Should airlines
invest in buying the new Being 737? And if they do, is it a smart business
investment to make? In short, yes and yes, it is more than worth it for
airlines to invest in the new 737. The airline industry is a tough business operate
in though, and in many cases is an industry that does not allow for much of a
profit margin for those seeking to make money out of it. Many airlines operate
in the red for a large majority of the time, and in some cases the smaller
airlines are forced to close up shop altogether, as they are pushed out of the
market by larger airline companies.
Because of this,
many “budget” airlines have entered the industry, spending the least amount of
money possible, and in doing so trying to turn a larger profit. The cost to
keep a large airline, or a small one, off the ground is no small amount, and
because of every airline is cautious about where it puts its money to ensure a
profit. This leads to us back to the question; Is really worth it for an
airline to abandon their old and inefficient, but still functioning, planes
that they already own for brand new Boeing 737s?
Ultimately, as I
sated before, yes they are completely worth their price-tag, even if it is a
steep 51.1 million to 87 million USD. However, this investment would only yield
significant profits if given enough time. The plane itself costs less to
maintain and operate than the older models of planes that many airlines
currently use. Why should you care about why its efficient though? If it gets
you from point A to point B what’s the difference? The difference is the price
that you, as the consumer, are going to have to pay for that ticket from point
A to point B.
The cost of jet
full has been going up consistently since the 1980s. It has more than quadrupled
in price in the past 40 years, and is currently hovering at around 3 dollars
per gallon, compared to about 0.36 cents per gallon in 1980. This increase in
the price of jet fuel ultimately means that airlines need to spend more to keep
their planes in the air. However, even
though this is the case, ticket prices have more than halved in price in that
same period of time. Why is this? Simply put the airline industry has become
much more competitive, and each airline is trying to undercut “the other guy”,
while also trying to get you to pay top dollar. Introducing the Boeing 737 into
the mix, would mean increased savings for the airline and therefore lower
ticket prices. The “top dollar” that they want to get you to pay would go down
in price and save you money.
On top of this the
Boeing 737 is much more sturdy than the older planes that are currently in use
today. The Boeing 373 has a hull made out of carbon fiber, a strong material,
that has a much longer lifespan than the steel used in older airplane hulls. On
top of this the planes themselves have many other features that make it much
more reliable, and less of a hassle to maintain. This saves the airline more
money yet again, as they do to have to pay for repairs, or new parts, nearly as
often. The margin of savings from this is only made wider due to the age of the
older planes in circulation. To reiterate, savings for the airline translates
to savings for you, and who in this day and age wouldn’t want to spend less
when traveling to get half way around the globe, or simply to visit family in
another state.
It is a sure bet
that if the airlines that buy the 737s, both budget and commercial, will
eventually see savings from this investment, and therefore it would be smart to
invest in them. However, because the airlines in this industry operate near or
in the red, it’s difficult to shell up 50 million dollars to replace something
that is still technically working well enough. Even though this is the case, if
they spent the money they would make it back and then some do to the fact that
these planes are efficient and built to last. In the Boeing 737 would save both
airlines and us travelers more money, and make them even more profitable in the
long run.
By Karsten,
but Gunnar uploaded it for him
That's the problem from an environmental point of view as well. Everyone has a vested interest in more efficient planes because they consume so much fuel and add so much pollution to the environment. The motivation is already there to buy new planes, but there is no clear way to force airlines to adopt new planes unless we change the market. If everything had a pollution cap that when exceeded required companies to pay fines then more efficient planes would be more valuable, but maybe airlines would have less money to pay for them anyway. In terms of production the government could try to encourage a bigger supply that would lower the cost of each plane. An economics of scale scenario?
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