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Author Topic: Regional airline  (Read 1880 times)

Ilyushin

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Regional airline
« on: November 25, 2010, 10:42:51 AM »
Is it even possible to run an all-Metro airline? I'm operating 4 at the moment out of my IRL home airport which is a small one. I got no competition at all and I'm bleeding money with a 60% avg LF.

I don't get it.

Online Sami

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Re: Regional airline
« Reply #1 on: November 25, 2010, 11:55:42 AM »
You can, but not with 4-plane fleet. You'd need 20+ of those, and 80%+ LF's with standard prices. And otherwise have to keep a very strong eye on expenses.

= It's hard....

Ilyushin

  • Former member
Re: Regional airline
« Reply #2 on: November 25, 2010, 12:09:53 PM »
Is it that hard too in real life?

In other words, is it harder in real life to run a regional airline with 19seat aircraft than an airline like KLM, Finnair or British Airways?

Offline jimsom

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Re: Regional airline
« Reply #3 on: November 25, 2010, 02:25:32 PM »
Most small operators operate flights with another ticket strategy than "normal" airlines that's suited for business travellers.
I.e. tickets are a lot more expensive than a regular airline.

Another common solution is government funded traffic where airline operations are estimated to be "needed" but where passenger demand lacks.
/ jimsom

Ilyushin

  • Former member
Re: Regional airline
« Reply #4 on: November 25, 2010, 02:28:40 PM »
If I increase the prices, my LF will drop a lot...

And your last suggestion isn't possible... :P

Offline jimsom

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Re: Regional airline
« Reply #5 on: November 25, 2010, 02:33:39 PM »
If I increase the prices, my LF will drop a lot...

And your last suggestion isn't possible... :P

Yeah, it was more a answer for your "Is it that hard too in real life?".
Pricing is a problem in AWS, because, as you say, you can seldom raise the ticket price without loosing a lot of passengers.

A key for good profitable small operators is short routes. If you can fill a 20/30-seater with 7-10 daily rotations, it will make loads of profit!
/ jimsom

Offline JonnyAngel

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Re: Regional airline
« Reply #6 on: November 25, 2010, 03:58:26 PM »
Pricing is a problem in AWS, because, as you say, you can seldom raise the ticket price without loosing a lot of passengers.

Yah, this is sooooo true.  ;D

Sami, does the price to demand model undergo any tweaks in v1.3. I've always found that the reaction of demand to pricing changes is way too sharp i.e. it doesn't make sense in game world (or IRL) that a fare increase/decrease of 5% should lead to a demand swings of 12-15% for example, especially when in some cases that 5% only adds/subtracts a few dollars of the fare and makes you only marginally more or less expensive than your competition on a route (if you have any).

Its even weirder when you are the only operator flying the route. Sure 'pax' could choose to drive/bus/train but if they were going to fly to begin with, the extra 5% shouldn't be that much of a disincentive.

Online Sami

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Re: Regional airline
« Reply #7 on: November 25, 2010, 04:11:35 PM »
hmm, yet others complain that the paxes are not price sensitive at all. :P

Offline JonnyAngel

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Re: Regional airline
« Reply #8 on: November 25, 2010, 04:16:15 PM »
We're a fickle bunch Sami, LOL, a fickle bunch... you'll never please us all  ;D

Hey, as your Online, one other regional airline related question: when oh when is the Bombardier CRJ1000 going to launch in this gameworld? CSeries is already up and available for order, so just wondering when the 1000 would make its appearance?

airplane_mech2

  • Former member
Re: Regional airline
« Reply #9 on: November 26, 2010, 11:21:37 PM »
I'm curious about this too.  Why is it that, let's say you fly from Atlanta to little rock and no other airline provides this route, and say the demand is 600 per day, and I can provide 200 seats a day, why is it that I can't raise my fares to almost astonomical and have load factors near 100%?  I'm new to the game, in fact I don't participate in MT3, yet I can't seem to get the ticket price vs. load factor down.  I raise my prices, LF goes down, I lower my prices, LF goes up, but no where near what I think it should realistically be.  can someone please explain this to me?

Offline JumboShrimp

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Re: Regional airline
« Reply #10 on: November 27, 2010, 01:12:41 AM »
hmm, yet others complain that the paxes are not price sensitive at all. :P

Demand seems elastic only one way.  When fares are increased, the demand seems to tank.  But the other way, when prices are reduced, there is very little, almost no elasticity.  LFs don't go up much, and pax don't seem to care to switch to lowest priced airline...

