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Author Topic: Ticket Prices  (Read 3120 times)

Offline johnlattanzio

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Ticket Prices
« on: January 11, 2011, 11:54:16 PM »
Is there a way to see what other airlines are charging on a given route?

Offline Sigma

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Re: Ticket Prices
« Reply #1 on: January 12, 2011, 12:34:55 AM »
No, but if they're smart they're charging Standard pricing, since there is effectively no point in competing on price in AWS.

Offline johnlattanzio

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Re: Ticket Prices
« Reply #2 on: January 12, 2011, 12:37:52 AM »
Really?

Are you saying the price does not make a difference?

None? Or just a little?

Under makes more/less difference than over?

As a newbie...can you explain this!!!

Thanks!

John L

Offline Sigma

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Re: Ticket Prices
« Reply #3 on: January 12, 2011, 12:44:28 AM »
Really?

Are you saying the price does not make a difference?

None? Or just a little?

Under makes more/less difference than over?

As a newbie...can you explain this!!!

Thanks!

John L

Well over makes a lot of difference.  You'll chase customers off very quickly if you charge more than a small percentage over Standard pricing.  Just how much you can get away with depends on your CI, not whether there's a competitor or not.

But under makes almost no difference.  Charge Standard, charge 75% less, you're not going to make a big difference in your LF and, aside from when your RI is really low when a bit less of a price makes a small difference, you won't make any more money by charging a lesser price.  Meaning if you take 10% off your price you won't get 10% more people, you probably won't see many more at all, so you only cost yourself money by lowering price.

Just don't bother competing on price.  It's pretty much a wasted effort.

Offline johnlattanzio

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Re: Ticket Prices
« Reply #4 on: January 12, 2011, 12:47:45 AM »
Wow. Thanks for that.

Is this generally agreed to be true? I would say its a fairly substantial weakness in the model, no?
I would expect price to be more important than that?

Or is this empirically correct behaviour? Does anyone know?

Thanks again for the reply!

John L

Offline alexgv1

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Re: Ticket Prices
« Reply #5 on: January 12, 2011, 12:51:29 AM »
Is this generally agreed to be true? Yes most players would agree

I would say its a fairly substantial weakness in the model, no? Definitely it is because in real world pricing has a big impact on passenger habits
I would expect price to be more important than that? It's being worked on for future model (we hope  ;D )

Alex
CEO of South Where Airlines (SWA|WH)

Offline Sigma

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Re: Ticket Prices
« Reply #6 on: January 12, 2011, 01:01:21 AM »
In real-life people are, of course, very price-sensitive.

One of the reasons why it isn't as easy as just fixing it in this particular game is because certain people know how to play the game really well.  If all one had to do was throw a plane on a route and give the seats away for almost nothing, a certain number of people can get away with doing that on dozens, if not hundreds, of routes simply because without competition on most of their routes (unrealistic in itself) they have plenty of cash to burn on those few routes where there is competition.

It's already easy enough to jump into force a smaller player into bankruptcy fairly quickly.  It would happen instantaneously if customers were as price-sensitive as they are in real-life.  The guy HQ'd in Saint Louis wouldn't have the cash that the guys HQs in New York, Atlanta, LA, etc all had -- so all they'd have to do is charge $10 a ticket, subsidized by all their other money-gushing international routes, and the poor guy in STL would be bankrupt before he knew it or at least would have to abandon all his routes leading to major cities.  Which would only further feed the machine of the larger players being unhindered by a lack of competition.

Offline johnlattanzio

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Re: Ticket Prices
« Reply #7 on: January 12, 2011, 08:08:42 AM »
Well, I guess that happens, to some extent, in real life too.

All of which proves (again) that the "market" is not the ideal way to make many decisions :-)

But - how does one compete with existing airlines if you want to also fly an existing route. If price makes no difference, how do you get a share of that market?

JL

Online JumboShrimp

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Re: Ticket Prices
« Reply #8 on: January 12, 2011, 09:08:09 AM »
Wow. Thanks for that.

Is this generally agreed to be true? I would say its a fairly substantial weakness in the model, no?
I would expect price to be more important than that?

Or is this empirically correct behaviour? Does anyone know?

Thanks again for the reply!

John L

As far as lack of price sensitivity when competing, it is a weekness of the model if you want the model to resemble real life closely.  But if the model has another goal as well - protecting weeker airlines from being run out of business by stronger airlines, then minimal response to price cutting makes some sense.

As far as empirical experience - yes, many of us have tried lowering prices to grab larger percentage of the market - and it has universally been proven to not work.

