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Author Topic: Oil Prices & Aircraft efficiency  (Read 1144 times)

Offline Scott

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Oil Prices & Aircraft efficiency
« on: April 18, 2015, 10:43:26 PM »
Hi,

I have been struck by how the oil price rising and rising in GW1 has caused probably more than half of the airlines to go bankrupt with more to come.  My own airline whilst surviving is not exactly prospering, which is fine and a good challenge.

What I struggle with is how oil prices are random but aircraft releases are not.  Aircraft manufacturers were driven to produce more economical aircraft to improve airline efficiency which in turn was partly subject to an oil price.  Essentially the aircraft that are available currently weren't designed with the oil price that is being experienced currently in game.  Oil prices this high would have had an effect on aircraft design but this isn't reflected in game.  The game is described as being highly realistic and in many cases I agree but in this crucial area, the relationship between aircraft design and world economy, it isn't.  I agree there should be a random element to the oil prices but they shouldn't be so dramatic as to create a disconnect between oil prices and aircraft design, as well as bankrupt over half the GW! :) Could it be designed to be random within 10/20% of historical?

Cheers,

Offline spiff23

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Re: Oil Prices & Aircraft efficiency
« Reply #1 on: April 19, 2015, 02:30:47 AM »
The current game isn't that difference from reality...assuming you are old enough or want a history lesson...which will follow... ;).

 US deregulated airline industry in 1978, thereby taking away artificial [high] prices on routes    1970s and early 1980s saw OPEC crisis after OPEC crisis and rampant inflation.   Unfortunately for many US airlines in retrospect, deregulation occurred right before the 1979 OPEC crisis so many airline went nuts with expansion on cheap oil...sound familiar?

In the US, during the early 1980s as a result of record oil prices (for the time), over-expansion, and rising cost for everything as inflation skyrocketed, there were massive mergers and some prominent bankruptcies....Braniff who embarked on global dominance campaign only to fall victim to oil crisis of late 1970s and the terrible recession of early 1980s.  Others airline were acquired, like National by Pan Am; North Central and Southern merged to form Republic, which was acquired by Northwest; Delta acquired Western; if mergers werent allowed many of these carriers would've been bankrupt if the RW was AWS.

In Europe, regulated skies kept fares sky high with routes shared between the national carriers and minimal independent competition. If you wanted to fly Paris to Madrid, you picked evenly spaced flights on either Air France or Iberia and paid a very high air fare set by bureaucrats in Paris and Madrid aviation ministries.

also airlines grounded many of their fleet in mass.  Those who picked the 707s grounded them in 1979/1980...AA, TWA come to mind.  DC-8 operators broke even with the re-engined 70 series...UA, DL in the US.  While not modeled into AWS an interesting note is that when the DC-10s were grounded in 1979,UA pulled its recently mothballed DC-8 50 series back into service and airlines like CO with no mothballed 707s to bring back simply had to abandon routes like LAX-HNL as they had nothing that could fly the route as their fleet was only 727 and Dc-10s...and this set them on the course for their first of several bankruptcies.  (Another missing component of AWS is Ch 11 which Continental used 3 or 4 times rather than liquidating like in AWS.

Airlines were definitely calling for new engines and fuel efficient planes.  They also pressed for 2 man cockpits, etc.  this era in real life led to radical changes in what we take for granted today and most of what the aviation industry offered through the 2000s.  The thought of flying a 2 engine plane across an ocean was heretical even with the pending 757, A310 and 767...releases which were designed for intra continental routes.  In RW ETOPS is still 10 years away!
« Last Edit: April 19, 2015, 02:58:41 AM by spiff23 »

Offline Scott

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Re: Oil Prices & Aircraft efficiency
« Reply #2 on: April 19, 2015, 07:20:50 AM »
What you say is entirely correct, but my point is that we have departed from the historical narrative you have described because of the random oil prices.  Aircraft specifications would have changed in the real world if it had experienced a different pattern of oil prices. However, I am not advocating a change in those or in release dates, which also would be different, but a cap on oil prices within a 10/15% of historical to make the aircraft available relative to the economic climate it was designed for (or not in some famous cases!).  I just don't understand why the oil price is random in a highly realistic and historic airline management game.  When someone suggested fictitious aircraft were introduced into the game there was overwhelming rejection from the player base due to the concept of the game yet we seem to be happy for there to be a fictitious economy in which those aircraft are operated. 

Also I have heard that real life historic events such as 9/11 and SAR's have an effect on PAX demand, so if that modeled for realism then why not oil prices?

