Hi,
I deleted a subsidiary that owned several planes. The owned fleet consisted of two recent 767-300ER (costed 80 something million each) and several recent 737's. The total book value of these planes was somewhere between 200 million and 300 million. After deletion, the mother airline received around 60 million.
Do I only get the scrap value (10% of the new price) if I delete an airline with owned planes between 1 year and 5 year old ?
Jan
Hi,
I deleted a subsidiary that owned several planes. The owned fleet consisted of two recent 767-300ER (costed 80 something million each) and several recent 737's. The total book value of these planes was somewhere between 200 million and 300 million. After deletion, the mother airline received around 60 million.
Do I only get the scrap value (10% of the new price) if I delete an airline with owned planes between 1 year and 5 year old ?
Jan
That's the case I'd say.
Thanks for your fast reply.
But what you are saying is that AS sells me a one year old 73G for 38-40 million. Less than one year later, AS will pay me around 8 million for that plane when I delete my subsidiary. Isn't that a bit silly for a game that calls itself realistic ?
Jan
Me again...
The few airlines who try operate a (partly) owned fleet of modern aircraft, are already punished by the game. It is 10 times more profitable to lease planes than to buy planes. Your airline grows much slower. When you return a leased plane, you get a full refund of your deposit, while an owned plane decreases in value.
Top quality airlines operate new planes and sell them after a few years. These planes are then bought by "cheaper" airlines who use them for many more years. However, in the game it is just impossible to sell a 3 year old 73G because everybody leases planes. I have planes that have been on offer for months...
@Martin
My three airlines own (in total) 285 planes, with an average age of 1.8 years. Please advise how I can replace these aircraft when they are older than 2.5 years (when image starts going down).
Jan
Your image didn't get worse, just cause your airplanes are older than 2.5 years. This is such a small difference, you cann't see it in the image.
Hi,
that is hardly the point. And it can make the difference between 4 and 5 green bars (average airline image). But let me rephrase it then: how shall I replace these 285 planes when they are 3 years old ? Or 4 years old ? Sell them to AS for scrap ? So that AS can put them on the market again the next day with the option "immediate purchase" for 51 million ?
Any suggestions, Martin ?
Jan
You can put them on market too and sell them before you close down the airline.
Red Star on the Tempelhof server has put its first plane up for sale on january the 1st 2013. Three more planes were put up for sale. By march none of the planes were sold. On march the 21nd, I have created a subsidiary and I transferred all the planes that are for sale to this subsidiary. 12 planes have been put up for sale until today. In all that time, one plane has been sold for its book value of 51 million.
If I buy a 739 today, I don't mind that I get half a million less when I sell it next year. But I don't want to pay 50 million today and get 10 million next year. The old system gave me the book value (price minus depreciation) after two weeks waiting. Automatically. That was fair. After all, if I return a leased plane I get my deposit back within a week.
How many airlines buy planes ? Almost everybody leases new planes and some airlines also buy 20 year old planes. But there is hardly any demand for nearly new planes on the the buy-market. You know it. That is why the old system bought the plane off your hands after two weeks. If that is not possible, then allow players to put their planes in a subsidiary and delete it.
My Pearls Airline lost over 200 million yesterday. I don't want my Tempelhof airline also to loose a few hundred million when I delete that subsidiary. That is why I ask Martin how I can get rid of owned planes.
Jan
To answer a question with a question: Why should AirlineSim (aka the simulated world/market) make any guarantees concerning the future selling price when buying an aircraft? Especially in a way that's rather convenient to the buyer?
I see the issue of most people leasing planes and because of that we introduced the ability to finance used planes via AirlineSim when we first launched the new aircraft market. But everyone knows how that went...
To answer a question with a question: Why should AirlineSim (aka the simulated world/market) make any guarantees concerning the future selling price when buying an aircraft? Especially in a way that's rather convenient to the buyer?
Hi Martin,
because buying implies selling. If selling a plane is almost impossible, remove the option to buy. Then we shall only lease. If you allow people to buy planes, there should be a way to get rid of the planes.
Convenient to the buyer ? Not very convincing, Martin. Let's be honest, the game is far more convenient to the leaser than to the buyer. That is exactly the reason why everybody leases.
