The problem of connecting flight prices has been brought up a few times in the forum, and I’m sure it’s something most players have thought about from time to time. I know there have already been a few suggestions as to how to make these prices more realistic, but I’d like to make a suggestion of my own that consists of two primary changes.
#1: Automatic Price Ceilings – The ORS already takes into account how connecting affects flight rating. A direct flight has a much higher rating ceiling (100), then a connecting flight (from what I’ve seen 65?). I think it would also make sense if a similar system could apply to pricing. In other words, each player can control the price of individual routes flown by their aircraft. However, when the ORS compiles these routes to make connecting flights, they would apply a price ceiling proportional to the overall flight rating (taking into account things such as price performance of each leg, connecting time, number of stops etc).
For example, in one game world, a flight from CGK to BKK costs a Y passenger AS$ 206. Alternatively, the same flight, connecting through SIN costs AS$ 279. However, the first flight has a rating of 83, and the second has a rating of 38. Let’s say, for example, that in this new system only a max connecting flight rating of 65 allows one to price a flight at 100% of the price of the two legs. In this simplified system, the price of this connecting flight would automatically be priced at $AS 160.
In order to prevent similarly unrealistically low prices I think it might also make sense to induce some sort of price floor, as well as not to have the rating and prices be proportionally linear but something more along the lines of a curve where the largest impact is in the middle ranges.
#2: Connection Caps — Anyone who has read this far has probably thought of the obvious problem with this approach. Taking our previous scenario, let’s say the game world has the demand calculation for CGK before the calculation for SIN. What would happen is that both my CGK-SIN and my SIN-BKK router would be filled with low paying connecting customers, significantly hampering my ability to turn a profit on those routes. What I suggest is allowing each player to set a connecting cap on each route, just like a player can set prices for each route. This means that on the inventory screen, I can cap my CGK-SIN connecting passengers at any amount I want.
Playing out this scenario, let’s assume I have direct demand from CGK-SIN and from SIN-BKK so that I can fill 75% of my capacity on that route. (In order to find this out one would have to do some trial and error). Once I know this I’ll cap my connecting capacity at 25% so that I primarily fill up all of my flights with full-fare paying direct customers and only use connections to fill out my load factor.
Benefits
If for some strange reason, you’ve read this far, I want to lay out a few cool benefits of this change, aside from simply more realistic representation of actual airline prices, without having to resort to a complex system of classes like Airline Sim attempted to do a while back, but never implemented.
#1: Varying Strategies — At this point most experienced players have similar strategies: use a hub and spoke model and peaking to facilitate waves of connections. While it is certainly difficult to do well, this strategy lends itself to certain homogeneity and doesn’t reflect the reality of the world of commercial aviation. Specifically in recent years, the trend has been away from hub and spoke models and toward more point to point offerings. Airline Sim, however, has been notoriously unfriendly to point to point operations. This model might change things.
With the clearly decreasing value of connecting flight, players will have to make serious strategic decisions when choosing to adopt a hub and spoke or point to point approach. The former will likely lead to higher demand, but lower margins, while the latter will have less demand to play with, but higher profits if hitting the right markets.
Inevitably, the best players will find some good mix of the two, more accurately mimicking most real airlines which brings me to benefit #2.
#2: Low Cost Airlines — This to me is perhaps the most exciting possible result of this change in price model. In the real world, low cost airlines such as RyanAir in Europe, or JetBlue in the US, don’t have traditional hubs, and don’t normally attract connecting passengers, unless of course they are self-hubbing (more on that later). Instead, these airlines rely on the strategy that they can attract customers, even in smaller markets, by flying direct flights between destinations at a much lower cost. In essence, they are trying to steal the passengers that might otherwise connect through a mega-hub like Frankfurt or Istanbul, by offering them direct routes that don’t otherwise exist. Alternatively, they will compete with the major airlines on routes they do fly direct, but do so to smaller airports with much lower fees. In both cases, low cost airlines can fly at lower load factors because of the lower costs associated with their flights, and therefore are not as reliant on hubbing as the major airlines.
