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Author Topic: How does daily demand work?  (Read 725 times)

Offline Wagster

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How does daily demand work?
« on: September 27, 2014, 11:46:07 PM »
Greetings,

Say an airport has a report of 100 daily passengers. You set up daily flights with 100 capacity and if route image is high and there are no delays or cancellations you should pick up about 100, is that correct?

Now suppose there's competition in this line. How does that work? 100 demand, two daily flights from different airlines each with 50 capacity. All else being equal, does each airline take 50 passengers?

What if there's more supply than demand? One company offering 50 seats, the other 200. Do both companies still each get half of the demand or does the larger aircraft pull more people in?

What about time? Do earlier flights grab demand away from later flights or vice-versa? Does departure time influence passenger preference at all? I realize if, say, you were supplying 100 seats with two 50 capacity flights you'd want to space them in time, but what about competing flights from different airlines?

EDIT: sorry, maybe this should've gone to the general discussion board.

Offline Sanabas

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Re: How does daily demand work?
« Reply #1 on: September 28, 2014, 06:55:12 AM »
There are plenty of threads around with this sort of stuff, but:

Greetings,

Say an airport has a report of 100 daily passengers. You set up daily flights with 100 capacity and if route image is high and there are no delays or cancellations you should pick up about 100, is that correct?

Yes

Quote
Now suppose there's competition in this line. How does that work? 100 demand, two daily flights from different airlines each with 50 capacity. All else being equal, does each airline take 50 passengers?

Yes

Quote
What if there's more supply than demand? One company offering 50 seats, the other 200. Do both companies still each get half of the demand or does the larger aircraft pull more people in?

Each flight will get about the same number of pax. e.g. If the demand is 120, you have 3 x 50 seaters, other airline has 1 x 150 seater, then all 4 flights will have 30 people each, everything else being equal. For the purposes of working that out, count yourself as having 6-8 flights/day, even if you have more. e.g. If the demand is 900, 1 airline offers 6 x 100, 1 airline offers 4 x 200, you offer 20 daily flights with 50 seats each, it's not the cae that there are 30 daily flights, therefore they all get 30 pax each. Instead, think of yours as 6 flights, so more like 55 pax/flight. The other 2 airlines will get 55 pax/flight, you'll get 330 pax in total, so only 17 pax/flight. You'd still get 330 pax in total if you had 6 x 100 instead of 20 x 50, and it'd be more profitable.

Quote
What about time? Do earlier flights grab demand away from later flights or vice-versa? Does departure time influence passenger preference at all? I realize if, say, you were supplying 100 seats with two 50 capacity flights you'd want to space them in time, but what about competing flights from different airlines?

Time is mostly irrelevant, except that flights that take off or land between 0000-0500 will get less people. But there's nothing like the opposition offers a 9am flight, so if you offer an 8.30am flight then people will pick yours over theirs. Your new flight will do just as well regardless of whether it's 8.30, 9am, midday, whenever.

Offline Luperco

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Re: How does daily demand work?
« Reply #2 on: September 30, 2014, 10:31:58 AM »
This means that sending more than 6/8 flight on already saturated route, doesn't gives you more paxes?

Saluti
Emanuele


Offline Sanabas

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Re: How does daily demand work?
« Reply #3 on: September 30, 2014, 11:55:12 AM »
More or less, yeah. It's not a hard limit, and seems like the bigger the route, the higher the limit. But stopping at 6-8 works well as a guideline.

It's hard to get exact numbers, exact details because you don't know exactly what the other airlines have (unless they're willing to tell you to help you test it), because of the various other factors like CI, RI, price, etc that mean all flights aren't requal in the first place, and because of randomness. All those things make your error margins bigger than the change in pax you're looking for. e.g. Say there's a route with 1000 pax. You have 10 flights, there are 25 flights overall. That's 40 per flight, you've got 400 total pax. You add an 11th flight. If the 11th flight is clearly over the limit and changes nothing, you still have 400 pax, 36.4 per flight. If the 11th flight is clearly under the limit and you get full value, you'd get 38.5 pax/flight, 423 pax overall. But if random fluctuations mean only 950 pax fly that day, you get 400 pax again. Plus your flights don't all have the same totals anyway, some might have 30 or 35, others might even reach 45. Which makes it tougher to analyse than it is when you have 1 of 2 flights on a 100 pax route, and then add one to make 2 of 3.

Offline Adam42185

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Re: How does daily demand work?
« Reply #4 on: November 06, 2014, 12:05:27 AM »
So that I understand fully, this means that if you happen to be the ONLY airline flying a route with a demand of 100 pax/day, you should fly a plane with 100 seats once per day, and not say a morning and evening flight?  One flight a day regardless of time will yield 100 pax vs 2 flights a day yielding 50 pax each?

But, if there are multiple carriers on one route, the carrier with the most number of flights will get the most pax?

All else equal...

Offline Wagster

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Re: How does daily demand work?
« Reply #5 on: November 06, 2014, 02:00:18 AM »
That's the basic, yes. But I'm seeing a lot of strange things.

I have double the flights, yet a competitor can grab 25% of market share. I have more flights and jets, yet the competitor can grab half the market share with turboprops. I have flights covering 100% of demand or nearly 200% of demand, yet the competitor can grab large slices. And then there's one route where I have only 7 or 8 flights not even close to covering the total demand and I lead the market share despite others having many more flights.

I tried increasing marketing but the effect was small. I tried cutting prices but the effect was small. Maybe they're using ultra-premium-high-luxury-spa-five-star seats on their planes... that's the only thing I didn't try yet.

This game is very strange and there seems to be things running under the hood that nobody knows about. Certain planes, on certain routes, work or fail to work against all known rules.

Offline Kadachiman

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Re: How does daily demand work?
« Reply #6 on: November 06, 2014, 02:38:11 AM »
There are other variables that come into play

1. what is the condition of your planes, are you having cancellations

2. Do you have enough spacing between flights - normally 60 minutes e.g. dep 6:00am then dep 7:00am
- I can see that you do not have the required spacing on some routes as you are flying 2 types of planes with different travel sppeds so even if they leave 1 hour apart they may arrive 20 minutes apart

3. are you departing prior to 5:00am and arriving after 11:00pm
- it appears that you are Ok on this

4. what is your turn-around time <1%
- otherwise you may be getting delays and cancellations

5. What is your CI compared to your competitor

6. What is your RI compared to your competitor

7. Does your competitor have marketing on the route

Many many others that can affect pax number, as it should be....otherwise it would be boring....e.g. you put 100 seats on the route and I put 100 seats and we will all be even...not much challenge :-)

Offline schro

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Re: How does daily demand work?
« Reply #7 on: November 06, 2014, 03:23:09 AM »
If all things are equal except for frequency, then you'll see the more frequent airline favored by 5-10% in passenger sales, unless that airline is flying more than the "ideal" number of flights per day (Quicksilver in HNL in GW2 is getting spanked for flying to many flights per day on F27's on an interisland basis).

Now, with increased frequency, you also have increased costs. So, let's say you do fly 2x 50 seaters instead of 1x100 seater. Your costs will be closer to double that of a single flight, yet, your revenue will only be a few percent higher. Thus, the higher frequency doesn't equate to higher overall airline profit...

 

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