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!
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TIPS AND TRICKS
a. 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.
b. Cost of interest on loans needed to purchase aircraft is usually less than the cost of chartering the equivalent number of aircraft.
c. Buy or sell aircraft when allowed to do so, but remember they have a market value of only £10 million.
d. 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.
e. 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.
f. 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.