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Author Topic: Large Airlines 'controlling' used a/c market???  (Read 1303 times)

Offline Marksw76

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Large Airlines 'controlling' used a/c market???
« on: October 22, 2014, 09:00:19 PM »
Anyone else noticed that the larger airlines are 'taking over' the Boeing production lines and subsequently 'running' the used a/c market??

Seems like a bit of a cartel to me, assuming that the majority are orders for their Alliance buddies etc...
B733/4s are currently one of the favourite birds, with none available to buy - overpriced leases only, although no doubt this choice will change as soon as NG 737 become available






 

Offline Kadachiman

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Re: Large Airlines 'controlling' used a/c market???
« Reply #1 on: October 23, 2014, 03:34:40 AM »
Maybe I am one of the airlines that you are referring too as I have the largest Boeing 737-400 order at present
I can assure you that NONE of the 220 x Boeing 737-400 that are still to be delivered to my airline are for anybody else but me :-)

I have 200+ BAC1-11 500 and 125+ Boeing 727-200Adv that are to be replaced by the Boeing 737-400

So my BAC's and 727-200Adv will be going onto the used market, scrapped or returned to lessor but none of my Boeing 737-400 will be going onto the used market until they are too old and uneconomical to fly :-)

How is this controlling the Used market?
It is simply my fleet replacement strategy.

PS - I did have 20 x Boeing 737-400 on the Used Market for lease at reasonable prices until I had disposed of a prop fleet I was operating.
« Last Edit: October 23, 2014, 03:38:59 AM by Kadachiman »

chris.abrams67

  • Former member
Re: Large Airlines 'controlling' used a/c market???
« Reply #2 on: October 28, 2014, 09:59:32 AM »
Every market that has finite supply has speculators, people only looking to trade the goods not use them themselves.

They do play a role in that they provide liquidity in a market when required...for a price. Usually they are risk takers, the product could go up or down in price, unfortunately, it's a bit of a no-brainer in AWS. Inflation, over-inflated balance sheets (availability of money) and the fact that everybody gravitates to the same aircraft all lead to the inexorable bunged up supply lines with both large airlines buying 100s for their own use and also the punters.

The only ways to avoid the long supply lines is to plan far in advance and get ready to pounce on an announcement of a launch or head in a different direction from the crowd and pick something less fashionable. There's a cost benefit analysis to be done - it may be less efficient/too small etc but I can open that route now rather than wait 10 years until the Boebus is available- how much extra profit can I generate in those 7 years by using the lesser aircraft now?

And in 7 years time, the other line will probably be begging for new customers.

Offline gazzz0x2z

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Re: Large Airlines 'controlling' used a/c market???
« Reply #3 on: October 28, 2014, 01:41:41 PM »
Plus, the new aircraft pricing system does change drastically the balance between aircraft. When you have the choice between a 15M/70 seater and a 105M/126 seater, even if the 70 seater is more costly per pax to fly, it can be a very good idea to use them. Even if it was not a good idea when respective purchasing prices were 25M and 65M.

There is trouble though, if you need range. Not much aircraft have long legs. And also, if everyone switches to the 70-seater, it will be no longer economic to buy.....

Offline Marksw76

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Re: Large Airlines 'controlling' used a/c market???
« Reply #4 on: October 31, 2014, 12:28:24 AM »
or head in a different direction from the crowd and pick something less fashionable.

I'm all for finding an alternatives for the usual suspects (Airbus/Boeing/McD). A few games ago I gave the Tupey 204 a go, with superb results, half the price of a 752, offset by higher than average maintenance and higher running costs but it still managed to turn a decent profit.

Bizzarely, in this game the 752 doesnt seem to be as popular as other games I've played, so there are always a few floating around the used a/c market so these aren't the problem this time.

I'm currently still trying to think of an alternative to a 1-11/F100. A 146 would have been perfect but as you say, short legs is the problem but ALOT cheaper and easier to come buy.

PS - I did have 20 x Boeing 737-400 on the Used Market for lease at reasonable prices until I had disposed of a prop fleet I was operating.

