Originally Posted by
Mixie
Car leasing and aviation leasing are completely different IMO especially when China is changing the game by flooding the market.
There's no difference in what a lease is. The difference between aviation and the car market is just the relative cost of the asset and availability. If Boeing and Airbus had opposition from China such as Comac, ACAC, AVIC and Harbin flooding the market that would just make the purchase and lease of aircraft cheaper. Car leasing companies make just as much as aircraft leasing companies, its the banking industry, they just make money off the movement of cash, not the use of the vehicle. They just balance risk vs reward and set a margin on the lease that ensures they make money even when things go wrong.
Hertz is in trouble because the usual way car rental companies work is to buy brand new and sell before the asset fully devalues and maintenance costs kick in. Which has worked fine for decades with petrol models. But what they didn't bank on is how little electric cars would be worth after the same period of use, compared to purchase price. So the write down in asset value has destroyed their balance sheets. So the issue could be if you purchase a fleet of 10 737s for instance based on 20-30 years of use and a new technology comes along rendering them completely obsolete, you are now left with an un-competitive fleet worth junk, if you leased it, you just return them. So in a lot of cases locking in a fleet for the long term via outright purchase (loans etc) is the right way to go. Where if you want flexibility then leasing might be higher cost, but give you more ways to pivot.
You can not compare Qantas to Rex or Bonza either. When QF buys a 'fleet' it's of significant size so there will be a large discount on the purchase per unit. Rex, Bonza, and all the small players will have to pay significantly more to purchase new aircraft, in the same way they have to pay more to lease them, they just don't have the negotiating power. Which comes back to what I said before that some aircraft leasing companies buy up aircraft in bulk so that they can purchase them cheaper and then offer lower lease rates comparable or better than what it would cost a small operator to purchase.
Originally Posted by
Mixie
Hindsight is a great thing but there was only going to be 1 outcome once they decided to compete with Qantas on high margin domestic routes.
Bonza didn't compete on the main routes and failed from lack of demand on the routes they did operate. Rex chose correctly to vie for the trunk routes, where they failed was in marketing and sales. As was pointed out many times here they had very low loads even with prices that were competitive. So they failed to attract customers, the other operators had high loads and at most times much higher fares.