General strategy question - high demand routes

[JohnGaleazza]

Just wondering what some of you do on routes where demand is well above your existing aircraft capacity (particularly in early days where maintaining fleet commonality matters), and sometimes even the largest aircrafts do not fulfill demand.

Is it better to run multiple flights using the same aircraft type from your fleet, or reach out and use a larger aircraft (which may be a outsider in the fleet).  Has anyone done any experiments with this?

Looking at real world examples airlines will run multiple departures throughout the day, and even change the aircraft size (gauge) throughout the day.  Using smaller aircraft at the beginning and end of the day and larger aircraft during the core of the day.

[Cardinal]

Frequency wins. 95% of the time. That said...

It depends on the route. Are you talking JFK-LAX with a CRJ200LR? Because that's not going to work.

Now if you want to fly the same JFK-LAX with several 737-300s, you'll do better than trying to fly A380s domestically.

However, JFK-LHR won't work on a 737, even a MAX. You will need a 767 at the smallest.

If you have a route that has no competition and there is a bigger plane in the same family you can acquire, go for the bigger plane. If you have to switch to another aircraft family, go for frequency instead. If there is competition, go for frequency.

[Amelie090904]

That's pretty much it, yes. Nicely written!

It's also wise to check routes regularly where you are using "larger" aircrafts. For example I had some routes in GW2 I was flying with DC-4 (a rather rare plane somehow). Demand was 150 and a DC4 made sense to grab the demand. However, 2-3 competitors came along with much smaller DC3 and "out-frequenced" me. My DC4 was not even half full anymore. What did I do? I replaced the DC4 with DC3, too. If I can only get some 30 passengers, then those 30 passengers make more sense on a full DC3 rather than on a half-empty DC4. And that DC4 can be used elsewhere where it makes more sense.

If your routes are rather domestic/regional, then go for frequency. If you have no competition, a larger aircraft will do, but check for new competition regularly. Because it is easy money for everyone else to "steal" your passengers with a smaller aircraft/better frequency.

[knobbygb]

Something else to consider... You don't always want to totally fill the demand for the route, especially where there is no competition and you have plenty of other options for expansion.  Yes, add frequency, but also you MUST remember to strategically raise prices too.  When you are well below capacity, and once the route has matured, you can REALLY hike the prices and still fill the aircraft.  Say you have an uncontested route with 600 demand and you have 150 seat aircraft: You could fly it four time per day with pretty much default prices (OK maybe 5% or 10% higher) or you could just fly it twice per day and probably charge 40% more than recommended. Now, in that case all your fixed costs would be much lower (fewer staff, less maintenance, lease/depreciation, route and landing fees etc.) and you'd only be burning half the fuel,  but you would bring in a lot more revenue per aircraft, thus leading to a bigger profit overall.  OK, later in the game you might be bored or may be chasing statistics (bigger airline, more aircraft/routes etc.) but early on, this IS the way to make more money more quickly.

Generally, the longer the route, the more benefit comes from this - because fuel becomes such a large percentage of the overall cost.  It works particularly well on long haul or when fuel prices are very high. In the recent "Long Haul Challenge" I was operating 747-800 from Asia to North America but I simply could not keep up with demand. On many of the routes I was charging 60% increased prices in economy class and, in a few cases, 130% increased in Business and First. Those aircraft were making four times the profit as the same aircraft type operating at default pricing on routes where supply just matched demand.

Being more realistic, looking at a modern narrowbody jet flying exclusively US domestic routes, the total profit is around 30% of the ticket income. This means that every time I increase fares by just 10%, the fixed costs remain the same so the profit goes up by 33% (assuming I don't lose any pax. of course).  So 30% higher prices = 100% more profit.

[paddk989]

Knobby your post is very enlightening.  I have been playing the game about a year, and your information opens up a completely new dimension, as to how to play the game.

[DannyWilliams]

Knobby your post is very enlightening.  I have been playing the game about a year, and your information opens up a completely new dimension, as to how to play the game.

I know how you feel mate, this is the first time i am actually increasing my ticket prices instead of decreasing them so it's been a lot of experimenting on my part...

[gazzz0x2z]

I know how you feel mate, this is the first time i am actually increasing my ticket prices instead of decreasing them so it's been a lot of experimenting on my part...

Ouch.

I nearly never decrease prices. Unless an opponent is about to die and I need to make his death quicker. In all other situations, decreasing prices is nearly never a good choice.

[DannyWilliams]

Ouch.

I nearly never decrease prices. Unless an opponent is about to die and I need to make his death quicker. In all other situations, decreasing prices is nearly never a good choice.

I used to care WAY to much about my LF instead of profit margin on a flight, never to late to learn...
That's why i am happy that we have people like you on here telling us when we make a mistake or just generally giving us a heads up on something we can otherwise improve on


Cheers
Danny

[RibeiroR]

Something else to consider... You don't always want to totally fill the demand for the route, especially where there is no competition and you have plenty of other options for expansion.  Yes, add frequency, but also you MUST remember to strategically raise prices too.  When you are well below capacity, and once the route has matured, you can REALLY hike the prices and still fill the aircraft.  Say you have an uncontested route with 600 demand and you have 150 seat aircraft: You could fly it four time per day with pretty much default prices (OK maybe 5% or 10% higher) or you could just fly it twice per day and probably charge 40% more than recommended. Now, in that case all your fixed costs would be much lower (fewer staff, less maintenance, lease/depreciation, route and landing fees etc.) and you'd only be burning half the fuel,  but you would bring in a lot more revenue per aircraft, thus leading to a bigger profit overall.  OK, later in the game you might be bored or may be chasing statistics (bigger airline, more aircraft/routes etc.) but early on, this IS the way to make more money more quickly.

Generally, the longer the route, the more benefit comes from this - because fuel becomes such a large percentage of the overall cost.  It works particularly well on long haul or when fuel prices are very high. In the recent "Long Haul Challenge" I was operating 747-800 from Asia to North America but I simply could not keep up with demand. On many of the routes I was charging 60% increased prices in economy class and, in a few cases, 130% increased in Business and First. Those aircraft were making four times the profit as the same aircraft type operating at default pricing on routes where supply just matched demand.

Being more realistic, looking at a modern narrowbody jet flying exclusively US domestic routes, the total profit is around 30% of the ticket income. This means that every time I increase fares by just 10%, the fixed costs remain the same so the profit goes up by 33% (assuming I don't lose any pax. of course).  So 30% higher prices = 100% more profit.

(assuming I don't lose any pax)
That's the case!

[knobbygb]

(assuming I don't lose any pax)
That's the case!

Well yes. So you just have to be careful, increasing the prices slowly and watching the load factor.  If I find routes running at 100% capacity I start with a 10% increase and then follow that with incremental 5% jumps.