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Topic: Start A Small Airline To Replace Loss Of Service
Username: FrequentFryer
Posted 2012-11-17 00:17:34 and read 8591 times.

Frontier has been servicing my city for two years but is closing the daily flight despite capacity loads for the last year. I learned the reason for closing was Republic wanted the 100 seat ER-190. (Perhaps old news to you)
I want to replace the once daily ER-190 flight (8am to Denver and 6pm from) with a twice daily ATR-72 600 flight (6am and 6pm round trip) and an additional flight in between to develop a route to one of two other nearby hubs that market research(Sabre) shows demand for.

It's as though Frontier took the risk in digging a hole, found oil, spent time improving the well, and are now walking away. The city is motivated to find a replacement to avoid a complete drop in service but have not found any takers yet. Am I wrong in believing that shunning daily 100 seat capacity feeder flights has more to do with the state of the industry and the economy than the desirability of my local market?

Despite being a fan of the service and being a frequent traveler myself, I have always had to use the nearest hub (50 miles) because of the odd mid morning departure time to Denver and the not late enough return time from Denver. 8am is too late in the morning if I'm traveling to anywhere but Denver and a 6pm return time means that I would have to leave the customer at noon in most cases to catch a flight that would connect to Denver in time and I can't cut days short like that.

My initial thoughts were that with a smaller, but efficient and comfortable aircraft, more flights, and more convenient flight times, I could keep the aircraft at capacity and break even on a wet lease flying under the lessor's code as a few successful airlines have done to get started.

Is it sound logic to believe that if you slightly under serve the demand in a growing market and use an efficient turboprop aircraft(New ATR 72), that you'll be likely to keep the flights full and better weather turns in the economy?

The city would prefer a larger aircraft because they believe people will avoid a turbo-prop, but the optimist in me believes that given everything I've read about the 72-600 in terms of improved stability and comfort, that this perception could be mitigated with some good marketing to get them to try out their new local airline.

A population of 550,000 live in the area served by this city airport and it is estimated that this group makes up 20% of the business at the nearby hub(50 miles away). I expect that the major carriers at the next closest hubs would be happy to sign a feeder agreement that drew bodies away from the incumbent at our local hub. There are also cities within a 20 minute flight with populations of 100,000 who's cities are or are looking to subsidize a quick intermediate stop.

There are more details but I don't want to lose good feedback because of a marathon post.

Thank you and please fire away!

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: flyingturtle
Posted 2012-11-17 06:26:11 and read 8600 times.

AFAIK there has been a startup in GVA after Swissair withdrew most of its long-haul service. SR reintroduced service just to push them out of service...

Perhaps you can study the business case of Darwin Airlines (F7). They have LUG as a hub, they fly Saab 2000 and Dash 8 aircraft, and Darwin Airlines was founded after LX discontinued service to LUG.


David

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: frequentfryer
Posted 2012-11-17 18:08:33 and read 8600 times.

Thank you! I can't wait to go through them!

Best,

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: xjramper
Posted 2012-11-17 18:22:40 and read 8598 times.

You kind of answered your question two paragraphs down, in regards to the airline providing odd departure times from your local airport and that the nearest hub airport is 50 miles away.

Without knowing your location, there really is only so much information that anyone can give without knowing local info.

Just as a side note, and seems to be the biggest misconception out there, high loads does NOT equal high yield. An airline can have 100% load, and if the yield doesn't bring the RASM above CASM, they lose money, no matter how many people board the aircraft on any given day.

I wish I could find the study, but FL did a market analysis on routes flown by their B717 vs the ZW CRJs. No matter how full they could fill the CRJ, it was just more cost effective to put those 50 people on a 717 and make more money (or lose less money) so partially why they did not renew their contract with ZW. Why they picked up OO for flying before WN took them over, was beyond me.

Your city isn't the only one by far to have this happen and it won't be the last. In the interim, thank your lucky stars that you only have a 50 mile drive. Some of my friends have to drive 2 hrs+ to get to the nearest airport that has any sort of sizable service.

And no matter how much you can show that turboprops are safe and comfortable (at least on the Q4s, personally don't like the ATR) people will avoid that kind of aircraft if they can help it. I had a stint in the Pac NW and spent a lot of days flying through PDX and SEA, and I couldn't even begin to count how many people complained they were flying on props. It still has a negative image in the heads of the general traveling public, and no matter how much great press goes out there, you will never have backing from the public on it.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: tan1mill
Posted 2012-11-18 22:17:07 and read 8600 times.

Quoting FrequentFryer (Thread starter):
Frontier has been servicing my city for two years but is closing the daily flight despite capacity loads for the last year.
Quoting FrequentFryer (Thread starter):

A population of 550,000 live in the area served by this city airport and it is estimated that this group makes up 20% of the business at the nearby hub(50 miles away).

