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Potential New Rise Of Start-Up US Carriers?  
User currently offlineairone1 From United States of America, joined May 2012, 4 posts, RR: 0
Posted (2 years 2 months 3 weeks 6 days 18 hours ago) and read 4719 times:

Hello A.net! I was thinking that since all the mergers have been happening and the number of airlines in the United States have decreased in the past couple years do you think there will be a resurgence of new start-up carriers in the US?

33 replies: All unread, showing first 25:
 
User currently offlineAWACSooner From United States of America, joined Jan 2008, 1913 posts, RR: 1
Reply 1, posted (2 years 2 months 3 weeks 6 days 17 hours ago) and read 4690 times:

Given the failure rate of all the startups since jetBlue, the cost of fuel, and all the government red tape? Hell no!

User currently offlinepoLot From United States of America, joined Jul 2011, 2184 posts, RR: 1
Reply 2, posted (2 years 2 months 3 weeks 6 days 17 hours ago) and read 4632 times:

As long as fuel prices are high and the economy is down...no. The mad startup rush usually happens in opposite circumstances (i.e. the 90s).

User currently offlineenilria From Canada, joined Feb 2008, 7190 posts, RR: 13
Reply 3, posted (2 years 2 months 3 weeks 6 days 17 hours ago) and read 4522 times:

I think things are different this time because times are relatively good, but the legacies and even the LCCs are not adding any capacity. It is a major opening for start-ups. I think we will get 2 or 3 new carriers. How long they last I don't know. I still think B6 and perhaps US will merge out of existence in the next 5 years. We need more carriers.

User currently offlinesrbmod From , joined Dec 1969, posts, RR:
Reply 4, posted (2 years 2 months 3 weeks 6 days 17 hours ago) and read 4507 times:

Quoting AWACSooner (Reply 1):

Given the failure rate of all the startups since jetBlue, the cost of fuel, and all the government red tape? Hell no!

You forgot about Virgin America.

Quoting poLot (Reply 2):

As long as fuel prices are high and the economy is down...no. The mad startup rush usually happens in opposite circumstances (i.e. the 90s).

Getting the start up capital is the biggest hurdle, and even if you have a sizable cash reserve as a result, it doesn't guarantee success. Skybus was the most highly capitalized start up airline in US history (JetBlue previously held that distinction.) and were out of business and bankrupt less than 11 months after their first flight.

There is honestly a very limited market for new start up carriers, as many of them at best would be trying to cherry pick from other airlines.


User currently offlinebrilondon From Canada, joined Aug 2005, 4226 posts, RR: 1
Reply 5, posted (2 years 2 months 3 weeks 6 days 16 hours ago) and read 4410 times:

There is always a chance. There is always a chance for anything to happen. If Warren Buffet decides to invest in an airline then they will have capital to use for the start up. There is always some person who has more money then they know what to do with who thinks there might be a market for another airline.


Rush for ever; Yankees all the way!!
User currently offlineHPRamper From United States of America, joined May 2005, 4058 posts, RR: 8
Reply 6, posted (2 years 2 months 3 weeks 6 days 15 hours ago) and read 4310 times:

Quoting srbmod (Reply 4):
You forgot about Virgin America.

I don't think of Virgin America as a true startup since the Virgin brand is already well known across the world, and has other airlines that actually make money under the umbrella to subsidize Virgin America.


User currently offlinesrbmod From , joined Dec 1969, posts, RR:
Reply 7, posted (2 years 2 months 3 weeks 6 days 15 hours ago) and read 4240 times:

Quoting HPRamper (Reply 6):
I don't think of Virgin America as a true startup since the Virgin brand is already well known across the world, and has other airlines that actually make money under the umbrella to subsidize Virgin America.

Virgin America is primarily owned by folks other than the Virgin Group, who can only by US law, own 25% of the airline and cannot run the day to day operations of the airline, which makes "subsidizing" the airline via other Virgin Group airlines assets unlikely. The Virgin Group is a minority investor in the airline.

Virgin America IS a start up carrier. Now had they bought another US airline and rebranded it, then you could say they aren't a start up carrier.


