Route Case Study: One 737, Twelve Weeks, Real Numbers
Guides tell you the principles. This page shows you the arithmetic. We take one leased Boeing 737-800, put it on one 1,100 km route between two major cities, and walk through twelve weeks of its life — the baseline P&L, a fuel spike, a competitor entry, and exactly what each decision was worth. The costs are worked from the game's own formulas for this aircraft and route; the load factors are one plausible run, and yours will differ in detail but not in shape.
The setup
The aircraft: a leased 737-800 — 189 seats in an all-economy cabin, $68,000 a week in lease, $57,600 a week in base maintenance, burning 400.25 litres per 100 km. In a game set today the 737-800 is out of production and arrives six years old, so its maintenance bill starts about 18% above base, at roughly $68,000. The route: 1,100 km between two major-tier airports, the kind of city pair with solid business traffic and year-round leisure demand. The schedule: fourteen round trips a week — two a day, a morning and an evening rotation.
Scheduling first, because it constrains everything: each round trip is roughly 4.3 block hours (about 1.3 hours of flying each way plus a 50-minute turnaround at each end), so fourteen of them consume about 60 of the aircraft's 140 weekly block hours. That matters later — this airframe has room to do more, and spare block hours are options waiting to be exercised.
Capacity: 189 seats × 28 departures = 5,292 seat-legs a week. The fare was left where the Route Planner sets it, at the market reference: about $156 one-way for 1,100 km.
Weeks 1–4: the baseline
After a spin-up period while the market discovered the service, the route settled at a 79% load factor — about 4,180 passengers a week. Here's the full weekly P&L. The top half is laid out the way the route's True profit line allocates it. The three costs below True profit are ones this aircraft brings to the airline, which the game charges centrally rather than to the route:
| Weekly P&L | Amount |
|---|---|
| Passenger revenue (4,180 pax × $156) | $652,100 |
| Fuel (2,200 km × 14 round trips, $1.45/litre, index 1.00) | −$178,800 |
| Crew flying pay ($1.42/km) | −$43,700 |
| Landing & navigation (28 landings × $2,400) | −$67,200 |
| Ground handling ($10 a passenger) | −$41,800 |
| Catering & delay compensation | −$51,500 |
| Route operating profit | $269,100 |
| Aircraft lease | −$68,000 |
| Maintenance | −$68,000 |
| True profit | $133,100 |
| Staff payroll for one narrow-body (market pay) | −$58,600 |
| Liability insurance | −$12,000 |
| Booking & distribution (2.5% of revenue) | −$16,300 |
| Left before head office | $46,200 |
Two things deserve a hard look. First, the gap between the profit lines: the route table's operating profit says this route earns $269,000 a week, and its True profit is a respectable $133,000. But the aircraft also brings its own pilots, cabin crew, ground staff and engineers, its insurance and its booking fees, and those land on the airline's books, not the route's. Charge them and $46,200 is left — a 7% margin, before a cent of head office. That's a healthy route, and it is one soft month from being an unhealthy one. Airlines run on thin margins; Tailwinds models that faithfully. Second, fuel is nearly half of the operating cost line. Remember that.
During week 3, with the fuel index sitting at 0.97, we bought a 13-week hedge at 50% coverage. The desk prices a lock off where fuel is expected to average over the term — about 0.98 here, because prices drift back toward normal — plus a 2.5% premium, so the lock came in at 1.005. It cost about $3,000 a week while fuel stayed calm. Routine hygiene, not a prediction. (Mechanics in the fuel hedging guide.)
Weeks 5–8: the fuel spike
An oil-market disruption hit an already firm market, and the index peaked at 1.45. Unhedged, the route's fuel line goes from $178,800 to $259,200 — an $80,400 weekly swing. True profit drops to about $52,700, and after the aircraft's own overheads the route goes from +$46,200 to roughly −$34,200. Same route, same passengers, underwater.
The hedge halved the damage: with 50% of fuel locked at 1.005, the effective index was 0.5 × 1.005 + 0.5 × 1.45 ≈ 1.23, a fuel bill of about $219,400 — $39,800 a week better than unhedged. The worst week landed at roughly breakeven, about +$5,600 after overheads, instead of −$34,200. By week 9 the disruption had passed, the index was back below 1.10 and the route was earning again — while the hedge went back to quietly costing its premium. That's fine. Insurance you didn't need is not a mistake.
The wrong move here, for the record: slashing fares to "stimulate demand" when the problem was cost, not demand. The route economics guide covers separating cost problems from demand problems.
Weeks 9–12: the competitor
Week 9, a rival opened the same city pair — six weekly round trips with a similar narrow-body, priced 10–15% below us. Demand on a route is a finite pool, and a credible second carrier takes a real share of it. Our load factor fell to 66% within two weeks: about 3,490 passengers and revenue of roughly $544,900. True profit was still positive at around $41,000, but after the aircraft's own overheads the route was at about −$43,000. A fuel spike and a competitor entry produce eerily similar red ink; the diagnosis is the whole game. This one showed up as our route alone souring while the rest of the network held — competition, not costs.
We priced the fare-war option before rejecting it: matching their fare at about $133 would need roughly 80% of every seat just to get back to the same loss, and about 87% to break even. Price wars on split demand are mutual destruction with extra steps. A sustained cut does buy one thing: an entrant that sees the route priced below the market reference for about five months scales back to a token schedule. That is twenty weeks of losses to find out. Instead:
- Held fares at the reference and kept the schedule advantage — fourteen frequencies against their six means we keep the larger share of travellers who weigh the number of departures.
- Trimmed two round trips to firm the load factor up and cut flying costs. Each round trip costs about $20,700 a week in fuel, crew and landing fees whether it flies full or not. The freed block hours went in the bank.
- Planned for them to stay. An entrant builds its schedule up toward about 80% of yours over the following weeks, and it does not abandon a route it has entered while the fares there are worth contesting.
By week 12 the rival was still there and close to its full schedule. The trimmed timetable had firmed our loads and True profit was comfortably positive, but after the aircraft's own overheads the route hovered around breakeven: a market we will be sharing for the foreseeable future. The roughly 9 freed block hours went to a new afternoon rotation on a short spoke. Reading a competitor's commitment before reacting is covered in depth in competition & alliances.
What twelve weeks teach
- Know which profit you're reading. The route "earned" $269,000 a week. True profit was $133,100, and after the aircraft's own staff, insurance and booking fees the airline saw $46,200 at best. Ownership and payroll costs don't stop for bad weeks — see mistake #5 in beginner mistakes.
- The margin is the buffer. A 7% margin means a 7% shock — fuel, competition, anything — takes you to zero. Every decision above was really about protecting that thin strip of profitability.
- Diagnose before you touch fares. Fuel problems and competition problems produce the same red number and demand opposite responses. Whole-network dip = costs; single-route dip = market.
- Buy your insurance on sunny days. The week-3 hedge was boring. It was also the single highest-value decision of the quarter: worth about $40,000 a week exactly when the route could least afford the hit.