I'm going to assume we are talking about Provo, Utah (PVU) here, since all the information you provided matches Provo's current situation. E190 flights out of Provo were rarely completely full, and even when they were it didn't guarantee a profit was being made. I think the Dash 8 would have been a much better permanent selection, with the E190 only being used during peak season. Props do get frowned upon a lot by the average flyer, regardless of how safe they may be.

I do feel another airline will attempt Provo, but will offer flights to either PHX or someplace in Southern California. Provo is a second home to a lot of people from SoCal who would love to fly from PVU, but didn't like having to fly east, then connect on a westbound flight when a nonstop SoCal flight was only a 45 minute drive away in SLC.

[Edited 2012-11-18 22:31:17]

[Edited 2012-11-18 22:32:50]

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: frequentfryer
Posted 2012-11-18 23:23:05 and read 8597 times.

Thank you for your response,

Quoting xjramper (Reply 3):
You kind of answered your question two paragraphs down

Could you elaborate further? I want to make sure that I understand.

Quoting xjramper (Reply 3):
Without knowing your location, there really is only so much information that anyone can give without knowing local info.

The airport in question is PVU and the nearby hub is SLC belonging to DL.

Quoting xjramper (Reply 3):
Just as a side note, and seems to be the biggest misconception out there, high loads does NOT equal high yield. An airline can have 100% load, and if the yield doesn't bring the RASM above CASM, they lose money, no matter how many people board the aircraft on any given day.

Understood. I am also aware that larger airlines often run these feeder flights at a loss to get bodies into their hubs for larger flights. I imagine a common strategy for a regional carrier might be to break even on feeder flights with more efficient aircraft and generate some income on code share agreements.

Quoting xjramper (Reply 3):
Your city isn't the only one by far to have this happen and it won't be the last. In the interim, thank your lucky stars that you only have a 50 mile drive. Some of my friends have to drive 2 hrs+ to get to the nearest airport that has any sort of sizable service.

I certainly do feel grateful to have a hub within 50 miles. Even with a fully functioning airport nearby serviced by several airline's, I expect driving to the hub would still be necessary for many. TUS is a great small airport serviced by all major airlines and many still make the two hour drive to PHX.

Quoting xjramper (Reply 3):
And no matter how much you can show that turboprops are safe and comfortable (at least on the Q4s, personally don't like the ATR) people will avoid that kind of aircraft if they can help it. I had a stint in the Pac NW and spent a lot of days flying through PDX and SEA, and I couldn't even begin to count how many people complained they were flying on props. It still has a negative image in the heads of the general traveling public, and no matter how much great press goes out there, you will never have backing from the public on it.


Having flown in a few junky beachcraft over hot Arizona desserts, I can certainly appreciate the apprehension.

In comparing the Q400 NextGen and the ATR 72 600, I found that both represent appreciable improvements in efficiency, stability, comfort, and noise. The Q400 is faster. The ATR slightly roomier, more fuel efficient, more stable in the air, quieter from the inside and costs about $10 million less. Both will be more stable than smaller aircraft just by being bigger. This is the extent of my knowledge from reading whats available so please tell me what I am missing.
If the major issue with turbo props is the perception, then I would think that stability in the air and a quieter cabin would trump the speed of the new Q400, if not the difference in price. I also understand that if you take advantage of that jet like speed, you get jet like fuel burn to go with it. I'm sure that its nice to have the option though if the flight needs to pick up time. Thoughts?

I'm curious how big an improvement the latest of the two models really represent over previous models. Can someone expect a significantly different experience in the cabin?

I believe the limiting factor on the number of hours an aircraft can do in a day has more to do with available crews and passengers than it does with mechanics correct? What is typical in the world of regional turboprops such as WestJet?

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: frequentfryer
Posted 2012-11-18 23:38:19 and read 8596 times.

Quoting tan1mill (Reply 4):
I do feel another airline will attempt Provo, but will offer flights to either PHX or someplace in Southern California. Provo is a second home to a lot of people from SoCal who would love to fly from PVU, but didn't like having to fly east, then connect on a westbound flight when a nonstop SoCal flight was only a 45 minute drive away in SLC.

Based on volume out of SLC- DEN, PHX and LAS. All non-DL hubs. I would think LAX and SFO would be avoided. I've always liked SJC, but anything is better that SFO and especially LAX.
I imagine allegient to AZA might be first.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: brons2
Posted 2012-11-19 00:27:05 and read 8595 times.

Q: How do you make million dollars with a new airline?

A: Start with 100 million dollars...

I know this is Tech/Ops and all, but the established airlines employ a lot more accountants than the OP does. If the numbers weren't there for F9 with full loads, it's likely they won't be there for anyone else either.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: T prop
Posted 2012-11-19 01:58:38 and read 8596 times.