Online Sami

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Re: Regional airline
« Reply #11 on: November 27, 2010, 06:24:38 AM »
That low price lowering factor is partly intentional since it wouldn't serve anyone for the pricing to become $1-$2 fare competition (or whatever the minimum fare is).

Offline JonnyAngel

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Re: Regional airline
« Reply #12 on: November 27, 2010, 02:55:37 PM »
Yes,

I can see why you put that floor in; to prevent constant price wars, and having to arbiter very large airlines going after start-ups (and everyone can stop acting so shocked, we know there are some in this game who LIVE for the kill), but a little more price sensitivity on the downside would be great too.

If for example, you build a regional airline, and are flying props up against a national airline, you should be able to use the fact that you can still make money off lower fares in a high fuel price environment, as a competitive advantage...

Offline JumboShrimp

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Re: Regional airline
« Reply #13 on: November 27, 2010, 07:02:22 PM »
That low price lowering factor is partly intentional since it wouldn't serve anyone for the pricing to become $1-$2 fare competition (or whatever the minimum fare is).

Maybe a wayt to model it would be through increased demand.

Suppose nominal demand is 300 pax at default price of $100.  If an airline lowers the price to $90, the demand for that airline should jump to 330 pax (or +30 pax).  Well, not just demand but something that more directly flows into higher LF.

Now, this +30 pax, some should come from competition (let's say +3), some from increased overall demand (+27).  This way, there would be perception of increased price elasticity on the downside, but at the same time, it would not have a completely devastating effect on the competition, but still, there would be some effect...

PS: As far as price wars, there have been plenty of them in real life.  In the 1980s in the US, 10 or 20 years later in Europe.  And, I don't know if it is still going on, but a few years ago, there were a some low cost European airlines offering promotional tickets for 1 Euro, or 10 Euro...

jordanD

  • Former member
Re: Regional airline
« Reply #14 on: November 28, 2010, 08:35:05 AM »
I'm curious about this too.  Why is it that, let's say you fly from Atlanta to little rock and no other airline provides this route, and say the demand is 600 per day, and I can provide 200 seats a day, why is it that I can't raise my fares to almost astonomical and have load factors near 100%?  I'm new to the game, in fact I don't participate in MT3, yet I can't seem to get the ticket price vs. load factor down.  I raise my prices, LF goes down, I lower my prices, LF goes up, but no where near what I think it should realistically be.  can someone please explain this to me?
Well, think about it in real life. If tickets were a thousand bucks a pop each way, you'd probably just end up driving. There's a lot of factors that go into it. Price and frequency being some.

As for the original question, take a guess why small all turboprop airlines generally pay their employees so poorly.  ;)

Quote
PS: As far as price wars, there have been plenty of them in real life.  In the 1980s in the US, 10 or 20 years later in Europe.  And, I don't know if it is still going on, but a few years ago, there were a some low cost European airlines offering promotional tickets for 1 Euro, or 10 Euro...
It happened with AirTran when they opened (I think) Moline. Delta dropped a whole bunch of RJs on the exact same route and lowered their prices so far AirTran couldn't keep up.

Offline Name_Omitted

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Re: Regional airline
« Reply #15 on: December 07, 2010, 03:56:01 AM »
A key for good profitable small operators is short routes. If you can fill a 20/30-seater with 7-10 daily rotations, it will make loads of profit!

10?  Even at if you keep it to 20 minute turn arounds, which will cause quite a bit of dely, you are spending 400 minutes on the ground, which exceeds 6 and a half hours on the ground.  Where and how do you turn any aircraft 10 times in a day?  Do you not have trouble filling it in the wee hours of the morning?  What am I missing?

Offline jimsom

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Re: Regional airline
« Reply #16 on: December 09, 2010, 11:41:10 AM »
10?  Even at if you keep it to 20 minute turn arounds, which will cause quite a bit of dely, you are spending 400 minutes on the ground, which exceeds 6 and a half hours on the ground.  Where and how do you turn any aircraft 10 times in a day?  Do you not have trouble filling it in the wee hours of the morning?  What am I missing?

There are places where you can operate flights with a distance of 40-100nm where you can fit that many flights.
/ jimsom

 

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