User currently offlinecivetfive From United States of America, joined Jun 2012, 120 posts, RR: 0
Reply 8, posted (2 years 2 months 3 weeks 6 days 13 hours ago) and read 4001 times:

I think we will see some startups as the economy turns around and capital flows again. WN and B6 are starting to turn the corner on their unit economics and won't be able to grow their way out of their emerging cost structure issues. More likely is a retrenchment or refocus in one shape or form, which will open the door for a new, low cost entrant to use the same business model that LCCs have been using time and again.

I wouldn't be surprised to see someone try to pick on AA or UA down in Texas (using a similar model that FL did in ATL) and if nothing else be a thorn in their side for a decade or so before growing pains and heavy checks start the cycle again.


User currently offlineNASCARAirforce From United States of America, joined Feb 2005, 3178 posts, RR: 4
Reply 9, posted (2 years 2 months 3 weeks 6 days 13 hours ago) and read 4000 times:

Quoting AWACSooner (Reply 1):
Given the failure rate of all the startups since jetBlue, the cost of fuel, and all the government red tape? Hell no!

What about Allegiant Air? True they were around since 1997 but mainly as a charter company. They didn't start moving to their current low cost model until 2001 after coming out of bankruptcy with new management.


User currently offlinetoltommy From United States of America, joined Dec 2003, 3292 posts, RR: 4
Reply 10, posted (2 years 2 months 3 weeks 6 days 12 hours ago) and read 3936 times:

If someone comes up with a viable business model that can attract investors, then we will see new entrant airlines. To think that there would never be another new entrant carrier in the US is silly. Seems like there's always someone here willing to lose a ton of money starting an airline....

User currently offlinepoint2point From United States of America, joined Mar 2010, 2758 posts, RR: 1
Reply 11, posted (2 years 2 months 3 weeks 6 days 12 hours ago) and read 3907 times:

Quoting NASCARAirforce (Reply 9):
What about Allegiant Air? True they were around since 1997 but mainly as a charter company. They didn't start moving to their current low cost model until 2001 after coming out of bankruptcy with new management.

I'm along the same lines of thinking. How about these "morphed" carriers, such as G4? I think that NK could be considered another one of them as well - since 2007 they have moved from trying to be a discount carrier into a ULCC model. F9 is attempting to somewhat replicate the NK model in that it too wants to be an ULCC now.

Any new carrier will probably have to follow the model of an ULCC - that's about the only realistic niche that hasn't filled up yet.

The premium model such as an MGM Grand might warrant some research for this economy, in that all economic trends are pointing to the rich getting richer. However, I think that there has to be more than the 1% for a viable airline.

What about this California Pacific, based out of CLD with E170's to a handful of nearby destinations. This model is attempting to fill a void at an underused airport in a basically well-to-do area. They're painting their first plane as we speak here. Or People's Express, 2012 version, flying 737s from PHF, PVD, PIT and PBI (just realized here and now that all of the airport codes of their initial planned hubs begin with a P - is there something to this?) on the theory that these airports are underutilized, and they will be offering nonstops to destinations from these (P) airports that they currently do not have?

So you want a resurgence of new start-ups?

 


User currently offlinesrbmod From , joined Dec 1969, posts, RR:
Reply 12, posted (2 years 2 months 3 weeks 5 days 23 hours ago) and read 3598 times:

Quoting point2point (Reply 11):
Any new carrier will probably have to follow the model of an ULCC - that's about the only realistic niche that hasn't filled up yet.

We all see how that worked out for Skybus.......

Quoting point2point (Reply 11):
The premium model such as an MGM Grand might warrant some research for this economy, in that all economic trends are pointing to the rich getting richer. However, I think that there has to be more than the 1% for a viable airline.

That's a very limited market, as most of the clientele that years ago would have used MGM Grand Air would likely have some sort of membership in one of the various private jet operations.

Quoting point2point (Reply 11):
What about this California Pacific, based out of CLD with E170's to a handful of nearby destinations. This model is attempting to fill a void at an underused airport in a basically well-to-do area. They're painting their first plane as we speak here. Or People's Express, 2012 version, flying 737s from PHF, PVD, PIT and PBI (just realized here and now that all of the airport codes of their initial planned hubs begin with a P - is there something to this?) on the theory that these airports are underutilized, and they will be offering nonstops to destinations from these (P) airports that they currently do not have?

