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Why Buy More Planes?  
User currently offlineA340pilot From Canada, joined Sep 2003, 576 posts, RR: 0
Posted (10 years 11 months 2 weeks 1 day 11 hours ago) and read 2620 times:

I don't understand why airline company's are buying 20-30 new aircraft when there is hundreds of there own aircraft at storage facilities like Mojave (MHV) I'm pretty sure that most (not all) of these aircrafts have some years left in them!! Why would they waste money on buying new 737's when they have like 40 perfectly flyable 737's! I've seen some pictures where there was good airplanes at the desert and some years later they are sitting on pallets because of collapsed landing gears! IM Happy to see that they wrap them all up nice and neat in tinfoil only to let them rust! Is there not some way of selling these dilapidated aircraft to people to either restore them to make them into a restaurant or for display! And IM sure that aviation technology schools can use a few that could be donated ( Yes, I am aware that westjet has just donated a 737 and that's great!) But IM just curious what all of you think should be done or opinions on the desert??


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Best regards,
a340pilot


Go! Canucks Go!
14 replies: All unread, jump to last
 
User currently offlineElwood64151 From United States of America, joined Feb 2002, 2477 posts, RR: 6
Reply 1, posted (10 years 11 months 2 weeks 1 day 4 hours ago) and read 2517 times:

For the tax breaks.

It's simple: As an airline depreciates an aircraft, they get a tax break because it shows up as a loss on their profit/loss statement, and is reflected in their balance sheet.

An airline with 100 fairly new aircraft in Mohave can actually cut its taxes in half by a) leaving them out there to rot and b) buying new planes to cover the route, but also showing depreciation.

Many of NW's DC-9s were depreciated years ago. That's why they're still flying. They can drop off new aircraft in the desert and depreciate them more quickly while using the DC-9s that are, technically, worthless. This also saves on insurance, since the replacement cost of a DC-9 is next to nothing (maybe $1M for a parked, opeational DC-9).

Like many things in accounting, it's a farce accepted as a Generally Accepted Accounting Principle. They're allowed to do it simply because there is no way to actually measure depreciation, but it does exist and is something that needs to be dealt with. So each company chooses an accepted method and depreciates the planes. If they're sitting out in the desert, they don't use fuel, and they do give you a tax break... Nice, huh?



Those who fail to learn history are doomed to repeat it in summer school.
User currently offlineLuv2fly From United States of America, joined May 2003, 12110 posts, RR: 48
Reply 2, posted (10 years 11 months 2 weeks 1 day 4 hours ago) and read 2444 times:
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Also a reason a lot of planes are not donated or turned into restaurants and such is, there is a lot of money to be made parting out the aircraft. A whole lot of money.

And some of the plane orders you speak of, the orders had been placed in better times, and the airlines would face hefty fines to cancel now.



You can cut the irony with a knife
User currently offlineCanadianNorth From Canada, joined Aug 2002, 3390 posts, RR: 9
Reply 3, posted (10 years 11 months 2 weeks 1 day 3 hours ago) and read 2354 times:

Well after this, it makes sence, but still doesnt seem right.

You have a perfectly fine aircraft there, why the hell would you wanna park it.. whats rong with it? Couldnt you donate it/sell it/keep it at yer maintenance base for parts/use it for charters/training/maintenance training?/or something? It just seems such a waste... buying new aircrafts when the ones you already have work just fine, its rediculus.

CanadianNorth



What could possibly go wrong?
User currently offlineBeltwaybandit From United States of America, joined Mar 2003, 495 posts, RR: 0
Reply 4, posted (10 years 11 months 2 weeks 21 hours ago) and read 2248 times:

Boeing and Airbus are giving great deals; and for several years you get a complete maintenance holiday. It has a way of making the financial statements look very good for a few years.

Of course, in a few years, you have a dilemma.