Quoting frequentfryer (Reply 5):
In comparing the Q400 NextGen and the ATR 72 600, I found that both represent appreciable improvements in efficiency, stability, comfort, and noise. The Q400 is faster. The ATR slightly roomier, more fuel efficient, more stable in the air, quieter from the inside and costs about $10 million less. Both will be more stable than smaller aircraft just by being bigger. This is the extent of my knowledge from reading whats available so please tell me what I am missing.
If the major issue with turbo props is the perception, then I would think that stability in the air and a quieter cabin would trump the speed of the new Q400, if not the difference in price. I also understand that if you take advantage of that jet like speed, you get jet like fuel burn to go with it. I'm sure that its nice to have the option though if the flight needs to pick up time. Thoughts?

The advantage the ATR has over the Q400 is the purchase price, but with the Q400 you get what you pay for. For about 7 mil more you get superior performance, more revenue pax, better flight controls, a real APU and less maintenance cost. The Q400 is more flexible in that it can replace a jet where as the ATR can't.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: frequentfryer
Posted 2012-11-19 04:12:08 and read 8594 times.

Brons2- I take your point. My first thought is that accountants didn't save F9 a few years ago, nor did they save AA again. In many cases I believe the airlines have been and are today their own worst enemy.
I've read in many places that the new Turbo props are the new reality, but some airlines are unable to make the move thanks to a glut of regional jet aircraft that no one wants to take off their hands and union restrictions.

Speaking of F9, I just flew PVU > DEN > IND (All seats full on both). What a change since my first F9 flight on my Honeymoon 6 years ago. The Attendants at PVU (Republic)were really young and didn't remember their lines during preflight and the attendants on the larger flight to IND were really cranky. Both announced devices off before the doors shut and were really getting after people for it(more ticked than I'm used to seeing). What really got me though was when the attendant got after a woman in front of me for having her infant standing between her knees with the same tone she was using for gadgets still on. I know it's about safety and its her job, but the attendant seemed to be angry from the start. Perhaps her mood is understandable in light of her career outlook as an employee of the industry and F9 in particular.
I think there are opportunities for the nimble out there especially where some are setting the bar pretty low.

[Edited 2012-11-19 04:16:00]

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: xjramper
Posted 2012-11-19 07:00:54 and read 8594 times.

Quoting frequentfryer (Reply 5):
Quoting xjramper (Reply 3):
You kind of answered your question two paragraphs down

Could you elaborate further? I want to make sure that I understand.

Absolutely. PVU has a problem two-fold. This goes with the likes of any airport within a ~60 mile radius of a hub. First, hub's tend to suck the surrounding passenger patterns away from the local airport. Automatically, you lose a lot of business to the hub area, for better pricing, availability, and more available non-stops. Secondly, I do not know what kind of scheduled air service, historically speaking, has served PVU, but with Frontier being the only carrier, that just doesn't cut it with a majority of frequent fliers. People who need to travel for work frequently, and especially outside the US, usually start and end with an airline in on particular alliance. If I needed to fly from PVU to RDU, regardless of what carrier I keep my status with, it would make zero sense to buy a ticket PVU-DEN and then have a completely separate ticket DEN-RDU on the carrier I want to go on. I would look at flying SLC-xxx-RDU on AA or UA or DL.

That being said, you stated that you were a fan of the F9 flying, but because of the odd departure and arrival time, you couldn't use it. That right there will force FFs to head to an alternative to commence their travels.

An anecdotal story I like telling is of my home airport, TOL. Fourty-four miles from DTW, before the merger and bankruptcy, TOL had DL flying 4x daily TOL-ATL, 12x mostly daily TOL-CVG, and NW had between 5 and 6x daily to DTW. Through the bankruptcy and merger service started to shed off, first being the CVG flying and then the ATL flying went away. That left 4x daily to DTW on the Saab340s. Then DL reassigned some of the Saabs to ATL and started parking the rest, which meant TOL was going to lose service. TOL begged DL to keep serving the city, but the only thing they gave to TOL was a CR2 from TOL-MSP. One single flight daily, left MSP at 0804 and left TOL at 1225. Hardly conducive to the business travelers.

Back when I was growing up, TOL was served by almost all major carriers, namely DL, US, MQ, CO/Coex, NW, at a certain point UAx, and TMA turned Allegiant. Today, it is served solely by MQ with random Allegiant and DirectAir flights and that airport is barely hanging on. Used to have a huge cargo operation called Burlington Air Express, turned BAX Global, turned Ch7. Flight Safety, one of the 15ish sim locations in the country just recently left. It's a ghost town from what i've been told.

Back on topic, I understand that you want to invest the time to start up an airline. I will leave the economy, fuel prices, world affairs aside for a second and pretend you want to start something like this up. Assuming you are looking to get under the belt of a major carrier, where would you fly and who would you prefer to fly the codeshare under?

Just a few cost conscious things to consider:
1. Who would complete your MRO work? And if the aircraft is in another city other than your location and goes tech, how would you go about getting the aircraft fixed in another city?