Both airlines will be trying to cherry pick from other nearby airports (SAN in the case of California Pacific and ORF in the case of PeoplExpress.) and that will be an uphill battle for both airlines. Had WN not pulled the plug on FL's operations at PHF, PeoplExpress would likely to have never even been created or would have chosen a different airport if not for that.

Both California Pacific and PeoplExpress are still paper airlines (Even though California Pacific has an aircraft being painted.) and will be until they take to the skies. There's still the chance that neither airline takes flights as there are hundreds of proposed airlines that never got off the ground. Even if they do take to the air, the odds are stacked against them.


User currently offlineJONC777 From United States of America, joined Jun 2012, 126 posts, RR: 0
Reply 13, posted (2 years 2 months 3 weeks 5 days 23 hours ago) and read 3568 times:

Given the fact that banks are more tight with loans and the volitatlility of oil I think it would be much more difficult for someone to start up an airline from scratch that in years prior. Mainline carriers have difficulty in todays world finding a business plan that consistently works much less trying to convince a bank that they wouldnt be pissing away millions by investing in the venture. I think in todays world you would likely see a group of investors come together or maybe even a hedge fund with a lot of cash try it. Anytime fares climb and overall service declines you leave room for a start up to come in. I just cant see someone who even has the cash to start up something choosing this industry vrs something else much less stressfull.

User currently offlinebobloblaw From United States of America, joined Jan 2012, 1725 posts, RR: 1
Reply 14, posted (2 years 2 months 3 weeks 5 days 22 hours ago) and read 3496 times:

Quoting airone1 (Thread starter):
Hello A.net! I was thinking that since all the mergers have been happening and the number of airlines in the United States have decreased in the past couple years do you think there will be a resurgence of new start-up carriers in the US?

Where do you see some opportunity?


User currently offlineCush From United States of America, joined Feb 2009, 236 posts, RR: 0
Reply 15, posted (2 years 2 months 3 weeks 5 days 22 hours ago) and read 3474 times:

Quoting srbmod (Reply 12):

We all see how that worked out for Skybus.......

I don't get why people keep bringing up Skybus as the "end all" of startup airlines. Yes it was well funded, but it also made a lot of mistakes. Bad timing when starting up, new aircraft, etc... If they would have purchased some cheap MD80's or older 737's, I think that things would be different. Look at the success G4 has. They don't have to worry about heavy lease payments each month, as the MD-80's are at bargain basement prices, with lots of spares to go around for them.

The airline industry relies on more than just the airline industry and a product type and market to succeed. An airline has a million other variables involved. Lets compare... Apple makes an iPad and it becomes a roaring success. The cost of oil jumps up $50, but the iPad still remains at $599, and people continue to buy them. They love the product. Now, on the other side of the fence. ABC Airlines offers a great product/service and is a roaring success. The cost of oil jumps up $50, and in turn they need to raise their fares and fees, which causes people to fly less. They love the product, but when it becomes outside of their price range or feasibility, they don't buy it.

Airlines will always be associated with vacations and travel for a majority of the world. A very small percentage of the world is able to fly for business, so most folks are flying for vacation. Even if a ticket is only $99 round trip, there is the cost of me driving to the airport, checking bags, paying for parking for X days, rental car or cab from airport to hotel, hotel costs, food, entertainment, etc... So even though an airline has a ticket for $99 r/t, the overall cost of that vacation could be hundreds or thousands of dollars more, and in a tough economy, or someone who has many bills to pay and cannot afford to travel, it doesn't matter how low an airline ticket is when there are so many other variables involved.



Fly me to the moon let me play among the stars.
User currently offlinesrbmod From , joined Dec 1969, posts, RR:
Reply 16, posted (2 years 2 months 3 weeks 5 days 21 hours ago) and read 3419 times:

Quoting Cush (Reply 15):
I don't get why people keep bringing up Skybus as the "end all" of startup airlines. Yes it was well funded, but it also made a lot of mistakes. Bad timing when starting up, new aircraft, etc... If they would have purchased some cheap MD80's or older 737's, I think that things would be different. Look at the success G4 has. They don't have to worry about heavy lease payments each month, as the MD-80's are at bargain basement prices, with lots of spares to go around for them.