User currently offlineA340pilot From Canada, joined Sep 2003, 576 posts, RR: 0
Reply 5, posted (10 years 11 months 2 weeks 13 hours ago) and read 2153 times:

Elwood64151: Thank you for the Input  Big thumbs up It does answer a lot! But it still seems to be a shame to leave all these beautiful aircraft on the closet shelf when they should be in the sky. Am I Mistaken or do they not lease some of these aircrafts to other company's (I.E: united airlines to air Canada for example) or do they lease there planes from an active list of aircraft?



Best regards,
a340pilot



Go! Canucks Go!
User currently offlineStartvalve From , joined Dec 1969, posts, RR:
Reply 6, posted (10 years 11 months 2 weeks 13 hours ago) and read 2111 times:

Airlines and accountants do not give a rats hairy butt about "all those beautiful aircraft". They do care about thinks like share prices. They are legally obligated to take the new airplanes because they signed a document saying so with the manufacturer before it was built. Pissing backwards on the order would probably cost them more than parking the silly thing. To an accountant that airplane exists to make money, granted it does not make a dime parked in the desert but then again they are not losing nearly as much on it as if it were flying where they were paying landing fees, fuel, maintence and salary to a crew. Elwood is exactly right about why they park what airplanes. Also airlines are not around for charity, yes its great to donate an airplane to a school or sell it to the school for cheap. But that is bad for business when they can make big bucks parting the thing out to other airlines flying the same thing, or save on their own parts costs using the parts themselves. Too many people on here think too emotionally.. Airlines are businesses if they do not make money they cease to exist then threads start appearing about how they should come back and operate from their old hubs and doing the very same things that lead to their demise.

User currently offlineA340pilot From Canada, joined Sep 2003, 576 posts, RR: 0
Reply 7, posted (10 years 11 months 2 weeks 13 hours ago) and read 2087 times:

Well it seems like you are a minority in this a.net forum! Go into the search and look at the threads............A hell of a lot of them are in regards to the beautiful shape and sheen look of the aircraft! If You were to run the airline industry with dirty, rusty aircraft I can guarantee that you would be out of business in a week! Everyone on a.net is entitled to there own opinions, If you don't think that shape or beautification matters....That's Fine! But don't come in here and call us "Emotional" because we think its a waste of airplane, Keep it to yourself!

Best regards,
a340pilot



Go! Canucks Go!
User currently offlineStartvalve From , joined Dec 1969, posts, RR:
Reply 8, posted (10 years 11 months 2 weeks 12 hours ago) and read 2046 times:

So when do you propose TWA relaunch itself with Super Constellations? I am not saying that I don't find airplanes beautiful. I also never said to keep the rattiest looking bucket they have in the sky. I am saying to use a little common sense if its cheaper to fly the older Airplane and park the new one do that... If it is best for business to park 727s and L1011s by all means do it.. Do not keep something flying only on the basis its pretty.. sheesh it sounds like my girlfriend managing an airline

User currently offlineBoingGoingGone From , joined Dec 1969, posts, RR:
Reply 9, posted (10 years 11 months 2 weeks 12 hours ago) and read 2037 times:

On the flip side of cash/asset depreciation, an airline can also lease new aircraft and write of the lease cost. In addition, if the aircraft value depreciates rapidly, an airline has room to re-negotiate the leases to cut costs. MEH is a perfect example of this cost cutting measure. Leases also reduce aquisition costs allowing a start up (i.e. JetBlue) to expand rapidly to meet demand.

[Edited 2003-10-09 07:26:14]

User currently offlineA340pilot From Canada, joined Sep 2003, 576 posts, RR: 0
Reply 10, posted (10 years 11 months 2 weeks 12 hours ago) and read 2012 times:

"Do not keep something flying only on the basis its pretty.. sheesh it sounds like my girlfriend managing an airline"

AH! HA! So its your girlfriend that operates the ZIP airline fleet with all the "pretty" aircraft! I've always wondered who was behind the gawdly pink zip!  Big grin But seriously, I agree with you that beauty doesn't keep the aircrafts in the air.......But there nice to look at!


