Chapter 150 - 146 Business Orders_1

"What is the hourly operating cost of this aircraft?"

"For a single aircraft, it’s around 150,000."

"That cheap? Shall we start with one plane?"

"..."

This scene took place at New Yuan Aeronautics, with SF Express inquiring about the An-1250.

In civil aviation cargo transport, pricing cannot be simply calculated based on the aircraft’s fuel consumption.

The costs of civil aviation transport are multifaceted:

First, the cost of fuel. Aviation kerosene costs about 4,500 RMB per ton. The An-1250 at most consumes 26 tons of fuel per hour, which is 5 to 10 times that of regular passenger and cargo planes. Assuming a 2,000-kilometer flight takes two and a half hours, the cost would be up to 292,500 RMB;

Second, crew expenses. Based on an average hourly wage of 500 RMB for a four-person crew, that would be 5,000 RMB;

Third, maintenance costs. Firstly, parking at an airport once could cost around 1,100 RMB, then there’s the calculation of tire wear and average maintenance. One flight could cost 50,000 RMB, so that’s a total of 51,100 RMB;

Fourth, takeoff and landing fees, which cost about 30,000 RMB to the airport;

Fifth, the airport’s service fees. The crew and ground staff have to be paid, as well as the guidance vehicles, de-icing services, etc. One takeoff and landing could cost 100,000 RMB;

Sixth, depreciation costs. Assuming the An-1250 is sold for 6 billion RMB and the cost is recouped over 8,000 takeoffs and landings, that would mean a depreciation cost of 750,000 RMB;

Seventh, en-route fees, which cost several thousand RMB, let’s assume 5,000 RMB;

Eighth, command fees for the control tower, let’s also assume 5,000 RMB.

After adding up all these miscellaneous costs, the operational cost for an airline to run an An-1250 would turn out to be 1.22 million RMB. Assuming a full load in the cargo hold of 360 tons, that’s an average of... 3,358 RMB per ton, only 3.36 RMB per kilogram?

That’s quite cheap, provided it’s fully loaded, and in fact, it could be made even cheaper by, for example, operating with only 6 engines.

A Boeing 747-200 freighter typically carries a 90-ton load, and the cost for a 2,000-kilometer flight is about 480,000 RMB, averaging 5.3 RMB per kilogram, still two RMB more expensive than the An-1250.

Don’t underestimate those two RMB; the per kilogram transport price is reduced by 36.6%!

If both were to transport 360 tons of goods and we assume a price of 10 RMB per kilogram, for one flight of the An-1250 compared to four flights of a Boeing 747 freighter, the former could generate an additional profit of 700,000 RMB, an increase of 40% in profit.

Moreover, the An-1250 is designed to fit 360 tons in the cargo hold, and carry 500 tons on its back. If nothing is carried on its back, the actual fuel consumption could be further reduced. After takeoff, it could operate on just four or six engines to save fuel.

As long as the An-1250 can load more than 245 tons of cargo in one trip, it can surpass the Boeing 747 in terms of economy.

But this is SF Express we’re talking about. With their vast express delivery network, obtaining an An-1250 would allow them to handle more bulky items. Filling up a 360-ton payload isn’t difficult, and purchasing one to serve busy routes with high airport standards, supported by large airports, is indeed more convenient than an older Boeing 747.

What’s more, having such a large aircraft emblazoned with SF Express livery is certainly good for the company’s image and stock price.

The only issue is that the An-1250 has some stringent operating conditions, and there aren’t many airports that can accommodate it, and not many routes exist where the anticipated cargo loads can be fully assembled at the desired times. Hence, SF Express decided to start by purchasing just one to try it out.

Thus, at Xinyuan Company, there was the spectacle of SF Express planning to extravagantly spend 6 billion RMB to purchase an An-1250.

In fact, it’s not too expensive, roughly 1 billion US dollars when converted. A Boeing 747 costs more than 300 million US dollars each, so it’s clear which is more valuable between an An-1250 and three Boeing 747s—using the An-1250 as a cargo plane is definitely cost-effective.

