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Author Topic: Replacing Fleet Types  (Read 446 times)

Offline Shmant

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  • Posts: 45
Replacing Fleet Types
« on: October 19, 2015, 07:16:34 PM »
In my last airline, I had a fleet of 41 737-400s. Their leases were running out, and I originally had plans to eventually replace the 737-400s with some new A321-200s. So I did this - I went to the New Aircraft page and ordered 41 A321-200s on lease. I was excited to getting these new aircraft with the knowledge that they carry more passengers for every tonne of fuel burnt per hour, and maintenance costs are incredibly lower.  ::)
Then my first A321 arrived. Before the delivery, my airline was getting about $17,000,000 per week in profits, but after the delivery of one aircraft, it suddenly dropped to about $13,000,000. A bit later, more aircraft arrived and I was starting to replace the 737s with A321s, but the profits dropped to around $5,000,000 per week.
How did my profits suddenly decrease with better, newer, more spacious, more fuel efficient aircraft? (I know the leases of the new aircraft cost a lot more but with all the other factors like lower maintenance costs, more capacity, etc., it seemed to balance out.) Is it to do with fleet commonality and if so, how do I replace fleet types effectively?

Offline gazzz0x2z

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Re: Replacing Fleet Types
« Reply #1 on: October 19, 2015, 08:07:29 PM »
The leases of new planes are killers. Check accurately the expenses of your new planes, compare them to the older ones, and do the maths. The "best" planes, as the A321, are so much in demand that their prices go insanely high. And it makes them less interesting.

In previous GW3, I replaced my CRJs by inferior A148...and this move allowed me to grow much quicker and to make more money. Best planes are not always a good choice. Of course, if you're swimming in cash, and you can afford to buy brand new "best" planes(I'm currently rich & doing that with 737MAX ans Ejets), then of course proceed. But, if you have to lease, then think twice. Old leased crap may be actually cheaper, depending on how costly is fuel, and how costly are the other planes. It's a complex maths to do, and as plane prices are dynamic, it's really not an easy choice. But don't think that "the best is always better". It often is. But sometimes not. I learned it the hard way with 737-700ER. I love those babies, but don't loan them. it's suicide(fortunately, I had taken only 3 of them, just to see. Once bought, they were very productive).

There is also the communality effect, but in your case, you are too small for it being significant. Unless you have 4 fleet types? If you are still at 3 or less fleet types, communality costs should not be a big deal.

Offline Shmant

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  • Posts: 45
Re: Replacing Fleet Types
« Reply #2 on: October 20, 2015, 03:44:17 PM »
OK Thanks very much  :)

 

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