2. How would you cater each flight? What would you offer? BoB products or free snacks and drinks?

3. How would you get pilots and F/As? You will more than likely deal with a union environment in this case and before someone gets their union panties in a wad, it is just a fact of life rather than do you want it or not. Your employees decide if they want to be unionized or not, by law.

4. Who would handle your flight dispatch and coordination center? Where would it be located?

5. How would you chose your ground equipment and who would repair these items when they break down?

6. How would you handle your airport, gate, ramp lease and how would you go about getting TSA back in the airport once Frontier finishes in January?

7. What kind of IT infrastructure would you use for your customer facing booking? Would you pay an airline to book all of your flights? Or will your passengers have to book separate tickets and you utilize your own?

8. You will have to put into manual pretty much every single thing your airline does from ticketing and support, to ADA driven required items, to emergency action plans, to deicing procedures, to fueling requirements, ground security, local station training, etc.

9. Will you contract your ground handling (ie ticket counter, ramp, gates and baggage service positions) and pay someone else to do the work, or will your company provide their own employees?

10. You will have to be versed in every thing your airline does and to guarantee your airline follows the parameter of the FAA and DOT regulations to the letter of the law.

11. Flight cancels due to your airline's fault, how would you handle such cancellation? Hotels, food vouchers, and taxi vouchers will be paid for by your airline regardless of who ground handles your flight.

12. This is something I am only vaguely familiar with, but if you act as a start up, even under another airline's lease, you must pass a proving flight with the FAA. If i remember correctly, you must complete this prior to any customer stepping aboard your flight. What it entails, I couldn't tell you.

13. PVU, if I am not mistaken, receives significant amount of snowfall. Deicing fluid and a way to apply the fluid to the aircraft (ie truck, deice tower, another airline contract) is a must or the flight is a no-go.

14. Aircraft. Apparently to operate an airline, you must have aircraft. Wet lease an aircraft to start would be the best way to go, unless you have a few hundred million just lying around where you can buy the craft(s) outright.

I am leaving a lot out for specific reasons, but hopefully this gives you an idea into the likes of running an airline. It's not an easy task and the list above is just scratching the surface.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: bjorn14
Posted 2012-11-19 10:11:15 and read 8593 times.

Quoting frequentfryer (Reply 5):
I'm curious how big an improvement the latest of the two models really represent over previous models. Can someone expect a significantly different experience

Drop down down IFE. A little bit better engine. Glass cockpit. I don't think any 72-600s are available yet from lessors. I would actually try to find a Do328 or ATR42-500. I would try 3x daily to DEN or a midday flight to LAS.

Quoting xjramper (Reply 10):
but if you act as a start up, even under another airline's lease, you must pass a proving flight with the FAA.

Not only that but you need to pass a financial litmus test by the DOT.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: frequentfryer
Posted 2012-11-19 11:52:56 and read 8593 times.

These responses are so great. I really appreciate it.

My initial quick thoughts-

Quoting xjramper (Reply 10):
Back on topic, I understand that you want to invest the time to start up an airline. I will leave the economy, fuel prices, world affairs aside for a second and pretend you want to start something like this up. Assuming you are looking to get under the belt of a major carrier, where would you fly and who would you prefer to fly the codeshare under?

Sitting below a DL hub and surveying the hubs in the west, United seams to be the logical choice. That sets up DEN(UA) as the gateway to the east.
Market data and daily non-stop flights out of SLC show demand for PHX(US), LAS, LAX(UA), SFO(UA), SAN and somewhere in the Northwest.
As pointed out above, PVU is comprised of transplants from all of these areas(the Northwest possibly being the exception) in large numbers. South-west to California is probably the predominant vacation travel pattern if not the whole southwest(Arizona, Nevada, California). BYU is the countries 3rd largest private university with 34,000 students. Only a 3rd of which are local to the state of Utah.

I need to look into the demand to connect through the west coast hubs as I wouldn't wish SFO or LAX on anyone. SJC would be a great alternative to SFO. I'm not sure if one of the LAX alternates makes sense or not. I would see one maybe two aircraft service DEN and perhaps PHX twice daily with single mid-day flights to LAS and parts in California to develop those routes.

Saving costs for a later discussion, some of the items above would be addressed in a wet lease. Is it common to have maintenance arrangements with code-share partners? Frontier currently does not have any staff onsite. I believe all operations at PVU are contracted with the local services. I would expect much of the business ticketing is conducted through Saber. Much of the IT related services including ticket sales can be contracted as I'm sure this is the case with at least a few of the carriers. My background is in the software that runs the internal operations of most if not all of these airlines.
I expect that any serious approach to this project would require an industry consultant the moment funds are to be applied. That is if David Neelman does not return my calls  Wink

[Edited 2012-11-19 12:23:45]

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: Birdwatching
Posted 2012-11-19 14:28:46 and read 8595 times.