Plus, it comes with a unique China-specific BUFF: domestically produced.

The domestic express delivery company you use ships your parcels with a wholly domestically produced, large Chinese aircraft. Just for that, it wouldn’t be a problem to increase the delivery fee by 1 RMB, and I believe many people would be willing to support domestic production.

There is another point, any domestically produced item has one characteristic: cheaper maintenance and service.

Even just for the sake of supporting Chinese enterprises, everyone believes that the warranty policy for the An-1250 will definitely not be as domineering as those of Boeing and Airbus.

For such a buyer, New Yuan has no reason to reject, especially since 6 billion is a true profit!

Including the development costs, a single An-1250 cost only 2.5 billion to produce. If three were produced, the average cost would be about 2 billion each, which means this one aircraft alone has earned back 4 billion, covering the development costs and the money for two planes!

Of course, there’s not just one order. Many more come from the military.

How important is a single An-1250? The cargo bay dimensions are 7.5 * 6.9 * 100 meters, and a 99A tank weighs 55 tons, with dimensions of 7.6 meters in length, 3.50 meters in width, and 2.45 meters in height.

The cargo bay of the An-1250 is especially reinforced; fitting 6 99As won’t work side by side, as the stress would be too concentrated, but staggered on both sides is no problem. Even like that, they would only take up 46 meters in length, weighing 330 tons, and there would still be room for another 30 tons in the cargo bay, equivalent to half a Yun-20.

That extra 30 tons could lift two tank repair vehicles, effectively air transporting two tank platoons at once!

To do the same with a Yun-20 would require 7 flights, and by then, the prime opportunity for warfare would have passed.

The Western Military District, particularly near the plateau, was especially eager: the supplies air transported by a single An-1250 could last a long time. If a cargo bay were installed on its back, wouldn’t the transport capacity double? Unfortunately, such a configuration would greatly compromise the efficiency of unloading, making it not very practical.

The Western Military District strongly requested at least two An-1250s, as they would be very beneficial for frontline transportation and regular supply assurance. Even for airdropping supplies, the sheer weight that could be dropped at one time would be terrifying, something the C17s of India wouldn’t even dare to consider.

The other Military Districts also thought it was a good piece of equipment, with each having the intention of procuring at least one. The Capital Military District believed the An-1250 would be very useful for strategic support and even contemplated ordering two.

In the end, the intention of the various Military Districts combined reached as many as 15 planes!

However, a 15-plane order was bound to be unrealizable. The military’s annual production of Yun-20s was just 10 planes, totaling only 8 billion RMB per year. If three An-1250s were to be delivered in one year, wouldn’t that require an expenditure of 18 billion RMB?

No, no, that’s not how military funds should be spent; even one aircraft is too expensive.

Moreover, such transport aircraft are tied to the strategic priorities of the military, which aren’t decisions that can be made in a short time. However, Lin Ju believed there would be at least one or two orders, which would be sufficient for an aircraft of the An-1250’s caliber.

On April 27, SF Express officially reached an agreement with New Yuan Aeronautics to deliver an An-1250 cargo aircraft (with minor modifications) for the price of 6 billion RMB, with delivery scheduled 8 months later, on December 27.

The reason for the 8-month wait was because New Yuan planned big moves for the middle of the year involving space, leaving them without much energy to focus on airplanes, but an 8-month delivery was still quite impressive.

Although this order, compared to the hundreds of billions signed annually between major airlines and Boeing or Airbus, is much less, it still created a record for the highest price of a single cargo plane and generated a huge response.

SF Express had already begun preparations for going public next year, and this 6 billion RMB worth of large aircraft only solidified their position as the industry leader in domestic logistics. By now, they had acquired over 50 cargo planes, far ahead as the kings of the industry.

Investor confidence soared, and Wang Wei was extremely excited. Although the aircraft hadn’t even started being built, he had already hired someone to sketch an image of the An-1250 in SF Express livery. He garnered a significant following and stressed that his action supported domestic production. Wang Wei even announced that the entire cargo of the An-1250’s first commercial operation would come with a commemorative card signed by the crew, sparking an enthusiastic response.