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Author Topic: Route Planning/Demand/Competion/load factor wtf?  (Read 1122 times)

Offline Jazza

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Route Planning/Demand/Competion/load factor wtf?
« on: December 21, 2013, 11:15:35 AM »
I'm operating 3 B737-300's, 5 Saab 2000's and a single Saab 340B.
What I'm not understanding is the fact that, When I open a new Route with any of the aircraft, according to demand. I only get profitable LF's on a route with competition? On routes with no/nil competition (using the rite aircraft for the job vs passenger demand) I'm lossing big money? Wtf? The only new routes I can make money on are those with competition? Doesnt make sense.
I've opened new routes without competition, and more than the demand. And have to spend mega bucks for 2-3 months game time in marketing just to get that route in the green.
Somethings not right here, I think?

Any thoughts?

Cheers

Offline Sami

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Re: Route Planning/Demand/Competion/load factor wtf?
« Reply #1 on: December 21, 2013, 11:19:07 AM »
When ever you start a route to a new destination, only a fraction of passengers can "see" you on that route (that's the Route Image). So you will never be able to gain full planes, if you supply the full demand, right from the start. Regardless of competition.

Offline Jazza

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Re: Route Planning/Demand/Competion/load factor wtf?
« Reply #2 on: December 23, 2013, 11:39:20 AM »
Thanks for your reply Sami,

But, heres the thing. I open a new route (demand 130pax) I put a 737-300 with 120pax and I get a LF of 21% = losing $$$ big time. This is with nil competition. That would mean the demand is incorrct? With 3 months of route marketing, I've gone from lossing -$16k to -2k! the demand is said to be there, or I wouldn't have opened the route. I have stuck with this route, and will continue to do so. Again (higher than demand per seats offered at lower cost,  and No competition. As a Test, My single S340. I put on mainly routes with competition vs PaxDemand. and have great LF's on those routes within a short time and next to nil marketing.

Offline Sami

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Re: Route Planning/Demand/Competion/load factor wtf?
« Reply #3 on: December 23, 2013, 11:42:15 AM »
Like I said, only a fraction of the passengers (of the 130, some 30-40) even knows of the airline when your route image is zero.

But that is not the only factor.. Even with 100 route image if your service is otherwise poor (like in the middle of the night) people will not fly you..

Offline Jazza

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Re: Route Planning/Demand/Competion/load factor wtf?
« Reply #4 on: December 23, 2013, 11:52:02 AM »
ok, cheers mate!

I'll try a few more things. Thanks for the prompt reply. Your've got a real winner, as in a business tool here. Are you utilizing this platform as such yet?

ON that topic, I'm blistering $$$. When I shouldn't be! I think I know the cause. C&D checks. Which are only ever done on Cycle time, Not on time time! ? How copy?
« Last Edit: December 29, 2013, 11:14:53 AM by Jazza »

Offline Sami

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Re: Route Planning/Demand/Competion/load factor wtf?
« Reply #5 on: December 23, 2013, 11:59:57 AM »
Just started marketing it for educational use etc.. http://airlinemanagement.net


Offline [SC] - King Kong

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Re: Route Planning/Demand/Competion/load factor wtf?
« Reply #6 on: December 23, 2013, 02:34:18 PM »
Ill forward that to my professor "airline marketing" :)


Online hmellouli

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Re: Route Planning/Demand/Competion/load factor wtf?
« Reply #7 on: December 23, 2013, 04:10:49 PM »
Just started marketing it for educational use etc.. http://airlinemanagement.net



that's an excellent idea. I went to school for a degree in aviation management, and I actually used airwaysim as a learning aide. its truly helpful to put some of the theories into practice with this platform. even these day as I work in the industry, AWS is a good tool to understand how some decision work.

Offline Jazza

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Re: Route Planning/Demand/Competion/load factor wtf?
« Reply #8 on: December 25, 2013, 12:20:37 PM »
Re:Trainning Aid

I suggested this the other day and last year I think? (making this commercial)     (I was going on about the accounting system)? ! However yesterday, I awoke too my airline being +$1.5m to being -$3.5m overnight.
I'll make this point in another thread, Tomorrow. or i'll leave it till after Christmas. Merry Christmas all, Take it easy and take care.

Offline Sami

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Re: Route Planning/Demand/Competion/load factor wtf?
« Reply #9 on: December 25, 2013, 06:39:17 PM »
However yesterday, I awoke too my airline being +$1.5m to being -$3.5m overnight.

...how's that the game's fault? :P

Offline 11Air

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Re: Route Planning/Demand/Competion/load factor wtf?
« Reply #10 on: December 26, 2013, 10:46:42 AM »
I intuitively understood that a reduced price is necessary to 'get interest' in a new route so I drop the 'suggested' price by 2 x -10% hits. I also start routes with a/c below the suggested pax load. As they begin to work I can raise the prices gently so the load continues to grow. Just what I'd expect in real life.
My Cessna's have generated a couple of routes that are now ATR42 routes, and that's been true from ATR42>75, ATR to B737, and even to A310's form B739ER's.
What I can't get to work is a late start in Modern Times. Jet#8 and Beginners#2 work OK. MT#9, this is my last bankruptcy run, trying with one smaller aircraft out of a base I play in the others just to see what it takes.

brique

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Re: Route Planning/Demand/Competion/load factor wtf?
« Reply #11 on: December 26, 2013, 11:43:10 AM »
There is an oddity when running on a heavily competed route : if there is considerable over-supply from 2 or more players, who are all cutting prices to win share, then an additional level of demand opens up, attracted by the low prices : so, the stated demand figure can, in actuality, be much larger : how much is a mystery as its not given and varies depending on how attractive the low price offers are.

As a new entrant on such a route, your RI gives a percentage of the potential pax pool who 'know' about you and so will consider flying with you : an RI:00 still gives a default 20% or so. If the demand level is high enough, you may well have enough potential pax already to fill your plane, especially if the additional demand has been created by your competitors, as you get to access 20% of that too. Basically, your offer doesnt have to convince everyone, just enough to fill the plane, and if you initially fly seats for less than 20% of the demand you can achieve decent loads at decent prices quite easily even with a low RI. As your Ri climbs and attracts a bigger pool of potential pax, you can add flights and/or tweak pricing, as long as your competitors keep their prices low and grow that demand. Effectively, you are piggy-backing their efforts to maximise their share of a growing market. And, more oddity, you can sometimes end up premium-pricing such routes, as it doesnt matter if your prices scare away 80% of the pax as long as the remaining 20% still fill your planes.

On a un-competed route, with demand/supply ratios much less advantageous, your RI has to grow big enough to convince the majority of potential pax, or you have to price-slash heavily to grow that extra demand : thats why getting decent loads in those cases can take so much longer than on a competed route. The difference is, on an un-competed route, the pax are all yours, eventually, on a competed one, you still have to work around what others may do and worse, if one competitor drops out and the other stops price-cutting, demand shrinks back to 'normal' levels and you may find you have to work much harder to keep your loads and prices up.

 

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