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Airbus: Who Controls The Price Of Each Aircraft?  
User currently offlineSquirrel83 From , joined Dec 1969, posts, RR:
Posted (11 years 1 month 11 hours ago) and read 3981 times:

My question is sparked by the following article

Why should IA pay an extra Rs 5,000 crore for 43 aircraft when the EU major has offered Air Asia a price of $26 million or less per aircraft in ready-to-fly condition for delivery in 2006? the MPs ask. If IA benchmarks its contract on the price offered to Air Asia, it will spend $1.2 billion against the $2 billion reportedly being paid out.



I think some of you can see where im going with this . .

Example - Lets say Canada and France or an EU coutry have good economic ties and would like to purchase a a346 and received a lower price due to the relation . . .See where IM going ?

5 replies: All unread, jump to last
User currently offlineJwenting From Netherlands, joined Apr 2001, 10213 posts, RR: 17
Reply 1, posted (11 years 1 month 11 hours ago) and read 3956 times:

In part your suspicions may well be right.
In part (hopefully for free trade a larger part) it's due to market forces though.

Airbus will give volume discounts as will just about anyone. Airbus will also lower the price if they see the potential customer leaning to the competition.

Maybe IA were just poor negotiators.

I wish I were flying
User currently offlineTrex8 From United States of America, joined Nov 2002, 5557 posts, RR: 14
Reply 2, posted (11 years 4 weeks 1 day 20 hours ago) and read 3850 times:
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there is also the costs of the financing which is not always part of the announced "price". ie it may be more expensive ultimately to buy a plane for say 10 million at 9% interest over 12 years as opposed to 12 million at 4% over 6 years.(actual numbers may not be right but you get the idea!)

User currently offlineDLKAPA From , joined Dec 1969, posts, RR:
Reply 3, posted (11 years 4 weeks 1 day 20 hours ago) and read 3849 times:

And back with the subsidies argument. Yay the worms are coming out of the can...

User currently offlineTrex8 From United States of America, joined Nov 2002, 5557 posts, RR: 14
Reply 4, posted (11 years 4 weeks 1 day 19 hours ago) and read 3827 times:
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Quoting DLKAPA (Reply 3):
And back with the subsidies argument

and which argument is that, AWST had an article maybe last fall when they quoted someone as saying if Airbus had to pay commercial interest rates on their "low interest" loans from the Euro govts it would increase the price of every plane they made by all of several tens of thousands of dollars only! hardly anything to make or break a deal. you change the basis points for the interest rate for the financing a little and you get more spread!

in any case with the a320 program they are just printing money like a mint whenever they sell one. and if they want to not make money on that particular line as they have paid off their govt creditors already, its hardly a new business practise to subsidise one product by making a loss on another!

User currently offlineDanialanwar From Switzerland, joined Mar 2001, 421 posts, RR: 0
Reply 5, posted (11 years 4 weeks 1 day 7 hours ago) and read 3743 times:

It's a commercial company. So the final decision will be with the CEO or maybe some very senior manager (given rather low volume high impact of purchases). The CEO is then responsible to ensure Airbus produced the results that it's owners (EADS and whoever else) commissioned him to achieve.

I have never heard of complaints that subsidies go to specific purchases ... as far as I am aware, all subsidies go into development. So I really dont see the EU or one government telling Airbus to give Air Asia extra discount!!! Governments may help countries purchase planes by giving loans to those countries that will then be used to buy the planes. Or help the decision making by offering traffic rights into Paris.

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