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Author Topic: How do they do it?  (Read 656 times)

Offline Shmant

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How do they do it?
« on: November 08, 2015, 08:36:28 PM »
I see so many successful airlines leasing a bunch of new and popular planes and making profits. The lease cost for a new A321-200, for example, is $1,033,700 per month in the game world I am in. A certain airline is leasing around 60 of these and making profits. The last time I tried this, my airline failed. How do you lease completely new aircraft and make a huge profit?

Online [SC] - King Kong

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Re: How do they do it?
« Reply #1 on: November 08, 2015, 10:59:31 PM »
they probably don't.
I would prefer to get rid of my 4th fleet type as soon as possible. If leasing some planes (breaking even on them) means I can get rid of tens of millions of extra costs i'm happy to do so.

If an airline needs to expand quickly but has limited cash, leasing planes is a better and faster option than saving up to buy some.
My airline for example in gw2 was 100% owned. I needed to expand agressively so I leased 25 md90's. At the time I had no money to buy so leasing worked out fine.

Offline EAS66

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Re: How do they do it?
« Reply #2 on: November 08, 2015, 11:06:39 PM »
They may place leasing orders early on to secure more production slots and then change those orders to direct purchase over time.

Offline knobbygb

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Re: How do they do it?
« Reply #3 on: November 19, 2015, 03:42:06 PM »
The key to making money with leased planes (and making MORE money with owned ones) is high utilisation.  When they're sat on the ground they are still costing a fortune in leasing costs yet earning nothing. Maybe you were not using your fleet to it's maximum efficiency.  An A321 should typically be airborne for 18 to 20hrs per day. If you can work out how to do this on the proper routes they cannot fail to make money, even when leased.

Offline gazzz0x2z

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Re: How do they do it?
« Reply #4 on: November 19, 2015, 05:05:37 PM »
The key to making money with leased planes (and making MORE money with owned ones) is high utilisation.  When they're sat on the ground they are still costing a fortune in leasing costs yet earning nothing. Maybe you were not using your fleet to it's maximum efficiency.  An A321 should typically be airborne for 18 to 20hrs per day. If you can work out how to do this on the proper routes they cannot fail to make money, even when leased.

Not only.

It's also a matter of good route choice. I've got an opponent who loans most of his 737. He's using them 18 hours. Still, profitability is only 2,7%. I'm at 14 hours, with 12,35% profitability. One of the keys is to avoid bad routes. A 2000NM route with 70 demand for a leased 130-seater, just for the sake of having it fly overnight, is not a very wise move(if the demand is 130, OTOH, jump!), IMHO.

If you've got a good base, a good plane use, good routes, and a sound pricing strategy, then yes, even at this price, you can make money. I've got a E195 that makes 1.7M$ a week. OK, it's bought, not leased, but leased, it would still make 1.5M$ or so. Of course, it's an exception. Normal earnings with such a plane are more around 400/500k$ a week(from which you can safely take off 30% for taxes, and then 130k$ for the general costs - still a good buy). Leasing reduces your profitability, but increases your growth capacity. As sinking Billions in fleet renewal is not fun, and opposition grows, in the meantime - the guy at 2,7% profitability is currently expanding at my expense, while I'm renewing my fleet.

There is no easy answer.

Offline knobbygb

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Re: How do they do it?
« Reply #5 on: November 21, 2015, 07:22:09 AM »
Yeah I totally agree but I did say "If you can work out how to do this on the PROPER routes" (caps added) - I suppose that was a bit ambiguous.

One thing I would add to your comment about super-profitable aircraft: Of course, if you put all the really good routes on one aircraft you will achieve this, but then it gets difficult later on when you want to expand.  I tend to go with the tactic of spreading out those high-earning routes from the start, to save me having to re-arrange everything later.  Ultimately I have found that taking a couple of hits on a few of those 'bad' long, overnight routes can make things better overall - so long as all the good routes get fully covered too. Of course, it's not so important with owned aircraft, but when they're leased, every extra $$$ you can squeeze out of them can make the difference. There is a fine balance.

Something to consider is the way staffing works here. The system will expect you to hire enough staff to fly each aircraft for the entire day.  Whether you put one, two, or three routes on each one, it expects the same number of pilots and cabin crew to be available if you want to avoid delays.  Thus, technically, if you ground the aircraft overnight you are still paying for a crew to sit around doing nothing. Fuel prices are probably the biggest factor when looking at the 2000nm, 70 demand routes.

Offline gazzz0x2z

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Re: How do they do it?
« Reply #6 on: November 21, 2015, 10:56:42 AM »
Indeed. There is a strategic choice also to be made about what routes to set up first. If you jump for the short, juicy routes first, you'll have an economic edge over your opponents. But your later opportunities will be more limited, as you said rightly. For my new base in Palermo(my 9th), I'me doing it your way. I can afford less profitability next year, to build a more comprehensive network in my new base. But when I jumped to Fare 20 years ago, and noticed there was no route to Lisbon at all, my first plane was here, as I desperately needed more funds for further expansion. Now I have a little bit opposition on this line, but it remains incredibly profitable. Other planes obviously less...

Offline jjj

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Re: How do they do it?
« Reply #7 on: November 27, 2015, 05:34:44 PM »
I feel situation is even more difficult for very large planes like Airbus 380 or Boeing 777

 

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