I like your idea. When I read your initial post, I knew that most responses would be very critical and try to convince you not to invest in an airline. So if I understand this correctly, you have the money and want to start an airline with it? Or you don't have the money and you want investors? In any case, I think the way this might work out is if you manage to wet lease a tiny aircraft in the beginning. Like a B1900 for example, maybe Great Lakes would lease you one, along with the crew. That way, you don't have to worry about purchasing an aircraft or hiring crews. Tell them you want to fly it 2x daily into SLC, once in the early morning and once in the evening, and maybe in between 1x daily to SGU or even LAS. Then ask them to make you an offer, then divide that by the load factor you're expecting (just half the capacity, to be safe). If it seems like it could work out, give it a shot. You'll need great marketing, and it will be hard as hell to get connecting traffic if people can't book it all on one ticket. But maybe if you have a small enough number of seats, you can fill it with O&D traffic. For example, if you fly a twice daily B1900 Provo - Salt Lake v v, you have 38 seats each way to fill, every day. Definitely easier in the beginning than an ATR. Plus you don't need any flight attendants on the Beechcraft 1900. The first officer is the flight attendant.
Maybe this is the way to go?

Other possible types would be the Jetstream 31 or Twin Otter.

Anyway, if you ever make it work, send me a message and I'll come to Utah and fly a round trip on your airline for the fun of it.

Soren   

[Edited 2012-11-19 14:31:43]

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: bjorn14
Posted 2012-11-20 01:33:05 and read 8594 times.

Quoting frequentfryer (Reply 12):
Market data and daily non-stop flights out of SLC show demand for PHX(US), LAS, LAX(UA), SFO(UA), SAN and somewhere in the Northwest.

You need to canvas local employers, travel agents, etc. to find out where they or their customers want to go and then figure out what the best hub is for you.. LAS is closer (341 v. 375) and has many more international/Hawai'i/California cx going for it than DEN. Try to cut some deals with the area's biggest employers.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: FrequentFryer
Posted 2012-11-20 11:10:57 and read 8592 times.

Quoting bjorn14 (Reply 14):
Anyway, if you ever make it work, send me a message and I'll come to Utah and fly a round trip on your airline for the fun of it.

Count on it!

Quoting bjorn14 (Reply 14):
You need to canvas local employers, travel agents, etc. to find out where they or their customers want to go and then figure out what the best hub is for you.. LAS is closer (341 v. 375) and has many more international/Hawai'i/California cx going for it than DEN. Try to cut some deals with the area's biggest employers.

bjorn- You are inspired, planning out route maps may be putting the cart before the horse on my part, but you solved a puzzle I was working through. Demand exists for a number of destinations on the west coast and I was attempting to calculate which would be best.
Demand is greatest for LAX, but also exists split between SFO and SJC as well as Sandiego.
The west coast cities lye just outside of the Q400's sweet spot range from PVU and the additional time to hit any one of them would make it difficult to get two flights to DEN and one to each of PHX and LAS, all of which have strong demand and really should happen.

What I did not consider is that LAS, although not a major hub(at least not for an airline that suits the task at hand), is frequently from ALL major citeies in the West. It just donned on me that LAS effectively gives me coverage of the west coast, pending an arrangement with UA of course. Its a double win as I end up with two gateway airports that both fall into that 330 Mile sweet spot(1 hour flight time at long range cruise speed). I should be able to ping pong between LAS and DEN through PVU twice daily with a longer round trip to PHX squeezed in between. Obvious to the rest of you I'm sure, but that little flash of knowledge has me pretty excited. Seems like a good plan for a single planed airline just getting started. Thoughts?

I noticed that UA has Q400's in DEN now. When I flew through DEN this week it appeared that F9/GLA shared the only small aircraft annex. I was clearly so distracted by walking amongst the aircraft, I didn't notice the end of terminal B right behind me.. I assume this means that UA is well equipped to service them there. Any master negotiators out there?  On that note, Bombardier has a service facility in TUS just south of PHX. I imagine with a second Aircraft, a maintenance rotation could be devised when necessary, to minimize disruptions to service. I certainly can''t afford a disruption while operating with a single aircraft.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: bjorn14
Posted 2012-11-20 11:44:36 and read 8594 times.

Quoting FrequentFryer (Reply 15):
bjorn- You are inspired, planning out route maps

Thanks. It's my job  

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: BE77
Posted 2012-11-20 11:52:15 and read 8594 times.

Here is an example of an air frieght group that I think originally got into the pax business when their local community was axed by the mainline carrier.

http://www.hawkair.ca/company-history

The biggest difference of course is it's a little more than 50 miles to a alternative hub for them, but, I think the idea of a locally based service has similarities.


As for the choice of aircraft, I think the main reasons that WS went with Q's for Encore would apply for Provo as well....some big hills to get over between Provo and pretty much anywhere, in addition to some of the other op issues.
Of course WS also had to consider the competition with Q's as well, and couldn't set themselves up to be smoked on speed for the longer legs that the props are used on in the Canadian market (it really is a big country with people spread relatively thinly once you get out of YYZ and YVR). Lots of detail elsewhere in A.net, so just a short summary here.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: FrequentFryer
Posted 2012-11-20 13:08:13 and read 8594 times.

