Research trees

[GEnx]

Not always, Aer Lingus would have gone bankrupt or been bought out by Ryanair if they hadn't changed their staffing and pricing structures to meet the growing number of low cost competition. Sometimes it can be a prudent business move. Another example, US carriers changing their route structures from point to point to a hub and spoke structure.

I think this applies as a very extreme case. Their choices were either bankruptcy/hostile takeover or radical change. And so I explained:

but only in very extreme cases

[alexgv1]

I think these things happen more often than you realise. Of course you are not going to change your business model unless there is a situation that calls it.

But two further examples:

1) Ryanair was operating as a regional carrier for a decade before it became the low cost giant you and most others would recognise. Michael O'Leary came in and re-wrote the business plan from scratch.

2) BMI has recently dropped all domestic routes and has cut down on the long haul. It is focusing on the European routes and has reconfigured it's planes. A less extreme example of these decisions that get made.

Indeed I can think of two game worlds where I changed my business plan, one was quite early on in my airline, the other was 10 years into a gameworld. These decisions were all just dictated by the changing market.

[Sami]

Search for 'business plans' on that topic.

[GEnx]

I think these things happen more often than you realise. Of course you are not going to change your business model unless there is a situation that calls it.

But two further examples:

1) Ryanair was operating as a regional carrier for a decade before it became the low cost giant you and most others would recognise. Michael O'Leary came in and re-wrote the business plan from scratch.

2) BMI has recently dropped all domestic routes and has cut down on the long haul. It is focusing on the European routes and has reconfigured it's planes. A less extreme example of these decisions that get made.

Indeed I can think of two game worlds where I changed my business plan, one was quite early on in my airline, the other was 10 years into a gameworld. These decisions were all just dictated by the changing market.

Right, but this is AirwaySim. People mostly change their business plans here because they think it is fun and AWS doesn't penalize for it. In the real world it is not even nearly this easy.


Let me try to explain organizational change clearly.

When an organization is faced with a change that alters its very nature, the change of this magnitude is called revolutionary change. In the real world, revolutionary change usually emerges as a response to significant technological and environmental changes. An example of revolutionary change to significant technological change is the computerization of banking. An example for environmental change would be a greater demand for cheap air travel, such as the case of Ryanair. What AirwaySim doesn't take into account and what is very important, is that revolutionary change is often accompanied by:

-Redundancies and downsizing
-Shifts in power
-Changes in strategy
-A new organizational structure

Which takes a lot of time, effort and investments depending on the size of the firm.

[alexgv1]

So you are saying you shouldn't be able to change the way you run your airline in AWS? Whether for fun or profits.

[GEnx]

So you are saying you shouldn't be able to change the way you run your airline in AWS? Whether for fun or profits.

You definitely should. But I think most people have an incorrect picture of organizational change due to the way it is modeled in AWS. There is much more to it than just pulling used aircraft off the market and hugely profit from them. Changing your entire business model is not a wise thing to do unless absolutely necessary, therefore I think there should be huge penalties when an airline does decide to do so (i.e. revolutionary change).

[Sigma]

Changing your core business model then isn't really a smart thing to do for any sort of business. It's like having Ryanair to decide to go from a budget airline to a "quality" airline, which is the most stupid thing they could do. Of course, change is an essential part of business (hence the vast amount of literature on it), but that only in very extreme cases applies to the entire business model. It would completely discard a firm's knowledge base and FSA's (Firm Specific Advantages) which make up the business as it is.

Well, sure, if we were talking about overnight changes.  But businesses change models over long periods of time, years, even decades, all of the time.   The span of AWS presently runs 2-3 decades and there are certainly players that want it to run a lot further than that.  And it would actually be fun if the world and the players (via the airlinse) was dynamic.

Southwest went from going so far as telling the US government it only wanted to be an intra-state carrier and therefore they had no standing to regulate it -- to being the largest airline in in the nation.  It just took 30 years is all.

Airlines migrating from point-to-point to a hub-and-spoke system applied to every single major airline in the world, hardly an extreme case.  And now some of the most successful newcomer airlines are moving back to point-to-point and then finding their sheer size at some point sometimes necessitates a hybrid operation of sorts.

