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Great Start Up Airline Idea 4 Anyone Who Wants It  
User currently offlineIainhol From , joined Dec 1969, posts, RR:
Posted (12 years 6 months 2 days ago) and read 2128 times:

The airline business is not right for me, however I came up with a great idea today. The idea is essentially a charter airline directed for the smaller markets. The 100+ seater is full, the biz jet charter is absolutely saturated. My idea is to get a EMB-135 and EMB-145 and charter it to small groups. The main customer (I think) would be schools for use on school trips. It seems that many classes/groups have to travel by air to get to events. I know at my high school cheerleaders used to go to FL once a year, in 8th grade we went to AZ (from CA), and I am sure there are many more youth trips. Most groups are 30-50 people so the aircraft is perfect for this market. I am sure their a numerous other small groups including clubs, travel holidays (short trips), etc would also be in your customer base. Just sharing.
Iain

15 replies: All unread, jump to last
 
User currently offlineLowfareair From , joined Dec 1969, posts, RR:
Reply 1, posted (12 years 6 months 2 days ago) and read 2041 times:

Probably wouldn't work. Here's why:

The average CASM I'e seen to operate a RJ is about $.15. If I used a CRJ-200, the cost to operate per mile would be $7.50. To fly it PHL-FLL(For example), it would cost $15000 r/t, or $300 per person if it was a full flight just to break even.

Many 1000 mile flights have much lower fares available and they have group rates and such.

Also, while the $.15 CASM may seen high as it's a pretty long route for a RJ, you'd have to realize that the plane will continuously have to fly in from other places, which doesn't really apply to scheduled airlines. To get to PHL, the plane might have to ferry from CAK, then it could go to HSV empty after it arrives in FLL to pick up some more flyers.


User currently offlineCo/ba From United States of America, joined May 2001, 399 posts, RR: 3
Reply 2, posted (12 years 6 months 2 days ago) and read 2010 times:

I have worked several flts were a it was a school trip and normaly it is the band or a sports team. An RJ would not be able to transport all of the equipment and baggage the students would be taking.

User currently offlineIainhol From , joined Dec 1969, posts, RR:
Reply 3, posted (12 years 6 months 2 days ago) and read 1996 times:

Lowfareair - Where did your figure of $15,000 come from? It seems INCREDIBLE high! If you look Here the direct operating cost per hour is $1131.00 per hour. I guess that flight is 3-4 hours, so I am about $10,000 short (exlcuding operating costs).
The cost of it flying in to pick the customer is the case with any charter, not just this idea. I am not sure how they do it.

Co/BA - I am not sure about that one. But considering it is a charter flight (and no outside cargo) you might get more. This is a something that has to be solved.

Iain


User currently offlineTxAgKuwait From United States of America, joined Aug 1999, 1803 posts, RR: 43
Reply 4, posted (12 years 6 months 2 days ago) and read 1977 times:

$1131.00 per hour. Gas, insurance, plus maybe flight crew.

Factor in facilities. (Airport gate space, hangar rent, office space for the headquarters, landing fees, telephones.)

Factor in non-flight-personnel. Gate agents. Ramp agents. Reservation agents. sales personnel. Secretaries.

Factor in marketing costs. Advertising.

Did you pay for the aircraft or did someone give it to you? Factor in the cost of borrowing the money to buy the airplane plus the depreciation after you fly the aircraft away from the showroom floor.

Factor in assorted other supplies. Paper. Xerox machines. Staplers. (I'm joking but you see where I am getting at).

All things considered, the DOC (direct operating cost) MIGHT make up 1/3 to 1/2 what it really costs you to do business.

For a fairly large air carrier spreading their fixed costs over a large fleet, the CASM on those RJs will run maybe 15 cents. For a smaller startup carrier with a limited fleet it is gonna be higher. Maybe as high as a quarter.

But let's say the ASM cost is 20 cents. You got 50 seats in the thing, so it is costing you 10 bucks a mile. PHX-LAX, for example, would be roughly $3400. That's just to break even.

3400 divided by 50 seats would be $68 per person one way. To break even. (The goal is not to break even, but to make a few bucks).

You can often buy tickets on a commercial airline between those two cities for well under $68 each way.


User currently offlineIainhol From , joined Dec 1969, posts, RR:
Reply 5, posted (12 years 6 months 1 day 23 hours ago) and read 1950 times:

I think all the calculations being made here are strictlt on a very ammature level. I think in order to find out the whole goings on, you will have to sit down with a pro who knows actual figures. Most arguements here are trying to prove the the RJ is not economical rather then the plan.
Iain


User currently offlineDelta-flyer From United States of America, joined Jul 2001, 2676 posts, RR: 7
Reply 6, posted (12 years 6 months 1 day 22 hours ago) and read 1920 times:

Our Learjet 45's cost about $1600/hour. That includes an average for ferrying, plus all the costs TxAg... notes above. That's what my department is charged if we use it to go from A to B. It's up to the corporate flight department to manage the logistics of basing the aircraft so as to minimze ferrying costs.