Offline tdf42

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Re: Oil Prices & Aircraft efficiency
« Reply #3 on: April 19, 2015, 08:46:20 AM »
I knew deregulation and the oil crisis would make the game more "interesting" but this is crazy. After successful cost cutting I was in the middle of transitioning to a younger fleet and this hit. Will these oil prices persist for the rest of the decade or is relief on the way. I dont remember how it ended up.

Offline Scott

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Re: Oil Prices & Aircraft efficiency
« Reply #4 on: April 19, 2015, 09:17:40 AM »
Who knows as the oil price is random. In reality the oil price plunged back down in late 1980, had another smaller peak and them dropped back again where is bounced around a bit until 1990's when various conflicts produced smaller blips although nothing compeared to the insane 2008 prices.

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Re: Oil Prices & Aircraft efficiency
« Reply #5 on: April 19, 2015, 09:42:27 PM »
That IS realism when you can't know future oil prices. That's exactly how airlines have to operate in RW. The thing is keeping your airline always one step ahead and e.g. saving money for peaks. And designing new aircrafts takes years.
« Last Edit: April 19, 2015, 09:45:03 PM by valioyksilö »

Offline Scott

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Re: Oil Prices & Aircraft efficiency
« Reply #6 on: April 20, 2015, 08:45:30 AM »
Still not getting my point are we.....

Historic aircraft designed and operated under historic economic situation A are not necessarily suitable in fictitious economic situation B.  It sort of contradicts the premise of a highly realistic simulation if aircraft unsuitable and frankly unusable for the fictitious economics of the game are released to a rigid historic timetable.  All I am suggesting is either a flexibility in aircraft releases or a limit to which the economy can fluctuate. 

Take the 747 the most popular wide bodied jet, by 1980 there were some 500 hundred in service, in game world there are just over 300 with approx 1200 in storage or for sale. Nothing wrong with the aircraft of course but it is powered by engines with efficiency not practical in the game world.  Another suggestion is offering replacement engines with better economy?  Engine updates occur all the time improving efficiency.

I have absolutely no problem with a random economy, it is enjoyable to play.  I am struggling to understand why there is such a disconnect between aircraft release, specs and possible updates against the prevailing economy.

Here is a suggestion for say the previously mentioned 747 - 200

The original:
PW JT9D - 7A
Range 4410 NM   Average fuel burn 33 246 lbs / hr   

The update
PW JT9D - 7A  -  $4m per aircraft
Range 5374 NM   Average fuel burn 28 767 lbs / hr   

You wouldn't have to fiddle with MTOW etc.. as this is an engine economy tweak.



Offline spiff23

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Re: Oil Prices & Aircraft efficiency
« Reply #7 on: April 20, 2015, 10:42:01 PM »
I get were talking past each other, but still not sure what you are advocating.

the late 1970 oil crisis did the same thing as many airlines who could, put lots of 747s into storage in the dessert.  It nearly bankrupted Pan Am and combined with the National merger sent them on the path of disposing assets to stay in business...starting with the Pacific routes to United in mid-1980s culminating with the liquidation by 1992.  TWA was a step behind and managed to survive until 2002.  The economics of flying 747s around everywhere no longer made sense.  Lots of US airlines took deliveries of domestic 747s and realized these also made no sense (AA comes to mind).   

Again, the reality was there were not 2000 747-100/200/SPs produced as in the artificial world that is AWS...but 500 vs 300 still operating presently probably is about right given the ability to switch planes in AWS is a lot easier than the real world. 

There's also some tactics at play that disconnects AWS 1970 - 2000 from reality of the era.   If you needed to fly routes like ORD-, BOS- JFK- IAD- to say LAX...you certainly didn't have hourly 727s to choose from spread across 5 airlines.   You took the 5 or 6 daily DC-10s/L-1011s that airline A or B offered on the route.   If you try to model this reality...you will get killed as a DC-10...no matter how RW appropriate simply kills you on most domestic routes unless you control all the slots and have a near monopoly...especially when someone is flying hourly 737-200s...which were not used on US transcontinental routes...even by Southwest.  Chicago to LA-area in around 2000 on southwest often involved 3 to 4 stops and 8 hours.   It was a constant debate with friends who wanted cheap vs a UA/AA nonstop...usually on a widebody of some sort ;) 

Online schro

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Re: Oil Prices & Aircraft efficiency
« Reply #8 on: April 21, 2015, 02:56:18 AM »
I don't see the issue with the fully random fuel prices. Even when they are "fully random", they will generally not be configured in a manner that will wipe out all of the well run airlines in the game that don't have a few billion in cash to sit through it. Even back when fuel prices were based on real life around here (yes, they were, back in the day), the 2008 fuel spike was even tempered a bit because it would have wiped all the airlines out. With the most recent fuel spike (that seems to be puttering out), my fuel costs reached about 33% of revenue at their peak. That's about equal to a moderate fuel spike in the modern era, but a hard one later on will run as high as 40% of revenue (for a well run airline).

