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Who Can Start An Airline?  
User currently offlineLehpron From United States of America, joined Jul 2001, 7028 posts, RR: 21
Posted (11 years 1 week 5 days 15 hours ago) and read 3163 times:

Where and how do these small carriers spring up?

What are the figures, the req's? An investment of a few tens of millions, maybe 5 dozen employees, a few planes and a few years to begin? What else is needed, I know some of ya'll are in the biz, how did your airline start and with what, where and/or who?




The meaning of life is curiosity; we were put on this planet to explore opportunities.
9 replies: All unread, jump to last
 
User currently offlinePanAmerican From Germany, joined Oct 2003, 384 posts, RR: 5
Reply 1, posted (11 years 1 week 5 days 15 hours ago) and read 3152 times:

Well, I just know that JetBlue was the startup with the most capital, I think they had something close to $100 Million...
Otherwise for smaller carriers with only one or two planes I'd think this startup capital would be much less than that.
Could one start and airline with only a million dollars? I don't know.

 Smile/happy/getting dizzyPA



Pan Am - The World's Most Experienced Airline.
User currently offlineLehpron From United States of America, joined Jul 2001, 7028 posts, RR: 21
Reply 2, posted (11 years 1 week 5 days 15 hours ago) and read 3141 times:

"Could one start and airline with only a million dollars? I don't know."

I think the real question is 'how many planes are avail for under a million'?



The meaning of life is curiosity; we were put on this planet to explore opportunities.
User currently offlinePanAmerican From Germany, joined Oct 2003, 384 posts, RR: 5
Reply 3, posted (11 years 1 week 5 days 13 hours ago) and read 3013 times:

You don't have to buy any planes, JetBlue didn't do that either.
They just lease them for a couple of years...
Now, I don't know how many planes you could lease with a million, but a used 727 or something very old would certainly be available for little money  Big grin

 Smile/happy/getting dizzyPA



Pan Am - The World's Most Experienced Airline.
User currently offlineIndianguy From , joined Dec 1969, posts, RR:
Reply 4, posted (11 years 1 week 5 days 13 hours ago) and read 3003 times:

From a biz perpective, its better to invest an X amount and lease out the reqd number of aircraft (4 seems to be the absolute minimum if you want to run a decent show) and hire employees on contract say for a period of 2 years. As an investor, you set aside that amount and no more initially.

That way if it doesnt work out in 2 years and the rate of returns are not as expected then you can opt out more easily by returning the planes and gates.

With owned aircraft, you do save in the longer term, however for startups it just doesnt make the same sense.

-Roy





User currently offlineInnocuousFox From United States of America, joined Dec 2003, 2805 posts, RR: 14
Reply 5, posted (11 years 1 week 5 days 11 hours ago) and read 2925 times:

Legally, anyone can do it. It is a free market entry system. You just need to get the equipment, personnel and then permission. It's quite easy to do, from what I understand. Now... about the economy of scale that may be necessary to succeed...

[Edited 2003-12-11 16:22:46]


Dave Mark - Intrinsic Algorithm - Reducing the world to mathematical equations!
User currently offlineSAS-A321 From Denmark, joined Mar 2002, 401 posts, RR: 0
Reply 6, posted (11 years 1 week 5 days 11 hours ago) and read 2907 times:

To earn a little fortune with an airline, you've got to start with a large fortune!


It's Scandinavian
User currently offlineElwood64151 From United States of America, joined Feb 2002, 2477 posts, RR: 6
Reply 7, posted (11 years 1 week 5 days 10 hours ago) and read 2899 times:

Both Vanguard and ValuJet started with just over $3 million. NJ was poorly run and suffered from limited gate space and bad routes. J7 was well run, had ATL to expand in, and had highly profitable routes.

NJ died after changing is style and failing to find financing follwoing 9/11 (try saying that three times fast!). J7 merged with FL following the 592 crash and has become one of the great turn-around stories in aviation.

Talk about two equal starting points and two completely different outcomes.



Those who fail to learn history are doomed to repeat it in summer school.
User currently offlineAlekToronto From Canada, joined Nov 2003, 328 posts, RR: 0
Reply 8, posted (11 years 1 week 5 days 10 hours ago) and read 2839 times:

Anyone with a couple mil to lose!
with the glut of used (unused) aircraft in the market, getting ones to lease will not be a problem.
You could start an airline with a couple of planes, 50 employees and about 3 million but the odds are totally stacked against you.
The major airlines have the resources and money to match low fares of any intruders into their markets and they will sustain a period of losses (selling seats below cost) to drive out competitors.
Unless you specialize in a route not served, or underserved by the majors you can count on going out of business in a few months.

The US Airline Market is very competitive and the majors have shown they will do anything to dominate.

good luck!
cheers.


User currently offlineBeltwaybandit From United States of America, joined Mar 2003, 495 posts, RR: 0
Reply 9, posted (11 years 1 week 5 days 8 hours ago) and read 2786 times:

First, the only limitation on WHO can start an airline is nationality. For now, a US certificated airline must be owned 75% by Americans.

You can bootstrap an airline with very little money. The administrative costs (legal, regulator, initial staff, overhead) will be about $500,000 minimally -- that's before you get into the aircraft issue.

You could start with a very modest point-to-point business using one or two aircraft. You can lease aircraft fairly cheaply, but you get what you pay for. You could be a charter firm (avoiding some expense of qualifying as a Part 121 scheduled carrier.

The tough part is that it's a brutal industry. You would need to find a niche where there is unsatisfied demand at a per-seat price that makes you money. The airlines have people paid to find these niches, so you would have to outsmart them. You need to fill the planes. Load factors are at an all-time high because airlines have gotten good at filling seats.


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