Skybus is a textbook example of the new realities in the airline industry in the US. What may work for Ryanair in Europe (Skybus based their business model on Ryanair.) will not necessarily work in the US. The line between the low-to-no frills LCC/ULCC and the major US carriers continues to blur (Look at Delta offering a new fare class on some routes it competes with Spirit on out of DTW. Look at how many major airlines charge for things that previously only the low cost/ultra low cost carriers charged for.). The lack of connections dogged them as well, as passengers would have to claim their checked bags and then recheck them to their final destination and not everyone wants to go through that hassle to save a few bucks. I don't think that they could have succeeded even if they followed the model used by so many start up airlines in the past of picking up used a/c. JetBlue changed the game in that regards, which does make it more difficult to start up an airline due to the costs of newer a/c.

You really cannot compare Allegiant with Skybus as they are not the same type of airline. Allegiant is not a true ULCC (more of a hybrid of the model) nor does their operating model fit into any other airlines' business model (While airlines do have routes that are operated on certain days, such operations typically make up a small percentage of their flights.) Allegiant doesn't offer connections either, but their route network isn't designed for it as their primary bases of operations are leisure-oriented destinations and in some cases use the primary airport in that market as a opposed to a secondary airport away from the city.

Spirit operates using the ULCC model, but it is really is a hybrid version of the model, as ULCCs typically don't have frequent flyer programs nor do they offer connections or have multiple seating classes (NK still retains the Big Front Seat from their pre-ULCC days.).

ULCCs can work in the US, but the model has to be tailored to the US market.


User currently offlineJONC777 From United States of America, joined Jun 2012, 126 posts, RR: 0
Reply 17, posted (2 years 2 months 3 weeks 5 days 21 hours ago) and read 3400 times:

Quoting HPRamper (Reply 6):

I dont view VX as a startup either but I do believe that they are more likely to provide innovation to the current travel experience than any existing domestic carrier.


User currently offlinePHX787 From Japan, joined Mar 2012, 7560 posts, RR: 18
Reply 18, posted (2 years 2 months 3 weeks 5 days 18 hours ago) and read 3166 times:

Quoting srbmod (Reply 4):
You forgot about Virgin America.

It's the brand name. People on the west coast are quite familiar with it, so I'm sure they'll fly it.


Quoting poLot (Reply 2):
As long as fuel prices are high and the economy is down...no. The mad startup rush usually happens in opposite circumstances (i.e. the 90s).

Well what about when the economy comes back up? I can see airlines starting up at underused airfields like CVG, IND, etc etc etc



次は、渋谷、渋谷。出口は、右側です。電車とホームの間は広く開いておりますので、足元に注意下さい。
User currently offlinebobloblaw From United States of America, joined Jan 2012, 1725 posts, RR: 1
Reply 19, posted (2 years 2 months 3 weeks 5 days 18 hours ago) and read 3145 times:

Quoting PHX787 (Reply 18):
Well what about when the economy comes back up? I can see airlines starting up at underused airfields like CVG, IND, etc etc etc

I got bad news for you. The economy is back. This is "back" in a world with excess debt.


User currently offlinecloudboy From United States of America, joined Jan 2004, 828 posts, RR: 0
Reply 20, posted (2 years 2 months 3 weeks 5 days 15 hours ago) and read 3048 times:

I don't think that we are going to see a "resurgence" in the sense of a bunch of new carriers looking to start up, at least not in any reasonable time frame. Buy I don't think that we will never see a new carrier ever again, either. All us armchair airline CEOs here on the board have our own opinions of what is attractive and what isn't, but the fact is there is always someone out there willing to try a crazy business idea everyone else says wont work, and enough crazy financial interests out there that will fund it. That doesn't mean they will be successful.

