Airline Mogul Forum

Airline Mogul => General Chat => Topic started by: AytchMan on May 13, 2008, 06:18:32 pm

Title: A Cheeky Disquisition on the Revenue Model
Post by: AytchMan on May 13, 2008, 06:18:32 pm
So there I was, minding my own bidness, running a poopy little regional carrier out of Austin, Texas when, all of a sudden, barely three years into the round, I became the proud owner of a 15-billion-euro behemoth.  Now, we've all been through this rant before:  the realism freaks versus the gee-whiz instant billionaires.  But correct me where I go off the track, er, flight path.

The admins want to maintain a, how can I put this delicately, INSANE revenue model for fear of scaring the horses.  Fine and good, that's their right, it's their game.  But here's the rub:  they are pursuing a self-defeating strategy.  The very blessing that they think they are bestowing upon the benighted beer-and-pretzellers is, in fact, a curse.  Here's why:  the game consists of two parts -- the expansion phase and the competition phase (the dreaded saturation that the pretzels detest).  The early expansion is fun -- building an airline, adding routes and bases.  It's easy -- and required if you want to win -- to build up a 100-plane, 300-route carrier in no time.  But then the competition kicks in.  And the pretzels become distraught because two things have occurred.  Their 300% annual growth rate has been reduced to 20% and they've been forced to enter the Spreadsheet Olympics.  And, yea verily, they become dyspeptic.  And they bring their angst to the forum, bemoaning the $1 routes and the saturation and the 10-frequency maniacs -- all, by the way, manifestations of normal, if aggressive, free-market competition.  Conditioned to the easy early profits, they rebel when the real game starts and their path to 500-Billion-EuroWorld is blocked.  And so they complain and/or leave the game.  So, I renew the call:  stop the madness, you're killing them with kindness.  The very blandishments you're tossing at them are driving them to distraction by making the second half of each round more tedious and difficult.  Cut the revenue growth by two-thirds.  By itself, this will rein in the frenzied early pace, reduce carpal-tunnel distress from the endless fare corrections by 80%, and reserve the bloodletting fare wars to the final years of the round.

For those of you gathering up torches and pitchforks, please answer this question first:  if I'm wrong, how do you explain why so many airlines drop out of each round after two years?
Title: A Cheeky Disquisition on the Revenue Model
Post by: StephenM on May 13, 2008, 06:24:51 pm
Nice post.  :)
Title: A Cheeky Disquisition on the Revenue Model
Post by: iranair777 on May 13, 2008, 06:27:11 pm
let me be the first to comment. He has a point. I think the way is to create a few worlds for professional player. I personally have deicided to follow a real life airline and then I realise that I cannot cause AM has people with ridiculous prices. Not the fact that there is a high frequency, but for the fact that there is just to low fares on the freq's. Amount of frequencies per day doesn't determine the price that is being put on the route as each route is independant. we need a min valu eat which no one loses and no one gains a lot.

as I say again, professional worlds is the way. now we have MW up and running, new worlds with proper games is the answer. Professional worlds will be for people who play properly to real world airlines and dont charge E1 flights etc. Yes real world airlines do E1 flights, but not on routes out of major cities and not on bottlenecked routes
Title: A Cheeky Disquisition on the Revenue Model
Post by: StephenM on May 13, 2008, 06:30:47 pm
Quote from: "iranair777"
I think the way is to create a few worlds for professional player.


Set them up when private worlds are available. ;)
Title: A Cheeky Disquisition on the Revenue Model
Post by: iranair777 on May 13, 2008, 06:32:42 pm
Quote from: "StephenM"
Quote from: "iranair777"
I think the way is to create a few worlds for professional player.


Set them up when private worlds are available. ;)

so your saying a public professional world is not possible? it is perfectly possible without resorting to passwords as the players who are playing properly can always report the ones who are not
btw, may I ask hun how long till private worlds is ready?
Title: A Cheeky Disquisition on the Revenue Model
Post by: Virgin Serbia on May 13, 2008, 07:14:30 pm
Quote from: "iranair777"
I think the way is to create a few worlds for professional player.


What would be the definition of a professional player?  :?:
Title: A Cheeky Disquisition on the Revenue Model
Post by: StephenM on May 13, 2008, 07:24:20 pm
Quote from: "iranair777"
so your saying a public professional world is not possible?


Show me where I said that.
Title: A Cheeky Disquisition on the Revenue Model
Post by: scottj63 on May 13, 2008, 08:02:21 pm
let me start by saying that i think "professional worlds" would be a nice addition, because half of me loves the game the way it is now, and the other half dreads having to change routes for the very reasons mentioned. It would be nice with a more realistic pricing, hell, overall economic model.