In AirlineSim this type of airline essentially doesn’t exist because low cost means low rating, means you are low on the ORS and can be easily beaten for demand on your route by competitors. On the other hand, having a connecting flight on a route (which means inherently low ratings), is not as dangerous since one doesn’t need to fill up the whole flight in order to be profitable. A good hub can merely skim the bottom of the ratings from each route and fill up all its flights.
With this new model, there will be a drastic shift in pricing. Pricing routes as they are will no longer be profitable for traditional hub and spoke airlines. By necessity, hub and spoke airlines will need to raise their prices, in order to recoup more from their connecting passengers (this will also most likely necessitate an adjustment in the impact of pricing on the ORS, so that raising prices of individual legs – to a point – does not impact the ORS calculated price proportion in such a way that I actually lose money. Applying a good curve, as mentioned above, also helps deal with this problem). By doing this, they can still operate with high connecting caps (see above), rely less on direct demand, and essentially operate as they were before. What results is a very accurate reflection of the real world: it is very expensive to pay for a direct flight on a major airline, but much more manageable to connect on those same airlines.
With the increase in price by hub and spoke airlines, their direct ratings will necessarily fall. What emerges is that a low cost point to point airline can come in with mediocre scores across the board (cram in passengers, offer few services etc.) and a price point which compares favorably to major airlines (since they’re not catering to connecting passengers anyway).
A possible result is that one would find the ORS would rank flights in the following order for Y passengers: Low-cost point to point, and then either hub and spoke direct, or hub and spoke connecting depending on the ratings and price of each. The radical notion here is that a connecting flight might actually jump over a direct flight due to the nature of each flight’s prices. In other words, the ORS would need to re-calculate the final price performance ratio after applying the proportional price (see above) for a connecting flight, and only then rank the flights available. This would result in only hub and spoke airlines with pristine ratings competing in the demand market with low cost airlines. It would also preserve the game’s emphasis on connections, albeit in a more realistic way.
Almost everything in this section applies to economy passengers only. As in the real world, and as is reflected by the current ORS, business and first class passengers are much more greatly affected by low ratings in other categories, and less affected by price. As such, these passengers would almost always have direct hub and spoke flights first, and low cost airlines last. This would lead to another realistic reflection of most low-cost airlines being economy only. Additionally, as is reflected in the current ORS, the longer the flight, the greater low scores in non-price categories matter. This would also realistically reflect the lack of low-cost long-haul airlines.
Given the previous limitation, and the realities of traffic rights, low-cost airlines would be limited to countries with high domestic (or European) demand, or with high short-haul direct international demand. This would also reflect reality in terms of the home countries of low cost airlines. (A question to explore would be how to recreate airlines like AirAsia which scoot traffic-rights by incorporating subsidiaries in other countries in partner with National companies. I know schemes like this existed in the IPO version of the game, but perhaps even without IPO’s players can set up multinational joint-ventures. A simpler way is just the Domination rules of allowing foreign investment across the board).
Another interesting benefit of low-cost airlines is how they would work in concert with ground networks. In the current ORS, ground-networks significantly reduce the rating of a flight, even if there’s only one actual flight, the ground network segment is considered a flight for the purposes of ratings. In other words, while DMK may be able to draw demand from BKK on a flight to CGK, via ground networks, it will do so at the cost of a big dip in ratings. However, it’s possible that the significant boost given by the lower price of low-cost airlines as compared to hub and spoke airlines, may even allow real-life low cost hubs like DMK, or Hahn, or Bergamo, to compete with the bigger Airports for their own customers.
