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Author Topic: Administrative costs on aircraft with no routes?  (Read 838 times)

MattDell

  • Former member
Administrative costs on aircraft with no routes?
« on: December 01, 2009, 10:27:05 PM »
This is sort of a weird issue I've run into.  I lease out a good number of aircraft and the lessees generally cancel the lease before the D checks are due.  Which, I understand and can live with since I generally make up that money in what they have to pay to get out of the lease (I don't understand why they don't just pay for the D check though... sometimes it would be cheaper).

Anyway, when these planes come back to me they usually get thrown immediately into D check before I even notice they're back in my possession.  But, when they're in D check, I have to pay for the Administrative costs, Fixed maintenance costs, and Crew training (see Fleet Commonality page) while they're in my possession.  I currently have 1 A310 going through a D check and I'm having to pay $800K per month due to these costs over three months time while the D check is being performed, on top of the D check itself!

But that also got me thinking... why should there be any fleet commonality maintenance costs involved with an aircraft at all if it's not scheduled to fly anywhere?  Can't you just have a parked plane?

-Matt

Offline Sami

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    • AirwaySim - Are you the next Richard Branson?
Re: Administrative costs on aircraft with no routes?
« Reply #1 on: December 01, 2009, 11:16:52 PM »
Planes that are under your ownership or operation are included in your fleet / you are responsible of them (routes or no routes). So your airline is responsible for the maintenance documentations and such things. For costs under 'crew training' one could of course say that they are not valid at this particular case, true .. But the system cannot know if you plan to keep that plane or sell it soon so that's why those are always counted in too.

For staff calculations having routes or not makes a difference but as the fleet commonality is a different thing it is made like this instead.
« Last Edit: December 01, 2009, 11:23:38 PM by sami »

Jake43

  • Former member
Re: Administrative costs on aircraft with no routes?
« Reply #2 on: December 02, 2009, 12:04:59 AM »
The way I get around having a parked planes maintenance cost is to put it up for sale at a ridiculously high price. No fees for a plane that is "being sold." And hey, if it does sell, then you probably just made yourself some good money. Not the safest way, but it is the only work around.

MattDell

  • Former member
Re: Administrative costs on aircraft with no routes?
« Reply #3 on: December 02, 2009, 02:56:34 PM »
But the system cannot know if you plan to keep that plane or sell it soon so that's why those are always counted in too.

Could there perhaps be the option of marking a plane for sale whilst in maintenance?  It could go on the market after the maintenance is finished and we wouldn't have to pay outrageous fleet commonality fees because of one plane being in maintenance.

-Matt

EYguy

  • Former member
Re: Administrative costs on aircraft with no routes?
« Reply #4 on: December 02, 2009, 07:22:29 PM »
I would simply put a clause in the contract about the D and C checks... When you lease an a/c you have to give it back "as it was" when purchased! I think it is too easy (and even say "stupid") to give back an a/c without proper maintenance.  The problem is that lessees usually do not even work out the A and B checks during the last month of operations!

Sigma

  • Former member
Re: Administrative costs on aircraft with no routes?
« Reply #5 on: December 04, 2009, 03:45:02 PM »
I've got you beat on increased costs....

I just had an A320 returned from a bankrupt lessor; a plane type that I never operated but have sold/leased in the past.  As a result of having a 4th plane type in my inventory now, my commonality costs doubled, and increased by some $25M per month.

The plane was also in poor condition as many are when returned.  So, of course, I've got to repair it to have any chance of selling it -- that cost another $8M.

Repairing the plane will take approximately 3 months, during which time my commonality costs are increased.

All in all getting this lease turnback will cost me somewhere in the neighborhood of $80M.  That's about 3 times what this plane is even worth.

Now I've got plenty of money so it's no big deal.  But if I had gotten that plane turned back to me when I was in poor financial shape, that would be a game-breaker for sure.

 

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