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Author Topic: I've seen this happen before, but is there an easier way?...  (Read 570 times)

L1011fan

  • Former member
My airline based at DCA, Capitol Airlines, can't seem to get revenue at all DCA-ATL, DTW, and ORD. The demand was there, the slots were there and they were great slots. Marketing all in place. Last time, to make this work I had to raise my fares, much to my surprise to get some revenue going and then it was fine after that. I tried doing a "fare sale" (like $99 to ORD and ATL just to see if it would spur anything) and that was a disaster! So I raised them to AWS suggested price, still going nowhere. Has anyone experienced this? I'm not terribly in the hole as of now, but it actually seems like you must raise your fare, sometimes much higher than I ever would have thought to start getting in the black. Its rare, but this does happen.  Does anyone have a special formula for this when it occurs? Thank you! :)

auerbacs

  • Former member
Re: I've seen this happen before, but is there an easier way?...
« Reply #1 on: May 20, 2010, 08:44:36 PM »
I've never raised fares much above the defaults. I'm curious to see how others answer this. I will say that you should be able to profit with default fares on those routes. If you aren't, it may be more to do with fleet commonality, exorbitant lease costs or something along those lines. If you're by chance using 707s, then the gas will kill you. But with decent planes and decent leases, the default prices should be profitable.

L1011fan

  • Former member
Re: I've seen this happen before, but is there an easier way?...
« Reply #2 on: May 20, 2010, 10:31:50 PM »
Well I have 727-200adv and a 737-200adv. I always start with default fares and those two routes went into the dumper immediately. I see a slow improvement now. I tried, cautiously mind you to lower fares just a bit, because there is competition obviously. The lease prices aren't bad, right around average for these types and they were both over 90% condition. This has happened, as I mentioned in other games with completely different scenarios. Its only once in awhile and its right off the bat at the very start. :-\

Offline Sigma

  • Members
  • Posts: 1920
Re: I've seen this happen before, but is there an easier way?...
« Reply #3 on: May 20, 2010, 10:36:01 PM »
Its only once in awhile and its right off the bat at the very start. :-\

All routes start with a RI of 0, and in the beginning you have a CI of 0 (or near it).  That means that your first routes start with very low LFs.  You've got to drop the prices fairly far in order to turn a profit right from Day One, and not much you can do is going to fill that plane up, particularly if there's any additional competition on the route with a higher RI/CI.  As your RI/CI increases, your LF will increase, and you're able to get away with raising the prices too.

Remember, with a RI or 0, that means people don't know about you.  It doesn't matter what you charge if your problem is that people simply don't know you exist, so lowering the prices only helps to a certain extent.  The best way to get that plane full is just to ride it out until that RI gets north of 80.

L1011fan

  • Former member
Re: I've seen this happen before, but is there an easier way?...
« Reply #4 on: May 20, 2010, 11:27:33 PM »
The numbers were red. That hardly ever happens and the route losing money right way. Most of the time the LF's are in at least low yellow numbers and are making some money at the beginning. I've never seen anything just go belly up that fast, practically as I was creating the carrier. This was a rare occurence I believe and our usual mathematical thinking is not going to give us answer. Heck maybe the other carriers wanted to price me out of the market. Happens! Oh well, enough about that. I've only seen it happen to me twice in all my time on AWS, so I'm gonna call this a fluke. Thanks anyway. :)

 

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