Republic of China: Ace Pilot

Chapter 170, page 169: Determining the business model of the betting company, and the aircraft purchase rights swap agreement.

The legislator was introduced by the church, and the judge was through John Harvey's connections.

Basically, it can be said that the upper-level approach has been successfully navigated.

But these things can't bring in customers to Las Vegas; there are other things to do.

How can we obtain accurate customer resources?
You can't just say, "Plant a plane in a city, and say, 'Free flight to Las Vegas to play cards,' and people will flock there."

That's obviously impossible.

Customer base is the key to the success of Taishan Casino Company; everything else is just a foundation.

Apart from Fang Wen, no one else knew how to continue.

The new confusion made others nervous.

After all, it's something no one wants to see fail despite all the preparation.

Fang Wen already has a plan for this.

After returning to Las Vegas, he held another short meeting.

Amid everyone's anticipation, Fang Wen looked at John Harvey.

“Harvey, you’ve dealt with all sorts of people and know a lot. Let me ask you a few questions.”

John Harvey nodded.

Question 1: Is gambling legal outside of Nevada?

"No, it's illegal."

"Question two, how do they participate in gambling outside of Nevada?"

"Most of them are underground casinos run by gangsters."

Question 3: How much money do these gangs make running underground casinos?

"As far as I know, it's not much. They have to give the local police department a long-term bribe, and there are other departments as well. They also have to face competition from their peers, and ultimately the profits are shared with the gang members."

Fang Wen smiled.

"That's the answer. Gangs control the customer base, but running their own underground casinos is illegal and requires a lot of additional expenses, whereas gambling is legal in Nevada. By connecting these three issues, we can arrive at a simple conclusion: simply hand over the business to local gangs, who will bring in the customers."

Everyone wore expressions that said they understood, but not entirely; they felt something was off.

John Harvey, speaking on behalf of everyone, asked: "The customer base in each place is limited. If they bring all their customers to us, won't it affect their own underground casino business? When they find that their business has been taken away, we will face the backlash from the gangs. They will not be merciful to us because of the money they have given us."

These words startled Lin Shuiwang: "General Manager, don't do that, it's too dangerous."

After listening to Lin Shuiwang's translation, Zhao Jiu also joined in the dissuasion: "Harvey is right. Gang members hate it when others take away their food. General Manager, your plan may attract those gangs to do things at first, but once they figure it out, they will definitely come after you."

Indiana also agrees: "In America, you can offend the police and congressmen, but you must never offend the gangs. Whether it's the Mafia or others, they all share the same creed: if you suffer a loss, you will definitely retaliate."

Despite everyone's attempts to dissuade him, Fang Wen explained, "I've only told you half of my plan; you haven't heard the rest yet."

So he hadn't finished yet! Everyone was curious about how Fang Wen would solve this problem.

Fang Wen continued, “If I were to take away the client resources of gangs in various places, I would definitely pay a price for it, but I don’t intend to do that. They can maintain their own client base; we provide the venue and services, and ultimately we split the profits with them.”

This is yet another emerging phenomenon.

According to Fang Wen's plan, a gang would be selected in each target city, and then the gang would find gamblers and bring them to Las Vegas.

Subsequently, each gang was provided with its own dedicated gambling hall, dealers, and various services, with the profits shared among them.

This is how junket operators will operate in the future, binding the interests of casinos and gangs together.

In this way, the interests of the casino company can be protected, except that a portion of the profits generated by the customer resources they bring in will be shared with them.

For gangsters, there's no need to run underground casinos anymore, and they can earn income in a more respectable way.

It's a win-win situation.

John Harvey was stunned, his eyes flashing with a hint of camouflage as he looked at Fang Wen. This was truly a business genius, turning the impossible into the possible.

In contrast, the other three were not so exaggerated. They had witnessed Fang Wen's amazing abilities and were used to them.

Seeing that everyone was convinced, Fang Wen continued, "Now, I need to send people to the three nearest major cities—Los Angeles, San Francisco, and Salt Lake City—to contact the local gangs. Who should go?"

Lin Shuiwang raised his hand: "General Manager, I'm best at this kind of thing. I'll handle all three locations."

Fang Wen thought about it and realized that Lin Shuiwang often dealt with all sorts of people and was multilingual, making him the most suitable person to deal with gangs of different ethnicities.

