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Why do people in S1 sometimes run routes on a loss?


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#1
pinksnowbirdie

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There's two airlines in S1 that seemingly are willing to run their routes at a loss or sacrifice their profits in the name of having a monopoly on that route, Nighthawk and Merica seem to be pretty aggressive with starting price wars and seemingly willing to run a route on a loss.

I don't exactly get that strategy, what does it really provide other than pissing other people off and creating a monopoly on that route?

I get the benefit to a monopoly but I feel like the willingness to hurt your own airline in the face of someone who won't back down either seems counter intuitive to not let up and allow the market to be shared, especially when it's a bigger market. 



#2
Pacific

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It's like the current Covid crisis. Nip the small airlines in the bud, or they'll haunt you for the rest of the game. A small loss for long-term benefit. It's especially important and easier to do in S1 with the one base rule.


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#3
Sharklet

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Hello.

I am running Nighthawk in S1.

My stratergy is running a route at default prices if possible.

When entering a market where there already is someone flying I keep default price even if the competitor has higher price. If competitor then matches I stay still.

If competitor reduces prices below mine I try to match price, but not go lower then the lowest price offered.

I have routes in this world where neither me or opponent has changed prices, and we fly with the marketshare we have gained. In other routes the competition keeps lowering price, and I will try to follow to prevent losing money. I am pretty sure I have not been the first to lower the price below competiton except when entering a market where the price is higher then my default price.



#4
pinksnowbirdie

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ah okay I was just curious what some who seem aggressive with pricing are intending on doing



#5
p.j

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I'm not currently operating in S1 but if there is a airline operating flights where I want to operate I offer flights for around 200-300$ less to try to bid them out and after they leave the route I increase prices, it's in favour of long term profits

#6
ashwinmpillai

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I too RIP off newly started airlines, because most of them wants the prime routes right away, so in order to establish higher occupancy they reduce the fares significantly. This will hurt my airline which runs multiple aircrafts on these high yielding route. So to teach these rogue startup a lesson, I just start services on his routes with aggressive pricing, and once he surrender, then I’ll follow the lowest price matching by filling required capacity. If the opponent is wise and ethical, I too respect his routes or else, you will be finished.



#7
pinksnowbirdie

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I too RIP off newly started airlines, because most of them wants the prime routes right away, so in order to establish higher occupancy they reduce the fares significantly. This will hurt my airline which runs multiple aircrafts on these high yielding route. So to teach these rogue startup a lesson, I just start services on his routes with aggressive pricing, and once he surrender, then I’ll follow the lowest price matching by filling required capacity. If the opponent is wise and ethical, I too respect his routes or else, you will be finished.

see I'm willing to share a market, but I find when someone has decided to dedicate more resources to that route in the means of higher frequency it proves tough because I have so many aircraft on order but admittedly I did a not great idea and tie up some cash in pre-order leases but I also was being frugal with ordering planes rather than taking chances on ordering a bunch of planes just in case I would face issues with routes.

I'm doing pretty good since I'm in the top 20 of S1 but I mentioned the two I have had some issues with, the one responded so I know that they're not really being so much of a dick as they are just trying to justly do things.

 

I'll admit I was being a bit aggressive on price war starting because I didn't want to reduce my frequency but keep my 100% PAX load.

I'm not sure if I should play around more with IFS to get a better rating or if I should stop maxing out the hours on my planes or what.

I'm content with the growth I have but it might prove more difficult as S1 fills up and airlines expand operations but I think where I'm at now I'm in a decent position to respond to those changes should they arise.



#8
Pacific

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Hello.

I am running Nighthawk in S1.

My stratergy is running a route at default prices if possible.

When entering a market where there already is someone flying I keep default price even if the competitor has higher price. If competitor then matches I stay still.

If competitor reduces prices below mine I try to match price, but not go lower then the lowest price offered.

I have routes in this world where neither me or opponent has changed prices, and we fly with the marketshare we have gained. In other routes the competition keeps lowering price, and I will try to follow to prevent losing money. I am pretty sure I have not been the first to lower the price below competiton except when entering a market where the price is higher then my default price.

RIP Nighthawk.

 

P.S. Thanks for the planes!


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#9
K Gridiron

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Sometimes I can make more money with a slightly higher price than matching the lowest price on certain routes.  If you loose market share and you see that the prices of your competitors have not changed just hit the saved button and you'll gain that market share back.



#10
gvgch

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You run some routes on losses and make up it in the others so that you can take out the smaller airline early before they get a chance to grow big. So they pull out of the route



#11
gvgch

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You run some routes on losses and make up it in the others so that you can take out the smaller airline early before they get a chance to grow big. So they pull out of the route



#12
K Gridiron

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You run some routes on losses and make up it in the others so that you can take out the smaller airline early before they get a chance to grow big. So they pull out of the route

 

You don't ever have to run a line at a loss.  I adjust  the price until my airline makes money.  Sometime I match the lowest price, other times I can charge a high price and make more money than matching the lowest price.






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