Competing with airlines from other countries

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1

Hello all,

I'm developing a nice little profitable airline but I've got some questions regarding competing against large airlines from other countries.

I've been slowly able to build up my market share in my hub and I have finally become the airline with the highest traffic there, followed 1-2% behind by "Large Airline B" from a foreign country. However, large airline B has most of the traffic out of my 2nd, 3rd and 4th largest airports too (I fly from these to my hub). On the 2nd largest I'm slowly able to take market share off him and keep my flights full. But with 3rd, 4th etc there are also other large airlines which take even more of my traffic so I find that my flights are barely profitable because I can't get them to fill up since they can fly direct from these cities to the other countries rather than going via my hub.

Now don't get me wrong, this isn't a complaint. I've made it a goal of mine to control the largest market share out of every airport in my country (I'm the only airline in my country). My question is what are some good strategies to take market share from these guys? Will this slowly happen as I get more international destinations, or will it take a more refined strategy than that?

OtterNZ

2

Are you talking about Silver Fern Airlines?

3

Oops forgot about my signature, no not my Aspern airline. I've temporarily removed my signature to avoid confusion on this topic. This is regarding an airline of mine on another server where I'm the only airline in my small country. My main competition is large airlines from other countries who fly out of my cities.

4

…there are also other large airlines which take even more of my traffic so I find that my flights are barely profitable because I can’t get them to fill up since they can fly direct from these cities to the other countries rather than going via my hub.

Now don’t get me wrong, this isn’t a complaint. I’ve made it a goal of mine to control the largest market share out of every airport in my country (I’m the only airline in my country). My question is what are some good strategies to take market share from these guys?

This is IMO a very old "problem". Huge airlines are able to capture traffic from secondary airports of my country and my offer are only flights via one of my hubs because I can´t feed flights at the secondary airports. I accepted this situation and concentrated my efforts to increase frequencies between a secondary domestic airport and a hub of mine and to offer flights from my hub to secondary international airports. My strategy is to ignore competition and to concentrate my efforts towards the flight ops of my airline and those of my important IL-partners as good as I can.

5

Oops forgot about my signature, no not my Aspern airline. I've temporarily removed my signature to avoid confusion on this topic. This is regarding an airline of mine on another server where I'm the only airline in my small country. My main competition is large airlines from other countries who fly out of my cities.

only one way is win that battle

you must buy airplane for that line (not lease) and cut ticket price

6

Buying is not a good option early in the game. The ROI is way too low.

You should rather use small a/c and offer more cconnections.smaller a/c are easier to fill and require a smaller deposit, allowing you to lease more a/c -> more connections -> more pax.

don’t look at the marketshare. If you have a good business plan, you will gain marketshare automatically.

also, don’t confuse marketshare with profitability. Although having the latter at the beginning usually leads to the former in the end :wink:

7

This is IMO a very old "problem". Huge airlines are able to capture traffic from secondary airports of my country and my offer are only flights via one of my hubs because I can´t feed flights at the secondary airports. I accepted this situation and concentrated my efforts to increase frequencies between a secondary domestic airport and a hub of mine and to offer flights from my hub to secondary international airports. My strategy is to ignore competition and to concentrate my efforts towards the flight ops of my airline and those of my important IL-partners as good as I can.

Did you only increase frequency when the planes were full to a "green" level? I ask because in my examples secondary airport 1 is in the 90-100% seat fill range on an ATR72, which I'm slowly increasing flights from, while secondary airport 2 is in the 50-65% range on an ATR72. I have an ATR42 which I'm using for the smaller airports, but I don't want to try and use it on the secondary airport 2 as it's definitely large enough to fill several larger planes and if I start to take any market share then the ATR42 will be too small.

I understand the other part though, concentrate on feeding connecting flights of my own and of good IL partners and eventually market share and passengers will shift onto my domestic flights as I get more high quality international flights.

only one way is win that battle

you must buy airplane for that line (not lease) and cut ticket price

Thanks, I'll keep that in mind for when I'm a larger/richer airline. Does this work on the idea that they cancel their flights because of low seat fill and I can then put my prices back up to normal with the reduced competition?

Buying is not a good option early in the game. The ROI is way too low.

