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When to open a new hub?

East West Airlines

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on: January 04, 2015, 11:50:37 pm
I have been playing AM for upwards of 5 years however stopped playing for a while and recently have started up again. I am of course using the premium Gate Search (I'm no rookie ;) ) however I need some help with expanding my airline. I have a general "business plan" set up in terms of where I want to open hubs and I am already in an alliance.

My DOC is over 10 million already which is good but not great. I have regularly in the past opened up anywhere from 2-7 bases but still to this day never knew when the right time to "make the leap" and open a new one.

Currently I am based at LAX and am allowed 4 bases. I have plans to open in IAH (to play off of my alliance members DFW base and allow him to do the same at IAH) and then another at JFK  after that with the 4th open to something more obscure and fun like Honolulu or a foreign base in Europe or something.

So my question is, when should I open up in Houston? My thoughts are that I would need 10-15 of my primary use aircraft (A320-200) and 15-20 combined of my smaller regional aircraft (ERJ-145 and ERJ-170STD) I also thought maybe I should make the 170s into ERJ-190s as they are slightly bigger and just ditching the 170 fleet all together.

thoughts?


1993matias

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Reply #1 on: January 05, 2015, 03:43:19 pm
I open a new base when I can afford the cost of it in half a month or so. As I see your base plans are far away from your home base, I'd suggest to wait a bit longer. I'm not sure what's most profitable, but if you have a DOC of a few million, you won't fail, that's for sure ;)


dktc

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Reply #2 on: January 11, 2015, 03:28:46 am
Depends on how you look at it really.

If you are looking at resources utilization, you should be opening your second hub very close to your first location-wise, at the time when all airports within the range of your first choice of regional aircraft are served. Even though you might have to save a little bit to afford opening the hub, doing this would boost your margin instantly because you will be using the gate slots that are formerly empty, with the hub gates as the only additional costs.

If you are looking at it from a cash-flow perspective, then what Matias said.

If you are looking at it from a ROI perspective, you would need to set up an excel and plug in data based on experience / projection to decide the exact point between the above two (as in when the wait to save up, and hence lacking a instant return on the cash-on-hand, would provide a large enough additional ROI to put you in a better place than if you re-invest in new planes at hub 1 instantly).

If you are looking at it from a competition perspective, you might want to stake your claim on some airports at the earliest possible, or you might want to have a hefty reserve before swooping into certain airports and launch a large network in a very short time.

Not helping... I know. ;)
« Last Edit: January 11, 2015, 03:30:45 am by dktc »
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