Route Frequency: 1 vs. 2, 3, etc.

[JayP]

Hello everyone,

I do not want to start a flame war, so please do not hijack this thread with hateful comments.  I would please like a meaningful discussion.

I am very new to this game, but I have already seen comments about the "haters" who create routes with frequencies greater than 1.  Such players are considered as "not knowing how to play the game" or similar comments.  I open this thread to understand why some players make these comments.

I would like to start with an example.  

When I attempt to start a route, say Chicago to Detroit, I try a frequency of 1.  I increase the price until the return starts to drop (profit begins to fall).  That way I find the maximum price I can charge to receive max profits at that frequency.  Let's say it comes to be ~$45,000 DOP.  I then try a frequency of 2.  I must drop the price to entice more passengers to fly. However, I am able to obtain a DOP of $65,000.  I then try a frequency of 3 and end up obtaining a DOP of $89,000.  I then try a frequency of 4 but cannot obtain a higher DOP (I have to drop the price too much to entice more passengers).  So, I settle on a frequency of 3.  I would think that makes perfect business sense.

Now, I am VERY careful not to lock in a ticket price lower than the lowest price already on the market.  I understand that it is bad for everyone to start a price war.  So, in all of my routes, I have made sure to set my price at least a few dollars higher than the lowest price already on the market.  Even so, I am able to use frequencies of 3 and receive good profits.

Why would I want to settle for a frequency of only 1 when it would result in less profit?

Thank you for your help!  

[herrgoda]

Actually you do start a price war, even if your fares are higher. When you add say 3 frequencies on a route, you throw so much capacity on there that the loads for your competitors are most likely to drop, which causes them to lower their fares to offset that, this in turn will have your loads decrease and so on. This will also happen with a 1 frequency, but the effects are less.

[Chavaquiah]

Why would I want to settle for a frequency of only 1 when it would result in less profit?

Let me start by saying that this a game and, as long as rules are observed, you or anyone else is free to set whatever prices or frequencies they want or think are better.

Now, onto your specific question. True, on a single route a higher frequency may yield higher total profit. However, it will also use the plane for much longer. So, the profit per hour goes down and down. In most cases you could have that route at single frequency and use the hours left to open a second (or more) route.

To put it simply:

1 route x 1 frequency x 500€ + 1 route x 1 frequency x 500€ > 1 route x 2 frequencies x 300€

[AirHanoverInternational]

1 route x 1 frequency x 500€ + 1 route x 1 frequency x 500€ > 1 route x 2 frequencies x 300€

Almost :wink: You forgot the additional gate costs. But those have just a little affect on the formula written above.

[JayP]

You know, that is a great point, mg35pt.  I had thought of that before, but I wanted to see what others had to say about the issue as well.  I wondered if it were really true.  I thought it would be better to get as much revenue as possible from one gate, since I am paying such a high price to lease the gate. Also, from a competition point of view, wouldn't you want more frequencies?

Herrgoda, that is a great point also.  I did not realize that happened.  So, are you saying that most routes are already at max capacity (meaning: all passengers who want to fly that route are already flying and everyone is fighting for the same passengers).  If not, I do not understand how adding more capacity would strip others of passangers.  If the route can handle 3,000 daily passengers and current flights are only carrying 2,500, what is the harm if I add another 325 capacity?  I guess I do not quite understand the dynamics of the game program.

Thanks for your help, guys.  Great stuff!  

[JayP]

1 route x 1 frequency x 500€ + 1 route x 1 frequency x 500€ > 1 route x 2 frequencies x 300€

Almost :wink: You forgot the additional gate costs. But those have just a little affect on the formula written above.

Yes, this is the reason why I thought it made more sense to make as much profit as possible on one route.  I want to get the most for my money. I'm already leasing the gate for $300,000.  That's a fixed cost.  Why would I not want to maximize profits on that route?

Thanks!

[JayP]

Something else I have just noticed: my load factors are dropping even though (a) no more airlines have been added to the route (b) no one has dropped their price.  Why would my load factors automatically drop after some time?  Does the program take into consideration seasonal fluctations?  Are there other considerations other than price and capacity (size of aircraft and frequency of flights)?

