Airline Mogul Forum
Airline Mogul => General Chat => Topic started by: Lux Carriers on September 06, 2008, 01:34:42 pm
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How is it calculated like the formula? How come you can be the lowest price of anyone but using the biggest plane and still loadfactor could be very low. :-\ I know I pick the lowet price when flying ;D
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Because the fare has to match the demand for the route as well as the number of seats available.
By adding the biggest plane to the route, you are, in a sense, flooding the market with seats. Because there are so many seats available now, you have to lower your fares to attract customers to reach 100% LF.
Real world example: A bunch of airlines run LAX-SFO mostly with 737s/A319s. They can all charge a low, but decent fare and still make a small profit. What if a brand new start-up comes in and adds five 747s to that route, running 24 hours a day? That new airline can't charge that "decent fare" because they've added so many seats to the route--well, they could, but their planes would basically fly empty. If they want to attract enough customers to fill every seat on all flights, they will have to charge a much, much lower fare. In turn, all other airlines on that route will have to lower their fares in order to stay competitive.
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I don't mean like huge planes but like running a 737 on a routes where most planes are twenty to fifty seaters like this atlanta to o hare route.
Airline Aircraft Frequency Fare
Air Saint-Pierre ?AdM? McDonnell Douglas MD-81 1 €615
Middle Georgia Transport Boeing 737-500 1 €830
Midwest Air View ATR 72-210 1 €1,000
Air Canada BAe Jetstream J61 1 €810
Air Canada BAe Jetstream J61 1 €1,149
Freedom Airlines ATR 72-200 1 €1,145
SUNWING Airlines ATR 72-200 1 €1,149
United Airlines Avro RJ70 1 €1,150
Cornwall Park Scenic Airlines Bombardier CRJ-100LR 1 €1,270
Triton Air ATR 72-200 1 €1,170
AJC Travel Inc. BAe Jetstream J61 1 €1,300
Gitall Antonov An-38-100 1 €1,200
Unofficial brokerage CASA C212C 1 €1,500
pilli air Shorts 360-200 1 €1,525
Barfarts National Air Antonov An-38-100 1 €1,600
USAir Shorts 360-100 1 €1,600
Domestic Air Antonov An-38-100 1 €1,750
Ryan Air VardaxServ-Aero Hotter 1 €2,000
I run a 188 seat 737 on it but to get 100% loadfactor I have to charge 410. The lowest fare is 615 so say I charged 575 why wouldnt I get 100 % loadfactor? The routes above is atleast 188 seats added up. I dont think anyone would . pay 2000 for a flight in the REAL world when they can take a faster plane and pay only 575
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Basically, the more seats you have, the less you can charge but the more you do make- to a certain point. Regardless of the total seats per route all prices will be different to get 100%, even if there are 2 of the same planes, one may charge more and still get a full plane.
The reason that the most expensive may get % is because the cheap ones (seats on big a/c) have all sold out so you have no choice to pay more or else you would have to walk (and or swim). As there are less seats available people are willing to pay more. As more seats are added, the price people will pay goes down- because there are more cheap seats.
Supply and Demand.