We almost never can justify that cost, even if we fill every seat. For example, from JAN to SNA and back, it would cost us about 6 hours, or $9,600 versus a round trip on Delta as low as $238 per person.

Cheers,
Pete


User currently offlineCeilidh From , joined Dec 1969, posts, RR:
Reply 7, posted (12 years 6 months 1 day 20 hours ago) and read 1909 times:

Iain, you have to only look at the failure of companies like British World to see the very limited market (to say the least) for regional aircraft charters.

Regional aircraft are a lot more expensive to operate than larger ones in terms of the cost per ASK - and all the more so if you only do adhoc charters. What sort of annualised utilisation do you think you could seriously achieve?

Contrast those high costs with the ability to get block discounts with airlines for that size of group and you'll see why it simply isn't - pardon the pun - a flyer!  Big grin


User currently offlineIainhol From , joined Dec 1969, posts, RR:
Reply 8, posted (12 years 6 months 1 day 19 hours ago) and read 1888 times:

I did not think about British World. I would be interested to see how their ATP's performed. They got into bigger things like the 737, 757, I wonder if the competition from Air 2 bob, Britannia, EAL, etc was what crushed them.
I had not thought about the discounted fares for block discount.
Iain


User currently offlineTeahan From Germany, joined Nov 1999, 5293 posts, RR: 61
Reply 9, posted (12 years 6 months 1 day 18 hours ago) and read 1870 times:

Iain,

Firstly, I have to admit that I don't really believe in your idea, sorry. Not saying it would not be profitable, but I can see many other ignored markets in Europe. Anyway, nowadays the way to go is low-costs.

But a small question, why aren't you made for the airline business, just wondering?

Jeremiah



Goodbye SR-LX MD-11 / 6th of March 1991 to the 31st of October 2004
User currently offlineLowfareair From , joined Dec 1969, posts, RR:
Reply 10, posted (12 years 6 months 1 day 17 hours ago) and read 1853 times:

Iain: thanks for calling me an ameteur(only thing I can figure the word ammature could be). If you look at many RJ operators, they had a $.15 CASM. While you may get lower pay and stuff, the added cost of ferrying and stuff you see for charters adds up. Here's how I got the $15000:

$.15CASMx50 seats=$7.50 per flight mile

$7.50/fmx1000 mi(Approx. Length of PHL-FLL)=$7500.00

$7500.00 each wayx 2 directions=$15000.00r/t

$15000.00/50 seats=$300.00 per person return.

AirTran has flights as little as $160 return with taxes, so it really isn't necessary for this route.


User currently offlineQFTJT From Australia, joined Dec 2000, 278 posts, RR: 0
Reply 11, posted (12 years 6 months 1 day 16 hours ago) and read 1842 times:

Iain

What happened to aircraft such as Dash-8, ATR 72, Metro's, shorts 360, Jetstream....

These aircraft would be a a lot cheaper to operate and be better suited to the job.

Would schools or clubs, want the speed and pricey comfort of an ERJ? Or would they prefer the cheaper, but slower opinion of the above aircraft.


QFTJT


User currently offlineIainhol From , joined Dec 1969, posts, RR:
Reply 12, posted (12 years 6 months 1 day 8 hours ago) and read 1808 times:

Teahen - Too high risk, the investment is not sound. It is one of the hardest investments to make profitable, and most go under.

Lowfareair - What is a CASM? That is what I missing.

QFJTT - They are certainly an option. The would be really cheap to get these days.
Iain



User currently offlineLowfareair From , joined Dec 1969, posts, RR:
Reply 13, posted (12 years 6 months 1 day 5 hours ago) and read 1784 times:

A CASM is Cost per Available Seat Mile. It means how much it costs to fly a seat on a plane for one mile.

User currently offlineIainhol From , joined Dec 1969, posts, RR:
Reply 14, posted (12 years 6 months 1 day 5 hours ago) and read 1778 times:

Thanks for info. Where did you get the figure of $0.15?
Iain


User currently offlineLowfareair From , joined Dec 1969, posts, RR:
Reply 15, posted (12 years 6 months 1 day 5 hours ago) and read 1773 times:

I got that as that is the average CASM of several of the CRJ carriers in the US. They were all actually pretty close to that number.

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