Real world subsidized liners?

[steve98052]

The standard Cr8000 Middle Passage and Cr10 000 High Passage figures -- roughly equivalent* to US$32 000 and US $40 000 respectively -- are one starting point. That's very expensive for a one-way ticket, comparable to chartering an entire private jet for 20 hours. That's a more realistic starting point for guessing passenger traffic.

However, the traditional Cr8000 and Cr10 000 figures aren't particularly sensible. Do they apply per parsec, per jump, or per trip? Shouldn't a trip on a slow Jump-1 ship be cheaper than a Jump-3 express?

More thoughts later.

* I base that on the standard of one Credit being defined as US$1 in 1978, with inflation.

 

[phavoc]

The main airport for Sofia, Bulgaria saw 4 million passengers in 2015. Athens main airport had 7 million domestic and 12 million international passengers in 2016.

How many Bulgarians or Greeks take intercontinental first class flights? That is a more cost-equivalent comparison.

A first class ticket to the other side of the world is much cheaper than a Mid passage...

A good question... and one that getting data on is going to be damn difficult. Only IATA would have an estimate, based on interline tickets. Other than that you'd have to go to the individual airlines and (a) find out their load factors, (b) find out how many revenue seats were on those planes, and (c) how many people bought full tickets as opposed to buying a Y or business class and upgraded (or were upgraded due to flight status on the airline or one of the alliances.

So let's agree that information is not readily available.

Also, neither of those airports offer direct flights halfway around the world, so that question is moot. It would be more accurate to ask what is the cost of a 1st class ticket from Athens to say Sydney. That, of course, involves changing planes somewhere. In this case you can purchase a ticket on Olympic 30 days in advance for 1,350 euros roundtrip. That's economy class. Business class is 1,950 euros. That's about the equivalent in dollars.

From what I've seen, an Imperial Cr is about equal to $1 in 1977 dollars. Today a 1977 dollar is worth about $4.15. Since Traveller doesn't seem to have inflation in it's universe we'd have to go with the numbers above.

According to the OECD the average net-adjusted disposable income (after taxes and transfers) is $18,575 per capita. That's an average. So an economy ticket is within the budget of an average person, but much depends on their other expenses. It's still doable though.

Of course, all this is real-world numbers, and this doesn't exist in the game because no macro, nor micro-economic models exist. Numbers were created and applied at the time of the game creation and they have changed very little since. I doubt MM did any sort of economic modeling for the Imperium - and I don't blame him, because economics for most people isn't "fun" - nor is it trying to shoe-horn it into a D&D in space.

However, for the Imperium to function and to exist at the size and capabilities it does today it simply cannot exist at such a low level of industry and trade along the lines of Greece/Eastern Europe. It would have to be modeled along the lines of, at least, Germany, France or England or the US. Maybe Russia, though that would be at the low end, or Japan. At the time the game was created China was out, but could potentially be included now.

It would actually be more of a question of costs related to ocean-travel in 1900-1920 from Europe to America. Ocean going ships are a much closer analogue than flights. For example Etihad airways has an apartment-sized cabin on their longer routes, available at about $30k on NY to Abu Dhabi. But you get your own dedicated steward for 12hrs. I haven't seen any load factors on this run. You can rent them for shorter flights, but it's about $1,000/hr. Prices are fluctuating as they are still trying to match availability to demand, but not making them too cheap that they loose their luster to the rich. If you used this cost model for a starship it would be Cr60,000/day - which totally busts the Traveller ticket price. It's an interesting, but useless comparison.

 

[phavoc]

The standard Cr8000 Middle Passage and Cr10 000 High Passage figures -- roughly equivalent* to US$32 000 and US $40 000 respectively -- are one starting point. That's very expensive for a one-way ticket, comparable to chartering an entire private jet for 20 hours. That's a more realistic starting point for guessing passenger traffic.

However, the traditional Cr8000 and Cr10 000 figures aren't particularly sensible. Do they apply per parsec, per jump, or per trip? Shouldn't a trip on a slow Jump-1 ship be cheaper than a Jump-3 express?

More thoughts later.

* I base that on the standard of one Credit being defined as US$1 in 1978, with inflation.