The interesting thing here, and one that leaves me with a few doubts, is how to scale a low cost airline in AirlineSim with security. I have a few ideas, but none is well-tested. The first is that as with real low-cost airlines, the larger the network the lower they can keep their margins and still grow, and therefore their prices. Even though having a large-hub with many connections provides perhaps an easier path to security as an airline scales, it’s possible that the very price point that a low-cost airline can operate at can be security in and of itself. Another way to boost this (and perhaps just as necessary as change in price modeling to realistically create low-cost airlines) is by charging for landing slots (perhaps maybe above a certain frequency to continue to allow the trial and error nature of research in Airline Sim). This raises the bar for entry for competitors and rewards the current holder of a point-to-point route with some security, while not totally preventing the possibility of growth and change. Perhaps landing slots (which should of course vary by airport as in real life) may also increase in price as the airport becomes more full, further providing security to point to point airlines, while still allowing newcomers to enter the market through creative means.
#3 Interlining — Another real-life phenomenon currently reflected in Airline Sim is interlining, or that one can book a connecting flight in which different legs are operated by different airlines. I think that this change in price model will allow for a more dynamic approach to interlining. Instead of restricting interlining flights to the connecting price ceiling model, interlining companies would be able negotiate to increase or decrease their ORS calculated price up to a certain percentage.
Again using our earlier example, if an airline based in Indonesia and an airline based in Thailand, wanted to interline in order to connect their mutual flights to Singapore, they could decrease their overall cost to undercut and steal demand from an airline already hubbing at Singapore.
Alternatively if two airlines can connect to serve under utilized markets, like in real life, they can continue to maintain high connecting costs. For example, if a passenger were to fly from Ulaanbaatar, Mongolia to Lagos, Nigeria they would still have to pay approximately 15,000 dollars despite making 3 stops. If, however, one booked each leg separately it would come out to less than 4,000 $, meaning interlining flights should be able to raise their prices above 100% of each leg. The idea of booking flights separately brings me to my final point.
#4 Self-Hubbing – In addition to an adjusted interlining model, I believe this change in price model should allow for a new feature known as self-hubbing. Essentially, self-hubbing would recreate connecting flights between interlining airlines as they currently exist in Airline Sim. In other words, self-hubbing would allow passengers with no alternative to fly on different airlines at 100% of each leg’s cost. This is a little complicated, so bear with me.
In this new system, each player would have the option to turn on self-hubbing at any station to which they operate flights. Again using our earlier example, say I operate flights from CGK to SIN, I could turn on self-hubbing at my SIN station.
Turning on self-hubbing would allow my flights at that specific station to connect with any other players’ flights at that specific station, even without interlining. The only catch is that both players must have self-hubbing for that particular station. This can be a coordinated effort, or simply unilateral moves operated in parallel.
Furthering the previous example, if my airline out of CGK turns on self-hubbing for SIN, and another player’s airline out of BKK turns on self-hubbing for SIN, and our flights are within the connecting window of each other, the ORS can connect passengers on our two airlines. These passengers would a) pay full price for both legs and b) bypass any connecting caps as the system would consider them to be direct passengers. This means that there would be (as in real life), no real way of recording whether these passengers are actual direct passengers, or simply the result of self-hubbing. As far as each player is concerned they are direct, but as far as the ORS is concerned, they are connecting. This essentially allows the ORS to function like a flight aggregator such as SkyScanner or Expedia.
The downside to self-hubbing would be the obviously low ratings. In fact, self-hubbing would most likely provide little demand when almost any other alternative exists. It would still help in two very important areas: 1. Start of game – Self-hubbing could facilitate more connections and help players to grow faster despite rudimentary networks. 2. Small markets – A player could develop a fairly sound strategy of flying small market passengers to larger hubs where more routes exist through self-hubbing. This would be a spin on low-cost airlines (and I believe a minor strategy of some existing low-cost airlines), and allow players to squeeze demand out of small markets through point to point flights.
Self hubbing would also help low-cost airlines squeeze just a little bit extra demand out of their markets.
The one question remains in terms of public transport, in order for this concept to work, self-hubbing would need to give a rating which is high enough that compels passengers to travel rather than stay home. Given that self-hubbing aims simply to recreate the current state of connecting flights in the ORS, this shouldn’t be much of a problem, but is still something to consider, especially given the probably-needed adjustment of price impact on ratings as mentioned above.