Outside of the airline business, Hyundai went from making cheap econoboxes that sold for about the price of a high-end television to now making $50,000+ luxury sedans that compete with BMW and Lexus.  And that's just the most obvious, widespread example.  There's countless examples in the automotive industry of particular models changing in extremely significant ways -- i.e. why a Taurus, once the proverbial apple pie of American midsize sedans for the masses, is now a near-luxury $45,000 full-size car.

Outside of large dynasty companies, usually mired in labor contracts preventing any appreciable changes or simply their gargantuan size making mobility difficult, a dynamic business plan is pretty much the norm.  Google certainly didn't start out with any visions of taking over the software world from top to bottom -- but it has, and now is constantly faced with difficulties of remaining as nimble as it once was due to its size.  10 years ago nearly on the brink of bankruptcy Apple certainly didn't plan on being the largest tech company in the world within a decade on the bank of a simple MP3 player -- but it did.

Most companies have a 'business model' vague enough to allow them a great deal of flexibility without the need to start over again.  No one would ever start a business saying "I'm gonna fly turboprops and ONLY turboprops for the entirety of my existence else I'll just bankrupt my business".  What if excessive short-range competition forces them to have to look further away?  What if new jet engine technology brings the operating costs down so much that ignoring them is a shortsighted move?

The way I envisioned it, and I didn't expound on every thing in my original post so perhaps this wasn't clear, was that, of the "dozens or hundreds" of "strategic decisions" that there was to choose from, you got to pick X of them every year (depending on the number coded in) and maybe a few to start with to establish a baseline model.  But the important thing is that, as I described, every one of these has a potential negative to go along with it as part of the cost of this 'revolution'.  So you're a few years in and you get a single choice -- this year you negotiated your pilot salary on small planes down at the expense of a higher salary on large planes.  So you've begun the process of moving your airline towards focusing on smaller planes and the 'cost' was a concession to your pilots of larger planes (so you've either increased some costs immediately, or hindered your ability to move in that direction in the future).  The next year you make a new "strategic decision" that gives you a large maintenance penalty for jet engines in exchange for superior mechanical efficiency at turboprops -- so you're furthering your path down the regional turboprop 'core competency'.  And so on and so forth.

And if someone comes in to compete against you, they are hindered by their previous choices and you are hindered by yours.  Or maybe they've been planning this for a long time, and they're ready to compete with you head-to-head after a series of decisions they made over the past 5 years.

[alexgv1]

You definitely should. But I think most people have an incorrect picture of organizational change due to the way it is modeled in AWS. There is much more to it than just pulling used aircraft off the market and hugely profit from them. Changing your entire business model is not a wise thing to do unless absolutely necessary, therefore I think there should be huge penalties when an airline does decide to do so (i.e. revolutionary change).

Most companies have a 'business model' vague enough to allow them a great deal of flexibility without the need to start over again.  No one would ever start a business saying "I'm gonna fly turboprops and ONLY turboprops for the entirety of my existence else I'll just bankrupt my business".  What if excessive short-range competition forces them to have to look further away?  What if new jet engine technology brings the operating costs down so much that ignoring them is a shortsighted move?

Well these are both sentiments which I can agree with. And perhaps Sigma's post has bought us back on topic, as he is integrating it with the research tree idea.

[GEnx]

Well, sure, if we were talking about overnight changes.  

That's exactly what I was talking about because this is what happens in AWS now.

But businesses change models over long periods of time, years, even decades, all of the time.   The span of AWS presently runs 2-3 decades and there are certainly players that want it to run a lot further than that. Southwest went from going so far as telling the US government it only wanted to be an intra-state carrier and therefore they had no standing to regulate it -- to being the largest airline in in the nation.  It just took 30 years is all.

Right, but that is evolutionary change, which involves ongoing minor changes that are incorporated in the existing organizational structure. Most change in business is evolutionary: it involves minor adjustments in response to circumstantial and unanticipated events. An example of evolutionary change is upgrading a firm's existing production process.

Most companies have a 'business model' vague enough to allow them a great deal of flexibility without the need to start over again.  No one would ever start a business saying "I'm gonna fly turboprops and ONLY turboprops for the entirety of my existence else I'll just bankrupt my business".  What if excessive short-range competition forces them to have to look further away?  What if new jet engine technology brings the operating costs down so much that ignoring them is a shortsighted move?

