Presentation on theme: "Models and presenting numeric data. About Finnley Airways Finnley Airways is a new low cost airline that operates flights from the UK to many destinations."— Presentation transcript:
About Finnley Airways Finnley Airways is a new low cost airline that operates flights from the UK to many destinations around the world Your job is to act as the flight finance manager for Finnley Airways Your job is to work out the cost of flights and set appropriate ticket prices, ensuring the company makes a profit on every flight You will do this by creating a spreadsheet model
Some important information Finnley Airlines only use Boeing 747s. This is to keep costs to a minimum by not having lots of different aircraft to maintain There is only one class of seat on the aircraft, so all tickets are the same price The capacity of the 747 is 400 seats, although these will not always be filled For a flight to be viable, it must make at least £1000 profit
Click the currency button to turn the format of a cell to show pounds
Where does your income come from? Your income for each flight is entirely from your ticket sales The only two variables for this are the price you charge for each ticket and the number of tickets you sell You alter your ticket price to be as low as possible to attract passengers while still making a reasonable profit
Where does your income come from? Under the income section of your spreadsheet enter labels for your ticket price and number of passengers Enter £50 for the ticket price and 350 for the number of passengers for now
What does it cost to fly a plane? There are many costs to consider before a plane can take off: –Fuel –Pilots and Crew Pay –Air Passenger Duty –Groundhandling Charges –Airport Charges –Administration –Air Traffic Control –Aircraft Hire –Aircraft Servicing and Maintenance As we look at these in more detail, put them in either the fixed or variable expenditure section of your spreadsheet.
Costs Fuel (variable) –Especially on long flights, this can easily be the biggest cost –Airline fuel currently costs around 93p per gallon –A Boeing 747 uses 5 gallons per mile and has a fuel tank of 63500 gallon capacity –A flight from Manchester to Barcelona would travel 861 miles and would use around 4305 gallons of fuel –4305 gallons of fuel would cost £4003
For now, we will use the distance between Manchester Airport and Barcelona. This value should always be in miles The two blue cells are to contain formulas. Amount of fuel needed = Distance between airports x 747 fuel usage Cost of fuel for journey = Amount of fuel needed x Cost of fuel per gallon
Costs Pilots and crew pay (fixed) –This cost is to cover the salaries of all the staff on the plane –For a single flight, this works out at around £900 Air passenger duty (variable) –This is a tax by the government which is charged to any flight taking off from a UK airport –The tax is charged per passenger and is currently set at £10 for European destinations and £40 for worldwide destinations –So a flight to Barcelona carrying 350 passengers would cost £3500 in air passenger duty
Remember to use the currency button and not type the £ symbol.
Total APD cost = Cost per passenger x Number of passengers The blue cell is to contain a formula. Did you get these formulas right?
Costs Groundhandling charges (fixed) –This covers the cost of people who work at the airport such as check-in staff, luggage handlers and the people who refuel the aircraft –This costs around £550 a flight Airport charges (variable) –This is what the airport charges the airline for using their facilities and runway –It is charged at £5.50 per passenger
Total airport charge = Charge per passenger x Number of passengers The blue cell is to contain a formula. Did you get this formula right?
Costs Administration (fixed) –This covers the cost of running the airlines head office and its ICT systems –This works out to cost around £700 per flight Air traffic control (fixed) –This is to pay for the various air traffic control points to assist the pilot in their navigation –This will typically cost around £450
Costs Aircraft Hire (fixed) –The airline does not own its planes, it hires them for £700 per flight Aircraft servicing and maintenance (fixed) –This covers the cost of checking the aircrafts systems and engines before every flight and also the cost of replacement parts –This costs around £700 per flight
Airport Codes International airports use a 3-digit code to identify themselves For example: –Manchester Airports code is MAN –Humberside Airport is HUY –Heathrow Airport is LHR You can get any airports code from http://www.world-airport-codes.com/
Airport Codes http://www.world-airport-codes.com/ Here you can search for an airports 3-digit code by entering the name of the airport, the city or country it is in
Distances between airports To get the distance between two airports, enter both airports 3-digit codes into the green box of the same website For example, this is how you get the distance from Manchester Airport to Barcelona
Distances between airports On the results page, simply take the distance given in miles. In this case, 861
Questions 1.Find the distances between the following airports a)London Heathrow and Los Angeles International b)Birmingham International Airport and Kingsford Smith (Australia) c)Humberside Airport and Charles De Gaulle (France) 2.How much fuel would you use for each of the flights in question 1? How much would the fuel cost?
Task 1 Set your model to a flight from Heathrow (LHR) to Ibiza (IBZ) How much would the fuel cost? Assuming the flight is fully booked, how low can you set the ticket price? Remember the profit must always be £1000 or more
Task 2 Set your model to a flight from Manchester (MAN) to New York (JFK) Competition from other airlines has forced us to reduce ticket price for this flight to £150 How many passengers will we need on the flight to: a.Break even? b.Make a profit of £1000?
Task 3 Stelios says his easyJet airline can offer flights from Gatwick Airport to Cyprus for £200 Can we wipe that smile from his face and beat him while still making a profit?
Task 4 Use your model to calculate the ticket price for a fully booked flight from Edinburgh Airport to Munich (Franz Josef Strauss) If the cost of fuel went up by 45p, how much would you have to increase the ticket price by? Dont forget to set your fuel price back to 93p afterwards
Task 5 After attending a big party in Newcastle, the Pope would like a private flight from Teesside Airport back to Rome How much will his ticket be?
Task 6 If Finnley Airlines started offering flights that did not take off or land at a UK airport, how much would you charge for a ticket from Vienna (Austria) to Cairo (Egypt)? Remember that air passenger duty is a UK tax so would not apply in this case
Task 7 Finnish heavy metal band Lordi are planning a European tour and would like Finnley Airways to provide all the flights between the countries they will be visiting For this task, assume only one ticket will be bought, as Lordi will be hiring the entire aircraft
Task 7 Continued Using the information below, work out a final price for the tour Remember any flight that does not enter or leave the UK does not need to pay air passenger duty The airports to be used on the tour are as follows: Helsinki-Malmi (HEM) Finland - TO - Chopin Warsaw (WAW) Poland Chopin Warsaw (WAW) Poland - TO - Berlin-Tegel (TXL) Germany Berlin-Tegel (TXL) Germany - TO - Madrid Barajas (MAD) Spain Madrid Barajas (MAD) Spain - TO - Heathrow (LHR) United Kingdom Heathrow (LHR) United Kingdom - TO - Helsinki-Malmi (HEM) Finland
Extension Task Finnley Airlines has decided to upgrade all of its aircraft to include a first class section This means instead of there being 400 basic seats available there are now 310 basic and 60 first class seats Assuming all seats would be filled, what could you charge for each type of seat on a flight from Humberside Airport to Paris? How would these prices differ if all of the original 400 basic seats used?