Ticket prices are generally per parsec travelled. But you are right, it's damn expensive to be a passenger on a starship. MGT 2e reduced the travel costs per parsec, except for 6 parsec jumps... those prices are astronomical! (pardon the pun). This doesn't even list costs above J6, which is now possible. Only the wealthiest of individuals or corporations would ever send someone on a 6 parsec trip. Regular liners couldn't operate because there isn't enough individuals to fill them. Ticket prices for the Concorde were about $10k ea, round-trip. That's about 5x the cost of a regular first-class ticket on a regular flight. And Concordes were relatively cramped. But people paid for prestige, and time. So J6 tickets are going to be rare, and the liners that offer them small. Nearly all travelers would go with a J5 ticket and then take a J1 hop. Or a J3/J2. All depends on the worlds in between as to which method is best.

Passage and Freight Costs (2e version)
Parsecs /High / Middle / Basic /Low / Freight
1/ Cr8500 /Cr6200/ Cr2200/ Cr700/ Cr1000
2 / Cr12000 / Cr9000 / Cr2900 / Cr1300 /Cr1600
3 / Cr20000 / Cr15000 / Cr4400 / Cr2200 / Cr3000
4 / Cr41000 / Cr31000 / Cr8600 / Cr4300 / Cr7000
5 / Cr45000 / Cr34000 / Cr9400 / Cr13000 / Cr7700
6 / Cr470000 / Cr350000 / Cr93000 / Cr96000 / Cr86000

 

[Infojunky]

Ok, another point or two.

A liner in in steamship parlance is largely a cargo ship. with maybe a third of it's payload volume dedicated to the Passenger trade. Especially on the Subsidy. Frequently the ports they serve have small transient populations, Inj traveller terms they probably will be serving average population worlds ie around Pop5-ish.

The Subsidy is to the Line not the specific ship, so in a lot of cases it will be a couple ships serving the same route temporally displaced from each other, often there will be a central point where ships of the same line will meet going different directions.

Note, this is Local commerce, between Higher Populations worlds there will larger Passenger Liners who have longer legs. Travel speeds between the Bright Lights will be much faster than to East Podunk.

On the topic of Economics I have always pondered sitting doe and figuring the true cost of Passage and Haulage for Commercial ships. The ballpark number per Stateroom is around 1500cr per jump plus required crew salary per jump. But this a requires breaking down the revenue space into there respective operational cost and comparing them to the respective overhead costs i.e. what the ship costs.

 

[steve98052]

Ticket prices are generally per parsec travelled. But you are right, it's damn expensive to be a passenger on a starship. MGT 2e reduced the travel costs per parsec, except for 6 parsec jumps...

Thanks. That spares me much searching.

More thoughts later.

Besides looking at the ticket prices in the books, one can look at prices from the point of view of what a ship operator needs to charge to make it worth their while.

Two fairly easy cases are pure passenger liners (which actually do carry cargo, up to passengers' cargo allowance) and pure freighters. For mixed ships -- such as the merchant ships most likely to be operated by player characters -- it's more complicated.

For passenger liners, the cost is the amortized capital cost of the ship plus the operating cost per jump, times the percentage of staterooms filled by paying passengers, divided by the number of passenger staterooms. In simplified terms, the amortized capital cost is the cost of the ship times the interest rate divided by the number of parsecs the ship travels per year. (In more detail, it would include the opportunity cost of money for the down payment, the principal and interest cost of the mortgage, and an adjustment for the value of the ship when it is sold.) Operating costs include insurance, crew salaries, port fees, fuel, routine maintenance, consumables, and a share of annual maintenance.

For pure freighters, all the same expenses apply, but they're multiplied by percentage of cargo capacity used, and divided by cargo capacity.

In the classic books, the interest on a starship mortgage was absurdly low, and insurance was entirely neglected. Ordinary freight was also overlooked (with the minor exception of mail); speculative cargo was the only type of cargo described. And I only described owners' costs; owners' expected profits would add to the prices customers would pay.

To calculate the costs for a mixed passenger and freight starship one would have to find a way to allocate the ship's expenses between passengers and freight, but there's no way to do that in isolation. Instead, one needs to look at the costs of a pure passenger liner, a Low Passage passenger ship, and a pure freighter. A mixed ship can't compete directly with pure passenger liners or pure freighters, because passengers have different expectations about schedules than freight customers. Instead, they survive by serving routes that aren't profitable for larger ships due to poor load factors, and the chance to make up for absent passenger load with freight and vice versa.

At least one of the three coauthors of GURPS Traveller Far Trader is an economist. They explain it better than I can. But I can illustrate with examples if there's popular demand.

 

[AnotherDilbert]

Besides looking at the ticket prices in the books, one can look at prices from the point of view of what a ship operator needs to charge to make it worth their while.