Fair enough. Still, changing from that knowledge base of only turboprops to large jets is quite a substantial move and again, involves redundancies, shifts in power, changes in strategy and a new organizational structure. I'm not saying a player should not be able to change, I am just trying to point out that they shouldn't be able to do it as easily as it is right now.

The way I envisioned it, and I didn't expound on every thing in my original post so perhaps this wasn't clear, was that, of the "dozens or hundreds" of "strategic decisions" that there was to choose from, you got to pick X of them every year (depending on the number coded in) and maybe a few to start with to establish a baseline model.  But the important thing is that, as I described, every one of these has a potential negative to go along with it as part of the cost of this 'revolution'.  So you're a few years in and you get a single choice -- this year you negotiated your pilot salary on small planes down at the expense of a higher salary on large planes.  So you've begun the process of moving your airline towards focusing on smaller planes and the 'cost' was a concession to your pilots of larger planes (so you've either increased some costs immediately, or hindered your ability to move in that direction in the future).  The next year you make a new "strategic decision" that gives you a large maintenance penalty for jet engines in exchange for superior mechanical efficiency at turboprops -- so you're furthering your path down the regional turboprop 'core competency'.  And so on and so forth.

And if someone comes in to compete against you, they are hindered by their previous choices and you are hindered by yours.  Or maybe they've been planning this for a long time, and they're ready to compete with you head-to-head after a series of decisions they made over the past 5 years.

Great idea.

Edit: These kinds of discussions are very productive, gentlemen.

[JumboShrimp]

Changing your core business model then isn't really a smart thing to do for any sort of business. It's like having Ryanair to decide to go from a budget airline to a "quality" airline, which is the most stupid thing they could do. Of course, change is an essential part of business (hence the vast amount of literature on it), but that only in very extreme cases applies to the entire business model. It would completely discard a firm's knowledge base and FSA's (Firm Specific Advantages) which make up the business as it is.

Changing a business model has its costs - in Real Life and AWS.  So the costs are there to make you think twice.  But I wouldn't want to see an outright prohibition in AWS from doing something, or being completely locked in from beginning to the end to one strategy.

[GEnx]

Changing a business model has its costs - in Real Life and AWS.  So the costs are there to make you think twice.  But I wouldn't want to see an outright prohibition in AWS from doing something, or being completely locked in from beginning to the end to one strategy.

There's been quite an extensive discussion about this already. I'd recommend reading it.

[swiftus27]

Thanks, Quinoky...

No one said you'd be barred from doing anything. 

Let's say you were a long haul carrier and went down that path.  If you decided to order 40 turboprops and plop them on short flights, you will find it difficult to compete with the guy who went down the turboprop route.... just as he would find it tough to go long haul.

[GEnx]

It may also finally solve slot hogging once and for all, as the penalty for operating cheap props would be pretty substantial.

[JumboShrimp]

It may also finally solve slot hogging once and for all, as the penalty for operating cheap props would be pretty substantial.

But some people are advocating making operation of cheap props - even cheaper - in future revisions, making it a more viable business.

If that happens (operating small aircraft becomes a more viable business), slots are going to become a much bigger headache than they are today.  If there is no ongoing slot rental charge, and frequency benefit remains what it, and there is no airport slot expansion based on demand, it may very well ruin the game, since it would encourage flying at very high frequency with small jets even further.  The slot problem will become a complete nightmare, possibly making the game unplayable.

[Sigma]

But some people are advocating making operation of cheap props - even cheaper - in future revisions, making it a more viable business.

If that happens (operating small aircraft becomes a more viable business), slots are going to become a much bigger headache than they are today.  If there is no ongoing slot rental charge, and frequency benefit remains what it, and there is no airport slot expansion based on demand, it may very well ruin the game, since it would encourage flying at very high frequency with small jets even further.  The slot problem will become a complete nightmare, possibly making the game unplayable.

That's because too many people think that small-plane operations need to be as ludicrously profitable as long-range jet operations.  When the reality is that it's the small plane operations that come anywhere even remotely close to being financially realistic in the game.  Other models need to come down to the profits found in the small planes not vice versa.

