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Author Topic: [-] lease termination by owner  (Read 427 times)

Offline hmellouli

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[-] lease termination by owner
« on: April 28, 2013, 04:35:14 AM »
would it be possible to allows owners to terminate leases - and pay a termination fee in the process, just as a lessor would if they terminated a lease early? This would provide flexibility for owners who would need the aircraft, without forcing them to buy or lease a replacement until the lease expires.

I'm not sure if this used to exist or not, I couldn't find any history on this topic.
« Last Edit: April 29, 2013, 08:26:01 PM by sami »

brique

  • Former member
Re: lease termination by owner
« Reply #1 on: April 28, 2013, 05:22:16 AM »
There was/is a thread in requests pretty much similar, that was more geared to enabling a player to reclaim an aircraft out on lease to another player who was neglecting maintenance and thus damaging the aircraft.

I'd foresee some issues with this idea : recalling the aircraft would leave the current user in the mire, perhaps even unable to replace it quickly enough with consequent damage to  their airline, particularily if they then lose expensive/rare slots as well. As they have leased the aircraft in good faith, that would be a bit unethical, in my view. Forced recall of an aircraft which the user is not maintaining is another matter, as they are the 'unethical' party in that case, so that seems a reasonable option to me. But how the game could differentiate between the two cases is another matter.

You can always limit the term of lease and thus have a pretty good idea of when the aircraft will be returned : that does make it harder to 'sell', as some players want them for a longer period, or to be able to extend the lease if reqd for their own plans.

I was looking over the published accounts of a small-sized feeder airline based in the States, running mainly leased Embraers : one item was interesting, as it seemed to be a sort of 'sinking fund' for maintenance checks, paid to the lease company, as part of the lease deal. It seemed that when the airline ran a check, it could then reclaim the cost from the leaseco, which held the fund. Not strictly relevant to your point, but shows how 'real world' lease deals can get a bit complex and thus hard to model into the more simplified 'one-size fits alls' approach necessary here. I'm sure I recall similar terms in lease-deals for companies I have worked for, requiring certain levels of maintenance, insurance, user-training, etc, failure of which could mean the equipment being reclaimed. I dont recall any which allowed the leaseco to reclaim just because they had another use for it elsewhere.

Offline hmellouli

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Re: lease termination by owner
« Reply #2 on: April 28, 2013, 12:05:20 PM »
I'm with you there on the unethical issue. maybe part of the termination process there would be a notice to lessor that the owner wants it back. at the end of the day the owner would be paying a good sum in termination fees, so most lessors are going to be happy with that cash. maybe to remove he unethical parts, the termination could be consensual (the owner request release from the lease holder, in exchange for a fee)

Offline EsquireFlyer

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Re: lease termination by owner
« Reply #3 on: April 29, 2013, 02:55:29 PM »
I agree with this being a "request" option, not a "forced" option. Certainly if the owner and lessee mutually agree to send the plane back to the owner, as a favor to the owner, it should be the owner paying the cancel fee (currently the lessee actually gets hit with the cancel fee even if it's a favor to the owner who wants the plane back).

However, forcing a recall (when plane is not being abused maintenance-wise) would be unfair to the lessee and could even be used to attack airlines that the owner competes with, by taking away their lots of their planes at once, since the used market cap makes it hard to replace large quantities of planes quickly.

Offline Sami

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Re: lease termination by owner
« Reply #4 on: April 29, 2013, 03:04:16 PM »
Not really in favour of this...

(missing maintenance would be another thing but I suppose there is a thread for that as mentioned)

Offline hmellouli

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Re: lease termination by owner
« Reply #5 on: April 29, 2013, 04:25:16 PM »
I would definitely agree with this being mutual, except in cases of abuse, as mentioned. I would also definitely put the cancellation fees on the person requesting, unless it MX i guess, and certainly make sure there is a contract length requirement, so people wouldn't use this for instant cash transfer.

also, from an MX standpoint: maybe add an option where the leaseholder can return it for no fee. this would bee relevant to those airlines in red, that don't have the cash to do MX or return the plane. It's better to do that than to see the plane's value and condition plummet because the airline can't get rid of it or maintain it.

Offline Jona L.

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Re: lease termination by owner
« Reply #6 on: April 29, 2013, 07:50:03 PM »
also, from an MX standpoint: maybe add an option where the leaseholder can return it for no fee. this would bee relevant to those airlines in red, that don't have the cash to do MX or return the plane. It's better to do that than to see the plane's value and condition plummet because the airline can't get rid of it or maintain it.

This option should (if at all) ONLY be available when DEEPLY in the red (say 500-1000% of weekly ticket income) in order to not screw with the lessors too much.
Because in that case leasing out planes would be disastrous, and no one would do it any more, drying out the UM even more.

brique

  • Former member
Re: [-] lease termination by owner
« Reply #7 on: April 30, 2013, 12:45:20 AM »
the original 'MX' related thread was mine, I think, or I contributed : the issue was one where no mx had been scheduled and the aircraft plummeted to an awful condition : thankfully, the player finally noticed, and did fix it back up again before BK-ing. But another one let a plane hit 2% before BK-ing... yeah... that hurt.

My view, if a leased aircraft hits, for example, 60% condition, there is an obvious problem of MX not being done, so a forced recall is acceptable, after due warnings are given : whether this could be an automated warning, similar to the one warning of possible grounding or at the leaseco's discretion is okay either way by me. As a leaser, I want the plane out there earning every month, for the term agreed. Often enough, they'll come back needing checks and a bit of tlc to get them up to scratch, but thats part of the 'deal' and I have no issues over that : getting them back less cared for due to a BK is also an acceptable risk : having to do a major rebuild on an otherwise young aircraft, just because the player didnt schedule MX properly and with no means for the owner to correct the problem any earlier, is not.

Recalling due to any other reason is more tricky : it does open up room for abuse, such as cash-transfer dodges, or 'pushing/pulling', already mentioned. If a player is so far in the red they need to send them back without compensation, MX not being done due to lack of funds is already an issue : allowing forced recall due to that aspect would perhaps keep the matter related to that one issue and avoid 'grey areas' of potential abuse.

 

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