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Starting an Airline

boeing.com

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Re: Starting an Airline

#201

Post by aj12345 »

fleitz wrote: post #189
fennecfoxen wrote: post #176

Earlier quoted context omitted.

Yes it does. A bank needs $1.1 billion to lend $1 billion, or they're out of compliance with Federal Reserve regulations. The interesting part is that once they lend the $1 billion, and it's spent on aircraft (etc) and ends up in the bank accounts of Boeing and its contractors and its employees and the raw materials companies... then there's $1.1 billion in the original bank's accounts and $1 billion in all the Boein…

This is a huge commonly held misunderstanding of fractional reserve banking. 'The capital ratio is the percentage of a bank's capital to its risk-weighted assets. Weights are defined by risk-sensitivity ratios whose calculation is dictated under the relevant Accord. Basel II requires that the total capital ratio must be no lower than 8%.' http://en.wikipedia.org/wiki/Capital_requirement With $1 billion in deposits a…

Deposits have nothing to do with capital. If you have 1B in assets and 12B in liabilities you are insolvent.

Re: Starting an Airline

#202

Post by seanmcdirmid »

xonev wrote: post #150
Shenglong wrote: post #142

Here's an investment banker joke I've been hearing oddly often recently: "How do you get a million dollars?" -> "Invest a billion dollars in the airline industry". On a more serious note: there's a lot of talk on this page about the finance and logistics of starting a company like this - but I think the human factor is also worth mentioning. I fly a moderate amount, and whenever I have an hour or so to spare on a lay…

I have a friend who's a beginner pilot for a regional airline (American Eagle). He doesn't fly more than 80 hours a month and he only gets paid for the hours he's actually flying, but he has to be on call a lot (sometimes on call in the airport). And yeah, he makes like $20k a year, I think. He was so upset with the airlines that he quit (also trying to save his marriage). But he loves flying so much that he went bac…

After he got some experience, he could come to China. They are paying major dollars for pilots right now with enough experience to fly a 737 or 320. There are serious shortages in the world that many of the pilots flying within China (and other countries in Asia) are not from Asia.

Re: Starting an Airline

#203

Post by brightsize »

jellicle wrote: post #192
SoftwareMaven wrote: post #170

Earlier quoted context omitted.

Pilot salaries are all based on union contracts. Union contracts are all negotiated by union leaders. Union leaders are all senior pilots. Senior pilots have a strong incentive to negotiate contracts that pay senior pilots the most, even if it is at the expense of new pilots. I know a guy who flies less than 20 hours a month but makes well over $100k/year. He's been a pilot for over 20 years and knows how to work the…

Things I learned from Hacker News: both high and low salaries are all the fault of dastardly "unions". (Actually, the regional carriers that employ newbie pilots are non-unionized.)

Not just the unions. "Regulations" are at fault too. They're unnecessary and expensive. The number of airliners that fall out of the sky per year due to faulty design/construction/maintenance or due to under-trained/overworked/unfit pilots is something for "The Market" to decide, not the Gubbmint!

Re: Starting an Airline

#204

Post by aphelion »

SoftwareMaven wrote: post #170
Shenglong wrote: post #142

Here's an investment banker joke I've been hearing oddly often recently: "How do you get a million dollars?" -> "Invest a billion dollars in the airline industry". On a more serious note: there's a lot of talk on this page about the finance and logistics of starting a company like this - but I think the human factor is also worth mentioning. I fly a moderate amount, and whenever I have an hour or so to spare on a lay…

Pilot salaries are all based on union contracts. Union contracts are all negotiated by union leaders. Union leaders are all senior pilots. Senior pilots have a strong incentive to negotiate contracts that pay senior pilots the most, even if it is at the expense of new pilots. I know a guy who flies less than 20 hours a month but makes well over $100k/year. He's been a pilot for over 20 years and knows how to work the…

Low pilot salaries are due partly to the dismal state of the airline industry and mostly due to the fact that while flying a 747 may be an immensely impressive skill it's not one that's in very wide demand.

