I wonder a bit about this with leasing versus buying aircraft on credit.
If one buys for example one 737-900ER BGW.
List price is 62M AS
With creditt purchase you pay the following:
Deductible 6200000
installment 214 615
Interest 1% 558000
Total per week 772 615
To me it seems to be 5-year repayment period
Leasing
Security deposit 3100000, which amazingly enough you get most back on, if you can not pay or will return the plane!
Weekly rental 310000
Suppose Aircraft Trading and Leasing Association receive a 10% discount on the plane, they have to pay 58.9 million AS.
When 0.5% interest rate they must pay 294500 AS in interest per week, ie either ATO must have unlimited cash and to buy all the planes that are leased, or operates ATO with charity.
When you lease a product in real life, you pay an advance and then monthly installments, if you cancel the plan, you get the at best delivered item back without having to pay, in mostcases must pay x number of months rent.
And you do not get the down payment back.
My point is that in AS Leasing is subsidized, and has made it really very beneficial and essential to rent instead of owning.
I’m not in the airline industry, but I think it’s pretty even number of companies that buy and those leases.
Buying vs leasing is generally only interesting if you are 100% certain that you will keep the aircraft for ever, or you have more cash on hand than you can handle. If you ever need to sell the aircraft, you may have problems finding a buyer, and AS only offers 10% scrap value.
OTOH, on the plus side, owning aircraft increases your credit worthiness, and if you have subsidiaries and you can asset transfer the aircraft between them, assuming the aircraft are debt-free. (Aircraft bought on loans are effectively mortgaged and cannot be transferred until the debt is paid off).
Bottom line is, as the saying goes - if you have to ask what the price is - you can't afford it. :unsure:
(Edit) just one other note, Tequila Air has over AS$110 million secured against the purchase of three aircraft at 0.8% interest rate, whereas the current rate for unsecured loans is 2.2%
The point is not what you get if you sell the plane.
I think the difference in weekly costs are abnormally large between leasing and buying on credit.
As I tried to show in my calculation, Aircraft Trading and Leasing Association (ATO) can not make money on leasing out aircraft, in Gatow, there are approximately 38,000 aircraft, most of which are leased.
Interest rates are now at 1.39%, if ATO “pay” this, they subsidize all that leases.
I do not think this is close to reality, which AS is supposed to be
Looking at Aircraft Trading and Leasing Association as a financing company that aims to make money, they do a poor job
players buy (nearly) new planes if their airline is very profitable and there is little room for expansion, or if they don't want to schedule 50 leased planes every week. If you need to borrow money to buy a plane (10% downpayment and 90% loan) your plane won't make a profit. I mean, all profits will go to the bank.
The gap between leasing and buying is indeed not realistic. As Haarek pointed out, the game (Aircraft Trading and Leasing Organization) heavily subsidises leased planes. But that is a matter of game play. Make leasing cheaper, and every new server is saturated after 3 months. Make leasing more expensive, and most players won't have the patience to build a decent airline and leave the game after two weeks.
Make the financial cost difference between leasing and buying smaller, to increase realism, and too many players will buy new planes. Owned planes are profitable with a 50% seat load, so forget competition and throw away the AGEX.
So yes, the difference between leasing and buying is not realistic. But the game works ;-)
What I think is most unrealistic is if one Lease and for some reason you need to deliver the plane back, you get almost the entire security deposit back.
I think the way it setup right now is prefect for the game.
The only thing I don't get is that it so difficult to get a loan. In the real world you will be able to get a loan if you hae an AAA rating. Just don't allow to loan to much if a company is young and set a boundary on the maxiumum amount of the loan e.g. at 10% of compay value or something like that. Young companies on existing servers have, imo, to much limitations to invest in their company.
By reading the older posts in this thread, the question is already been answered.
You can easily compare the different scenarios of buying on credit, buying with cash and leasing. Then you will know that buying a plane does not make any sense and unless you have a very rich company who does not know how to spend the money you should refrain from buying planes.