He instructed, "Go and just deliver a message, tell them about the free airfare, the dedicated gambling hall, and the profit sharing. If they agree, continue the discussion; if they don't, don't force it."

“I understand,” Lin Shuiwang replied.

The new user acquisition plan has been finalized.

The next day, Lin Shuiwang took a train and left Las Vegas.

The casino is currently undergoing major renovations, and the airport is also under construction.

There's one last thing missing: the airplane.

Fang Wen can fly to transport passengers, but not for long, since he will be returning to China in two months.

He plans to purchase three Boeing 247s as permanent operating aircraft for Las Vegas airport, dedicated to flying scheduled routes between fixed cities and Las Vegas.

Therefore, Fang Wen dialed Neil's number, who was still in the United States.

But then I received some bad news.

He never expected that the Boeing 247 would sell out so well.

Because of the Boeing 247's outstanding performance, coupled with Boeing's extensive promotion of its long-haul Asia-Europe flights, American Airlines ordered 60 aircraft.

This directly led to Boeing's production and assembly lines operating at full capacity, and other airlines that wanted to order Boeing 247s had to wait until all of American Airlines' aircraft were delivered before production could begin.

Fang Wen's current proposal to purchase a Boeing 247 is simply impossible to obtain.

However, ordering the d.332 from Europe would be impractical.

Then the only option is to sign a service contract with the airline.

There are quite a few domestic airlines in the United States, but only three have capacity that Fang Wen is satisfied with.

Those are: American Airlines, TWA, and China Eastern Airlines.

American Airlines is currently experiencing rapid growth, having merged with several smaller airlines and established a more comprehensive network of routes. They have absolutely no interest in Fang Wen's small-scale business.

Trans World Airlines was founded in 1925 and only recently changed its name; it was formerly known as Western Air Express.

Its headquarters are located in St. Louis, Missouri, and it radiates throughout the United States from the central region.

Eastern Airlines was founded in 1926 and is headquartered in Miami, Florida. The "Eastern" in its name refers to the easternmost part of the United States.

Fang Wen is choosing between TWA and China Eastern Airlines.

Suddenly, I realized that St. Louis, the headquarters of TWA, is the same city near where I discovered the strange mountain.

I thought I could take this opportunity to learn more about that strange mountain.

Fang Wen then contacted Global Airlines.

The demand for dedicated flight services surprised TransAsia Airways, which is still hesitant about this unprecedented business.

But after Fang Wen revealed his identity, the other party warmly invited him to St. Louis and requested that he bring his D.332.

Fang Wen simply flew his D.332 to St. Louis and went directly to negotiate.

The plane traveled 2500 kilometers to reach the skies above St. Louis.

The mysterious energy fluctuations were still very clear, emanating motionlessly from the strange mountain.

Unfortunately, there was no time to deal with it now. Fang Wen activated his radio to contact the ground and landed.

After the plane landed, a group of people came to greet us.

The cabin door opened, and John Harvey got off the plane first. A while later, he got back on to give a briefing.

"The delegation was led by the president of TWA Airlines. They were very interested in D.332 and wanted to come in for a tour."

Fang Wen roughly guessed the other party's intentions.

Because the Boeing 247 was in full production, TWA had no better aircraft to compete with American Airlines and had to purchase aircraft from other companies.

The story of him piloting a D.332 across the Atlantic has finally taken hold in the United States, and it's no surprise that they are interested in it.

Fang Wen didn't mind promoting d.332.

After all, Devatina receives a rebate of about 15% for every D.332 sold.

Fang Wen naturally agreed to this.

The group then entered the interior of d.332.

They were filled with curiosity about the plane and asked all sorts of questions.

"Mr. Fang, we learned from reports in Europe that you also participated in the D.332 aircraft modification, is that right?"

"Yes, mainly on the wings. We'll change the original forward-swept wings to backward-swept wings, which will make the aircraft more stable," Fang Wen replied.

The president walked across the airplane aisle without any barriers and asked, "I know your airline has four Boeing 247s. Having flown both types of aircraft, you should be very familiar with them. Can you share your thoughts?"

Fang Wen was stunned. Both Boeing and Devatina were his aircraft suppliers, so it wouldn't be good to say bad things about either of them.

