Egerton wrote:kitplane01 wrote:Egerton wrote:
Well, IATA deals with averages. This implies that the required return on shareholders funds from say IAG at 15% will result in a much higher than the quoted 10% of the cost of running an airline.
Again, what you wrote makes no sense.
When you wrote "We like to talk about efficiency and operations but one third of the cost of a flight is paying for the airframe" that was an average. When I wrote "The IATA says that buying and financing the airframe is 10% the cost of running and airline." that was also an average.
When I wrote that the airframe acquisition costs are 10% of the airlines, I was writing about costs. If you want to mark up all costs (labor, fuel, etc) by some percentage to allow for a profit that's fine. But it will not effect their relative levels. It will still be 10% of the now marked up costs.
Again, you wrote that " but one third of the cost of a flight is paying for the airframe" but the IATA says its 10%. I'll believe them.
Please be kind enough to read this again, perhaps noting WHO SAID WHAT?
@kitplane, you are correct. I overestimated the acquisition cost by a fair bit. Nevertheless, it can easily be the second largest amount of the airlines' cost. You cannot simply disregard the list price and the necessary financing deals as an important factor for an aircraft sale. The higher the (percieved) risk for the bank is, the more the airline will have to pay. A 2% higher lease or loan cost can outweigh a 1% fuel burn advantage.