The old system automatically bought planes at book value if they were on the market for two weeks. I never saw any cheating there.
But thanks for your reply.
Anyway, if the game pays me 10% or 15% of their value, I can just as well sell my fleet at 10% of their value to other players.
Jan
@sobelair
Maybe you should create a leasing subsidiary and act as an aircraft lessor for your older planes which you don't want to use. I guess that's a better approach then selling them at 10% value.
Thanks for the hint.
If I can sell a 3 year old plane for 38 million, I can replace it and buy a new plane for 46 million, or a nearly new plane for a few millions less. Leasing a plane out for 190.000 per week won't allow me to buy a new plane.
Besides, that doesn't solve the problem. What shall I do a few years from now, when the new planes are 3 years old ? I would even have more owned planes that nobody wants to buy. At this moment I am stuck with my business model. Doesn't work on the long run, not with the current game rules.
Over the past years my three airlines have accumulated 11.000 million worth in planes. If I sell them at 10%, I still have 1.100 million in cash. I'll buy more of my leased planes and also sell them at 10%. Until there is nothing left. And in the future - if the game is more convenient for buyers - I can always start a new airline ;-)
Jan
....
The few airlines who try operate a (partly) owned fleet of modern aircraft, are already punished by the game. It is 10 times more profitable to lease planes than to buy planes. Your airline grows much slower. When you return a leased plane, you get a full refund of your deposit, while an owned plane decreases in value.
…
You get the full deposit, yes. But you seem to forget hat after 4 years, you’ve paid the equivalent oft a new airframe just to lease it. For what? To have it one minor image bar better?
Having troubles selling your ageing aircraft? It’s just a matter of the price you’re asking. Until now you’ve obviousely asked too much.
... Having troubles selling your ageing aircraft? It's just a matter of the price you're asking. Until now you've obviousely asked too much. ;)
Hi,
you get a sarcastic answer first: yes I know. AS thinks these planes are worth 10% of their value. That's why I already said that I shall sell them at 10% of their value.
And the serious answer: take a look at the second hand market on the Tempelhof server. All my planes are on the first page of their aircraft type, and they are on offer at decent prices. If they were up for lease, they would find a lessor.
My point is that there is no demand for recent planes on the buy market. That is why the old system automatically bought my planes back. My three airlines are older than the new second hand market. In the past replacing owned planes was not a problem, and there was no cheating involved.
I have checked about hundred airlines on the Tempelhof server. These airlines operate a total of 4.547 boeing 737-700BGW. Out of these planes, 114 are owned by the airline. That means a mere 2% are owned. If you take a closer look at airlines who operate owned 73G's, you will see that half of these owned planes are 10 year old. In other words, 1% of the 73G's that are flying around on the tempelhof server are owned and recent.
Why is it so difficult to admit there is hardly any demand on the buy market ?
Jan
Hi,
you get a sarcastic answer first: yes I know. AS thinks these planes are worth 10% of their value. That’s why I already said that I shall sell them at 10% of their value.
And the serious answer: take a look at the second hand market on the Tempelhof server. All my planes are on the first page of their aircraft type, and they are on offer at decent prices. If they were up for lease, they would find a lessor.
My point is that there is no demand for recent planes on the buy market. That is why the old system automatically bought my planes back. My three airlines are older than the new second hand market. In the past replacing owned planes was not a problem, and there was no cheating involved.
I have checked about hundred airlines on the Tempelhof server. These airlines operate a total of 4.547 boeing 737-700BGW. Out of these planes, 114 are owned by the airline. That means a mere 2% are owned. If you take a closer look at airlines who operate owned 73G’s, you will see that half of these owned planes are 10 year old. In other words, 1% of the 73G’s that are flying around on the tempelhof server are owned and recent.
Why is it so difficult to admit there is hardly any demand on the buy market ?
Jan
But I honestly still don’t understand your problem.
You offer a 2.5 years old 73G for 38m. I recently bought some for 35-36m from AS. Add to that that my money goes “nowhere” when buying from the official source, but it would go to a competitor when taking your offer. Naturally, your offer would have to be significantly lower to make a deal.
You need to be prepared to never get the full book value when selling your stuff. The old market with guranteed book prices for sales was crap.
