a3
Posts: 212
Joined: Wed Oct 04, 2006 5:24 am

Buying Aircrafts. What Are The Key Factors?

Fri Feb 16, 2007 2:51 am

What make airline companies buying certain aircrafts over others of relative capabilities???
It¢s a very discussed topic on this forum but from the technical and the “romantic” view of the aviation lovers.

I am thinking that companies don¢t take much under consideration any “romantic” issues and technology issues is weighted on their decisions but not as a key factor.

The way I see it the some of the key factors are :

Overall investment cost per unit per life span
Financing the investment,
Time to return the capital invested,
Company growth plan,
Maintenance costs ,
Commonality (if possible) with current equipment (or cost of diversification) ,
Easy access to staff (type rating etc) ,
Easy access of replacement parts (and cost) ,
Corruption (YES it¢s a major factor in some countries ….) ,
Political orientation of the country (to put it politely) ,

Please place your thoughts.
Rgds
A3
Don't spend your money on airlines that don't respect your business.
 
DLPMMM
Posts: 2128
Joined: Wed Apr 20, 2005 12:34 am

RE: Buying Aircrafts. What Are The Key Factors?

Fri Feb 16, 2007 3:11 am

1. Price (including start up costs if any such as training, ancellary equipment required ,and any financing costs...)

2. Operating costs (including maintainence costs, fuel consumption, landing fee differentials, personnel cost differentials...)

3. Capabilities (ranges and loads).

4. Corrupting influences (such as politics or bribes...)

Pretty much anything could be categotized into one of these categories.
 
v2fix
Posts: 299
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RE: Buying Aircrafts. What Are The Key Factors?

Fri Feb 16, 2007 7:51 am

I few years back, more than I care to remember, I was invovled in a study with one of the world major aircraft manufacturers (I'll let you guess which one!) and we were looking at the Total Cost of Ownership for a modern jet.

End of the day it was calculated that if the aircraft could be maintained by the manufacturer (and this means all the spares, all the logistics support the aircraft) and train the pilots then the through life cost was 5 times the cost of the aircraft.

That is, only 20% of the total cost was the aircraft pruchase.

The major aircraft manufacturers was trying to establish if they could give the air frame away (effectively a 20% reduction on the TOC) and make money on the maintaince and training.

I wont (and can't) tell you what the result was - but it might surprise you.
742; 744; DC10, DC3, 321, 320, 319, 170,190, 772, 773,333, 346, 343
 
a3
Posts: 212
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RE: Buying Aircrafts. What Are The Key Factors?

Fri Feb 16, 2007 2:22 pm

Thanks for your replies,
I think that many arguments regarding A. vs B. , comparisons between various models of these manufacturers resulting marginal differences of a few hundred miles in long haul range or 0.5% fuel consumption (for a specific route) does not make any sense since the major key factors that an airline buys their planes are completely different.

P.S Serenely it’s not a factor “how nice looking “ an aircraft is ….
 white 
Don't spend your money on airlines that don't respect your business.
 
JAAlbert
Posts: 1555
Joined: Tue Jan 31, 2006 12:43 pm

RE: Buying Aircrafts. What Are The Key Factors?

Fri Feb 16, 2007 3:37 pm

Quoting V2fix (Reply 2):
The major aircraft manufacturers was trying to establish if they could give the air frame away (effectively a 20% reduction on the TOC) and make money on the maintaince and training.

Amazing! Sorta like the business models used by the makers of the laser printers. Sell the printer for next to nothing, sell the replacement ink cartridges for $100s each, knowing that every few months a business needs a new ink cartridge replacement!
 
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N328KF
Posts: 5810
Joined: Tue May 25, 2004 3:50 am

RE: Buying Aircrafts. What Are The Key Factors?

Sat Feb 17, 2007 12:12 am

Quoting JAAlbert (Reply 4):
Amazing! Sorta like the business models used by the makers of the laser printers. Sell the printer for next to nothing, sell the replacement ink cartridges for $100s each, knowing that every few months a business needs a new ink cartridge replacement!

Yes, and Kodak is introducing printers that do not follow this model -- the units are more expensive and the ink is cheap. There was an article in The Wall Street Journal essentially stating that HP and Lexmark were crapping their pants because of it, public statements notwithstanding. The assertions were backed up by several analysts.
When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' -Theodore Roosevelt