Thanks!

[dktc]

Yes, this is the reason why I thought it made more sense to make as much profit as possible on one route.  I want to get the most for my money. I'm already leasing the gate for $300,000.  That's a fixed cost.  Why would I not want to maximize profits on that route?

Because a gate of 300k rent translate into 12,500 daily rent only. If you are flying a plane with like 30 seats to a 300k airport, you should get 50k or more DOP.

Also, because you should not only fly to 300k airports.

[iranair777]

Something else I have just noticed: my load factors are dropping even though (a) no more airlines have been added to the route (b) no one has dropped their price.  Why would my load factors automatically drop after some time?  Does the program take into consideration seasonal fluctations?  Are there other considerations other than price and capacity (size of aircraft and frequency of flights)?

Thanks!

They must have dropped their price. Nothing else can explain it unless theres a major bug. Freq 1 is good cause you can use the plane on other routes therefore getting a higher return

[Chavaquiah]

Although gate costs must be taken in consideration, their impact is minimal. 300K per month turns out to be just 12,500€ per day. A route to or from an airport with such expensive gates will yield far higher profits than that, even with a small plane. And the difference in price between doing 1x or 3x will almost always be enough to justify adding a second gate at another airport and taking your plane there.

Mind you, I'm not a fundamentalist against high frequencies. They are justified in some circumstances, namely amid strong competition. It's just that they seldomly a good idea for small or starter airlines.

Also, there is not a fixed capacity for a route. What the games shows when creating a route is just a general indication, so broad as to be useless. Instead the number os passengers willing to travel will vary with prices and, to an extent, with the number of seats offered or the number of airlines offering them. So, it is sort of meaningless to assume that a route can handle 3000 pax per day. If 2500 are already flying the only way to make that number go up 325 more is by reducing prices.

Finally, are you sure no one touched their prices? :wink:

[herrgoda]

So, are you saying that most routes are already at max capacity (meaning: all passengers who want to fly that route are already flying and everyone is fighting for the same passengers). If not, I do not understand how adding more capacity would strip others of passangers. If the route can handle 3,000 daily passengers and current flights are only carrying 2,500, what is the harm if I add another 325 capacity?

I am not too sure about that one, but it happened to me several times that my load factors dropped on a route most certainly not already at capacity when an additional competitor entered that market. But I guess that's because of the route evaluation gives "potential" passengers, not the passengers that are available from the airport right from the start (at least unless you serve it 5x with E1 fares). Competition creates demand, at least IRL, so maybe that's used here, without the new demand being enough for keeping everybody happy.

Something else I have just noticed: my load factors are dropping even though (a) no more airlines have been added to the route (b) no one has dropped their price

Larger competitor's aircraft maybe?

[Shawa]

maybe some competitor put a bigger aircraft on the line

[yourefired]

That's why in a duopoly (or triopoly or quadopoly) you don't engage in a price war. However if you explicitly agreed not to engage in a price war, that's colluding and an antitrust violation (well in the US anyway; in some countries antitrust regulation is unheard of; I wouldn't want to do business in any country like that). But then I'm in the peaceful coexistance camp. It's absolutely possible for two large airlines to peacefully coexist in one big airport.

Doing more than one frequency is almost never justified.

[JayP]

Wow!  Thanks to all of you who gave such great responses!  This is very good information.  Maybe it should be a sticky.  :wink:

Finally, are you sure no one touched their prices? :wink:

LOL!  Quite so.  You're right: it is possible someone changed their price. I just remember recording in my mind what the lowest prices were.  The prices had not dropped, but it is possible that someone with quite a bit higher prices dropped ticket price a bit.  As Shawa suggested, maybe someone changed to a larger aircraft.  

Thanks again, everyone!!

[sam051]

In the game i recommend 1 frequency but in real life eg. Qantas does 21 flights a day (21 Freqcuencies) from one city to the other and they charge from $300 - $600 in Boeing 747-400's and there full every flight (almost....average at about 88.9%). This flight is from Perth to Sydney or Melbourne. So i don't really have a problem with poeple in the game doing more than one. Unless its at my base. hehe