Hi all! It's time for another round of passenger demand model changes (I know some of your guys have some bad flashbacks of changes like that)
Goals1. To make low income country aviation market more playable. Currently the PAX demand is way too low both domestically and internationally
2. To make service quality to have more strategic meaning - instead of always just 5 star everything and peg company wide service quality to a single "golden" value. Depending on the market the airline serve, the seat configuration and the nature of the flight Airlines should need to think more carefully of how to set service level to cater to different markets
Expectations1. Low income country should see significantly more domestic demand - for those that have income level <= 35. The lower it is, the bigger boost it gets. See observation section for some quick examples.
2. International route with at least one end as Low income country should see moderately more demand
3. Passenger from different country has different "expectation" of flight quality with lower income country start with lower expectation. (Ie easier to impress). However, passengers from lower income country are also more likely to back away if the ticket price is high
4. Quality expectation could be different for the 2 ends of the route. For example, a flight from India to the US. The passengers from India would have lower quality expectation while the passengers from US would be higher. Therefore a lower quality/lower price airline and a higher quality/higher price airline flying the
same route would be attractive to different demographic - the budge airline will be more appealing for PAX from India and the higher end airline will capture more US passengers
5. Passengers react to "extremely high" quality differently now. Back then it's all linear - if overall quality of the flight is X points higher then ur ticket price could go up constant * X without losing customer. Now it's a bit more complicated. If the flight quality is moderately higher than the expectation, it will still yield similar benefit like before. However, further benefit would be reduced for extremes. For example, if your economy passenger is expecting quality 30 on a short-haul flight, but airline A offers a quality 60 service, while airline B offers a quality 90 service. If they both charge the same price, there will still be more passengers going for Airline B (90). However, if exceeding the service expectation of 30 points from Airline A allows it to charge 10% extra, the 60 points extra from airline B should no longer allow it to charge 20% extra
6. Extra popup is added to give estimates of service expectation
ObservationsChanges to low income country (before ECON demand -> after ECON demand)
India (income level 12)New Delhi<-> Mumbai : 770 ->5626
New Delhi<-> Singapore : 258-> 526
Brazil (income level 32)Rio <-> Brasilia : 1137 ->1391
Rio<-> New York: 1396-> 1519
China (income level 28) - China receives a -40% adjustment to domestic demand due to highspeed rail network - to make this change less powerful for ChinaGuangzhou <-> Wuhan : 6741 -> 7007
Guangzhou <-> Singapore : 1790 ->2164
QA serverDeployed on
https://ec2-18-219-62-16.us-east-2.compute.amazonaws.com/ Feel free to test and provide inputs