Quoting BE77 (Reply 17):
Here is an example of an air freight group that I think originally got into the pax business when their local community was axed by the mainline carrier.

At first this sounded like an example of a small regional that got axed by a mainline carrier. Nothing wrong with examples of failure. I was just pleasantly surprised when I got to the bottom of their story on the website and they were still in business 
Quoting BE77 (Reply 17):
As for the choice of aircraft,


The sentiment on the forum seams to be that Q400 is a technically superior aircraft to the ATR 72 and that the larger engines give you options in real time- If you need to be a jet, just give it some gas.
I saw a brochure that attempted to illustrate the difference in performance between the aircraft under single engine failure. In the illustration, the Q400 recovers, clearing the nearest peak comfortably while the ATR doesn't make it. Imagine someone being brought to court over an incident and a prosecutor pointing to the illustrated brochure. "You were warned!" 

I'm trying to start pulling together cost estimates to flesh out the scenario for success. The rep at Bombardier is providing some lease documentation, but was not excited to pass names of the lessees themselves. Said they would not appreciate getting a call from an unqualified customer. A nice guy though.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: FrequentFryer
Posted 2012-11-20 13:34:11 and read 8594 times.

Quoting bjorn14 (Reply 16):
Thanks. It's my job

A flight planner huh? How do you plan departure times? I look at an early arrival at Denver and everything else arriving is from really small markets. If you schedule the aircraft to sit until until Chicago deplanes, your only 40 minutes from a New York or Philadelphia connection arriving. Probably all comes down to Market data. "How many bodies from connecting flights can you expect to get based on the number of hours waited? Is there some trial and error involved?

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: BE77
Posted 2012-11-20 14:27:47 and read 8592 times.

Quoting FrequentFryer (Reply 18):

Well, to be fair, while they are still in business they did go broke once, and a few years later were taken over by a larger regional player, but it seems that such is the life in the airline biz!

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: doug_Or
Posted 2012-11-20 19:39:53 and read 8536 times.

Quoting FrequentFryer (Reply 15):
What I did not consider is that LAS, although not a major hub(at least not for an airline that suits the task at hand), is frequently from ALL major citeies in the West.

Keep in mind, all the major cities in the west have non-stop service to SLC already, most with multiple carriers. If you're offering a flight non-stop to DEN, LAX, SJC, or wherever someone wants to go you have the advantage of leaving from their convenient local airport. If you're asking them to get on your propeller driven airplane, sending them to Vegas, and having them connect to another airline you will be offering them a product which is less desirable than driving to SLC and getting a non-stop. That means discounting to fill flights and make up for the competitive disadvantage.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: bjorn14
Posted 2012-11-21 04:14:32 and read 8494 times.

Quoting FrequentFryer (Reply 19):
How do you plan departure times?

You will need to look at UA flight banks (WN & F9 less so. Remember WN doesn't interline) I'm sure UA will help you plan it and take care of ground handling. Although, not sure they want another Great Lakes on their hands.

Quoting FrequentFryer (Reply 18):
I saw a brochure that attempted to illustrate the difference in performance between the aircraft under single engine failure. In the illustration, the Q400 recovers, clearing the nearest peak comfortably while the ATR doesn't make it.

I wonder if this was comparing the -500 or -600 to the Q400 because the new engine on the -600 has solved these problems. IIRC

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: FrequentFryer
Posted 2012-11-21 06:13:25 and read 8476 times.

Great incites, thank you!

I'm not at this point yet, but does anyone have a recommendation for industry consultants? Bombardier recommended KPMG.
I went through a breakdown of all costs associated with a 200 nm flight on a brand new Q400, to include maintenance, depreciation, crews, landing fees.. The numbers were based on 2004, so I needed to triple the cost of fuel. At 74 seats the cost per seat on a flight came out to $33 a seat. To me that implies that your breakeven point could be as low as 1/3 of the plane.

I assumed that on a wet lease, you would be doing well if you only broke even, allowing time to prove your service is viable and opening the door to greater financing. This paints a slightly rosier picture. Obviously breaking even on each flight is not the same as breaking even as a business.

Quoting doug_Or (Reply 21):
If you're asking them to get on your propeller driven airplane, sending them to Vegas, and having them connect to another airline

Point taken. Its tough because the current model calls for a single aircraft. Anything further than Denver/ LAS puts a dent in the number of flights I can get in a day. LAS and Denver themselves are two of the highest demand markets to fly to along with Phoenix. It may make more sense to have fewer flights covering longer distances. As a business traveler, I like the idea of packing is some short early morning and late evening flight to get the greatest number of people off in time to make it to the office at their destination before noon the day of and then late enough in the evening to connect folks coming from the midwest who aren't able to get to the airport before 4pm. Then in the midday flights or flights you hit markets you would like to prepare for when additional aircraft can be procured.

