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Online Airline Management Simulation
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Author Topic: Fuel price  (Read 5439 times)

Sandager

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Fuel price
« on: October 15, 2010, 10:18:35 AM »
 I must admit I find it a bit ridiculous the fuel price in this game world. They are once again approaching 1000 Usd.

  A few years ago, real world, we saw what happened when the oil price approached just a few hundred Usd/barrel. The world when into recession, airliners had to add a fuel fee to the tickets, people stopped using their car as much, they bought smaller cars, less flying and so on. Imagine the price of oil like this in the real world. World economy would collapse. In this simulation game everything goes on as normal. What kind of simulation is this?

 It has been suggested that this is a way to drive people from this game into a newer game world, by making it very difficult to run an airliner in this world. A former alliance member has noticed the same ridiculous increase in fuel price at the end of another game world. Is there anything to this?

 I say it is a poor kind of simulation. We see extremely high profitmargins, no where near a realistic level, and fuel price no where near what the real world could afford. Profitmargins should be lower, significantly lower, and some common sense in the fuel price as well.

Offline Sami

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Re: Fuel price
« Reply #1 on: October 15, 2010, 02:56:31 PM »

Actually.. The fuel price at present date (2005-2007) of MT#2 is exactly what's happened in real world.

Even it says the price is "custom", I haven't customized all parts of it as it's pure manual work at present (= bits changed here and there but baseline is roughly real-world).

And fuel prices have no relation to other game worlds. I do not know the game world schedules even myself until let's say 2-3 weeks before I open them. So no conspiracy there.... :P


Yet I cannot understand the reasoning of this whole thread. You firstly say that profits are too high (compared to reality, true) but at the same time you are unhappy with the presently only truly flexible and variable item that controls the profits; fuel..?
« Last Edit: October 15, 2010, 03:03:12 PM by sami »

Offline type45

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Re: Fuel price
« Reply #2 on: October 15, 2010, 03:44:09 PM »
so the fuel price should go down not later than 2008 in this game? ;)

and next time please try to give some hints before, thanks ;)

Daemus

  • Former member
Re: Fuel price
« Reply #3 on: October 16, 2010, 11:54:46 PM »
and next time please try to give some hints before, thanks ;)

Real world airlines don't know for sure what fuel prices will be in the next week or month or year. Even with being able to make a very good guess based on historical prices, you should still be trying to maximize fuel efficiency and making sure your ticket prices are up-to-date so they reflect any rising costs in the game world (such as fuel prices).  ;)

filipebravo

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Re: Fuel price
« Reply #4 on: October 17, 2010, 12:45:57 AM »
I understand what Sandager means. Fuel prices are rising originating higher ticket prices, but demand levels remain unchanged (at least for my European routes) providing ridiculously high profit margins. Let's say, demand levels should be lower following a highly likely economy slowdown in this situation. Then I think we could have sensible breakdown in profit margins, followed by many bankrupcies.

Are demand levels representing reality (with periods of economy slowdown)? Don't know, maybe Sami could answer this question.

Sandager

  • Former member
Re: Fuel price
« Reply #5 on: October 17, 2010, 04:09:54 AM »
 Daemus, indeed some airliners know the price of fuel tomorrow, next week or even some months into the future. At least a good part of the price. They simply do fuel hedging.

Daemus

  • Former member
Re: Fuel price
« Reply #6 on: October 17, 2010, 11:52:00 PM »
Fuel hedging is a wonderful thing for a business that deals with day-to-day use in large quantities, but it isn't modeled into the sim. Any airline in the real world that doesn't hedge, doesn't know what their cost of fuel will be over a certain time period. I don't know of an airline that doesn't fuel hedge but, for the purposes of this sim, fuel hedging is irrelevant.

It would be a neat feature however if fuel prices were made more turbulent day-to-day (not out of control pricing, just harder swings) with hedging being an option to stabilize the prices for an individual airline, like the real world. Would add another business aspect to the game, which I am all for. Not at the top of my list for game changes but still something I wouldn't mind seeing at some point.