You should rather use small a/c and offer more cconnections.smaller a/c are easier to fill and require a smaller deposit, allowing you to lease more a/c -> more connections -> more pax.

don’t look at the marketshare. If you have a good business plan, you will gain marketshare automatically.

also, don’t confuse marketshare with profitability. Although having the latter at the beginning usually leads to the former in the end :wink:

At the moment I'm using 1x ATR42, 3x ATR72 for Domestic, and 4x A318 medium for international flights. Were the ATR's the small planes you meant, or were you more meaning go down to smaller ones like LET? Also, I know I'm profitable, but I could be doing better if some of the domestic routes had higher seat fill from the secondary airports with heavy international traffic from other liners. I've noticed that they have increased slightly in seat fill as I have added more international connections and signed with more IL partners, I think this might just be how I continue my strategy. Also I intend to start flying to a couple of the major airlines hubs that are taking my traffic, but it will be hard to set up as they are in major hubs with very few slots remaining.

Thanks to all 3 of you for your help :)

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Well, if you were providing us with the airline and server we might actually take a look and give more solid feedback.

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Thanks, I'll keep that in mind for when I'm a larger/richer airline. Does this work on the idea that they cancel their flights because of low seat fill and I can then put my prices back up to normal with the reduced competition?

well look on your flight report

If you own airplane you need 50% full plane for cover expences

If you have lease airplane you need 70%+ or 80% full plane for cover expenses

Basically you will kill competition with lease planes and when sell 100% seats you got extra profit (no lease depreciation) 

Another way for war on some route is make more flights then competitor and if you have chance schedule your flight 30-60 min before, and clear surplus number of passengers

So if competitor fly 2x in day, you fly 4x or 6x on same route

If you own plane you will win in 2 weeks max against some leased plane

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As mentioned, even though the profit margin will be higher (not taking depreciation into account), but the return on investment (ROI) would be pretty low.

11

Hi,

I would go with the advice that MD80 gave.

Don't waste energy in commercial battles. Go for a profitable airline. If you face competition, make sure your ratings are okay. As your number of international destinations increases, you will get more connecting traffic from your domestic airports (as you noticed yourself).

If you secondary airports allow transfer passengers, make them into (small) hubs. That will also help.

Jan

12

Did you only increase frequency when the planes were full to a "green" level? I ask because in my examples secondary airport 1 is in the 90-100% seat fill range on an ATR72, which I'm slowly increasing flights from, while secondary airport 2 is in the 50-65% range on an ATR72. I have an ATR42 which I'm using for the smaller airports, but I don't want to try and use it on the secondary airport 2 as it's definitely large enough to fill several larger planes and if I start to take any market share then the ATR42 will be too small.

It really depends on the individual market-conditions. A number of flights are not green but they get green as soon as I offer enough connecting-flights between my hubs. Regarding Sparrow Air, I´ve decided to offer a vast amount of frequencies between my domestic hubs to increase the chances that the feeder-effect starts to kick-in.

The hubs also allow me to provide routes to secondary destinations with healthy loads and I also tend to think “mid-term”. Five flights a day with a 137-seat MD-80 might be too much at the beginning but adequate in the mid-term and I don´t need to monitor a growth on that particular route. Scheduling a cheap MD-80 to offer five short haul flights is functioning for me.

Another approach is needed for difficult markets. Flights to China from Indonesia are not automatically well-booked. Important ILs are needed and I tend to begin with two to three flights a week and gradually increase the frequencies as soon as I see enough demand to increase the number of flights.

Additionally there are regional-subsidiaries which feed my hubs and which also assist me to fill mainline aircraft. I also rely heavily on important ILs.

The demand on domestic trunk routes is that high that I could instantly offer 50 additional daily flights but slots are rare and it is getting difficult to grow at Jakarta on devau (due to my networks) but hey: I respond to demand and I need to have a strong network to compete against much bigger airlines in the region.

It is (IMO) also an important factor to “know” the market in AS. I think that I learned a little bit of the Indonesian market and I know that some routes would work while others won´t be viable.

I once wrote that I don´t like the 100%-green load factors on many flights between major hubs of mine because I don´t know how many passengers were left behind! In real world, an airline knows that and can adjust capacities and fares to reflect the demand and to make full use of the demand. Many airlines also “control” demand through fares etc…

Last but not least I started my current Sparrow Air with 7 million and established a regional subsidiary with 3 million. The subsidiary allows me to use smaller aircraft which are not welcomed at my mainline. I wanted to avoid the situation to start with ATRs and to experience that the ATRs are far too small. ATRs are nice for feeder services.

In short: Try to establish an airline with some major trunk routes which allow your airline to generate enough income. I think that it´s very important to have routes which “always generate money”. Add secondary destinations and these flights will feed your other flights vice versa.

Think forward and not only until tomorrow.