It seams the market for leasing preowned aircraft is favorable for the consumer at the moment. Given people's apprehension toward propellers and this being the start of a new service, I would really like to utilize new aircraft. That just may not be possible with Bomardier. Any news of anyone backing out of their orders for the Nextgen? People have said that the ATR 72 has a shorter backlog.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: bjorn14
Posted 2012-11-21 14:42:22 and read 8408 times.

Quoting FrequentFryer (Reply 23):
I would really like to utilize new aircraft.

We're still talking propellers. I've heard stories of ppl wanting to fly 732s v. brand new Q400s. The perception still is propellers = (dangerous) puddlejumpers. I understand planes don't make money sitting on the ground but I'd be wary of initially biting off more than you can chew. My advice would be to perfect your 2x daily DEN flights (morn.-eve.) and then later add the midday LAS or PHX flight (Both might be possible). I personally would pick LAS as that generates more O&D. Maybe even generate some ancillary package deals.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: FrequentFryer
Posted 2012-11-24 09:20:53 and read 8238 times.

I just flew through the small aircraft annex in DEN and got a chance to talk to some of the Republic staff. Republic owns F9 but also services all the major carriers in the US. Case in point- the Q400s Frontiers uses at DEN are becoming UA aircraft, but still operated by republic.

Clearly it takes a great deal of time to satisfy all FAA regulations and others I have not identified yet to get an airline off the ground. I liked the idea of a wet lease flying under the lessor's code as you are not required to purchase an aircraft, can start relatively quickly, it gives you time to prove your business case and several start-ups have been successful using this method.

Can someone help me get a more clear idea of what needs to happen to set up a service operated on a wetlease and under the lessor's flight code?
You have already identified the proving flight and financial litmus test. The requirements for the litmus test were 3 months of operating capital on hand if I read correctly.

What else?

I wish David Neelman patronized this site as he started Morris Air this way.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: FrequentFryer
Posted 2012-11-24 10:01:41 and read 8223 times.

I once came across a leasing company's site that touted a history of assisting start ups through wet leases. I need to get in contact with someone to get more specific numbers so that I can really start doing the math. Any suggestions for a lessor or consulting group I should engage? Bombardier suggested KPMG or a smaller consulting group. Any recommendations?
I see on SpeedNews that Avpro and Skyworld have newer Dash 8's.

[Edited 2012-11-24 10:06:28]

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: tdscanuck
Posted 2012-11-24 10:34:35 and read 8251 times.

Quoting FrequentFryer (Reply 26):
Any suggestions for a lessor or consulting group I should engage? Bombardier suggested KPMG or a smaller consulting group. Any recommendations?

L.E.K Consulting has an aviation practice (http://www.lek.com/industries/aerospace-defense)

All the big investment banks will also have a transportation practice; Morgan Stanley is particularly strong in the sector.

Tom.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: FrequentFryer
Posted 2012-11-24 11:18:01 and read 8238 times.

Quoting Birdwatching (Reply 13):
maybe Great Lakes would lease you one, along with the crew. That way, you don't have to worry about purchasing an aircraft or hiring crews.

If UA has a Q4 fleet in Denver, is it possible I could do the same through UA? Even if their current aircraft are all spoken for, I could lease a Q4 from someone else and engage UA to run the flight through Republic. Ideally this would facilitate the code share relationship with UA.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: doug_Or
Posted 2012-11-25 01:17:53 and read 8137 times.

Quoting FrequentFryer (Reply 28):
If UA has a Q4 fleet in Denver, is it possible I could do the same through UA? Even if their current aircraft are all spoken for, I could lease a Q4 from someone else and engage UA to run the flight through Republic. Ideally this would facilitate the code share relationship with UA.

I'm not sure, but it doesn't sounds like United is the one you need to talk to here (aside from setting up a code share or interlining agreement). Republic staffs, maintains, and operates the aircraft.

Have you considered an older CRJ-200? They might be much easier to find, there are plenty of operators, fewer seats to sell, no scary propellors, and MUCH lower lease prices (which means lower fixed costs, which means you can have a lower utilization rate early on as you develop markets, time flights for connections, and build in slack for the maintenance delays that can be catastrophic in a 1 plane fleet). Just an idea.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: COSPN
Posted 2012-11-25 01:54:50 and read 8132 times.

The only way it can work is to do something like Morris air did years ago at SLC

Yo will need to have something "good or cheap enough" to get SLC folks up to PVU to take your flights or it wont work

How did booze work in Utah before the Olympics ?? you havd to be a member of a club with a card to drink, a mabe a travel club I would try just one or two places >> you need to do lots of research, how about Skiing is Provo closer to the ski areas than SLC ??

