Question on the Revenue Model

[AytchMan]

I've long wondered why AM's revenue model is structured the way it is so perhaps one of the admin's can 'splain it to me in terms of a specific example.  I'm running PanGalactic Universal in Public World 2208.  On the Dubai-Al Ain run, there are currently five different airlines offering service at wildly different prices.  These range from $205 to $678.  Not only that but two different airlines are offering service on the exact same model plane at wildly different prices -- the only difference is the frequency (5x for one and 1x for the other).  It's also pretty clear that, at this stage of the game, the load factors for the five airlines on this route are all around 100 percent.

So my question is simple:  why is this happening?  A basic real-world check tells us that the prices for all of these flights should be fairly close together because the game does not offer multiple classes of service or discounts or other differentiating factors.  It's obvious that, all else being equal, multiple frequencies drive down the price significantly and, in so doing, distort the real-world economics rather severely.  Because, with rare exceptions, your average real-world passenger is not particularly price-sensitive based on flight frequency or aircraft model.  So, again, why is this happening?  But I guess my real question is this:  aren't there a few simple changes that can and should be made to AM to better model real-world economics?  Shouldn't the gap for different frequencies be narrowed or closed altogether?  If not, why not?  Is there a purpose or benefit to basing the game on an inaccurate economic model?  And the biggest question of all:  shouldn't the overall net revenue produced for any given flight be drastically reduced?  Note that my intent here is not to drive the game to model the near-bankrupt operation of many carriers.  Rather, it's to revise the revenue model to produce a more reasonable rate of return that would require some additional strategy on the part of the player to succeed.  [All questions asked with warm, fuzzy affection.]

[wishfulanthony]

Ah, I have noticed that problem. I have discussed that extensively on one of my AM mini-pages on my website that explains that scenario pretty well. And thank you for bringing up that issue since multiple frequencies do affect the cost and competition on different flights. Follow the link below for an explanation:

http://www.anthonynachor.com/route-pricing--competition.html

You will see there how I represent flight prices affected by competition, as well as aircraft choices and route demand. If you have more questions, feel free to ask me on this thread.

[AytchMan]

Thanks, Wishful, I appreciate the info.  I posted a cheeky screed back in '08 about the exaggerated revenue model and nothing has changed.  I still believe that a substantial cut in the net profit from each route would serve the game very well.  As it is, I think that, instead of rewarding players, the current revenue model actually removes a lot of fun from the game.  The enormous piles of cash that a player generates from the very beginning eliminate a lot of strategic decision-making and this drives many players away.  Instead of applying thoughtful strategies, player simply engage in a land rush.  We expand at a breakneck pace until all routes are saturated and the dreaded carpal-tunnel price-cutting begins.  In my view, that's why fully half of the airlines become moribund after a year or two.  If the admins fixed this one problem, I think the game would be revitalized.

[StephenM]

If the admins fixed this one problem, I think the game would be revitalized.

There are a number of those items kicking around the game that need to be changed. In terms of changing the revenue/economics side it could only work as a "go-forward" fix, since it would have such a drastic impact on existing games we would annoy more people than we would please. Let me read through what you have posted in better detail tomorrow and I will try and reply then.

[AytchMan]

Stephen--

I first posted this back in '08 and it may shed some additional light:

http://stephenm.org/smfforum/index.php?topic=6833.msg65075#msg65075

Basically, I think that cutting the exaggerated route revenue by a substantial margin would rein in the explosive growth in the early game.  Rather than energizing players with the prospect of billions to be made, I think the current structure strips out a lot of the strategic decision-making that would otherwise be required.  At present, the early game is simply a headlong rush to add planes and routes that requires little planning or analysis.  Cutting revenue drastically would force players to choose new aircraft and select routes more judiciously.  It would also delay the late-game continuous price-cutting that becomes tedious as bases and routes become saturated.

Finally, in a different vein, I'd like to see a sprinkling of random events that require decisions by the player; this would also liven things up.  Note that I'm NOT suggesting those simple types of events where a player is simply informed something good or bad happened and he made or lost five million.  I'm suggesting the addition of decisions that offer a couple of options, each with a balanced set of benefits and disadvantages, thus requiring a little head-scratching by the player.  But this is a subject for another thread.

