Looking for a bit of advice please ... as I'm considering opening a route where there would be competition.
The route has a demand for approx 720 pax/day. My competition currently provides approx 400 seats/day, but operates the route with a 3x/day frequency. My intention would be to provide an additional 200 seats/day, but with only a single flight.
Obviously, the demand is present for the additional 200 seats/day, but am I going to lose money on this route because I'm operating it less frequently than my competition?
Appreciate any advice, input, explanations, criticisms, etc.
Thanks!
You are not going to loose, but you will sell a bit less than equal, or you have to be a bit better in some other values (price,flight timing,seating,RI,CI).
Demand = 720
Supply = 600
So, in normal circumstances, I think both airlines will operate with almost full LF, right?
Frequency benefit will kick in when total supply > demand. Even so, you won't lose money. You just have lower LF% in comparison to competitor's, thus revenue rate might be a little lower, too
When there's a demand of 720, I clearly see about 800-850 seats you should offer.
If you operate a single flight offering about 200 seats you'll make of course money on this route if your Route Image has grown a bit. There's no big frequency bonus in 1vs3, if you go up to 2vs3 frequency bonus is nearly gone.
Thanks for the input everyone. I opened the route and I'm seeing basically what has been indicated here. Just shy of a 50% LF, but making a profit on the route nonetheless.