business/first class make decent executive jets on a far more cost friendly basis. We have discovered you can't use all First Class seats as in many regional / executive airports, you simply will not have the customer base to fill those seats.

The "seat buying" program idea that has been discussed elsewhere in this forum may be the key. In the future, this program, if implemented, would require operators to buy seats for each aircraft and you would not be allowed to flip them around every flight unless they are of the type specifically designed to do so like the PC-12, Cessna 208, Daher/Quest Kodiak, etc. It is not normal for real world airlines to constantly be changing the seating in their aircraft as it takes time and expense to pull those airplanes out of service to reconfigure the seating.

So having said that, if we do get a seat buying program, perhaps a VIP seat can be added for executive aircraft as suggested above that takes up the space of a business class seat but pays the same as a First Class seat. But now the big question: what constitues an "executive aircraft"? I can already see the people who's sole purpose is to try to cheat the system trying to fill up large airplanes (Boeing 737/747 BBJS) with VIP seats to make more money per flight. It's always those who game the system that slow down development and implementation of new features as all angles must be viewed to try to plug as many "cheat holes" as possible before the initial rollout.

It is sad that Joe has to think that way, but that's just the way it is.
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joefremont
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Re: Profitability of aircraft types

Post by joefremont » Mon Jan 10, 2022 4:40 am

Business Jets have always been a bit of a problem. Most of the time they owned by some ultra rich capitalist as more of a status symbol than anything else with no concern of making any money. As Sam said, when your using business jets as charter aircraft, how do you draw the line between a CJ4, a CRJ200 converted to a business jet or a CRJ200 where they just want to upgrade the seats. Then ppl want to throw packages into that as well.

I have tried to make it so most of the smaller bus jets have a seat factor of 2 (instead of 1 for normal jets) and allow to replace business seats as the standard seat on a one for one basis, so in effect they should be getting 4x the revenue per seat compared to that 767.
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Wolfhound
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Re: Profitability of aircraft types

Post by Wolfhound » Mon Jan 10, 2022 12:54 pm

Well IRL, there are numerous companies operating bizjets on charter. And exactly so it's at least harder to exploit, I suggested to limit it to "light" wake turbulence aircraft, respectively "F":
https://skybrary.aero/articles/recat-wa ... gorisation

Wolfhound
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Re: Profitability of aircraft types

Post by Wolfhound » Mon Jan 10, 2022 5:21 pm

Just an example how you basically earn nothing operating bizjets, even with only 5% pilot salary. Almost a 4h flight.
https://photos.app.goo.gl/iArbyCBX3VEmvqt98

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Cat
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Re: Profitability of aircraft types

Post by Cat » Tue Jan 11, 2022 1:56 am

Yup with biz jets, any flight longer than 90 minutes you are burning your profits up in jet fumes. :shock:

For sure, the absolute worst segment of business to enter in FSAirlines is executive jet services. I just pulled some old records from 2018 and the Phenom 300 and Citation S550 had been flown well over 100 flights (and none of them very long) and were still less than half paid off.

We have had pilots actually outfly the profitability of the airplane as well, ending up with negative income on long cross country flights with regional jets and/or biz jets.

And we use the standard 25x multiplier. You have ZERO chance of making any noteworthy money at 1x multiplier rate.

a snip from this website article:

https://www.investopedia.com/articles/p ... arters.asp

How Much Does It Cost to Charter?
If you’ve decided that purchasing a plane is a little out of your price range, you’re going to do what most of the world’s wealthy do: charter a plane. How much does that cost? Depending on the type of aircraft, costs could be $100 for a one hour flight on a business commuter jet or $40,000 to fly across the United States. According to the U.S. Air Charter Service, a light jet will cost you between $4,000 and $5,500 per hour, a medium jet will cost between $5,500 and $9,500 per hour, and a large jet will cost between $11,000 and $20,000 an hour.

Unlike commercial aviation, however, you’re not paying for a seat, you're paying for the plane. That means no matter how many people you take with you, the price is the same. Therefore, the more people on the plane, the more cost-effective it becomes.
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I do not see any easy way to incorporate aircraft rental time into FSAirlines.
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Wolfhound
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Re: Profitability of aircraft types

Post by Wolfhound » Tue Jan 11, 2022 10:08 pm

Yes I understand that a full aircraft charter might be hard to build in, that's why I suggested to increase ticket prices considerably and limit it to light aircraft.

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Cat
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Re: Profitability of aircraft types

Post by Cat » Wed Jan 12, 2022 5:08 pm

Yup on the seats, but thinking instead of putting any particular weight class to the new VIP seat class, just have a maximum amount allowed per aircraft, say 8 which is typical seating on most biz jets with executive interiors. The "staff" seating, if available, would be standard business class seats.

Still not sure how Joe would code it out tho, probably first class passengers only from the "passengers waiting pool" at each airport, as they are the ones willing to spring for such an expensive ride. Then we get into the problem of there not being enough first class passengers at smaller executive feeder airports in major metropolitan areas. So it's a sticky wicket to make a new seat class work. A lot of people do not realize this, but FSAirlines does not have any full time paid development team. Joe does this as his hobby and is the sole developer for the network. I volunteered my services to assist in clearing flagged flights and answering questions when i can as well as being the "test dummy" on new features, but this is his baby all the way. So knowing that, we need to have patience when it comes to getting new ideas and features looked at and implemented.