Not particularly difficult, if perhaps a bit tedious.

http://forum.mongoosepublishing.com/viewtopic.php?p=899558#p899558

In the classic books, the interest on a starship mortgage was absurdly low, and insurance was entirely neglected.

You payed 1/240 of the ship's price for 480 months to finance 80% of the ship in CT. That works out to a 6.25% interest, not too bad in a inflation free environment.

Yes, insurance was absent, but you could also make no insurance claims. I always assumed a loss insurance was included in the mortgage, which works if the risk is low. Hence no mortgages for risky business models.

I have generally used a 5% interest rate in Traveller for this reason.

Ordinary freight was also overlooked (with the minor exception of mail); speculative cargo was the only type of cargo described.

?? Freight was certainly included, and a much more stable source of income than passengers that were IIRC rare on marginal worlds.

And I only described owners' costs; owners' expected profits would add to the prices customers would pay.

Of course. I tend to use 5% of investment as a minimum, based on the calculated interest rate above.

 

[AnotherDilbert]

Of course, all this is real-world numbers, and this doesn't exist in the game because no macro, nor micro-economic models exist. Numbers were created and applied at the time of the game creation and they have changed very little since. I doubt MM did any sort of economic modeling for the Imperium - and I don't blame him, because economics for most people isn't "fun" - nor is it trying to shoe-horn it into a D&D in space.

Of course not. The only economic modelling we have is basically for a Free Trader operating among a few small ports.

We know nothing about the major trade routes.

However, for the Imperium to function and to exist at the size and capabilities it does today it simply cannot exist at such a low level of industry and trade along the lines of Greece/Eastern Europe. It would have to be modeled along the lines of, at least, Germany, France or England or the US. Maybe Russia, though that would be at the low end, or Japan. At the time the game was created China was out, but could potentially be included now.

Why? Empires have existed far longer than cheap transport.

It would actually be more of a question of costs related to ocean-travel in 1900-1920 from Europe to America. Ocean going ships are a much closer analogue than flights.

I have seen it compared to the East India trade of the 18th century. Only extremely valuable cargos can be carried, yet it is still important to the economy. That didn't stop European powers from building empires in Asia.

 

[Condottiere]

With a fusion engine and manoeuvre drive, intercontinental travel costs peanuts.

The two bigger issues are low wages and transition times, one which makes space travel expensive, if not unaffordable for the proletariat, and the second that multiplies that cost through operating costs,maintenance, salaries and depreciation. Assuming depreciation exists.

 

[steve98052]

Besides looking at the ticket prices in the books, one can look at prices from the point of view of what a ship operator needs to charge to make it worth their while.

Not particularly difficult, if perhaps a bit tedious.

Right. The main challenge is thinking of a reasonably comprehensive list of expense categories and enumerating them, something I don't want to attempt on a phone.

In the classic books, the interest on a starship mortgage was absurdly low, and insurance was entirely neglected.

You payed 1/240 of the ship's price for 480 months to finance 80% of the ship in CT. That works out to a 6.25% interest, not too bad in a inflation free environment.

I just did the numbers, and I got 3.985214%, for an annualized percentage rate of 4.058818%, if I did the math right. That's similar to the rate on my home mortgage, but I have a 15 year mortgage, my house is not mobile, and insurance is a condition of the loan.

Based on interest rates at the time classic was published, circa 4% was absurd. Based on today's interest rates -- which agree better with the apparent economy of the Imperium -- it's not low, but not absurd.

Yes, insurance was absent, but you could also make no insurance claims. I always assumed a loss insurance was included in the mortgage, which works if the risk is low. Hence no mortgages for risky business models.

There are several risks to commercial starships:
- Accidents, including misjump
- Manufacturing defects
- Acts of war, including things like planetary insurrections that spill into starports
- Piracy (passengers can still attempt to steal ships or kidnap crews and innocent passengers, even if ship to ship piracy doesn't work)
- Negligence, including maintenance deferred due to financial squeezes
- Attempted insurance fraud
- Skipping and ordinary mortgage default (applies only to mortgage insurance)

Those all seem to add up to considerably more than the margin of risk that can be included in lenders' cost of money (probably 1% or less) and the 4% they charge, which realistically covers only lenders' profit and the risk of default (net of value after a repossession sale).

Ordinary freight was also overlooked (with the minor exception of mail); speculative cargo was the only type of cargo described.

?? Freight was certainly included, and a much more stable source of income than passengers that were IIRC rare on marginal worlds.