His expression made the president of Trans World Airlines understand his meaning, and he quickly explained: "Please rest assured, I will keep this conversation confidential and will not tell any outsiders. In addition, if what you said is true, I will immediately provide you with the private flight service you requested."

Fang Wen could say something about that.

He and the president got off the plane and spoke when they were alone.

"The D-332 has a robust fixed landing gear, and the huge streamlined fairings are closely connected to the engine nacelles located on both wings. This design may limit the aircraft's performance and range."

The president turned to look at the plane, lost in thought.

Fang Wen continued, "Devatina is a private aircraft design company. It's normal that they have shortcomings in hydraulic systems and can only use fixed landing gear. When I flew it, I didn't feel any major problems. The advantage of the Boeing 247 is that its aluminum alloy structure is relatively lightweight, and the retractable landing gear has little impact on flight."

The president sensed Fang Wen's ambiguity and became somewhat anxious.

"Mr. Fang, your answer is very important to us. Please reply carefully."

Fang Wen said leisurely, "When I was in the sky, I saw a strange mountain north of St. Louis. Can you tell me what that mountain is called?"

“Those are the ruins of Cahokia, left by the Native Americans.” The president of TWA Airlines actually knew about that strange mountain.

Kahokia, Fang Wen memorized the name. He understood that buying land with cultural heritage was impossible, so he would have to explore other ways in the future.

He then went on to talk about the differences between the Boeing 247 and the D.332.

And finally, a summary is made.

"The Boeing 247 is undoubtedly the best medium-range aircraft currently available. Its range is insufficient to fly over the United States, but its performance in all aspects is excellent. The D.332 is considered a bit slower in terms of speed, but its range and payload are much greater than the Boeing 247. The two are actually not in the same competitive category; one is a medium-range aircraft, and the other is a long-range aircraft, both of which are currently the best aircraft."

The president nodded in satisfaction: "I heard that your Taishan Airlines is planning to purchase five D.332s. This already takes up the entire year's production capacity of Devatina Company. Could you allocate two of them to us?"

It turns out it was for this.

Fang Wen hesitated.

If the Japanese aircraft ownership plan is implemented, Taishan Airlines may have to reduce its fleet by at least two Boeing 247s. The company originally intended to convert the vacated routes into D.332s.

If it is sold to TransAsia Airways, how will the company make up for the short-term capacity shortage?

Taishan Airlines is his foundation. Even if he can't get dedicated air service from Global Airlines, Fang Wen will not do anything to harm Taishan Airlines.

He shook his head without hesitation and refused: "No, our company's business is also expanding, and we can't give you two D.332s."

The president of Trans World Airlines sighed helplessly: "Our two companies are in similar situations, but you don't have a behemoth competitor like American Airlines. Can you imagine it buying 60 Boeing 247s at once? I think it doesn't need that many planes at all; it just wants to dominate the entire American aviation business and then swallow up other airlines when their businesses decline."

Fang Wen agreed wholeheartedly, saying, "It's really tough to have such a powerful opponent. I want to help you, but I'm powerless to do so, especially since Taishan Airlines' Asia-Europe route is about to open."

After some hesitation, the president of Trans World Airlines said, "Our company has a long-term partnership with Douglas Aircraft Company. The DC-1 aircraft they provided is specifically designed to compete with the Boeing 247, and we were a great help when it was put into service. For this, Douglas Aircraft Company granted Trans World Airlines a franchise right to purchase any aircraft they manufacture in the future. If you are willing to make an exchange, our two companies can sign a purchase rights swap agreement."

(Produced in 1933, the Douglas DC-1 was designed to compete with the Boeing 247)

“A swap of purchase rights? Wait a minute.” Fang Wen turned and called John Harvey over.

He asked Harvey, "Is there a buy-out option swap agreement?"

John Harvey explains: "A purchase option swap agreement is a special type of agreement that involves two parties exchanging specific purchase rights. Such agreements are commonly used in the real estate, stock, bond, or other tradable asset sectors, allowing parties to exchange the right to purchase a specific asset according to the terms of the agreement."

Indeed, there is. Under the protection of the law, Fang Wen wanted to know what kind of aircraft Douglas Aircraft Company had, and whether it was worth exchanging the purchase rights of D.332 for them.

(End of this chapter)