Originally Posted by Reroute

JBLU's A320s might have had very low initial costs, the leases are structured such that much of the costs are shifted towards the back end of the lease, hence the desire to sell aircraft after just a few years.

Originally Posted by Reroute

Good post NG. Let me just add my 2 cents. You get what you negotiate and apparently JBLU negotiated some good deals up front. Good for them. However, some one please correct me if I'm wrong, while JBLU's A320s might have had very low initial costs, the leases are structured such that much of the costs are shifted towards the back end of the lease, hence the desire to sell aircraft after just a few years. Which brings us to the first law of economics, "there's is no such thing as a free lunch". Eventually the piper will be paid.

The aircraft warranties I believe are fairly standard. Boeing offers them too.

Originally Posted by greedyairlineexec

there are no back-loaded leases from airbus at jb, just some big volume discount and a great warranty plan for the first 5 years.just like ual with their 319, or frontier or nwa, same deal for all.

Originally Posted by Reroute

. What I do know is that the interest rates float with the market on some of those aircraft, which seems unusual to me.

Originally Posted by NGINEWHOISWHAT

Bob, I'm opening myself here, but I figure I'd throw a few things out there. The smoking gun I was looking for I could not find. I found a lot of clues pointing towards the smoking gun, but no actual item admissable as evidence other than JB's website describing lease agreements.

The LCC startups always use Airbus. Why? Airbus always undercuts Boeing and we all know it. Airbus subsidies allow them to dump "cheap" airplanes on the market. If the LCC's had to pay fair market value for their aircraft, there wouldn't be any true LCCs.

People point to SouthWest, and to that I say that SouthWest is not always the cheapest thing going and that is something else we all know. Often times SW is higher than the legacy carriers, but they paid fair market value for their aircraft and did not contribute to the demise of McDonald Douglas or any other American plane maker, and for that I salute them.

The tax cuts/ government subsidy argument between Airbus and Boeing is almost as old as commercial aviation. There is a reason that Skybus, Virgin, and JetBlue chose Airbus. Airbus undercut Boeing, and in doing so was able to offer seats at a MUCH reduced rate initially taking market share away from the Legacy carriers. EasyJet was offered aircraft at 1/3 of what Boeing was offering making their cost per seat mile something like 4-5 cents

The US government, through the military, "gives" money to Boeing through Research and Development. No one can argue that fact. The governments of Germany, France, Spain, and Great Britain do the same for Airbus, but they go beyond that with forgivable loans and indefinitely extendable loans. They help with initial development costs and other launch costs, to which Boeing always cries foul. IMO, it's absolutely not fair and if it were the World Trade Organization would not have gotten involved.

Unlike Velopicide, I'm not angry with Legacy carrier guys and gals for going to JetBlue after 9/11. We all have to eat ... It's kind of like how we are all upset with China for taking all of our manufacturing jobs, but if you go into each of our homes and turn over a lot of items, they would say made in China or Taiwan. We work the black seem together.

I'm sure I may be somewhat misguided on some of these issues, maybe not. I would not care to see JetBlue go under, or Delta, or Airtran for any reason. Skybust, now there is another issue. By putting this information and my opinions out there, maybe some of you can prove or disprove what I have stated. I have links below, some of which are in .pdf format, so I don't know how to cut and paste.

Tom


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http://www.bna.com/itr/arch378.htm


GENEVA--Illegal subsidies provided by the European governments to the aircraft consortium Airbus have helped drive two competing U.S. companies out of business, seriously undercut the sales of a third, and resulted in tens of thousands of lost jobs, according to arguments submitted by the United States to a World Trade Organization dispute panel.

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The United States also argues that launch aid and other forms of subsidization have caused serious prejudice to the trade interests of the United States, in violation of Articles 5(c). Article 6.3 of the SCM Agreement, by displacing or impeding imports of U.S. aircraft in both European and third country markets, by seizing sales of Boeing aircraft through price undercutting, and by depressing prices for Boeing aircraft on the world market.
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Citing an example where subsidies to Airbus have undercut prices and taken sales away from Boeing, the United States said the European low-cost carrier easyjet was quoted a price of $19.36 million per Airbus aircraft in a bidding contest with Boeing in 2001, a discount of 56 percent off the $44 million list price. Washington said other sales lost as a result of price undercutting by Airbus include aircraft orders by Air Berlin/NIKI, AirAsia, Iberia Airlines, South African Airways, Thai Airways International, Singapore Airlines, Emirates Airlines, Qantas, and Czech Airlines.


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Furthermore, since subsides present a major obstacle to the free market economy, they may impact on the quality of products and services produced by subsidized industries. Many cases, subsidies have practically illuminated foreign competition in the domestic market.13 The power of the buyers will decrease, since there will be less competition in the marketplace. It could therefore be possible for the subsidized industry to offer its customers products and services of less quality. It is the widespread belief that more stringent competitive forces tend to enhance quality of products and services.

http://www.geocities.com/TimesSquare/1848/subs.html

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http://cei.org/pdf/4679.pdf

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LCCs have lower start-up costs: The recession in the airline industry gave the LCCs an excellent opportunity to lease or buy grounded aircraft at bargain prices; and the recession in the job market enabled these outfits hire trained pilots, engineers, and other airline staff on lower salaries. According to aviation consultants, it now costs only $10 million to launch an LCC, as the narrow-body Boeing-737s, and Airbus A-320s and 319s, used for short-haul sectors, are now available at the half the 1990s prices.

http://www.blonnet.com/2004/11/17/st...1700080900.htm

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http://www.easyjet.com/en/news/20030225_01.html

In addition, the Company chose to purchase Airbus aircraft because:

• the Airbus Contract enables it to purchase Airbus A319 aircraft at a price approximately a third per seat below the price for the Boeing 737-700 aircraft delivered to it under the Boeing Contract in August 2002;
• the Directors believe that the offer from Airbus was significantly better value than the offer received from Boeing;

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