10 March 2009

Update on that game from a few posts ago

I bankrupted my once-successful simulated airline, and left the game.

My increasing workload leaves me with little time to check the game. Moreover, the game time was 2000, and the tripling of fuel prices, and the expensive leases on my large 747 fleet (which also required long downtimes for scheduled maintenance), proved to be too much. A 3-week annual check on a single 747 cost me $1.5 million US in lease fees (for a plane I couldn't even use), plus lost revenue adding up to another $2 million or so, in addition to the actual maintenance fee of around $1 million. That's $4.5 million per plane, and I had 27 - adding up to well over $100 million in losses, per year, something I couldn't cover. And I'm not even counting the major overhaul, which must be done about every 8 years, grounds the plane for 3 months, and costs at least $5 million on top of lease and lost revenue.

Aggressive overexpansion, without steady revenue stream from shorter flights and more efficient planes to keep my income positive, was what killed me. $100 million could've just as well been used to purchase - not lease, but purchase - three or even four brand-new smaller airliners, fly them on short, frequent, high-demand routes, and make tons of money.

My demise has similarities to the 2002 bankruptcy of United Airlines, whose aggressive international expansion in the 1990s backfired when the neglected employee unions started striking, and when the costs (fuel, etc.) started going up. At least I didn't neglect my unions - and made sure to bankrupt my airline while I could still afford severance packages for my staff. For that matter, American automakers are not all that different, as their reliance on low-tech, gas-guzzling SUVs, which were very profitable, meant that their cars were neglected, and their long-term reputation (and ability to survive a spike in fuel prices) suffered.

I don't know if I'll start up another simulated business online, airline or otherwise. If I do, I'll certainly run it more conservatively. Even with this game, my initial success was due to my conservative management, sacrificing short-term profits for long-term gain, and next time, I'll have to keep that in mind.