Lease prices of aircraft

[BizFlyer]

Hallo Sami,

The other day I wanted to offer a plane for lease.

Real value was, say, 10.000.000 US$. The market for this plane-type is very tight and the used planes on offer for this type are "snatched" away by interested airlines.

So, what hinders me to set a very high leasing-price? Say 17.000.000 US$ or even more?

Your system, because it declared, that a plane could not be leased out at such a high rate.

Sami, I tell you: It could have been leased out even at 20.000.000 US$ Either by someone who doesn´t know the game, but that is to be booked under experience then, or by someone, who just deperately needs to expand his fleet, maybe to retain some slots or whatever the reason is.

Question: Why don´t you let me capitalize on this?

We are not in a communist game.. Ha, ha.

As always, this is not to be seen as nagging, but just as a constructive comment.

Best regards,

BizFlyer

[Sigma]

You gave the reason why in your own post -- because there's always someone out there willing to pay 1.5, 2, 3, even more times the value of the aircraft just to get it.  And because there are certain players that can make a TON of cash no matter what, more money than they could ever hope to spend, what will happen is that they will get every single plane simply because they're willing to pay the most for it.  Meanwhile most players are left high and dry, constantly outbid every single time which only further hinders their opportunity to grow.

The game needs to make it easier for those who don't know precisely what actions to do to make the most money of by 'gaming the game', it certainly doesn't need to make it harder by making it nearly impossible for them to get planes at all while only furthering the unchecked growth of certain airlines.

[JumboShrimp]

You gave the reason why in your own post -- because there's always someone out there willing to pay 1.5, 2, 3, even more times the value of the aircraft just to get it.

To secure the slots.  Wouldn't you pay 2x for a plane if that was your only way to secure a slot to, say LHR?

[alexgv1]

Sami, I tell you: It could have been leased out even at 20.000.000 US$ Either by someone who doesn´t know the game, but that is to be booked under experience then, or by someone, who just deperately needs to expand his fleet, maybe to retain some slots or whatever the reason is.

I don't think entering the leasing market with a view to take advantage of newbs or inexperienced players by charging them extortionate sums for planes is in the best spirit of the game either.

I think the system of having upper and lower limits for leasing your aircraft is just to keep things fair.

[BizFlyer]

OK, for the sake of the game I accept Sigma´s argument.

However, it does not reflect the reality, as even mega-carriers will not buy a plane at any cost. Even for them the laws of economic operations should apply.

And if someone has to pay a very high leasing-rate, then this will be reflected in bad operating-results of that plane.
If that same airline does that more often, then I believe, this could even brake the neck of a successful airline in the end as
- the ability to react to lower prices from the competition is impaired
- the revenue from that particular plane is low or even then already showing a loss.

Finally: Couldn´t we be a bit more realistic in an even futher way? (Sorry, I know, now it is getting me  )

If the problem is how to get young and small airlines up from the floor, then, couldn´t we do it like in real life?
Small ones get subsidies from their respective governments for the first few years of operation (say 5 years) and the big ones pay more taxes and the tax-money is spent on the subsidies. - Just an idea...

Good luck to the small airlines and also good success to the big ones and thanks to Sami and his Team. It is fun to participate!

Greetings,

BizFlyer

[ACfly]

Is there a cap on the sale of aircraft?

[JumboShrimp]

Is there a cap on the sale of aircraft?

I never tried the cap, but I know there is a floor - of 70% of the value of the aircraft.

[Sigma]

OK, for the sake of the game I accept Sigma´s argument.

However, it does not reflect the reality, as even mega-carriers will not buy a plane at any cost. Even for them the laws of economic operations should apply.

And if someone has to pay a very high leasing-rate, then this will be reflected in bad operating-results of that plane.
If that same airline does that more often, then I believe, this could even brake the neck of a successful airline in the end as
- the ability to react to lower prices from the competition is impaired
- the revenue from that particular plane is low or even then already showing a loss.

The economics of AWS do not reflect reality so its impossible to expect any individual function of it, i.e. aircraft procurement, to do so.

I can easily create an airline that nets out a 40% profit margin -- about 10 times what most good airlines get in reality and better than just about any legal business venture does on the planet.  Even if my aircraft leasing/purchase costs were to more than double, I'd still make a ton of money.  Far more than the vast majority of other players.  With that fact in mind (and the fact that sami's in business to have more than 10 really good players playing his game), LOTS of things about the game have to change that may not necessarily reflect reality.

If the problem is how to get young and small airlines up from the floor, then, couldn´t we do it like in real life?
Small ones get subsidies from their respective governments for the first few years of operation (say 5 years) and the big ones pay more taxes and the tax-money is spent on the subsidies. - Just an idea...

While not a terrible idea itself by any means, the problem isn't just relegated to "Big" or "Small".  It's simply those who know how to "game the game" and those who do not.

I can't make a ton of money in AWS because my business acumen is so much better than someone else's.  In fact, if anything, executing any real business acumen is a detriment here.  I don't crush my competition by offering lower fares, superior quality and higher levels of customer service, and a cohesive marketing plan -- I crush them by flying 2 dozen flights to a destination with a demand of 500 people/day many of which I schedule at 2am.  Or I fly an A306 at 6am to make the cash and then 10 more ATRs I throw onto the schedule at midnight.  If my competition tries to do what they "should" do -- increasing route marketing, lower pricing, etc -- they only hasten their departure in a very big way.

Is there a cap on the sale of aircraft?

It's roughly +-30% of the value of the aircraft, so 70-130% of the listed "value".

[Powi]

One major reason for limits of what one can ask for a plane is to prevent selling/leasing planes become a "give money to other player" function, which has been denied for good reasons.