Ah yes, you did my friend, in fact I was one of your 'launch' customers, I think I leased the very first 734 you had delivered, but I didn't notice the 'auto renew lease' being switched off. Had to do some quick sorting out to get things back on track when my (your) 734s left Hoi Chi Minh for the last time.

Don't blame you though, the reason you needed your toys back at such short notice was because the 734s are so scarce, brought on by these ridiculous lead times which brings me back to the original point.

Offline Kadachiman

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Re: Large Airlines 'controlling' used a/c market???
« Reply #5 on: October 31, 2014, 01:10:03 AM »
Yes I leased 20 out on 1-2 year leases only, so that I could have them back when my props were due to leave.
Might as well be making some income from them instead of storing them and waiting.

So yes I agree with you - fleet renewals and the 3 fleet policy causes a massive storage of aircraft by the bigger airlines, but they have too as the 4th fleet penalty is a one way road to B/K

Offline schro

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Re: Large Airlines 'controlling' used a/c market???
« Reply #6 on: October 31, 2014, 02:24:12 AM »
Bizzarely, in this game the 752 doesnt seem to be as popular as other games I've played, so there are always a few floating around the used a/c market so these aren't the problem this time.

The 752 got nerfed a year or two ago with the introduction of the "This plane is too small" functionality. Basically, it is too big (thus, too expensive) to use on domestic routes where the A320/B737/MD90's can play and too small to use on longer haul routes (unless you have that perfect 200 pax 3500nm route that won't trigger the warning. Given those limitations, it isn't worth burning a fleet type on them unless you're in a few specific airports where they are a perfect fit (Egypt and other middle eastern areas come to mind). To counter this from a playability perspective, I made a feature request over a year ago to combine it with the 767 fleet group.

Offline Marksw76

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Re: Large Airlines 'controlling' used a/c market???
« Reply #7 on: October 31, 2014, 07:38:30 PM »
The 752 got nerfed a year or two ago with the introduction of the "This plane is too small" functionality. Basically, it is too big (thus, too expensive) to use on domestic routes where the A320/B737/MD90's can play and too small to use on longer haul routes (unless you have that perfect 200 pax 3500nm route that won't trigger the warning. Given those limitations, it isn't worth burning a fleet type on them unless you're in a few specific airports where they are a perfect fit (Egypt and other middle eastern areas come to mind). To counter this from a playability perspective, I made a feature request over a year ago to combine it with the 767 fleet group.

Well I'm going to have to introduce another two 752s on a smaller route as apparently two more of my 734s are being 'collected' by their owner in early 1995. Unless my some miracle two more 734s appear on the used market I have two choices: a 752 (slight oversupply) or 732s (Undersupply and a fourth fleet type) I'm assuming 733s will still be as rare as rocking horse 5hit and they are slightly too small anyway.

Its not the first time a 752 has had to stand in due to aircraft shortages (namely 734s) they are good ol' workhorses BUT at least it I'll know in future a couple of things:

a)never lease from another player (no disrespect to fellow AWS friends, its just it does leave you wide open to the possibility of leases being terminated)

b)order new 734s not 733s in advance


Tell you , some dude called Swift Aero Leasing company is having it off big time at the moment. This guy had about 30 mid life 733s on the market. When they first arrived I thought...nah he'll never shift em. Bloody hell they've all gone. Shame he wasnt selling them I'd would have had a few off him

Offline bdnascar3

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Re: Large Airlines 'controlling' used a/c market???
« Reply #8 on: October 31, 2014, 09:07:48 PM »

a)never lease from another player (no disrespect to fellow AWS friends, its just it does leave you wide open to the possibility of leases being terminated)



You can check the length of the lease allowed before leasing. most players dont restrict the length of the contract although some do, and some also do not allow renewel, which is also specified on the original lease page

Offline CarlBagot

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Re: Large Airlines 'controlling' used a/c market???
« Reply #9 on: November 01, 2014, 04:00:57 AM »
Have you check swift's profit margins  :o . He fired all his staff (he was an airline) then he became a lessor so his margins are 70%+, very smart (if his profits are enough to stay in the game as a lessor).