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Best regards,
a340pilot


PS: to all you AC fans I am not anti air Canada, I just think they could have picked a better color  Nuts



Go! Canucks Go!
User currently offlineStartvalve From , joined Dec 1969, posts, RR:
Reply 11, posted (10 years 11 months 2 weeks 12 hours ago) and read 2005 times:

BTW When was the last time anyone saw aluminum rust? I know it can oxidize a bit but if your aluminum is rusting it may be a sign of a deeper problem. Oh and I have flown on some ratty looking airplanes, I recall a Delta 727 a few years ago that had most of the widget missing.. It still flew ok as far as I could tell and I am quite confident that competent mechanics signed off on it being safe to fly. Was it the norm for the Delta fleet? At the time maybe but the new livery was just starting to pop up so its forgivable. Did the airplanes rough appearance away from its ability to generate income for the airline? HELL NO. Would that airplane have made as much money for the airline had it been a spanking new 737.. Doubtful when you relate what Elwood said earlier.. Which is exactly right. Every airline has a few airplanes that look like ass.. Its a fact of life, the key is to not have the whole fleet looking awful. Also when you make decisions based on nostalgia for a type, or the attractiveness of its lines, or just thinking it looks cool, that is making a decision based on feelings or emotions. Run your airline or any business on emotion instead of financial data and YOU will be out of business in a week. If the thread was about how attractive a particular type is I would probably be participating whole heartedly but this particular thread relates to a basic dollars and sense question of fleet management, where there is little room for emotion.

User currently offlineStartvalve From , joined Dec 1969, posts, RR:
Reply 12, posted (10 years 11 months 2 weeks 12 hours ago) and read 2000 times:

ok example time:
I personally always sort of found the 737-200s ugly no matter how they were painted. That is an Emotional response... The 737-200 was the best match for Zips needs based on the acquisition cost, fuel usage, range, maintenece costs and seat mile costs for the markets it serves and probably a few other factors, some it does better than other airframes on other aspects it does worse but overall its the best choice.. That is a logical response.

oh and a paint job costs a lot less than a new airplane

[Edited 2003-10-09 07:52:16]

User currently offlineA340pilot From Canada, joined Sep 2003, 576 posts, RR: 0
Reply 13, posted (10 years 11 months 2 weeks 12 hours ago) and read 1978 times:

OK Truce, I have heard your reasons and I agree with you 100%. But as seeing that I will never own an aircraft (not even a Cessna) I have to live by what I can watch and fly-on at YVR, LAX, SEA and In my opinion I would rather see a nice looking aircraft, than the NW 747 cargo plane. IM Not going to break down in tears and require years of counseling if a plane looses its colors or becomes dilapidated, all IM saying is it would be nice to see them in the air. And as for the aluminum, I am fairly new to the aviation world as stated in my profile and didn't even know they where aluminum, as far as I knew they were "metal birds" ! I run a trucking company, and the only thing that I know for sure about airplanes is they bring me my cargo for shipment. So I apologize if some of the things I said don't make sense, but its all I know!  Smile


Best regards,
a340pilot



Go! Canucks Go!
User currently offlineStartvalve From , joined Dec 1969, posts, RR:
Reply 14, posted (10 years 11 months 2 weeks 11 hours ago) and read 1950 times:

This was never anything personal we were debating an issue. Actually trucking companies were sort of a way of life for me growing up, my father is ops manager for a small one in Ohio. I used to work there part time (until I moved) and I picked up more than I ever cared to know about moving the nations crap. He does fleet management along with a lot of other things... Many of the same concepts apply only its far more complex with airplanes but what it comes down to in both cases is what equipment is going to make the company the most money. I agree fully it would be nice to keep the old workhorses we all love seeing in the air flying but the old pretty stuff has had its day. And while you and I may find the howl of old jet engines nice, it tends to tick the airport neighbors off. Now its time to fall in love with a new pack of airplanes, each generation more similar looking than the last. Someday we will all remember the 757 and the A321 fondly.

Those are just examples, insert whatever types best fit your criteria of blah to prevent this becoming a what type is better looking thread.


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