It's in there? I played classic for years and only saw speculative trade, mail, passengers and adventures as income sources.

And I only described owners' costs; owners' expected profits would add to the prices customers would pay.

Of course. I tend to use 5% of investment as a minimum, based on the calculated interest rate above.

Just to pull a figure out of the air, I'd expect that owners' profits should be at least as large as the cost of the mortgage. A small time operator (like a player character) might sacrifice profit for pride of ownership, but investors wouldn't.

With a fusion engine and manoeuvre drive, intercontinental travel costs peanuts.

Some operating costs become negligible, but capital and payroll costs remain. Years ago, I read that airlines' expenses were almost equally divided between capital, payroll, and fuel. (Profits throughout the industry were approximately zero at the time.) With fusion and gravitic drives, fuel goes away, but capital and payroll remain.

 

[AnotherDilbert]

I just did the numbers, and I got 3.985214%, for an annualized percentage rate of 4.058818%, if I did the math right. That's similar to the rate on my home mortgage, but I have a 15 year mortgage, my house is not mobile, and insurance is a condition of the loan.

Based on interest rates at the time classic was published, circa 4% was absurd. Based on today's interest rates -- which agree better with the apparent economy of the Imperium -- it's not low, but not absurd.

We don't use the same formulas, but the results are not too different. (Checking I see that you are right, I used an oversimplified formula, sorry for the confusion.)

The interest rate was higher in the 70s because of the inflation. The real interest (interest rate minus inflation) was not all that much higher then. In Traveller, without inflation, ~4% is not very low.

There are several risks to commercial starships:
- Accidents, including misjump
- Manufacturing defects
- Acts of war, including things like planetary insurrections that spill into starports
- Piracy (passengers can still attempt to steal ships or kidnap crews and innocent passengers, even if ship to ship piracy doesn't work)
- Negligence, including maintenance deferred due to financial squeezes
- Attempted insurance fraud
- Skipping and ordinary mortgage default (applies only to mortgage insurance)

Those all seem to add up to considerably more than the margin of risk that can be included in lenders' cost of money (probably 1% or less) and the 4% they charge, which realistically covers only lenders' profit and the risk of default (net of value after a repossession sale).

I have assumed the total risk of ship loss is low, otherwise shipping costs would be higher.

There is, as far as I know, no information whatsoever about total loss rates in Traveller, so you are free to make any assumption you want.

If we assume a 1% annual loss rate a ship (or crew member) would have a ~33% chance of loss during a 40 year period. Neither the current aerospace nor shipping industry would accept anything near that loss rate, except during world wars.

It's in there? I played classic for years and only saw speculative trade, mail, passengers and adventures as income sources.

LBB 3, p8. Availability table on p11.

Just to pull a figure out of the air, I'd expect that owners' profits should be at least as large as the cost of the mortgage.

Generally required calculated profit is based on invested capital?

 

[phavoc]

It would actually be more of a question of costs related to ocean-travel in 1900-1920 from Europe to America. Ocean going ships are a much closer analogue than flights.

I have seen it compared to the East India trade of the 18th century. Only extremely valuable cargos can be carried, yet it is still important to the economy. That didn't stop European powers from building empires in Asia.

I used a later time frame and location because the technology, warships and merchant marine of the early 1900s is a better match. Sailing vessels of the 1700s did not have the same sort of capital investment and building time that steel cruisers and battleships had. Warfare of the time, with large turrets able to be brought to bear (as opposed to broadsides) also works better for Traveller. For merchant vessels, especially liners, you see the same thing in the 20th century as you would in the 52nd - just with some tech upgrades. Sailing vessels of the time were extremely cramped and everyone travelled in crappy conditions (with lucky exceptions of the captain or owner aboard in their larger suite).

Cargoes of the time were varied. You still had grain being transported long distances (Rome did it with Egyptian wheat), the Mediterrean was full of merchants carrying mundane as well as valuable cargoes.

 

[AnotherDilbert]

I just did the numbers, and I got 3.985214%, for an annualized percentage rate of 4.058818%, if I did the math right. That's similar to the rate on my home mortgage, but I have a 15 year mortgage, my house is not mobile, and insurance is a condition of the loan.

Based on interest rates at the time classic was published, circa 4% was absurd. Based on today's interest rates -- which agree better with the apparent economy of the Imperium -- it's not low, but not absurd.

We don't use the same formulas, but the results are not too different. (Checking I see that you are right, I used an oversimplified formula, sorry for the confusion.)

I think we were both wrong.