But again… a leased 73G costs you close to 47m in 4 years. After this you’ve nothing in your book, while the one bought for 47m still yields at least its scrap value.
While buying aircraft isn’t a prefered method for growth, I can’t understand how people could claim that leasing is the more profitable option.
... I can't understand how people could claim that leasing is the more profitable option.
Hi,
you're not really a competitor, we share a few routes but we're in different countries. Unless you regard Taiwan as a rogue province of China ;-)
Profitability of leased versus owned planes is on old discussion. Say you want to invest 100 million dollar...
You buy 3 (cheap) 73G's from AS
Weekly return on your investment is 1.5 million (or 500K per plane)
(you could buy a fourth plane after 20 weeks, but lets not compound the profits)
After 4 years you have earned 312 million and let's say you get 90 million back for your planes.
You end up with 402 million.
You lease 42 brand new 73G's from AS
Weekly return on your investment is 10.5 million (or 250K per plane)
(you could lease four extra planes after one week)
After 4 years you have earned 2.184 million and you get the full deposit back for your planes.
You end up with 2.284 million.
Buying planes is not more profitable. The 98% leased planes are not leased by idiots ;-)
Yes sure, your weekly net profit margin is higher. But that doesn't take the investment into account. Let's say the two imaginary airlines above were on the stockmarket. Both would have a balance value of 100 million with the same price per share. But the former would pay out a weekly divident of 225K , while the latter would pay out 1.5 million to its share holders.
Buying planes is good if you're not interested in fast growth. Buying planes is good if you have no more slots and you don't know what to do with your money. Buying planes is good if you like to own your fleet. Buying planes is good if you want to go on a 4 week holiday without having to check your airline and the AGEX.
So... would you buy them off my hands for 35-36 million ?
Jan
Hi,
you’re not really a competitor, we share a few routes but we’re in different countries. Unless you regard Taiwan as a rogue province of China
Profitability of leased versus owned planes is on old discussion. Say you want to invest 100 million dollar…
You buy 3 (cheap) 73G’s from AS
Weekly return on your investment is 1.5 million (or 500K per plane)
(you could buy a fourth plane after 20 weeks, but lets not compound the profits)
After 4 years you have earned 312 million and let’s say you get 90 million back for your planes.
You end up with 402 million.
You lease 42 brand new 73G’s from AS
Weekly return on your investment is 10.5 million (or 250K per plane)
(you could lease four extra planes after one week)
After 4 years you have earned 2.184 million and you get the full deposit back for your planes.
You end up with 2.284 million.
Buying planes is not more profitable. The 98% leased planes are not leased by idiots
Yes sure, your weekly net profit margin is higher. But that doesn’t take the investment into account. Let’s say the two imaginary airlines above were on the stockmarket. Both would have a balance value of 100 million with the same price per share. But the former would pay out a weekly divident of 225K , while the latter would pay out 1.5 million to its share holders.
Buying planes is good if you’re not interested in fast growth. Buying planes is good if you have no more slots and you don’t know what to do with your money. Buying planes is good if you like to own your fleet. Buying planes is good if you want to go on a 4 week holiday without having to check your airline and the AGEX.
So… would you buy them off my hands for 35-36 million ?
Jan
Sure, there’s always the two sides of the leased vs. bought aircraft discussion. But this is due to two very different targets. One’s growth, the other is profitability.
Most players are interested in growth - you are too. And while leasing is the best way to go for fast growth as it binds much less capital - it is obvious that profitability is higher for bought aircraft. Sure, buying doesn’t make any sense as long as you’re growing - I think that’s obvious to anyone who’s able to do some simple math.
Operating a new airframe for 5 years hardly yields any disadvantage. Leased, it’ll cost you 1,2x the purchase price. Bought it’s obviousely the purchase price minus the scrap value ( at least).
In case of a 73G, the minimum advantage is roundabout 14m dollars.
Make it 30m and you’ll find a taker;)
Hi,
the value of a plane is what people are willing to pay for it, is a principle that works fine...
if people want to buy planes,
or if planes are scarce.
Neither of these conditions are fulfilled in the game. There is a regular flow of second hand aircraft from players who delete, and a new plane is built in 21 hours.