Sandager

  • Former member
Re: Fuel price
« Reply #7 on: October 18, 2010, 04:46:11 AM »
 Daemus, now you are just contradicting yourself. You just posted a message saying real world airliners  don't know what the fuel price will be next week or next month or year. Which is not true. As many real world airliners do hedging ( at least for a certain percentage of their fuel requirement) they will have a pretty good idea as to how much they will pay for fuel.

Offline Sami

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Re: Fuel price
« Reply #8 on: October 18, 2010, 05:48:43 AM »
You just posted a message saying real world airliners  don't know what the fuel price will be next week or next month or year.

He is right. Airlines, or nobody else, do know exactly what the fuel price will be in the future. However airline analyzers and other staff PREDICT what it could be and they place the fuel hedges according to this.

All airlines don't hedge fuel either, but most do, and not all purchases either like you said. Few years ago many airlines made terrible losses due to poor fuel hedges since the prices started to come down with the recession but they had prepared for higher prices -> they had to pay more in the long run than those who hadn't hedged.. Was it Easyjet or Ryanair who has announced in public that they don't hedge fuel, can't remember.

Offline mtnlion

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Re: Fuel price
« Reply #9 on: October 18, 2010, 05:52:10 AM »
Yeah, don't forget the other side in the fuel hedging! I'm sure the oil companies don't want to lose money by giving too low hedging price. They must have pretty good idea of the coming prices too?

Offline type45

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Re: Fuel price
« Reply #10 on: October 18, 2010, 08:10:57 AM »
well, what I means is "can sami tell us the custim fuel price is really fully customized or just some small editing on real one" ;)

Daemus

  • Former member
Re: Fuel price
« Reply #11 on: October 18, 2010, 10:30:06 AM »
Daemus, now you are just contradicting yourself. You just posted a message saying real world airliners  don't know what the fuel price will be next week or next month or year. Which is not true. As many real world airliners do hedging ( at least for a certain percentage of their fuel requirement) they will have a pretty good idea as to how much they will pay for fuel.

I don't believe I contradicted myself. Knowing the price you pay for fuel that you have set up on a hedge isn't the same as knowing "actual" day-to-day fuel prices. An airline hedging at $50 per unit for the next week still doesn't know what market price will be tomorrow. Monday it could be 51, Tuesday 57, Wednesday 44, etc. Hedging allows an airline to know what they will pay but not what prices will actually be on the market - it could be a win, loss, or a break even; that is just the gamble they take. A price on a fuel hedge contract is not the same as market price and the hedge price only applies to the airline with the contract.

As sami mentioned, a couple posts up, airlines that hedged fuel before the recession definitely did not know what market prices would be. No contradiction in my postings that I am aware of, just a possible difference/misunderstanding regarding what you and I each consider to be "the price", in this case.

Daemus

  • Former member
Re: Fuel price
« Reply #12 on: October 18, 2010, 10:41:02 AM »
well, what I means is "can sami tell us the custim fuel price is really fully customized or just some small editing on real one" ;)

My original reply to your post was my way of calling you a "cheater" for wanting to know if you could just look back to real-world fuel prices and get insight on what prices would be in the game world; knowing when you can buy a pollution factory with wings and what month you should be getting rid of it for the hybrid with wings. I am referring to "cheating" in that you know what real-world airlines didn't, not actual cheating in the game - just to be clear. :P

Offline type45

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Re: Fuel price
« Reply #13 on: October 18, 2010, 05:01:52 PM »
I can tell you I never buy that kind of planes except for my first game in JA2 ;) you can check my fleet in TMT2 now (or 77E and 345 are in the list now? :laugh: )

what I consider about is "how much can I trust on my expectation of fuel price", if sami tell us it is fully customized, I'll consider this with the history in the world only (in another word, purely guessing :P ), finding the record high and low before (and pray do not get things out of the tract......) but if he tell us this is only partly customized, I'll add the real world data into my thinking and maybe playing a bit conservative after 2000, like saved the cash to own more planes but not ordering 77E and 345

