Life of an Airplane – Economics of planes

Life of an Airplane – Economics of planes

The airline industry collects its revenue
in billions of dollars, as you can imagine. One example can be Emirates
Airlines that wrote its transport revenue from passengers, cargo, and excess baggage
fee wass up to 25 billion dollars in 2018 – 19. But, what is the actual profit that an
airliner makes in its lifetime? Hello and welcome today we explored the life of an
airplane, from the business side. Don’t forget to subscribe to our youTube
channel, click on the notification bell, and drop a like. Thou the air transport service is highly capital intensive and brings in a hefty revenue, it’s not as
profitable as one would imagine. The industry has a small profit margin of 2%
which is significantly less than the US average of 5% for other businesses. The
minute a plane is delivered to an airline, it starts costing money be it for
storage, maintenance, or other outlays. Out of the main expense of flying, operation
costs for fuel and Pilots salary take around 27% of the revenue, labor and
parts for maintenance 13%, and a detail of other cost is take nearly 60% more.
Then we can start making real money. Let’s break this down on our new, 154
seats, A320 we purchase for a hundred and seven million dollars. How much do you
think your plane makes in its lifetime? Write your answers in the comment
section below. We have included our sources and calculations for all of you interested in the nuts and bolts. For the rest of us we have kept this video short,
sweet, and abbreviated. Based on rough calculations by Wendover productions,
let’s fly our plane from New York JFK to DC DCA, assuming a fully loaded plane
making a 12.5% profit of $10 from this specific flight. This, however, is highly
unattainable as flights get delayed, cancelled, and not all seats are mostly
filled. In its 25 years of service, our A320 makes about a hundred and forty
four million dollars. We can extend the life of our bird by 20 years through
conversion for cargo; but, to do this we need to give up our plane on its 10th to
12th birthday, and the process costs a sweet five million dollars. Our cargo
plane now flying from Shenzhen China to New York in the
United States for 15 years makes eighty eight point two million dollars. At the end of
its life, our A320 is sitting on a hundred and forty point nine million
dollars. Air crafts at the end of the line go to the graveyard like the famous Victorville in Southern California to “Rust in peace” and in most cases they are
scrapped for parts our A320, if scrapped, can sell its
engines for three million dollars and other parts altogether make an average
of half a million. To sum it up, finally after making us a more likely
average of twenty one point seven million dollars with a two percent profit to a
very rough and ideal average of one hundred and twenty nine point four
million with twelve point five percent, our A320 we bought 25 years ago, or say sometime in the last
five minutes dies. And these final words were please
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8 thoughts on “Life of an Airplane – Economics of planes

  1. I wish the video was more comprehensive and long as its hard to explain this in a less than 4 min video. Good video and gives a rough idea but it could have been more coherent. I wanted to take more concrete information from this video but that didn't happen.

    This is just my opinion and only saying this as the quality can definitely be improved. Please consider making longer videos that explain things better.

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