7 replies to this topic

[Don Baker]

I would like to encourage competition on routes since, IRL, at most airports you will see takeoffs by a variety of companies.

I'm not sure how the passenger demand is accounted for. It seems in market share there are many more flyers than the demand would indicate. For example demand might be 2828 but airline A is enplaning 2114 and airline B is enplaning 2039. Traffic is 4153 enplaned on a demand of 2828. Is this extra demand created by Airline B and his alliance?

I ask because it seems to me 2828 daily demand is enough to support at least 2 airlines but it's not clear which demand I should try to split. if I have 1414 seats as a reputable airline I should be covering my share of the demand. Is the actual demand the sum total of pax carried or are all the pax above demand connecting pax and always there for the airline in an alliance?

    

[Don Baker]

I'm wondering, too, if someone can explain what it takes to be able to fill a plane with pricing double the default on uncontested routes. This seems an advantage. Certainly if revenue is where it all comes from having twice the revenue as the competition has to be. I've tried doubling the suggested price but usually only fill 1/4 capacity. with a positive DOP still but too empty.

[RubberDuckGaming]

Total demand is different for every airline. The demand for any individual airline that is in an alliance on the route is what’s listed (2248) PLUS 0.2% of the total passengers of the alliance’s airlines that have hubs at either end. For an unallied airline, it is just what’s listed. (2248)

[Don Baker]

Thanks. I don't understand I guess. That sounds like the demand I see listed means that many pax would fly my airline if I had seats available but for another airline some may not feel the same so his demand would be different. I was thinking, I guess, demand is the total number of pax that want to go from point A to Point B. Uncontested, I should be able to match seats with demand and build a reputation for getting them point A to point B. I should be able to set fares to profitable for me and satisfactory to the pax. I assume some pax only make their travel if the price is right while some have no choice but to pay the full fare. I should see the market share chart totally the demand, no?

[Don Baker]

I think what I'm asking is if another airline decides to over supply the route do they bring their own passenger revenue, too or are they just expecting to depart with these seats empty until the market decides they are the better airline and pax shift from the first to the second?  Or does the first airline just have a chance at a bigger pie brought by the second?

[RubberDuckGaming]

If another airline oversupplies a route, they have to use their own demand (by being in an alliance with hubs at either airport) or lower their price. Lowering the price doesn’t actually increase demand, but it means more passengers will fly with you rather than another airline.

 

Essentially, there is a big pool of demand. The pool has a maximum limit which is different for every airline: the demand displayed (always the same) + 0.2% of allied traffic through hubs at either end of the route (different in each alliance). Every airline takes up a portion of this demand. Once the maximum is reached, passengers will prefer the airline with the lowest price.

[Don Baker]

By demand displayed you mean the blue demand bar? On an uncontested route, Matching seats to demand should be full planes with the default ticket pricing. I could supply half the demand and try to get the price up for those who just have to go but have no seat but I haven't found doubling the price  to work as consistently as other airlines I've noted.

Do you also know the mechanics of making doubled pricing work? I've noticed an airline with double pricing on every route I checked. Entering those markets I only get LF of 25% or so and don't get the advantage of gouging the fare.

I only ask for fairness sake. 

 

I understand picing ashould not  increase demand although I might take a trip ?I wouldn't have it the price is $5. That would leave enough for a cocktail at the destination bar.

[Don Baker]

As an example I'm not really understanding, I am in a market with Demand of 1064. There is one competitor. I have 143 seats filled at the average price. Market share shows competitor has 1327 of his 4207 seats filled. Since his load is already more then the demand I probably can't take advantage of my 100% load and add a flight but I'm not sure if I'd be trying for a share of the 1064 or not.