Secondly i think stephen would be a great politician judging by his posts (laughing)

scott in philippines
Title: A Cheeky Disquisition on the Revenue Model
Post by: Air Elbonia on May 13, 2008, 08:33:03 pm
I will say that i do periodically make minor tweaks to the economic model to try to slow it down, with or without warning.  generally without warning, unfortunately, i can only pull off something that would pull a couple hundred thousand out of a given world's DOP without raising too much ire.

it is noted, truly is.  but i can only do so much without angry mobs (which seem inevitable).  I only hope that each tweak manages to push that chasm between active players and inactive players back an extra hour each time.
Title: Re: A Cheeky Disquisition on the Revenue Model
Post by: pseudoswede on May 13, 2008, 08:56:06 pm
Quote from: "AytchMan"
Cut the revenue growth by two-thirds.  By itself, this will rein in the frenzied early pace, reduce carpal-tunnel distress from the endless fare corrections by 80%, and reserve the bloodletting fare wars to the final years of the round.


I will first say I agree with your post 100%. One problem this game faces is that, unlike in real life, 20-30 airlines don't suddenly appear at the same hub and all immediately start flying to the same destinations. The distribution of route profits between the airlines is what needs to be tweaked. Currently, I see it as more of a "spread the wealth" model--where you'd have to screw up intentionally to not turn a profit. However, the more you make it more of a "Darwin" model--where only a certain handful of airlines can make a profit on a route (similar to today's world)--I think you will actually create more of a environment where it's essential to continually monitor (i.e., adjust routes) in order to maintain a positive DOP.

Whereas real airlines have a large staff to monitor airfares, this game is all about a one-man shop. Unless you're running scripts to maintain your routes (which I suspect a few airlines are doing), you will find yourself in the red quickly.
Title: A Cheeky Disquisition on the Revenue Model
Post by: AustraliaConnect on May 13, 2008, 09:11:00 pm
Quote from: StephenM
Quote from: "iranair777"
Your Mother is Fat


Sorry, I wanted to try that  :P
Title: A Cheeky Disquisition on the Revenue Model
Post by: Air Elbonia on May 13, 2008, 09:34:11 pm
I just ran the math, actually, on a relatively recent update i made.  in world 3, 4, and 6 one small change i made should (when filtered through via update route) be pulling approximately 15 million out of the global DOP.  in smaller worlds, it's a much less impressive number, however it still should add up nicely.
Title: A Cheeky Disquisition on the Revenue Model
Post by: scottj63 on May 13, 2008, 09:36:08 pm
air elbonia, thank you for doing what you can, and for what you do. I think what you said about having pissed off players is a great reason to have a professional player game.

scott in philippines
Title: A Cheeky Disquisition on the Revenue Model
Post by: yourefired on May 13, 2008, 10:14:08 pm
Trust me, the answer to the ridiculous competition problem isn't to cut the revenue model, it's to enable people to differentiate their product. More niche markets=less saturation=less competitive. Multiclass seating goes in the right direction. Adding flight time as a factor into the fare equation is another step in the right direction. The reason we have people mindlessly editing routes 16 times an hour is because they can't make any money any other way. When you promulgate a model that says that ONLY the person with the lowest price will make the most money, you are adding fuel to the fire of this ubercompetition.

When I create my private world, I'll be forced to restrict the world to 60 people and limit the player count to no more than 10 per continent to avoid oversaturation and give people space to roleplay. I like airline mogul, believe me, but it's nowhere near perfect.

To cut competition, one of three things needs to happen:
1. Curb the ridiculous growth rate (however let people start with larger planes)
2. Increase expenses to absurd highs (this has already been done)
3. Differentiation

The third is the best option in my opinion. Realistically, startups in infant industries (dotcoms in the 90's, airlines in the 50-60s, biotech now) DO have 300%+ growth rates. However growth slows when there's more entry. BUT, in the real world companies differentiate their products to shift their demand curves-when your product is ever so slightly different from a competitor's, or VERY different from a competitor's, price matters less. When you claim that a seat is a seat is a seat, people always go for the cheapest ticket and that exacerbates this ubercompetition.
Title: A Cheeky Disquisition on the Revenue Model
Post by: iranair777 on May 13, 2008, 10:21:29 pm
Quote from: "StephenM"
Quote from: "iranair777"
so your saying a public professional world is not possible?


Show me where I said that.