ETA:  I absolutely agree that games in progress should not be revised.  I think that running one or two public test worlds with a simple fix (that cuts revenue to a level that ensures a decent profit but no more) would be a useful test.  Both to see if the game runs properly and to gauge player reaction.

[AytchMan]

Here's another couple of data points to add perspective to the revenue problem.  We're a little over a year into PW 2208.  Having started with a plane and cash totalling 2.5 million in net worth, PGU is now worth almost 2.7 billion.  That's an ROI of about 100,000 percent (!!!) in fifteen months.  That's so far beyond reasonable expectations as to require no further comment.  And it's routine; I can do it every time.  Beyond that, I've bought all of the planes I need and have effectively saturated all available bases and routes so I'm now sitting on one billion in cash with nothing to spend it on but bigger replacement aircraft.  That's fifteen months into a ten-year game.  The revenue model is seriously out of whack.

[MrOrange]

Very true. Apart from adapting the route revenue, which in my honest opinion is a must-do, there should be more aspects of running an airline taken into consideration in AM, such as staff (which we have already, but in a very basic way), maintenance (same), airport charges other than in gate rent and that sort of stuff. Problem is, it takes time, and you have to find that perfect balance between ease-of-implementation and realism. Still, has to be done IMO.

[TheKevinShow]

This should also be paired with making larger airplanes actually profitable. Games that run into the late 2000s run out of good long-haul options since anything that carries over 300 passengers just isn't profitable. The model should be adjusted to make it possible to run an airline using the larger aircraft. Obviously it's possible to make a profit flying those larger aircraft, or else Boeing and Airbus wouldn't be manufacturing them. However, that isn't reflected in-game.

[Fitch93]

 That Last line is one of those things thats always irked me about this game, if a 747 can't make a profit the airlines wouldn't be flying thousands of them. The big planes are more profitable then the smaller ones, sometimes not by much, but if they weren't, again, the airlines wouldn't use them.

 anyways, back to your regularly scheduled economics debate.

[Royal Dunes]

Agreed with all the above.. I'd also like to add fleet commonality in regards to maintenance fees... I'm currently running an airline on a wide variety of airplanes, I just find it amusing that maintenance is not affected by that or that if we do move towards a common fleet, maintenance cost does not change!


Going back to the frequency issue, would it be more profitable to run a 1x frequency or should I run more frequencies? If I should, when should I, because from what I see, it does not make as much money as a 1x frequency trip.

Thanks Y'all

[Cipher53]

The most profitable frequency (AFAIK) is 1, you can run more frequently on a route but it doesn't really make you any more money, it just adds to the fuel cost.

And honestly most of the long haul aircraft out there are twinjets now, the only case where 747s are being used massively are in cargo airlines. If cargo does get implemented into the game then I would argue more for fixing the maintenance model, because then larger aircraft would be much better for an airline.

I will say though that it'd be nice to include some sort of bonus for fleet commonality. Some sort of percentage reduction in the overall maintenance cost of your fleet, provided that a certain percentage of your fleet is one aircraft, and that you have a large number of that aircraft in service.

[iranair777]

The most profitable frequency (AFAIK) is 1, you can run more frequently on a route but it doesn't really make you any more money, it just adds to the fuel cost.

And honestly most of the long haul aircraft out there are twinjets now, the only case where 747s are being used massively are in cargo airlines. If cargo does get implemented into the game then I would argue more for fixing the maintenance model, because then larger aircraft would be much better for an airline.

I will say though that it'd be nice to include some sort of bonus for fleet commonality. Some sort of percentage reduction in the overall maintenance cost of your fleet, provided that a certain percentage of your fleet is one aircraft, and that you have a large number of that aircraft in service.

In all honesty, the game requires a complete overhaul. Yes hotswap is one of the major things, but the thing that hasn't been modified since iirc 2008-9 is the pricing and maintenance models. List of things that need a overhaul:

- Pricing (aircraft, profit, costs etc)
- Maintenance
- Statistics (There is a whole bunch of stats that can be implemented alongside the other additions)
- Scenarios
- Plus some other things i cant think of at 2 in the morning