Re: Starting an Airline

#205

Post by FireBeyond »

Shenglong wrote: post #142

Here's an investment banker joke I've been hearing oddly often recently: "How do you get a million dollars?" -> "Invest a billion dollars in the airline industry". On a more serious note: there's a lot of talk on this page about the finance and logistics of starting a company like this - but I think the human factor is also worth mentioning. I fly a moderate amount, and whenever I have an hour or so to spare on a lay…

Without hijacking the subject / topic, this is one of my pet peeves... many EMTs and paramedics, even unionized, are absolutely responsible for lives, directly, as a job description. Yet you will find that the national average salary for an EMT is $19,000. That's $3,000 less than the person that makes your coffee at Starbucks...

Paramedics, who do even more, including being entrusted with cardiac drugs, narcotics, and skills up to and including cricothyrotomy, often fare barely better than said barista.

Re: Starting an Airline

#206

Post by jacques_chester »

fleitz wrote: post #189
fennecfoxen wrote: post #176

Earlier quoted context omitted.

Yes it does. A bank needs $1.1 billion to lend $1 billion, or they're out of compliance with Federal Reserve regulations. The interesting part is that once they lend the $1 billion, and it's spent on aircraft (etc) and ends up in the bank accounts of Boeing and its contractors and its employees and the raw materials companies... then there's $1.1 billion in the original bank's accounts and $1 billion in all the Boein…

This is a huge commonly held misunderstanding of fractional reserve banking. 'The capital ratio is the percentage of a bank's capital to its risk-weighted assets. Weights are defined by risk-sensitivity ratios whose calculation is dictated under the relevant Accord. Basel II requires that the total capital ratio must be no lower than 8%.' http://en.wikipedia.org/wiki/Capital_requirement With $1 billion in deposits a…

The accounting rules for banks are different. They book cashflow differently and I believe balance sheets are presented in a way that essentially neutralises the deposits and loans in order to focus on what the bank itself owns or owes.

Re: Starting an Airline

#207

Post by fleitz »

aj12345 wrote: post #201
fleitz wrote: post #189

Earlier quoted context omitted.

This is a huge commonly held misunderstanding of fractional reserve banking. 'The capital ratio is the percentage of a bank's capital to its risk-weighted assets. Weights are defined by risk-sensitivity ratios whose calculation is dictated under the relevant Accord. Basel II requires that the total capital ratio must be no lower than 8%.' http://en.wikipedia.org/wiki/Capital_requirement With $1 billion in deposits a…

Deposits have nothing to do with capital. If you have 1B in assets and 12B in liabilities you are insolvent.

There's one of two possibilities, either I'm wrong and capital requirements don't work like that, or every bank in the world is insolvent. Given Quantitative easing 1,2,3,etc which do you think is true?

You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland, and I show you how deep the rabbit hole goes. Remember, all I'm offering is the truth – nothing more.

Re: Starting an Airline

#208

Post by hrasyid »

beambot wrote: post #185
sp332 wrote: post #183

Earlier quoted context omitted.

Well... The bank could start with half a billion, and lend $450,000 of it. Then whichever bank that gets put into could lend 90% of that again, and so on. After a few times, there's a billion dollars lent from half a billion.

I fail to understand your reasoning: 0.5e9 * 0.9^n < 0.5e9 < 1e9. In other words: No one is ever receiving $1B even if banks' balance sheets sum to more than $1B lent collectively. On par, each bank is holding a small part of the 0.5e9, and then the final individual is holding the rest.

see http://en.wikipedia.org/wiki/Money_creation#Money_creation_t...

Re: Starting an Airline

#209

Post by tb »

SoftwareMaven wrote: post #170
Shenglong wrote: post #142

Here's an investment banker joke I've been hearing oddly often recently: "How do you get a million dollars?" -> "Invest a billion dollars in the airline industry". On a more serious note: there's a lot of talk on this page about the finance and logistics of starting a company like this - but I think the human factor is also worth mentioning. I fly a moderate amount, and whenever I have an hour or so to spare on a lay…

Pilot salaries are all based on union contracts. Union contracts are all negotiated by union leaders. Union leaders are all senior pilots. Senior pilots have a strong incentive to negotiate contracts that pay senior pilots the most, even if it is at the expense of new pilots. I know a guy who flies less than 20 hours a month but makes well over $100k/year. He's been a pilot for over 20 years and knows how to work the…

For anyone who's interested in why this is the case, here is the classic article on this situation: http://philip.greenspun.com/flying/unions-and-airlines
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