Above you said that 'Set them up when private worlds are available.' So you mean that you cannot create a new world for now which only has about 50 players for the public as a public world? I am saying that its possible to control the professionalism in that world if created by feedback from other players. Also I meant it to start up before private worlds.

btw, whens private worlds starting up?
Title: A Cheeky Disquisition on the Revenue Model
Post by: yourefired on May 13, 2008, 10:24:29 pm
iranair-I'd love to join your 50-player professional world when you start it up. I first joined this game because I thought it would be a more role-playing based game, but I found several things that seriously need fixing (see my essay on it above). That is not to say, however, that I don't enjoy the game. But it's far from perfect.

Less competition, role-playing, no ridiculous fare-adjusting every four minutes-sign me up!

Another thing: people have whined and moaned about this before too, but the pricing model, to be honest, is ridiculous beyond belief. If I place a 747 on LAX-SYD, not only will I spend most of the revenue on fuel, but I can charge 300 to fill all the seats. In the real world, the same route SELLS OUT for $2,000 in coach class. Business class fares go for $12,000 plus. First goes for the price of a small car. And that's with Qantas, United AND Air New Zealand (with a stopover in AKL) running flights. A person who has no competition on LAX-SYD can only get 300 on a 747.

Concorde tickets in the AM world go for about 900 for JFK-CDG. The same ticket on board Air France 6 years ago costed $4,000 ONE WAY. Yes, I looked (it was a part of a french project, don't ask). I'm currently charging €678 on an LAX-NRT with about 300 seats on a Tristar, and the same ticket from LAX-NRT goes for $1000+ for coach alone, in a 777. Business goes for $4,000 plus. First? forget it. Transcon US flights go from anywhere between 340 and 850. I'd say the current model is pretty reasonable in that respect. But to equate a 3 hour hop across the pond to a 7 hour marathon across the pond is absurd, and should be tweaked. To say that people's willingness to pay is the same for LAX-JFK vs. LAX-SAN is also absurd. The difference doesn't have to be as drastic (800 vs. 4000) but a concorde ticket shouldn't be treated the same way a ticket aboard a conventional jet would be treated. That's absurd, or as we say in my administrative law class, arbitrary, capricious and patently contrary to logic.

I hope the competition will be less of a problem for me and others here as the model is tweaked to make longhauls more profitable, make faster flights more profitable, make pricing more realistic, and allow for differentiation.

This suggestion may go ignored again, but I'm going to keep tooting this horn until someone listens.
Title: A Cheeky Disquisition on the Revenue Model
Post by: iranair777 on May 13, 2008, 10:59:27 pm
whoever wants to join (and I am choosing!) my private world when its operation, just PM me. At the moment I have about 80 credits lying around waiting for private worlds :lol:

Anyway, as a reply to above message, :shock:, no wonder how airlines make money!
Title: A Cheeky Disquisition on the Revenue Model
Post by: StephenM on May 13, 2008, 11:00:06 pm
Quote from: "iranair777"
Above you said that 'Set them up when private worlds are available.' So you mean that you cannot create a new world for now which only has about 50 players for the public as a public world? I am saying that its possible to control the professionalism in that world if created by feedback from other players. Also I meant it to start up before private worlds.


If you want a world like that, I'm saying to create it.

Private Worlds will launch when Will is finished doing his work, when I have done my work, and when the GUI Is ready. Probably when the new AM Admin panel is ready, when the current admin panel is curtailed for local admin only and testing on top of that.
Title: A Cheeky Disquisition on the Revenue Model
Post by: MAXAir on May 13, 2008, 11:02:09 pm
While I do understand the pricing structure is way off, keep in mind that a Euro and a Dollar are not the same thing.  Your LAX-NRT seems about right considering the game assumes all aircraft are single class.  If you really wanted to make the game realistic, you could add multiple classes, inflation based on whatever year you are in and what country you operate out of, slots at different times of the day, etc...  Really the possibilities are endless, the question is whether it's even possible, and if it is, will it make the game too involved to the point where you can't compete if you have a life.  
I do really like the idea of worlds of varying difficulty.  That being said, random things would have to come in to eliminate the fact that once you figure out the strategy to win, it basically comes down to who spends the most time on their airline.
Title: A Cheeky Disquisition on the Revenue Model
Post by: yourefired on May 13, 2008, 11:03:48 pm
Keep in mind I'm in 1984, when the euro.....um....didn't exist.

This is still a hobby for me. I don't want to get too involved to the point it becomes a full time gig. I just want th pricing structure fixed and differentiation added. I know multiclass is in the works and is on the way...soon.

