Welcome to class of
Airline Simulation Game
by
Dr. Satyendra Singh
University of Winnipeg
Canada
Learning Objectives
Objectives:
• To appreciate and understand
• Business and strategic plan
• The complexity of managing an airline
• Strategies within the concept of airline
• Staff organization and sizing
• Fleet planning
• Schedule planning
• Yield Management
• Marketing Management
Financial
• Cash : $20m
• Current fuel price: $1.05/litre
• Loan
– You can take loan up to $1.25m (50% of stocks’ value)
– 2% of loan is deducted each quarter and applied to the loan. If
defaulted, 5% of the loan value is added to the loan amount.
• Bonds: Issue
• Stock market: 50m shares at $0.05 $2.5m, if sold
– You can buy stocks of other airlines, if you wish
– Dividends, stock value
• Income tax: 20% (fixed  i.e., no change in govt.policies)
• Interest rate: 10% (fixed  I.e., economy is stable)
• Interest earned: if you have $ in your bank
• Bankruptcy: 4 straight quarters of losses
Human Resources
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Pilot training
Support staff needed per 100 seats in the fleet = 1
Support staff needed per 100 seats at airport = 1
Cargo staff needed per cargo handling centre = 100
For each leased airline, extra staff needed = 20
Managers
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Scheduling  gives advice on checks
Purchasing  reduces maintenance cost by 10%
Training increases effectiveness of staff by 20%
Reporting  provides maintenance reports
Airports
• About 20 National and International airports
– Choose home office, size
• Given Beijing and Winnipeg
– Airport departures (hourly movements)
– Terminal capacity option to buy own terminal
– Airport parking/landing fee based on aircraft size
• Cargo operations
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Suggested cargo rate $1.47per km for every 1000kms
Cargo handling facility – must have
You may lease it out to up to 10 airlines
If you underpay your staff, they will go on strike
Contract cancellations carry penalties
You can sell the cargo handling centre
Fleet
• Aircraft: Boeing and Airbus
– I have given you two.
– If lease new aircraft, 10% deposit reqd. If cancelled, you lose the deposit
– Configuration: passenger, cargo or both
– Age of the aircraft, buy or lease, runway length
– Lease out, sell it
• Maintenance: In-house or global outsource
– A check (at any airport) Every 60 flight hours
– B check (Engine Overhaul Centers) 500 flight hours; needs 200 manhours
– C checks (airframe manufacturer) 7500 flight hours; needs 2000 manhours; allow 6 weeks for this check.
– D checks (Restore as new) 22000 flight hours; needs 25000 manhours
Marketing
• Airfare
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F = First, J = business, Y = economy class
Q = Discount economy class (80% of Y fare)
N = Discount economy class (60% of Y fare)
I = Discount economy class (50% of Y fare)
• Service Level
– Meals, headphones, video, tel., drinks, alcohol
• Luggage
– By default, one carry-on luggage is free
– International first piece $25, second piece $35
– Domestic first piece $15, second piece $25
• Advertising
– TV, radio, print, sponsorship, billboard
– Check effectiveness
• Commission to travel agents
• Rename airline
– Bankruptcy, crash, accidents
Operations
• Forecasting for demands
• Arrivals and departures
– Technical stop, if long haul. Load limit (5-20%) can increase
range and decrease runway requirements
– Schedule for checks
– Try to arrive in the morning and depart in the evening
• Scheduling within a foreign country
– You must have your own office in that country
• Code sharing
– Offering seats on your flight for sale in bulk to other airlines
to sell and market as their own
– You can buy or sell seats through the code sharing
Performance
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Balance sheet
Loss and profit account
Passengers carried
Cargo carried, if applicable
Capitalization
Fleet size
RASK: Revenue per available seat
CASK: Cost per available seat
ASK: Available seat kilometers
RPK: Revenue passenger kilometers
Some Points
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Be careful when leasing, you cannot undo it
Age of aircraft will affect public perception
To make $, your aircraft (passanger/cargo) must be configured  $0
To make $, you must set airfare on scheduled flights  Otherwise $0
Check airfare carefully  Expensive tickets may fly empty seats
Usually, short haul flights are more expensive than long haul flights
Aircraft < 1 year cannot be leased
You cannot lease a leased aircraft
If an aircraft is up for lease, it cannot be scheduled
If you buy an aircraft before lease it expired penalty
You get discount for bulk order of aircrafts
Check—not all used aircrafts are configured, in case you buy used one
For every hour an aircraft is not flying, a parking fee is charged
If outsourcing all maintenance, be careful, it will delete schedules
Maintenance depends on different airframe/engines
Reduction (e.g. 20%) in paylaod will reduce the runway requirements
Through passengers vs. point-to-point passengers (e.g. 30% for through)