Please rotate your device to play to the game.
Please use a larger screen (min 440 pixels) to play to the game.

Simulation


Simulation Parameters
Aircraft A300 A370 A440
Number of passengers (max) 300 370 440
Fixed cost per trip 33,000 38,850 39,600
Marginal cost per passenger 50 40 35
Avg cost (if full) 160.0 145.0 125.0

Air Blue
Select Plane
Number of seats {{ simCtl.selectedPlane1.seats}}
Price (1..300):
Demand at prices {{simCtl.demand1| number}}
Seats sold {{simCtl.sales1| number}}
Unsold seats {{simCtl.selectedPlane1.seats - simCtl.sales1}}
Load Factor {{simCtl.load1}} %
Average Cost $ {{simCtl.averageCost1 }}
Marginal Cost $ {{simCtl.selectedPlane1.marginal_cost }}
Profit per Ticket $ {{simCtl.profitPerTicket1}}
Revenue $ {{simCtl.revenue1| number}}
Cost $ {{simCtl.costs1| number}}
Profit $ {{simCtl.profit1| number}}
Air Green
Select Plane
Number of seats {{ simCtl.selectedPlane2.seats}}
Price (1..300):
Demand at prices {{simCtl.demand2| number}}
Seats sold {{simCtl.sales2| number}}
Unsold seats {{simCtl.selectedPlane2.seats - simCtl.sales2}}
Load Factor {{simCtl.load2}} %
Average Cost $ {{simCtl.averageCost2 }}
Marginal Cost $ {{simCtl.selectedPlane2.marginal_cost }}
Profit per Ticket $ {{simCtl.profitPerTicket2}}
Revenue $ {{simCtl.revenue2| number}}
Cost $ {{simCtl.costs2| number}}
Profit $ {{simCtl.profit2| number}}

Instructions

(The multiplayer game can be created on the games page, in the industrial organization section.)

"Competition in the airline industry is sometimes fierce. In this simulation you get to make the major decisions for operating an airline: choosing which aircraft to operate to a given destination, and what price to charge.

Imagine you are the route manager for a single destination, say, Melbourne–Jakarta. Only two airlines offer flights on this route: AirBlue (your company) and AirGreen (your competitor). It is well known in the industry that both airlines have the same types of aircraft available to operate on this route: A300, A370, and A440. Each aircraft type is equally configured, and both airlines incur the same cost as the other for each type. Due to the operating requirements (viz., staffing: captain, 1st officer, number of flight attendance; fuel; landing fees; etc) each aircraft incurs a given fixed cost per trip to Jakarta. In addition, there is a nominal marginal cost per passenger – between $35 and $50 per passenger, depending on the efficiency of the aircraft.

The table below summarizes the fixed, marginal and average cost (when all seats are occupied) for each aircraft. The A440 is the newest, largest, and most fuel efficient plane. The average cost at full capacity as well as the marginal cost per passenger are the lowest for this aircraft. The A300 is the oldest plane, with less capacity and highest per-passenger operating cost at fully capacity. Here are the details:


Simulation Parameters
Aircraft A300 A370 A440
Number of passengers (max) 300 370 440
Fixed cost per trip 33,000 38,850 39,600
Marginal cost per passenger 50 40 35
Avg cost (if full) 160.0 145.0 125.0

Some customers shop online for the cheapest tickets, while others have a preference for one of the airlines. As you enter different ticket prices into the forecasting tool below you will notice that by charging a lower price than your competitor, you will sell more tickets than the competitor, while the competitor is still able to attract some of the less price sensitive passengers; and vice versa.

Your goal is to maximise your profit from the route to Jakarta by selecting the aircraft type and setting a price. The choice of the aircraft affects your operating cost and the capacity available on the route. The ticket prices charged by each airline determines the demand both for your and for your competitor’s flights. This demand—and the availability of seats by each airline, determine your total sales and thus your profits.

Each airline charges a single, uniform price for all its tickets, and it cannot sell more tickets than there are seats on the plane they have allocated to the route (In practice airlines “overbook”, i.e., they sell more tickets than available seats in the expectation that some passengers make last-minute changes. They also charge different prices for tickets with different restrictions or sold at different times. We will ignore these complications in this exercise to keep it simple enough).

In order to determine your best choice you may use the forecasting tool..."

(Sven E. Feldmann and Boğaçhan Çelen, Melbourne Business School, 2018)


You have been randomly and anonymously paired with another participant. You will play with the same partner until the end.

For your convenience, these instructions will remain available to you on all subsequent screens of this game.