Not that that's the only problem finance-wise with the game -- flying nothing but a small fleet of a couple-dozen BAC's out of SAN, a level 5 airport that even shuts down at night, I'm still able to make a ludicrous 60% net margin in JA3.  And that's sustaining a needlessly high CI of 70, a fairly meager 70% LF, and a sizeable chunk of my fleet converted to superior seating just because I didn't have the demand for high-density seats.  $2.2M in net profit on sales of $3.5M.  Insane.  I could easily surpass 70% margins if I could operate my planes at night and dropped my CI down, and 80% margins if I had slightly denser routes that would fill my planes a bit more.

[JumboShrimp]

That's because too many people think that small-plane operations need to be as ludicrously profitable as long-range jet operations.  When the reality is that it's the small plane operations that come anywhere even remotely close to being financially realistic in the game.  Other models need to come down to the profits found in the small planes not vice versa.

Not that that's the only problem finance-wise with the game -- flying nothing but a small fleet of a couple-dozen BAC's out of SAN, a level 5 airport that even shuts down at night, I'm still able to make a ludicrous 60% net margin in JA3.  And that's sustaining a needlessly high CI of 70, a fairly meager 70% LF, and a sizeable chunk of my fleet converted to superior seating just because I didn't have the demand for high-density seats.  $2.2M in net profit on sales of $3.5M.  Insane.  I could easily surpass 70% margins if I could operate my planes at night and dropped my CI down, and 80% margins if I had slightly denser routes that would fill my planes a bit more.

I am not one of the people advocating small planes to be more profitable, and I would not mind if the environment was more challenging for larger aircraft.  I am not that familiar with early era games, I play only 2000+ games.  One way to make things challenging is with high fuel prices.  It was the case in the previous 2000-2020 game (ATB) where fuel prices hovered in 1000 to 1200 range in the second decade.  Not even 1/3 of the airlines survived to the end.  In current MT3, the fuel prices are very low (700 - 800 in 2010 to 2015).  Outside of a short fuel price spike, hardly anyone goes out of business because of financial difficulties...  So fuel prices are a good tool to make the game more challenging...

What I am concerned about is that if the algorthms are changed to make flyig small aircraft more profitable, it will just exacerbate the slot constraints at all major airports.  They will be so flooded with small aircraft that routes such as LH routes from JFK / LAX / NRT / LHR that exist in RL and in current games will be severely constrained by lack of slots.

I think most people agree that frequency (with smaller aircraft) is already a competitive tool that is too powerful.  Making it even more powerful would un-balance the game even more.

[GEnx]

I am not one of the people advocating small planes to be more profitable, and I would not mind if the environment was more challenging for larger aircraft.  I am not that familiar with early era games, I play only 2000+ games.  One way to make things challenging is with high fuel prices.  It was the case in the previous 2000-2020 game (ATB) where fuel prices hovered in 1000 to 1200 range in the second decade.  Not even 1/3 of the airlines survived to the end.  In current MT3, the fuel prices are very low (700 - 800 in 2010 to 2015).  Outside of a short fuel price spike, hardly anyone goes out of business because of financial difficulties...  So fuel prices are a good tool to make the game more challenging...

Right, but the reason why people bankrupt is because of the sudden increase in cost, which makes their unrealistic operations.. well, prove to be unrealistic. I also think the aim should not be to bankrupt as many airlines as possible. The aim should be to have a different algorithm to completely change the way players invest into planes, routes, personnel etc., making things more realistic, balanced and challenging.

What I am concerned about is that if the algorthms are changed to make flyig small aircraft more profitable, it will just exacerbate the slot constraints at all major airports.  They will be so flooded with small aircraft that routes such as LH routes from JFK / LAX / NRT / LHR that exist in RL and in current games will be severely constrained by lack of slots.

I think you're missing the point here.. It is only when a player invests heavily in (for example) long haul operations, that other aircraft types would be penalized (as per the ideas expressed in this thread). If a player starts with props operations, however, the algorithm adapts so that operating props becomes more realistic, not more profitable. (And as the current algorithm for props already comes close to reality, not much would have to be changed here.)

[swiftus27]

Getting back to my original idea here.   Too many of you are focusing on it using the current in game data/profits and more.  This isn't something that id want adopted overnight. 

I agree that lh is way too profitable right now especially in the beginning of games.  This isn't just to slow these airlines down.  It is for all of us to mainly think of an airline idea early on, and focus on it.  No more running lh, continental, regional, and sh as one airline