Also "some editing on real one" can means many thing, not only "a rise after 2004" or "a cheap fuel price at the begining of the world". He can make a double high pattern, a even lower price in mid-2000s, or just like what he did in ATB2, a much earlier rise on fuel price (about 1998-2000 I remember). I lost my company at that time and I did not complain anything but the fuel price (sami I can promist I did not blame you at that time ;) ) you can check the log in ATB2 forum if it is still there. I don't think "telling us it is fully customized or base on real one" is the same as "using real fuel price". We can sure the price will rise at around 2004 for "using real fuel price", but there is uncertainty for our acknowledgement of no fully customized price

Why I want to know it is really fully customized or not is because of the way to think about will be different. I have to say it feel like I've been cheated when sami tell me that the customized fuel price is programed to follow the historical track. I think I'll not have feel that bad if it is really fully customized but turn out that the "fully customized fuel price" just follow the real price ;) (well, maybe I'll feel like being rickroll'd by sami? :P )

(I do not expect I need to explain so many things for that sentence......)

(ok, I'm only trying to tell my though here, I don't thing I'm a "cheater", but I think I'll not reply on this even if you still think I'm......I'll try to get used to that ;) )
« Last Edit: October 18, 2010, 05:22:24 PM by type45 »

Offline Sami

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Re: Fuel price
« Reply #14 on: October 18, 2010, 05:52:16 PM »
You can consider it fully custom, easier that way than trying to guess what I have edited and what not .. etc.  ;)

(like I said earlier, it's not 100% custom but not real either.)

Offline type45

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Re: Fuel price
« Reply #15 on: October 18, 2010, 06:14:37 PM »
ok, thank you sami :P

Offline Sigma

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Re: Fuel price
« Reply #16 on: October 19, 2010, 01:31:09 PM »
I must admit I find it a bit ridiculous the fuel price in this game world. They are once again approaching 1000 Usd.

  A few years ago, real world, we saw what happened when the oil price approached just a few hundred Usd/barrel. The world when into recession, airliners had to add a fuel fee to the tickets, people stopped using their car as much, they bought smaller cars, less flying and so on. Imagine the price of oil like this in the real world. World economy would collapse. In this simulation game everything goes on as normal. What kind of simulation is this?

It's worth noting that the price in the game is not "per barrel".  So you cannot compare the prices in-game to what we see in AWS.

In-Game fuel is purchased in 1000Kg increments.'

1000Kg equates to roughly 325 gallons of jet fuel which is approximately 8 barrels of oil.

So to get anything remotely resembling a "real-world" price you must take the cost in AWS and divide it by 8.

And even that is a gross misrepresentation because you're comparing a wholesale raw resource figure to a wholesale finished good figure (i.e. why you can't take a $80 barrel of oil, divide by 42 and get the price of gasoline).  To account for value-gain on the jet fuel and margin you'd actually need divide it by somewhere between 10 and 12.

So when fuel is $1000 in AWS, that's actually something a bit closer to $80-100/barrel  -- which is HALF what we saw in the worst of things.  And that's why sami has had to smooth out the numbers when using real-world figures for fuel in the past, because players just can't survive when fuel approaches $2000 in AWS.
« Last Edit: October 19, 2010, 01:38:40 PM by Sigma »

filipebravo

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Re: Fuel price
« Reply #17 on: October 20, 2010, 12:20:08 AM »
(...) because players just can't survive when fuel approaches $2000 in AWS.

And why not? You can actually survive for some time... losing money.
Ohhh I want a game world like that!!!  ;D ;D

Offline Sami

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Re: Fuel price
« Reply #18 on: October 20, 2010, 04:17:55 AM »
Sigma, I think you are miscounting there...

Offline Sigma

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Re: Fuel price
« Reply #19 on: October 20, 2010, 07:22:46 AM »
Sigma, I think you are miscounting there...

Wouldn't doubt there's a problem in there somewhere, what with converting metric to standard to whatever-the-heck 'barrels' are. ;)  Plus the simple fact that you can't get a straight 42 gallons of jet fuel out of 42 gallons of crude oil in that barrel.

But, either way, the point is that you can't compare AWS pricing to "real-world" pricing since the units aren't the same.

 

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