Your objective in Airline is to make enough capital by trading at a profit to take-over British Airways! You are required to decide on the number of aircraft to operate, whether to buy or charter, the level of staffing and maintenance, whether to enter into long-term contracts for supply of fuel and whether to repay loans. Problems encountered are tax demands, strikes, cancelled flights, hijacks and aircraft crashes. The program makes use of histograms, bar charts and graphics to assist the user to simulate the information available. Can you be more successful than Sir Freddie?
1. Game Objective
You are the Chairman of L-AIR, an airline which starts up business with £3 million. You have seven years to increase your net assets to £30 million which will enable you to raise enough finance to take-over British Airways. Situations and costs are realistic. The need to create revenue to cover fixed costs soon becomes apparent to the player. This program provides a good opportunity for you to see if you can be more successful than Sir Freddie!
2. Information Available
Bar chart forecasting pay-load i.e. passenger/miles market. Histograms showing Charter Rates expected for next year.
Graph showing interest Rates for next year.
Profit & Loss Account and Balance Sheet.
Financial Times report.
3. Business Decisions Required
You may either charter, buy or sell aircraft.
You have to decide on how many aircraft to operate.
Levels of staffing, maintenance and insurance.
Whether or not to enter into a long-term fuel contract.
Whether or not to repay loans.
4. Problems Encountered
Increase in fuel costs.
Loss of revenue through cancelled flights, strikes, hijacks, air crashes and sabotage.
5. Graphs And Charts
Bar Chart - Passenger Payload
The first chart to be displayed is a bar chart showing a forecast of the Passenger Payload for each level of activity. Generally it is best to select the number of aircraft with the highest payload factor. However, you should also consider the forecast of charter rates and the number of aircraft which you already own.
Histogram - Forecast of Charter Rates
This chart shows a quarterly forecast of Charter Rates for the coming year. If Charter Rates are high, it is usually best to charter fewer aircraft.
Graph - Forecast of Monthly Interest Rates
This graph plots a forecast of monthly interest rates. When Charter Rates are above normal, it is cheaper to borrow money and buy aircraft instead of chartering. However, you should consider that the market rate for each aircraft is £10 million. When aircraft are bought for more than £10 million, the additional cost will reduce your net assets as it will be debited against Capital Reserves.
6. Hints For Playing
From information in pay-load bar chart, decide on best high and low number of aircraft and take decision after watching level of Charter Rates expected.
Cost of interest on loans needed to purchase aircraft is usually less than the cost of chartering the equivalent number of aircraft.
Buy or sell aircraft when allowed to do so, but remember they have a market value of only £10 million.
Risk of cancelled flights are higher due to lack of crew than lack of maintenance. Cost of crew is £50,000 per level per aircraft. Cost of maintenance is £90,000 per level per aircraft. Penalty for cancelled flights is £30,000 per flight per aircraft operated.
It is usually not worth the risk of having a low insurance cover. Cover is cumulative, i.e. if you key 3 you are covered for both accidents to aircraft and claims from passengers and other third parties. Cost £20,000 per level per aircraft operated.
Fixed overheads amount to £3.25 million, therefore losses may result even with a good pay-load factor when only one or two aircraft are operated. However, if the pay-load is poor for other levels, much greater losses may be incurred if one chooses to operate more aircraft.
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