There is another issue: lack of demand elasticity.  Meaning: even if you fly the route without competition, will lower ticket price generate greater demand?  No again.

Online JumboShrimp

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Re: Ticket Prices
« Reply #9 on: January 12, 2011, 09:17:08 AM »
As far as lack of price sensitivity when competing, it is a weekness of the model if you want the model to resemble real life closely.  But if the model has another goal as well - protecting weeker airlines from being run out of business by stronger airlines, then minimal response to price cutting makes some sense.

As far as empirical experience - yes, many of us have tried lowering prices to grab larger percentage of the market - and it has universally been proven to not work.

There is another issue: lack of demand elasticity.  Meaning: even if you fly the route without competition, will lower ticket price generate greater demand?  No again.

Well, if you fly the route, you will get some market.  If you increase frequency of your flights, you will get more of the market.  Frequency really the only tool at your disposal.  So while price insensitivity protects weaker airlines, the only tool available - frequency - can really skew the market.  If you see 40x day Dash-8 flights - now you know why...

Another variable that seems to have a meaningful impact on competition is CI (Company Image).  If your CI is, say 10, and your competitor's is 100, and everything else is equal (aircraft, frequency, time of the day of flights), your competitor will end up with larger share of the market.

L1011fan

  • Former member
Re: Ticket Prices
« Reply #10 on: January 15, 2011, 03:04:06 AM »
Pricing is very powerful in taking away market share from other carriers. Just make sure you have some flights already going there, then hit'em with a discount! It does have definite advantages, you just have to "work it" :laugh: Simply leaving on default is not always the right answer.

Offline johnlattanzio

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Re: Ticket Prices
« Reply #11 on: January 15, 2011, 05:53:40 AM »
Well, that seems to contradict the view of most people...

Leaving me confused!

JL

Offline Sigma

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Re: Ticket Prices
« Reply #12 on: January 15, 2011, 06:41:31 AM »
Well, that seems to contradict the view of most people...

Leaving me confused!

JL

It has virtually no effect.  I promise you.  No offense to L1011 who is an extremely enthusiastic player, but he tends to have a lot of... original ideas about doing things; that, while often times more realistic, are not exactly the most effective in the game.  Which is fine, we're not all out to be the most profitable airlines in the game, everyone sets different goals.  But anyone who is experienced at running a competitive airline in AWS will be absolutely unanimous in saying that it's virtually worthless to compete on price and it is most definitely not "very powerful".

You can always try it yourself.  It's not like you've got anything to lose by trying it on a route.  Find a route where you and the competitor fly the same frequency in similar planes with the same seating and you roughly divide the traffic 50/50 (to mitigate the odds of there being CI differences).  Note you revenues, profits, and market share (notepad function on the left is good for this).  Take pricing down 10%, note any changes.  Take pricing down another 10%, note changes.  And continue until you're satisfied.
« Last Edit: January 15, 2011, 06:43:40 AM by Sigma »

Offline johnlattanzio

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Re: Ticket Prices
« Reply #13 on: January 15, 2011, 07:27:20 AM »
Thanks Sigma :-)

I was indeed going to that test but I have no suitable routes at present...

thanks again

JL

Offline Sigma

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Re: Ticket Prices
« Reply #14 on: January 15, 2011, 07:44:41 AM »
And when you do it, make sure you do it for a few weeks straight before making any further changes.  You don't know when your competitor may have had a C-Check or something and that's skewing the results.

Offline BobTheCactus

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Re: Ticket Prices
« Reply #15 on: January 15, 2011, 01:42:27 PM »
Keep in mind that if a flight takes off or lands between 23:00-5:00, you should reduce the ticket prices
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Offline CVACEO

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Re: Ticket Prices
« Reply #16 on: January 15, 2011, 02:53:43 PM »
Keep in mind that if a flight takes off or lands between 23:00-5:00, you should reduce the ticket prices

You are right about taking off, but as long as the flight departs prior to 23:00 it doesn't matter when it lands and you don't need to adjust ticket prices to produce high LF's on that flight.

altmants

  • Former member
Re: Ticket Prices
« Reply #17 on: January 16, 2011, 01:43:37 AM »
I notice the drop off closer to 0000-0500.

I have flights leaving at 23:55 and they get a lot higher LF than 0000.

Riger

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Re: Ticket Prices
« Reply #18 on: January 16, 2011, 02:20:41 AM »
I agree that the impact is apparent between 00h00 and 05h00.

Offline JonesyUK

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Re: Ticket Prices
« Reply #19 on: January 16, 2011, 10:45:48 AM »
Never bother touching ticket prices (except to reset them all), even with red-eye flights. As stated, you're just costing yourself money :)

 

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