An easier method perhaps would be to determine which aircraft are "business/executive jets" elligible for a ticket factor increase and just boost the income via that method - the ticket factor multiplier. But then the question is how much is enough and why should business jet operators get preferential treatment just because they picked the most unprofitable part of the airline business to get into? LOL

Always a gazillion angles needed to look at any issue before making any type of wholesale changes. This is why R&D takes so long on something that many pilots would think should be easy to do.

Another option would be to offer "Executive Aircraft conversions" much like turning passenger aircraft into dedicated freighters. The seating/ticket factor would be changed only after the customer puts the aircraft in for a paid conversion and then the seating cannot be changed thereafter. Aircraft manufactured for the purpose of executive aircraft services would not need a conversion but again, this would be a lengthy process to go through the database and modify each aircraft one by one.

FSAirlines is slowly becoming a victim of its own success with so many features offered now, sometimes when one change is made, it negatively affects 2 or 3 other features already in place, so again, all angles must be viewed before any change is instituted.
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Re: Profitability of aircraft types

Post by joefremont » Thu Jan 13, 2022 2:04 am

Just some brain storming, no decisions yet.

I have tried to use two controls to help keep different aircraft profitable, there is the ticket factor, which is a multiplier to seat revenue and a first/business class seat factor, which controls how many of the economy seats are needed to be replaced to put in a premium seat. The ticket factor I have used more to boost older aircraft and the seat factors more to boost smaller aircraft.

For ticket factor, aircraft from before 1960 (1.5) and 1980 (1.25) each get a boost, the Concorde gets a load factor of 3 (the only aircraft that does) all business jets get 2 along with pre war flying boats and helicopters. As we are already giving biz jets a 2x boost I am reluctant to do more there.

With seat factors basically every twin engine aircraft with less than 20 pax limit can replace its economy seats 1-1 with business seats. Single passenger aircraft can replace there economy seat with a first class 1-1.

The idea of say up to 8 VIP seats per aircraft is intriguing, but I see many just using it as a way to boost pax revenue and leave more space for cargo, its already bugging me that many are replacing all there seats with first class so they can carry more cargo. I can see everyone putting 8 vip seat on every aircraft just because they can where in real world very few have the equivalent of VIP seats except maybe those very long 12 hour plus flights. It might be more complicated that its worth.

I could see playing with the seat factors so that multi engine jets with a pax limit of 8 or less can replace there econ seats with first at 1-1 and the ratio slowly drops down to the normal 4-1 at 64 seats (I saw a company that was selling converted CRJ200's with 15 seats), maybe turbo props can with 4 or fewer seats could do the same.

What ever rule we come up with, it has to work with CJ4, a CRJ200 conversion or a 777 BBJ.

Ultimately we can't make every aircraft profitable to fly, some just wont be.
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Re: Profitability of aircraft types

Post by Cat » Thu Jan 13, 2022 4:37 pm

Excellent post/explanation Joe, thanks and I agree. Ya just can't make everyone happy, the end result will be only making yourself crazy. :shock:

We are very much guilty as charged when it comes to pulling econo seats for more cargo to make enough money to make aircraft such as the CRJ's, ERJ's even viable to operate. Our 2014 CRJ-200 took 147 flights to payoff and because it was not a "primary company aircraft", that payoff didn't happen until 2018. 4 years for a VA to even remain in business is a long time. :lol:

One solution to the seating issue and all the haters will go crazy on this idea :
Require "paid seat changes" and remove the ability for operators to keep flipping seats on a flight by flight basis. If they don't like flying the default configuration, they can pay a seat conversion fee to buy a different seating package. This will really make a lot of people mad tho, especially the gamers making tens of millions per flight. :roll:

And then there is the argument we had previously at the start of the pandemic about pax planes flying with cargo in the seats instead of pax..... so like I said, you will never make everyone happy. Just have to go with what feels right and if people don't like it, oh well. Tis what it is. Just my opinion of course.

So just like in the real world, FSAirlines business jet operators must understand the executive jet business is not a"quick cash maker" like flying older cargo planes. It is a long haul, a marathon instead of a sprint. It takes decades for a real business jet to show a profit, but they also have depreciation they can use as well which we do not. Most privately owned business jets are status symbols and the owner never has any intention of "making a profit with it". How do you become a millionaire with a business jet? Start out as a billionaire. :lol:

We do have one thing real business jet startup companies do not: The dynamic multiplier. This will get even business jets profitable quickly but many purists who want to "grind it out from the beginning" won't use that method.

Another thing real companies can do that we cannot: A lot of executive jet companies are now in the "aircraft management business" whereby a private jet owner leases out their airplane when not in use to the executive services company which becomes a win win .. The owner gets a percentage of the revenue as well as on call flight crew services and the executive services operator does not have multi-millions invested which they will not recoup for a long long long long time. And aircraft that are in use always fare better than those that sit for months on end, even in a hangar. Just ask the airlines how well parking all those jets at the start of the pandemic worked out. It cost them thousands of dollars a day to keep those aircraft parked in the desert in "flyable condition".
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Re: Profitability of aircraft types

Post by joefremont » Sun Jan 16, 2022 8:50 am

I am doing some flights in the CJ4, trying my version of Sam's 5010 game (1810 now) I have done 3 flights in it and have flow it for 5.4 hours and with a 25x multiplier have a total profit of 374,625 v$. At that rate the aircraft will pay for itself in 125 hours. Looking closer I see that compared to the fuel other expenses the flights have a profit margin of 74%. Over all of all the CR4 flights in the last year on the platform, 91% of them made profit.

It does not seam to be they are not able to make profit, just that they are not making as much profit as some would like.
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