Like the OP, I have been thinking a bit about codesharing recently - thinking which has been speeded up by the hints in this thread that city based demand may still be a long way away. Now I agree that for codesharing to serve its real life purpose, we need a connections system in place first. But I think a form of codesharing brought in to AWS as it stands now could still be worthwhile because it could serve two very different purposes:
(1) as a quasi-replacement for ABCBA routing.
(2) as a hedge mechanism to support new startup airlines competing against big incumbents (which in turn means that the demand model can be tweaked so that price becomes more significant than frequency but without big airlines being able to kill of small competitors by starting a price war)
Now this may fail the "real life test", but I don't think it would be a big success in any "playability test". Here's how I'd see it working:
- An airline can put up for sale a block of 20% of its seats on any given flight. They can advertise these to a specific airline, to airlines in their alliance, or to all airlines. They will specify a percentage of the default ticket price (within a range - say 60-80% - to avoid abuse) that they would charge an airline for purchasing these seats. If it succeeds in selling one block of 20%, an airline can then list a second block of 20%, but they would have to be bought by a different airline, and after two blocks that's it - so you will always have to try to fill 60% of your seats yourself.
- An airline can buy one of these blocks of seats if it flies from one of its own bases in to the airport that the proposed codeshare flight departs from, and provided purchasing the block does not mean it would have more codeshare seats going out of that airport in a week than it flies passengers in to it (i.e. if you fly 500 passengers a week to airport x, the max number of codeshare seats you can buy out of that airport x is 500 per week). When an airline makes a purchase, it commits itself to buying 20% of the seats on every single instance of that flight for a year, and at the % of the default ticket price (i.e. 60-80%) agreed in the contract. It also has to pay a fee (perhaps in staffing costs). It then sets a flight number for this flight and sells the tickets on at whatever price it wants - acting almost as a travel agent if you like.
In other words the selling airline is getting a guaranteed sale of 20% of its seats, but at a discounted price compared to what it would be able to get if it successfully sold the seats itself and at full price. In essence it has taken a hedge, and the buying airline has taken a risk. In that sense, it's quite simple, but the beauty comes in what it could mean for gameplay. Take an example:
I am Airline A, part of the Green Alliance and based at LHR. Our competitors the Red Alliance have a player (Airline B) who is bossing the market at JFK and starting to get very big, and scoring lots of points for Red Alliance. Airline B's only competitor is Airline C, a small startup that Airline B is trying to defeat by dropping his prices on any route Airline C flies. Currently demand LHR - JFK is 1000 per day, and I offer one flight with 200 seats (Airline B offers 900 seats and has the majority market share). Meanwhile demand JFK - MSP is 600 per day and demand JFK - MIA is also 600 per day. Both Airline B and Airline C fly four flights a day to each of these destinations, with 150 seats per plane. But because of lower prices Airline B is taking 65% of the market. Airline C therefore decides to offer a block of 20% of the seats (i.e. 30 seats) on each of its flights to these two destinations as a codeshare, charging 75% of the default ticket price. I buy the rights to codeshare on each of the four JFK - MSP flights and price my seats aggressively to get a chunk of the market share and cause Airline B some headaches. I also do likewise for two of the JFK-MIA flights but at that point I can't buy any more codeshares because I now have 30 seats on 6 flights = 180 seats, and buying another block of 30 would take me over 200 - the number of seats I currently offer with my own airline flying in to JFK each day. If I want to buy these extra codeshares I'm going to need to man up and offer more seats LHR - JFK in direct competition to Airline B. Or perhaps I will see if I can get my Green Alliance partners based at CDG and AMS to buy them...
So, who benefits from this scenario? Well:
- I, Airline A, benefit because I can now find a way to challenge my global rival Airline B, even though I can only go head to head with him on one (or a handful if we both have multiple bases) of routes. I can compound this by providing some financial stability to a startup who wants to compete with him on other routes. Meanwhile I have also benefitted from adding extra destinations served, which I believe is one of the things that can score points for my alliance. (and if not should be
- Airline B clearly does not benefit, as his monopoly is being challenged. BUT, many players have said that running a big airline with no competition can get a bit boring, and this would certainly force him to keep his attention up and/or to work closely with his alliance. And of course he could try to do the same thing back to me - in fact, as he's flying 900 seats a day in to LHR he could buy quite a lot of codeshares from there if he wanted. Meanwhile, his own direct losses from my involvement are capped because of the number of seats I offer flying in to his base - probably he has loads of other routes he can still make money on.
- Airline C is a big beneficiary as they are able to hedge their risk, and establish a foothold in the gameworld at a big base. It's still going to be tough competing with Airline B, but if he can sell lots of codeshares he helps protect himself from a price war.
- The Green Alliance can be encouraged to work together by all building up a portfolio of codeshares out of JFK to challenge Airline B - good for alliance teamwork. Maybe in time we could even seek to bring Airline C on board.
- The Red Alliance can be encouraged to work together to strike back, or perhaps to help their team mate Airline B if he does run in to trouble by buying codeshares on his flights or offering him cheap ones on theirs.
- Those who hate competition based solely on frequency benefit because this will allow price to become a more important factor in demand without killing mid-game startups.
- The other airlines in the world benefit because potentially lower profit margins for big airlines (from more competition on price) means they may be slower to open more bases and unable to control as many slots in production lines.
Now, I wouldn't pretend this is a perfect system. It would definitely take some coding (although nowhere near the scale of city based demand and/or passenger connections I wouldn't have thought), and it might fail some people's "reality test" - to be clear, there is no sense in which my passengers on LHR-JFK are actually connecting through to these flights (except in my imagination!). But I think it would add a lot to gameworld playability IMHO.