What I'm saying is, if I were to sum up my entire essay in a sentence, that differentiation would curb all this price warring because a seat on independence air is NOT a perfect substitute for, say, a seat on Delta Airlines. Right now, since a seat=seat=seat, every time an airline changes prices or adds capacity to a route, everyone else's prices freefall. In the real world there are things that differentiate one airline from another to slow the freefall.
Title: A Cheeky Disquisition on the Revenue Model
Post by: dotter on May 13, 2008, 11:09:46 pm
Quote from: "yourefired"
a concorde ticket shouldn't be treated the same way a ticket aboard a conventional jet would be treated

flight time should be in the calculation, this way a Concorde or any other jet would be treated different. much different.
Title: A Cheeky Disquisition on the Revenue Model
Post by: StephenM on May 13, 2008, 11:13:56 pm
Quote from: "yourefired"
This suggestion may go ignored again, but I'm going to keep tooting this horn until someone listens.


Will took responsibility for the loadfactor equation. So toot him all you like. Cuts down on my reading time. ;)
Title: A Cheeky Disquisition on the Revenue Model
Post by: yourefired on May 13, 2008, 11:18:40 pm
Who's Will? Air Elbonia?
Title: A Cheeky Disquisition on the Revenue Model
Post by: iranair777 on May 13, 2008, 11:30:33 pm
Quote from: "yourefired"
Who's Will? Air Elbonia?


yup
Title: A Cheeky Disquisition on the Revenue Model
Post by: MAXAir on May 13, 2008, 11:41:27 pm
Yourefired- I guess I forgot that part about the Euro, since I was only in Europe one time when they didn't have the Euro.  Now that I think about it, the Euro wouldn't have existed in any of the worlds in the game yet.  I agree with you 100% though, not only about the pricing stucture but also things that aren't realistic.  If I have a choice between taking an airline that flies one round trip between two airports every day, or an airline that flies a one way flight each way, why would I ever choose to fly the second airline, let alone pay more for a ticket?  Distance should absolutely be a factor as well. I also think it should be taken into account where the passengers are going.  JFK-LHR in the real world would not be less expesive than EWR-any London airport.  To make it really interesting we could have flights at different times of day, like morning and evening could have higher airport fees (I know these don't even exist, but they could) and then it would at least slow the game down a bit because you would basically have each route cut in 2 or 3, depending on how many time slots the day was cut in to.  I know I'm getting into suggestions now, but the thing that has really impressed me most is the way the developers treat everyone in the game, other games they might get defensive and say their game is the best.  Here they know their game is the best, but are constantly listening to everyone on how to improve it.  Just like the evolution of each world, the evolution of the game in itself is amazing to watch.
Title: A Cheeky Disquisition on the Revenue Model
Post by: iranair777 on May 13, 2008, 11:54:26 pm
Quote from: "MAXAir"
Yourefired- I guess I forgot that part about the Euro, since I was only in Europe one time when they didn't have the Euro.  Now that I think about it, the Euro wouldn't have existed in any of the worlds in the game yet.  I agree with you 100% though, not only about the pricing stucture but also things that aren't realistic.  If I have a choice between taking an airline that flies one round trip between two airports every day, or an airline that flies a one way flight each way, why would I ever choose to fly the second airline, let alone pay more for a ticket?  Distance should absolutely be a factor as well. I also think it should be taken into account where the passengers are going.  JFK-LHR in the real world would not be less expesive than EWR-any London airport.  To make it really interesting we could have flights at different times of day, like morning and evening could have higher airport fees (I know these don't even exist, but they could) and then it would at least slow the game down a bit because you would basically have each route cut in 2 or 3, depending on how many time slots the day was cut in to.  I know I'm getting into suggestions now, but the thing that has really impressed me most is the way the developers treat everyone in the game, other games they might get defensive and say their game is the best.  Here they know their game is the best, but are constantly listening to everyone on how to improve it.  Just like the evolution of each world, the evolution of the game in itself is amazing to watch.


I'm listening, but seems like you didn't listen to you english teacher when doing paragraphs :lol:

but seriously, seeing how long it takes things to be implemented in the game, I doubt it will come in the near future. I might even start learning PHP to help stephen out  :?
Title: A Cheeky Disquisition on the Revenue Model
Post by: Triple_7 on May 14, 2008, 04:33:39 am
There defiantly needs to be some changes in how the fares are calculated.  I can make more out of a 200 mile flight then a 3000 mile flight with the current set up :?