The reason fuel is not based on history any more is because it allows experienced players to preplan all aspects of their airline, giving them an unfair advantage over the less experienced players. You may not realize, but plane launches are randomized as well, but in the context of history - 18 months +/- real launch date, so a 3 year span. Those 3 years are enough to create uncertainty about the next best move for a player. Regardless, this isn't a historical simulation, this is a game....

With the big airlines going tango uniform all around that you don't understand why they are failing, it's because the game was too easy in the 60's and 70's to make them fail, but as we progress into this era, those big but poorly run airlines will start dropping like bugs in a bug zapper. You can make it through the 70's running fuel hogs with 50% load factors, but during the DOTM era, economics realign to the MT expectactions where you need a far higher load factor and more efficient fleets. Many of the doomed ones I looked at 5, 10 or 15 game years ago and saw that they were setting themselves up for failure in the long term. By that, I mean, too many fleet types, poor fleet choices, poor routing choices, poor basing choices, etc. As you gain experience in the longer game worlds, you'll start to learn what it takes to properly manage through more expensive times. Generally this point in the game is very difficult even for the best players...


Offline Teadaze

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Re: Oil Prices & Aircraft efficiency
« Reply #9 on: April 21, 2015, 06:20:37 AM »
pretty much what schro said. the game has already been toned down in recent games.

Offline gazzz0x2z

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Re: Oil Prices & Aircraft efficiency
« Reply #10 on: April 21, 2015, 10:53:39 AM »
+1 with Schro & spiff23 too.

Though I'm only playing modern times, but the 11th November will make some cleaning as well. I see plenty of companies with poor management that are still big in 1996, but with just 3% of margin. When demand will plummet, they will die a painful death. They are annoying to me now, but I'm in position to take the place.

Planes are not adapted to fuel prices? Bad luck. The interest of the game is to react when bad things happen. 7 months after the beginning of current GW3, I rushed to London City in search for a place with few opposition. 2 months later, 2 opponents followed me, and took my E145 in sandwich(Fairchild for one, Avro RJ70 for the other one). It sucks. That's life. That's what makes the game pleasant. I've got to be better than them, and good enough to survive the bad times.

E145 suddenly does not seem like a good choice, but I went for it. So I'll bite the bullet, and try to optimize their use. There is no free slot before 07:10, airport closes at 22:00, and I haven't got legs long enough to fly during the night. Still, I shall make it profitable by clever planning and sound pricing policy. Others elements I'm not going to change. All destinations within range are full. Fuel prices are going up. Shall I complain? No : it's a challenge, and I shall survive.

Offline Scott

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Re: Oil Prices & Aircraft efficiency
« Reply #11 on: April 22, 2015, 05:56:05 PM »
Fair enough, and as I have said before I don't disagree with what you have all been saying, maybe I am looking too hard at the relationship between aircraft development and economy.  It's just the statement that this game is a highly realistic simulation that led me to think that evolution of aircraft design would follow the economy rather than be totally independent of it.  This is my first GW (although I have also started recently in GW3) and i'm still going and prospering as I slash the excess flights and oil prices fall.

I would be very interesting added feature if the aircraft manufacturers could be made dynamic, i.e. that there was development in the stats of their historical aircraft that was proportional to the amount of income they received through aircraft sales.  These 'update packages' are offered at a price for existing aircraft every few years or at certain investment trigger points and applied automatically to new aircraft at the same time.  For example aircraft like the Dassault Mercure could have range and economy improvements offered if enough sales are produced making it a more attractive proposition.  A Dassault Mercure MkII that could do 1200nm would be a heck of an alternative! 

Anyway, I am sure Sami has more than enough on his hands than to contemplate the above idea.

S

Offline gazzz0x2z

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Re: Oil Prices & Aircraft efficiency
« Reply #12 on: April 23, 2015, 07:29:21 AM »
It's been asked already, but very, very far in the list of priorities. I'd love to have new generations of certain planes. But there is this huge thing to do first : city-based demand.

Offline Tiberius

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Re: Oil Prices & Aircraft efficiency
« Reply #13 on: May 18, 2015, 11:53:47 PM »
I think he's suggesting that there be some semblance of historical reality when setting prices, like aircraft release dates for new models (based within a span of historical release dates).  How about prices are random +/- 15% of historical prices, or +/- 5%, or something.

Offline Teadaze

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Re: Oil Prices & Aircraft efficiency
« Reply #14 on: May 19, 2015, 04:29:04 AM »
new aircraft price is already volitile, based on aircraft ordered and inflation.

 

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