6 replies to this topic

[Michael.]

I've two small topics to bring up simply for discussion purposes. While they've been mentioned before, I think it's up to the general community to decide what exactly we would like to see in the next version of the game and to discuss how certain things will work.

 

1 - Aircraft Leasing.

 

As it stands obviously one can lease from the market quite easily.

 

i) I have a vision of aircraft leasing companies: sale and lease-back transactions. In case anyone doesn't know, it's when an airline orders aircraft but those aircraft are paid for by the leasing company and the airline leases from there. How do you feel prices should be negotiated (e.g. do we use the current system or change) and when the contract is up, does the leasing company have the facility to lease the aircraft elsewhere and how does that work?

 

ii) Airlines may lease among themselves (which I know has been suggested before but I'll throw it in anyway). The issue of airlines leasing aircraft to subsidiaries (which would be another worthy feature) for nothing was raised in a previous topic. Therefore does one simply put restrictions on how low the price can go or do we fix prices in the way it is done at present.

 

iii) What other facilities to lease to people want? Personally I feel leasing companies and leasing between airlines would be excellent but of course I do appreciate that this is stuff for the future.

 

2 - Valuation.

 

I'd love to see the valuation be changed from assets to Market Capital. However I do see there are a lot of issues with this so I'm interested to hear your opinions. 

 

i) Airlines might not want to be publicly traded in which case, how are they valued?

 

ii) Who determines share price? Perhaps other airlines can buy stakes in eachother (as suggested today: http://www.airline-e...6-stock-market/) but I can only see that becoming messy and obviously if you're in second place, it's easy to try to bring down top spot by trying to buy shares cheaply. However I would love to see some sort of test/trial run on this. Lastly, for this to work, I do think this would be necessary: http://www.airline-empires.com/index.php?/topic/20987-public-financial-statement-for-leasing-rights/?hl=%2Bleasing+%2Bcompanies

 

Thoughts?

[Stevphfeniey]

There was a test trial for stocks years ago. It failed miserably.

[Lironicus]

As for the shares, I'd say it SHOULD not be too hard? 

We already have the financial performance of a company under Airline Options. Given how you can see the profit margin, you should be able to calculate PE, ROE, PBV etc. based on that, no? Share valuation however should not be solely based on planes alone(especially leased ones), but also debt and I think it'd be important to include more buildings and some options for recurring income, like a restaurant at an airport, buying airports(non-stated-owned ones in politically restricted areas) or hotels. That works for football manager games I know. In those games however, it was easy to push your stock price. You just needed to be successful and the money came pouring in. You lost a lot and your share price tanked. You won a lot and it skyrocketed. 

Like you say, a trial run would be important. Maybe to buy shares of other airlines, we could include the option of getting a salary(as player), depending on the size of our airline?

So say your airline is the size of Lufthansa. You get 10 mio USD a year. With "only" 10 mio, it will be hard to buy any big airline(or it will take decades). So big players can't just buy, buy, buy. Also, the IPO should be possible in steps and limited to say 40-49% at first. Once a company is public, players should have the option to sell as many shares as they want, but they need to be aware that if they sell the majority of shares, there could be a hostile takeover. 

It sounds complicated, but I think the game already gives us many of the tools to include at least some of it.

As for the share price, I think kerosine prices(and hedging?) could play an important part too. Nothing influenced the aviation industry more than the oil price changes up to 2008 and afterwards.

[dazwalsh]

Im all for shares but the game is far too easy as it is, so the act of selling shares to gain capital is lost as before too long your into the billions in cash reserves.

[Michael.]

Im all for shares but the game is far too easy as it is, so the act of selling shares to gain capital is lost as before too long your into the billions in cash reserves.

And naturally it would be easy, if I have shares in a competing airline, for me to sell them for dirt cheap in an attempt to damage their aluation, assuming I'm sufficiently affluent to do so and make a net gain. I will try to come up with ways to make market cap work because, since I play this game as both a business enthusiast and an aviation enthusiast. However I am short on simple ideas. 

[maxchentaipei]

echoing the valuation part:

 

for private entities, we can use 'exit multiple method' to calculate the terminal value. (i can address more on valuation if needed) it's fairly simple. the current finance tab already has information regarding cash flow and whatnot.

 

for stock simulation, i think a test run should be required to determine if the liquidity in game world with about 100 players is sustainable. market inefficiency can result in ridiculous excess return, hostile speculation/sellout, and can be taken advantage of, hence, not realistic.

 

also, i suggest adding a few options to the bond section such as early repayment with a penalty, option to purchase other players' outstanding bonds, option to issue bonds at a much higher face value, and a more sophisticated credit rating system.

 

last, adding in m&a option which a player can decide to sell a profitable airline to another player for a negotiated price and start over with the cash received would be nice in some cases.

[iquit]

It sounds complicated, but I think the game already gives us many of the tools to include at least some of it.

Again, the problem is not complexity in implementation but complexity in anticipating exploits.