Just some Ideas...study up on June Morris and Morris air in 1988-1992 they used to just charter CO 737's running SLC-SFO and LAS and some other places in the West...

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: FrequentFryer
Posted 2012-11-25 06:51:07 and read 8089 times.

Quoting COSPN (Reply 30):
The only way it can work is to do something like Morris air did years ago at SLC

I am a big fan of David Neelman who got his start in the industry with Morris air. For anyone who's interested, the business case is published and easily accessible. Just google Morris Air business case. A fun read.

Quoting doug_Or (Reply 29):
Have you considered an older CRJ-200?

Thank you for this idea. Its an interesting one I had not considered as part of the underlying business case is that the modern turbo props are so more efficient and effective at these shorter range mountainous flights.

I did a WAG (my operating cost numbers on the Q4 are very general and my crj200 numbers are worse) on flying either aircraft PVU-DEN.
I could do 3 RTs a week for 3 months at less than $200k. 3 months is time to get the ball rolling and aligns to the FAA requirement for 3 months of operating income on hand.
Remember this is replacing the daily F9 service that was filling not less than 80 seats.
A strategy of working up to daily flights over the next year should do well with demand being sluggish post Christmas/New Years and allowing me to work with a leasing company to secure an option on a new Q400. I believe their backlog sits at 10 months to a year.

2 Questions-
Is anyone going to be willing to do a wet lease for 3 RTs (an hour each way) a week?

What is UA's motivation to code share? Obviously more bodies is more revenue, but what is going to make my operation attractive to UA?
My first thought is getting passengers that may otherwise be flying DL out of SLC.

Without an agreement with United, I would be tempted to go with the 50 seat RJ to ensure capacity loads. Obviously a UA code share changes everything.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: xjramper
Posted 2012-11-26 09:50:58 and read 7930 times.

Just as an FYI, CR2s perform abysmally in the high altitude areas. During the winter months, watch flights utilizing the CR2, especially in and out of SLC/DEN. They have no additional fuel capacity, which turns out to a lot of diversions as opposed to holding or at least attempting a few approaches.

If you are going with the flights, turboprops would be the way to go in this respect. Or you could offer a CRJ with 35 or so seats. The only problem you have with the smaller aircraft, is that you may not be able to carry ski items, especially for those looking to vacation.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: bjorn14
Posted 2012-12-12 06:46:18 and read 7350 times.

Quoting FrequentFryer (Reply 31):
Is anyone going to be willing to do a wet lease for 3 RTs (an hour each way) a week?

Sure, if you got the dough.

Quoting FrequentFryer (Reply 31):
What is UA's motivation to code share?

Not much. UA doesn't even code share with ZK. Your best hope is an interline agreement.

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: frequentfryer
Posted 2012-12-31 00:25:59 and read 6556 times.

Quoting COSPN (Reply 30):
The only way it can work is to do something like Morris air did years ago at SLC
Quoting bjorn14 (Reply 33):
Quoting FrequentFryer (Reply 31):
Is anyone going to be willing to do a wet lease for 3 RTs (an hour each way) a week?

Sure, if you got the dough.

What type of lease/charter arrangement would you call the Morris Air model? Lessor provides Aircraft, crews and AOC. Lessee sells seats. For 6 months to a year.
Wet, ACMI, Public charter?

ALK lists the QX Q400s on their charter site. Is QX in a position to service a regular scheduled Q4 charter for months at a time? Do they have a history of doing so?

It makes sense that QX might have a disincentive to prop(no pun intended) up another western regional service. I would think that a Non-compete agreement would be common under these circumstances.
This would also protect me from them deciding to take the route over at some point, correct?

Thanks!

Topic: RE: Start A Small Airline To Replace Loss Of Service
Username: frequentfryer
Posted 2013-04-16 02:01:35 and read 5229 times.

Since starting this thread, G4 has Announced PVU to AZA, OAK and will soon announce LAX.
That's 2 RTs/week at ~150 pax. All routes less than 600 miles.

It seems logical that 4-5 RTs/week on an 70pax ATR(perhaps operated by Empire) or 50 pax CRJ2(operated by Skywest) could go full even at fares closer to what is charged at SLC.

My understanding of G4's business model is that they close routes if they start dropping to 80% load factor. I don't know who would want to fund a startup who's first order of business was to unseat G4, but offering an additional 4 flight options a week aught to do some damage, even at higher fares approaching what is charged out of SLC.

I wish I had the means to assess potential margins. The TP's excellent operating costs are offset by higher cost of ownership as the most acceptable models are only a few years old.

A CRJ2 scenario initially seams like a step in the wrong direction as their high operating costs and fewer seats are part of what makes the business case for the TPs. With the CRJ2s you start to look like a baby G4, but the cost to get started could be favorable.
Is a $2 million line of credit and $500,000 in cash enough for a Skywest to entertain operating flights for me? The idea would be to demonstrate that the service could break even, at which point you open up for major funding.


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