Skip to main content

airline business: Yesterday I was told that I was an idiot!

Yesterday, an acquaintance called to point out that I was an idiot if I thought that solving the airline business problems was as simple as I made it to be!  I pointed out that this was not a "how to list" but provide to the layperson a sufficient understanding of the industry's complexity, and how different players made different decisions based on valid concerns and realities, that applied to their situation -- Singapore airline decision process is very different than that of American airlines!

So he no longer thinks I'm an idiot, just a "higher functioning moron"  I call that an improvement!

However, my ex-friend (he was really really really upset) did make one massive error (and that's where things got ugly) he was sure that the older aircraft would come out of retirement.  I spoke with some acquaintance at ILFC (Now AerCap -- not so sexy a name) he said that out of the 1,000 aircraft they expected maybe 50 not to return to service --- ever (these usually will not be owned aircraft but managed aircraft on behalf of third parties).  The point I am making is that they've got a very modern fleet (avg 6.0 years), some lessors have really ancient (like 15-year-old aircraft).

My ex-friend disagreed and said that too much capital was invested in these aircraft to be written-off, I told him there are two issues; the cost of bringing an aircraft back -- and the potential income it could generate.  In 2018 I was looking to start a small airline in Mexico -- very dedicated routes (thank God it didn't work out -- we would be broke now), but we could get EMB145 for virtually nothing (the lease rate for these aircraft should be around $250,000 per month -- we could get them for a 10th of that!!!

The owners were simply keeping the aircraft flying in the event that demand for the type ever came back (that may even be a bet that pays off since demand for smaller aircraft is rising), also kudos to Airbus for buying the C-series from Bombardier.

So I believe that the cost (and time) to bring these old aircraft back is not worth the effort (especially bigger aircraft like the A330, early models) the B747 is probably a goner as is the A380 -- it is hard to imagine that capacity demand will resume to what it was in 2019.  again I could be wrong -- the deal I could get with the EMB145 is probably unavailable now!  because there is a scramble towards smaller aircraft.

Comments

Post a Comment

Popular posts from this blog

The end of Tesla?

 it takes a special kind of idiot, to think that he can antagonize his entire customer base, and think that it will not impact his business. When Elon Musk went to work for Donald Trump, and created the doge department, he antagonized every liberal, and these people represent 90% of his client base.That’s not a brilliant move. Now Elon Musk is worth hundreds of billions of dollar, so he shouldn’t care a great deal, however, he needs to care because of several other issues. The cyber truck has been a disaster, most have had to be recalled because of defective glue, it’s not a truck, it’s not a car, it’s noisy, relatively uncomfortable, but great as a development platform. What Tesla has learned in making car manufacturing more seamless is truly amazing. The problem was that Elon Musk was so pissed with the Democrats, and with Joe Biden, in particular because of some slight, which were just plain stupid too. By the way, that he decided to support with hundreds of millions of dollar, ...
Post a Comment
Read more

what people get wrong about tariffs

 The issue is simple. What percentage of the economy is dependent on tariff goods? The truth, is that the US economy is far more closed than people understand. People genuinely believe that all manufacturing has ceased to exist in the United States all given to China on the altar of woke policy the truth can be further from That statement. Only about 15% of US GDP is related to foreign trade. Of that amount, slightly more than half is from Canada in Mexico. And half of that is energy. What that means, is that about 7% of US GDP is tariff dependent. The proof in the pudding, is how little money tariff generates. People think that 30 or 50 billion is a lot it’s not in an economy that has $3 trillion. The impact on the US economy will be less visible but not absent. Inflation hasn’t occurred yet first because tests have hardly started to bite, but more importantly it’s such a small percent of the economy. Now certain things are critical. The rare earth metals from China were critical....
Post a Comment
Read more

Demographics

 I am preparing a kind of family tree for our children so that they know where they came from.  In my family I am the only survivor, although my brother and sister died recently they were both in their seventies (a story I told already).    It was a fun process, but it provided more than that.  First, I married relatively young I was 26 when I married and nearly 30 when our first child was born.   I was looking at my ancestors.  On my mother's side, she had 6 siblings, Four died before the age of 30, two in war, and two from illnesses.  Only she and a single sister survived.   The two boys had a child each but they died in WWII, and the other sister died as an infant.   what is interesting is that every one of my mother's siblings had children in their early 20s.   I know that my mom was hardly 20 when my brother was born.    What is remarkable is that among our friends, we are the only ones to have fou...
Post a Comment
Read more