In CT you could only borrow 80% of a ship's value, you had to pay 20% yourself. The repayment was still 1/240 of the ship's cost per month. I get that to 0,465% per month or 5,72% per year.

 

[Condottiere]

The most expensive part of a starship is the engineering.

Salaries depends on how well staffed it is.

 

[Infojunky]

Based on interest rates at the time classic was published, circa 4% was absurd. Based on today's interest rates -- which agree better with the apparent economy of the Imperium -- it's not low, but not absurd.

We don't use the same formulas, but the results are not too different. (Checking I see that you are right, I used an oversimplified formula, sorry for the confusion.)

I think we were both wrong.

In CT you could only borrow 80% of a ship's value, you had to pay 20% yourself. The repayment was still 1/240 of the ship's cost per month. I get that to 0,465% per month or 5,72% per year.

Remember Traveller uses Simple interest, where in the real world it would Compound interest....

 

[AnotherDilbert]

Remember Traveller uses Simple interest, where in the real world it would Compound interest....

Sorry, I do not understand?

 

[phavoc]

Remember Traveller uses Simple interest, where in the real world it would Compound interest....

Sorry, I do not understand?

It's how the interest is calculated. Simple interest is done based on the amount of the original loan. Compound interest is calculated based upon the amount of the original loan AND the interest that you would have to be paying in future periods.

Compound interest is more like what you pay for a home mortgage while simple interest is what you would pay if you got a car loan. Since there is 0% inflation in the Traveller universe it skews the normal financial model. Also, if you have simple interest paying off your loan early doesn't help you out because that cost is baked into your loan and you pay it no matter what. In a compound model, if you pay off additional principal earlier it pays big dividends later (again, no inflation skews the normal financial calculations).

Here's a website that helps explain some of the concepts:
http://www.investopedia.com/articles/investing/020614/learn-simple-and-compound-interest.asp

 

[AnotherDilbert]

Remember Traveller uses Simple interest, where in the real world it would Compound interest....

Sorry, I do not understand?

It's how the interest is calculated. Simple interest is done based on the amount of the original loan. Compound interest is calculated based upon the amount of the original loan AND the interest that you would have to be paying in future periods.

Any multi-period loan with a fixed payment schedule is an annuity, whatever the marketing department says. I think most developed countries have laws about showing "effective interest rate" in marketing material. An annuity is a prime example of compound interest.

A loan with simple interest would either have a decreasing repayment schedule, or no amortisation and hence the full amount of the loan due on the end date.

Traveller starship mortgages are annuities, hence compound interest, not simple interest.

Where did simple interest in Traveller come from?

 

[phavoc]

Sorry, I do not understand?

It's how the interest is calculated. Simple interest is done based on the amount of the original loan. Compound interest is calculated based upon the amount of the original loan AND the interest that you would have to be paying in future periods.

Any multi-period loan with a fixed payment schedule is an annuity, whatever the marketing department says. I think most developed countries have laws about showing "effective interest rate" in marketing material. An annuity is a prime example of compound interest.

A loan with simple interest would either have a decreasing repayment schedule, or no amortisation and hence the full amount of the loan due on the end date.

Traveller starship mortgages are annuities, hence compound interest, not simple interest.

Where did simple interest in Traveller come from?

Well, the loan a PC takes out for a starship is NOT an annuity, since he is the borrower. An annuity would be money flowing to a person, not from the person. To be fair I suppose you could possibly characterize it as an annuity, though I think that's a stretch of the definition. Annuities, at least here in US, flow TO a person, not FROM.

You could set up an annuity with simple interest. Annuities are variable in how/when they pay. All of that is defined when purchasing an annuity. It's possible to purchase an annuity that pays out $1,000/mo for a set period without using compound interest rates. I think it would be the exception rather than the rule though.

 

[Infojunky]

Traveller starship mortgages are annuities, hence compound interest, not simple interest.

Since when? By which I mean that isn't what the TMB says....

Where did simple interest in Traveller come from?

CT Book 2, then every other edition of Traveller including Mongoose....

 

[AnotherDilbert]

Well, the loan a PC takes out for a starship is NOT an annuity, since he is the borrower. An annuity would be money flowing to a person, not from the person. To be fair I suppose you could possibly characterize it as an annuity, though I think that's a stretch of the definition. Annuities, at least here in US, flow TO a person, not FROM.

Interesting. I actually checked, wiki used "monthly home mortgage payments" as an example of an annuity.

What do you call a loan where you pay a fixed amount for a fixed period?