Boeing 73G's that are put on the market by AS, are scrapped if they are not sold at a certain price. It shows they believe in free market principles, but it also shows they don't want planes to be leased out or sold at ridiculously low prices. And one has to keep in mind that 98% of the 73G's are leased. If AS only sold planes, they would have to scrap 98% of the second hand 73G's.
I am convinced AS knows there is only a very limited market for second hand planes to be sold, but it is apparently very hard to admit that fact. And although I believe in realism, there should be a balance between realism and game play.
Do you honestly think a 2 year old 73G is only worth 30 million ? I hope your sense of realism is better than that. But we're only playing a game, so you can have it for 10 million.
Jan
Edit: apparently I can sell it as low as 6 million :-)
Hi,
the value of a plane is what people are willing to pay for it, is a principle that works fine...
if people want to buy planes,
or if planes are scarce.
Neither of these conditions are fulfilled in the game. There is a regular flow of second hand aircraft from players who delete, and a new plane is built in 21 hours.
Boeing 73G's that are put on the market by AS, are scrapped if they are not sold at a certain price. It shows they believe in free market principles, but it also shows they don't want planes to be leased out or sold at ridiculously low prices. And one has to keep in mind that 98% of the 73G's are leased. If AS only sold planes, they would have to scrap 98% of the second hand 73G's.
I am convinced AS knows there is only a very limited market for second hand planes to be sold, but it is apparently very hard to admit that fact. And although I believe in realism, there should be a balance between realism and game play.
Do you honestly think a 2 year old 73G is only worth 30 million ? I hope your sense of realism is better than that. But we're only playing a game, so you can have it for 10 million.
Jan
Edit: apparently I can sell it as low as 6 million :-)
First off, let me thank you for that 73G. To my true amazement it was available for more than 10 hours without being snatched by someone else. Just goes to show how few people watch the aircraft market on Tempelhof I guess.
As far as my sense of realism goes, given my background I think it is fairly good.
Question is, what "realism" are we talking about? The in-game realism, or how the game compares to the real business world? As for the latter, not much. As for in-game and player decisions, well, I wouldn't say 98% are idiots as you called it, far from it, but quite some decisions are "questionable", some are truely weird. I remember when people leased 739s for way more than standard on the new market while the 73J was a bargain the same time...
So, why can't you sell your 2.5 years old 73G for - say - 36m? Just as an example:
Personally, I want to recoup the costs for an owned plane before it turns older than 5 years or so. A new 73G can be had for 47m. Consequently, I'd calculate with the scrap value of 4.7m after 5 years.
That gives me 42.3m (8.46m/year) to recoup. A 73G aged 2.5 years consequently would be at 47-(2.5*8.46) ~ 26m. (In a theory of course as prices don't fall that low due to in-game market regulations)
The point is the depreciation period. I think the game (book value) depreciates over 20 years, making your book value on used aircraft way higher than what potential buyers might be willing to pay for those aircraft.
Hi,
first of all, I did not say 98% are idiots. I said these 98% were not idiots, given the fact that you get a far better return on your investment when you lease planes.
Secondly, two of my 73G's are for sale at 36 million. But the question "what is a reasonable price" is a secondary question. That is an easy question, depending on some discussion and compromise. The first question is: is there enough demand on the buy market ? If there is enough demand, there is no need to regulate things. In my opinion there is not enough demand. Only 1% of the 73G's is owned and younger than 5 years.
And so far I have talked about the 73G, because it is a widely used plane. On the Tempelhof server, 61 Antonovs 148A are owned. My two holdings own 53 of these 61 planes. Now tell me how much chance there is I could ever find a buyer for these planes. And please don't tell me I should have gone for a more popular plane. There are hundreds of CR9's flying around Tempelhof, but the 8 players who operate the most CR9's, only own 10 of them (I have not checked their age). The rest is leased. If I owned 50 recent Bombardier jets, I would face the same problem.
So I can only say again, in a game where only 1% of the nearly new planes is owned, there is no second hand market for them.
AS is a good game, and I like it. But it has a few flaws. Refusing to see these flaws is a lack of intellectual integrity. Or living in denial. And we all know denial is a river in Egypt. The same happened when I said that "seat space" (using less seats to get a better image rating) does not work.
Enjoy the plane ;-)
Jan