OnyxWingman Posted January 24 Share Posted January 24 (edited) My airline, Aer Lingus, is a full economy airline from Dublin. Anyways, I was playing around with my ticket price. As I lowered it, more profit was being made from more people. Once I hit about $365 for a price, the PAX was not at its max value, I lowered it to like $360 and it tanked from $37,709 to about $11,000. Is there a way to calculate the ideal ticket price? I always thought it was when you got the full PAX, but it seems not. Edited January 24 by OnyxWingman Quote Link to comment Share on other sites More sharing options...
sviridovt Posted January 24 Share Posted January 24 Your revenue is number of pax * price of the ticket (plus whatever IFE you have this might bring some income). The costs of your flights do not depend on the price so may be discounted for this discussion. The default price is slightly lower than the median of what the willingness to pay is, such that with that price you should be able to capture about 80-90% of the demand, if you want to capture 100% you'll have to lower prices, similarly if you capture less of a demand, you may increase prices to generate more revenue per passenger. Further consideration is which passengers you're capturing, for example if your aircraft has 2 or more classes, it's possible to see that pricing your economy class might drive passengers away from business class as you have excess capacity in economy from lower cost pax opting to not fly (admittely there is no mechanic in the sim to say that if the prices are similar enough some passengers will opt to 'spoil themselves' and upgrade, this is covered in my plans for demand redesign). In this scenario, you might have passengers who are willing to pay a premium price but would still opt for the cheapest option, as you price people out of economy those folks will buy an economy ticket rather than a business class which may also decrease your revenue. Essentially it's important to remember that the passengers are 'fluid', and do not attach themselves to a particular class just as in real life your business class competes with your premium economy class and economy class etc. As for an ideal formula, there isn't a mathematical formula that I'm aware of, and while I'm sure that it exists, I try hard to make sure that there isn't a hard and fast way to 'win' the system. I aim for realism with the sim so want to keep some variability to keep things interesting. Quote Link to comment Share on other sites More sharing options...
OnyxWingman Posted January 24 Author Share Posted January 24 16 hours ago, sviridovt said: Your revenue is number of pax * price of the ticket (plus whatever IFE you have this might bring some income). The costs of your flights do not depend on the price so may be discounted for this discussion. The default price is slightly lower than the median of what the willingness to pay is, such that with that price you should be able to capture about 80-90% of the demand, if you want to capture 100% you'll have to lower prices, similarly if you capture less of a demand, you may increase prices to generate more revenue per passenger. Further consideration is which passengers you're capturing, for example if your aircraft has 2 or more classes, it's possible to see that pricing your economy class might drive passengers away from business class as you have excess capacity in economy from lower cost pax opting to not fly (admittely there is no mechanic in the sim to say that if the prices are similar enough some passengers will opt to 'spoil themselves' and upgrade, this is covered in my plans for demand redesign). In this scenario, you might have passengers who are willing to pay a premium price but would still opt for the cheapest option, as you price people out of economy those folks will buy an economy ticket rather than a business class which may also decrease your revenue. Essentially it's important to remember that the passengers are 'fluid', and do not attach themselves to a particular class just as in real life your business class competes with your premium economy class and economy class etc. As for an ideal formula, there isn't a mathematical formula that I'm aware of, and while I'm sure that it exists, I try hard to make sure that there isn't a hard and fast way to 'win' the system. I aim for realism with the sim so want to keep some variability to keep things interesting. Thank you. I found out that I was also using too much flights, reducing amount of flights increases demand, therefore more PAX for the same ticket price. Quote Link to comment Share on other sites More sharing options...
Fargio Posted July 17 Share Posted July 17 On 1/24/2024 at 6:35 AM, sviridovt said: Your revenue is number of pax * price of the ticket (plus whatever IFE you have this might bring some income). The costs of your flights do not depend on the price so may be discounted for this discussion. The default price is slightly lower than the median of what the willingness to pay is, such that with that price you should be able to capture about 80-90% of the demand, if you want to capture 100% you'll have to lower prices, similarly if you capture less of a demand, you may increase prices to generate more revenue per passenger. Further consideration is which passengers you're capturing, for example if your aircraft has 2 or more classes, it's possible to see that pricing your economy class might drive passengers away from business class as you have excess capacity in economy from lower cost pax opting to not fly (admittely there is no mechanic in the sim to say that if the prices are similar enough some passengers will opt to 'spoil themselves' and upgrade, this is covered in my plans for demand redesign). In this scenario, you might have passengers who are willing to pay a premium price but would still opt for the cheapest option, as you price people out of economy those folks will buy an economy ticket rather than a business class which may also decrease your revenue. Essentially it's important to remember that the passengers are 'fluid', and do not attach themselves to a particular class just as in real life your business class competes with your premium economy class and economy class etc. As for an ideal formula, there isn't a mathematical formula that I'm aware of, and while I'm sure that it exists, I try hard to make sure that there isn't a hard and fast way to 'win' the system. I aim for realism with the sim so want to keep some variability to keep things interesting. So, does this infographic show all the demad of its respective route (RIX-BKK in that example)? Quote Link to comment Share on other sites More sharing options...
rohithbala Posted July 17 Share Posted July 17 2 hours ago, Fargio said: So, does this infographic show all the demad of its respective route (RIX-BKK in that example)? It does. You should probably be able to get almost all of the demand on that route, if not all of it, with a reasonable pricing. Quote Link to comment Share on other sites More sharing options...
Fargio Posted July 17 Share Posted July 17 2 hours ago, rohithbala said: It does. You should probably be able to get almost all of the demand on that route, if not all of it, with a reasonable pricing. Alright! Thank you! BTW, I am playing as a latvian airline with pre-EU political restrictions, so I try to make the most out of the Latvian airports there are Quote Link to comment Share on other sites More sharing options...
rohithbala Posted July 18 Share Posted July 18 On 7/17/2024 at 2:49 PM, Fargio said: Alright! Thank you! BTW, I am playing as a latvian airline with pre-EU political restrictions, so I try to make the most out of the Latvian airports there are That's nice. Europe should be a bit calmer, especially all the smaller countries. Seems like you're new, so that's a good starting point. I right now have two airlines, one in India (which is busy eventually), and one in South Africa. I'm hoping I can take take the whole African market soon since there is pretty much 0 competition there. Quote Link to comment Share on other sites More sharing options...
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