Offline Kadachiman

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Re: Large Airlines 'controlling' used a/c market???
« Reply #10 on: November 04, 2014, 12:40:14 PM »
Have you check swift's profit margins  :o . He fired all his staff (he was an airline) then he became a lessor so his margins are 70%+, very smart (if his profits are enough to stay in the game as a lessor).

Some players change from running an airline to being a leasing company due to real life time restraints, it is a way of staying in the game without committing as much time :-)

Offline Kadachiman

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Re: Large Airlines 'controlling' used a/c market???
« Reply #11 on: November 04, 2014, 12:55:40 PM »

a)never lease from another player (no disrespect to fellow AWS friends, its just it does leave you wide open to the possibility of leases being terminated)


To try to Clarify the Game Play

I am one of those players that leased 737-400's out on shorter term leases (in fact I was the player you leased from)
It is not intended as trying to control the Used Market or as an underhand type of play it is simply good business and required play for my airline.
Fleet replacement and the greater than 3rd fleet penalty which is very hefty for bigger airlines creates by necessity play like this.

Situation -

I was operating -
a. 60 seater props - 70+
b. BAC111-500 - 200+
c. Boeing 727-220Adv - 150+

- 3 fleets and 420+ frames = very big penalty to bring in a 4th fleet
- props were getting too small for the routes as pax numbers increased and B727-200Adv need to go as fuel costs increase

Solution-

a. order 250+ B737-400's to replace both the props and the older Boeings
b. dispose of props and move pax to BAC111 or B727-200Adv (timeframe 2-3 game years)
c. lease out newly arrived B737-400's on short term leases to make $$ instead of sitting idle until props are all gone
d. when props are gone recall leased B737-400's and start to schedule.....staying at 3 fleet types


So I hope this shows you that no player intends to 'screw over' another player but it is simply required play for the bigger airline to remain financially viable (which is also the case for RL airlines e.g. Qantas is going through fleet type reductions now after massive losses recently)

When you see the bigger airlines fall over and go B/K it is normally due to the 'mishandling' of his fleet transition, and he simply runs out of his allocated 'change-over' funds, which for a bigger airline can be a very big $$ amount required (in previous game worlds this was always my fate, hopefully I have cured the problem for this and future game worlds...lol)

Kadachiman
CEO Wontok Air Services
« Last Edit: November 04, 2014, 01:35:54 PM by Kadachiman »

Offline CarlBagot

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Re: Large Airlines 'controlling' used a/c market???
« Reply #12 on: November 23, 2014, 11:43:18 PM »
I find smaller, new airlines to be worse for lessors. They often go BK but some of them do not do the maintenance required (either A and B checks or some do those but fail to do C ro D checks) and run the frames into the ground before BK and returning useless but brand new frames to you.....

wish there was a maintenance cost attached to leases so that for the time you had it you had to pay that portion of the C or D costs, and cost of returning to 85% before it could be returned, that way it would solve the lack of maintenance problem and early return problem.

Offline Maxair

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Re: Large Airlines 'controlling' used a/c market???
« Reply #13 on: November 26, 2014, 02:17:35 AM »
So what you're saying is make it even harder for new airlines to establish themselves and easier for already established billion dollar airlines to make more money? Lol

chris.abrams67

  • Former member
Re: Large Airlines 'controlling' used a/c market???
« Reply #14 on: November 26, 2014, 02:30:20 PM »
Quote
So what you're saying is make it even harder for new airlines to establish themselves and easier for already established billion dollar airlines to make more money? Lol

If you returned a hire car in poor condition you would expect to have to pay to make it good. And it seems unfair to return in an un-air worthy condition if you leased it in an air-worthy condition.

I would also like the option of, when you put an aircraft up for lease to, not only select who sees the offer if it's private, but also to deselect airlines who you don't want to lease to. Some airlines perpetually return them in poor condition (God knows what they do for maintenance) and return the day before a significant check. Also, you would like to avoid leasing to basket cases because you know what's going to happen. IRL the lessor would have the choice whether to lend to someone or not depending on a credit check, or indeed a competitor.

It's not about being either rich or poor.

Offline Obi-Gun Smokenobi

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Re: Large Airlines 'controlling' used a/c market???
« Reply #15 on: March 05, 2015, 07:18:51 AM »
a very cool, educational thread.   8)

 

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