Multi class seating would be nice and defiantly make a drastic improvement.  But there is some simpler things that would make a difference.  Using one currency is perfectly fine, makes things simpler and less confusing.  Its the already mentioned fare issue that needs work.  Who in their right mind would pay €600 to fly 150 miles :o  But then the long hauls take the biggest hit.  If you have a 747-400 in the current set up its a complete waist, high fuel, long turn time, and a profit that is minimal.  But on a long haul you can barely max it out around €275 for a 1 frequency round trip....I assume that by one frequency that is the fair for both directions as .5 doesn't seem to make much difference.  Thats about $425 USD for a round trip ticket.  I paid nearly $1050 for a round trip cattle class from LAX-TPE-LAX a couple years ago.

The pricing is just out of whack.  You wouldn't pay more for PHX-LAX then you would PHX-LHR in real life...thats just absurd.  The current structure makes things rather boring in a matter of the first year.  Its all who has the fastest fingers and the lowest price...wheres the fun in that.  Its annoying to set get a route to 100% and a few seconds later its back down to 60% because of a €1 difference :x

Also its all about the bigger the airports on a route the higher you can charge.  Not usually like that in real life from what I've found.  My closest airport is Fort Wayne, FWA.  Small regional, not many flights to choose from.  I've always flown from there simply because of convenience in distance, but also because its a great airport being so small, its an enjoyable experience instead of a LAX nightmare.  But the thing is, I could just as easily drive down to Indianapolis, IND.  Every booking I've made you will pay about a $100-$150 more to fly out of FWA then you would IND...Even if the connection city is the same.  FWA is closer to Chicago then IND...yet its generally about $100 cheaper to fly from IND and connect in Chicago then it is to fly from FWA and connect in Chicago...flights arrive about the same time, same airline, same aircraft.  Unlike AM in real life you will generally pay more to fly from a smaller airport then you would to go from a larger airport.  Something to be considered.

But either way the pricing structure needs a serious tweak even before multi class seating is ready to be put into effect.  Long hauls are not really worth it at the current set up.
Title: A Cheeky Disquisition on the Revenue Model
Post by: Seattle on May 14, 2008, 05:30:20 am
I dont think most people realize how long it would take to create another system that is more accurate for prices and daily pax amounts. It took a certain person in another certain type of simulator game, involving the use of aircrafts more than several monthes to create what is now a sophisticated pricing ticket and demand system, based on population around the airport, length of flight, % of shorthaul international, domestic, and LH international (and some occations domestic) flights. For the US, there is actual data on the pax demand. Im not trying to promote that game, just pointing out that it would take a loooong time to revise the system to make a signifigant impact.
Title: A Cheeky Disquisition on the Revenue Model
Post by: Wiseman on May 14, 2008, 10:50:29 am
Another things to add from me:

Frequency, frequency, frequency... the more you have, the more business people get attracted because of the flexible schedules, thus you have better load factor.
Common fleet efficiency... pretty self-explanatory.
Title: A Cheeky Disquisition on the Revenue Model
Post by: MAXAir on May 14, 2008, 02:19:26 pm
Sorry about the paragraphs, I do know how to use them.  Like everything else in my life, I had to write as fast as possible or risk an hour going by and losing 100k in DOP  :D

I just want to be clear, I think the game is great, and what I really like about it is how everyone is able to make suggestions on how to improve it and the developers actually listen.  I know it would take a huge amount of work to make the game more realistic.  Even if the changes are small, it's really cool to see it all evolve.

Wiseman:  I agree with you there, flying once a day in a 757 to a little airport shouldn't make you more money than a few flights a day on smaller planes.  However, there is some realism in the fact that if we could live in a world where 1 frequency was all you needed to sell tickets, the costs of one plane is less than the cost of several.  The problem is if you actually did that you wouldn't be able to sell many tickets unless they were priced so far below market value you wouldn't turn a profit.
Title: A Cheeky Disquisition on the Revenue Model
Post by: iranair777 on May 14, 2008, 04:27:03 pm
Quote from: "MAXAir"
Sorry about the paragraphs, I do know how to use them.  Like everything else in my life, I had to write as fast as possible or risk an hour going by and losing 100k in DOP  :D

Best Excuse I've heard all year!
Title: A Cheeky Disquisition on the Revenue Model
Post by: yourefired on May 15, 2008, 08:41:19 am
I paid $1390 recently to fly JFK-ICN-SFO. The same trip would probably price out on AM to be 650 total (744 there, 772ER back).

Surely you don't believe this to be true. If the game wants to call itself competitive, there's gotta be more than one way to win.