Personally I think that enough people are getting fed up with the limited number of major carriers. The Low Cost model quite frankly is getting old, and unlike Europe where you have another transportation option to give it competition, the US market is static, ripe for a new entrant with new ideas. As the majors consolidate and aim for the cream of the crop, there is a growing pool of mid level fliers who are getting marginalized. At some point someone is going to aim for this market.

The one potential game changer would be if the US suddenly made a hug investment in passenger rail. This would give new form of competition to the airlines, and stir up the industry and get it to start innovating again to stay in business.



"Six becoming three doesn't create more Americans that want to fly." -Adam Pilarski
User currently offline727LOVER From United States of America, joined Oct 2001, 6436 posts, RR: 17
Reply 21, posted (2 years 2 months 3 weeks 5 days 15 hours ago) and read 3006 times:

Quoting srbmod (Reply 12):
We all see how that worked out for Skybus.......

Well, its working for NK

Quoting bobloblaw (Reply 14):
Where do you see some opportunity?

I once did a thread about a GVV based airline:
Would A Chicago/Gary(GYY) Based Airline Work? (by 727LOVER Jan 8 2008 in Civil Aviation)



Listen Betty, don't start up with your 'White Zone' s*** again.
User currently offlineanstar From United Kingdom, joined Nov 2003, 5244 posts, RR: 6
Reply 22, posted (2 years 2 months 3 weeks 5 days 14 hours ago) and read 2971 times:

Quoting HPRamper (Reply 6):


I don't think of Virgin America as a true startup since the Virgin brand is already well known across the world, and has other airlines that actually make money under the umbrella to subsidize Virgin America.

Funniest thing I've read on A.net today! It is a fantasy if you think Virgin Atlantic or Virgin Australia subsidise Virgin America...


User currently offlineridgid727 From United States of America, joined Jul 2008, 1122 posts, RR: 0
Reply 23, posted (2 years 2 months 3 weeks 5 days 14 hours ago) and read 2924 times:

If California Pacific does get certification, and makes it to the skies, I would wager that for survival it will be neccessary to become an express or connection carrier for someone else within 18 months after startup. It will be tough to make it as a stand alone airline, especially counting on Carlsbad as your major revenue producing source..

User currently onlineGoldenshield From United States of America, joined Jan 2001, 6035 posts, RR: 14
Reply 24, posted (2 years 2 months 3 weeks 5 days 14 hours ago) and read 2893 times:

Quoting ridgid727 (Reply 23):
If California Pacific does get certification, and makes it to the skies, I would wager that for survival it will be neccessary to become an express or connection carrier for someone else within 18 months after startup. It will be tough to make it as a stand alone airline, especially counting on Carlsbad as your major revenue producing source..

Or possibly a bit longer than that. It's also possible that either Horizon or SkyWest (talking strictly west coast here) could hostily take them over to a) get rid of a potential competitor, and possibly b) get a new aircraft type, or c) use that certificate to start branded ops.

Of course, look how long Shuttle America limped along until they were bought by Republic.



Two all beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame seed bun.
25 DesertAir : Here is a new idea. What about a start up airline made up of entirely retired airline personel? Since everyone would be on pension, everyone from the
26 Goldenshield : Already done, but they flew cargo. Didn't last too long, either.
27 srbmod : Spirit is not a true ULCC along the lines of what Skybus tried to do and what airlines like Ryanair have been successful at doing. NK has a frequent
28 poLot : That all of course depends on what you consider a "true ULCC". The term isn't definite; there is no rule out there that a ULCC has to have no frequen
29 ACdreamliner : Are you for real? World debt is nothing new! The bigger the depression, the bigger the boom. The economy is being held back because of lack of confid
30 DesertAir : Amen! This is what small and medium size cities seem to lack, Good Value Carriers. Southwest is a good value carrier. They may not always been the le
31 Post contains images PHX787 : thank you!! These new start ups won't be any old Virgin America or B6 - these airlines will become "legacy" carriers that I potentially see maybe buy
32 FlyPeoria : How about a little variation on this topic. Should fuel prices trend downward (a situation viewed as a longterm trend) and US passenger traffic resum
33 ckfred : That won't happen, ever. Warren lost a lot of money on his investment in US. I think Warren has joked that someone should have shot the Wright Brothe
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