Graham697 From United States of America, joined Dec 2003, 350 posts, RR: 0
Reply 2, posted (10 years 5 months 6 days 22 hours ago) and read 2374 times:
Here in the US, you typically need a lot of cash. jetBlue for example started off with i believe 365 million of Investment Capital. You would not see thsoe kinds of dollars now a days. You can use Investment Capital Services, which go out to the rich old people and banks to ask if they want to invest. Used equip. used to be the norm for a start up, but yet again jetBlue bucked the trend and ordered 50 A320s(firm) and 50 options.
BeltwayBandit From United States of America, joined Mar 2003, 495 posts, RR: 0
Reply 3, posted (10 years 5 months 6 days 20 hours ago) and read 2348 times:
So hard to say. You could start with 4 aircraft on a single route. You could lease MD80s and have your fleet in place for about $300,000 in downpayments (assuming you got your lessor to cover configuration costs). You contract out for all the ground handling and maintenance, set up two stations, hire about 50 to 75 people, secure gate and counter space at two airports, cut deals with Travelocity and others. You need to buy, or apply for, an operating certificate from the DOT, and get your operation blessed by the FAA. The regulatory side can go quickly (if you buy an existing certificate and airline manuals), or slowly (up to a year).
I'm going to say (really guess) that you need $1,000,000 cash to start up a bare-bones 4 aircraft operation. Probably need another $1,500,000 (cash or line of credit) to cover operating losses until you start to fill the planes. Break even load factor will probably be in the 65-75% range, so the route(s) you pick would be critical. Of course, if there is any such under-served route, any existing airline could step in and fill the need in a heartbeat. If you became a threat to another carrier, you could get snuffed out pretty quickly.
Airlines on a shoestring are really hard to pull off because the industry is so competitive and efficient right now. That's why JetBlue is where it is. They opened up on day one with a very efficient operation, wads of cash, and a brand new fleet. All the compromises you make to minimize the start-up costs (old planes, contracted services) make you a less efficient operation.
Horus From Egypt, joined Feb 2004, 5230 posts, RR: 59
Reply 4, posted (10 years 5 months 6 days 20 hours ago) and read 2337 times:
But Jetblue was one of the most highly capitalised airline start ups in the industry. Very few airlines start up with orders of over 20 brand new A320s. Most LCC carriers start 'cheap' with old 737 Classics, so start up costs are far lower than JetBlue's.
Backfire From Germany, joined Oct 2006, 0 posts, RR: 0
Reply 5, posted (10 years 5 months 6 days 19 hours ago) and read 2305 times:
JetBlue was highly capitalised -- but don't start thinking that it went overboard.
Starting up an airline takes a vast amount of money. Failure to appreciate just how much, resulting in subsequent undercapitalisation and dried-up cash-flow, is the number one reason why new airlines collapse.