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TS-IOR
Posts: 3505
Joined: Mon Oct 08, 2001 9:44 pm

Funds Needed For An LCC To Start?

Sat Mar 27, 2004 1:39 am

What one may prepare,funds and equipement,to start a LCC ?

How long does it takes ?

How can one find investors in such a business ?

Thank you very much...
Next flight TUN-YUL Tunisair A330-243.
 
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TS-IOR
Posts: 3505
Joined: Mon Oct 08, 2001 9:44 pm

RE: Funds Needed For An LCC To Start?

Sat Mar 27, 2004 10:41 pm


Any idea ? Is there aviation professionals here to respond ?
Next flight TUN-YUL Tunisair A330-243.
 
graham697
Posts: 344
Joined: Fri Dec 12, 2003 11:59 am

RE: Funds Needed For An LCC To Start?

Sat Mar 27, 2004 11:10 pm

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.
Looking forward to the new AA
 
BeltwayBandit
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Joined: Tue Mar 11, 2003 4:25 am

RE: Funds Needed For An LCC To Start?

Sun Mar 28, 2004 1:19 am

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.

[Edited 2004-03-27 17:21:40]
 
Horus
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Joined: Sun Feb 22, 2004 1:04 am

RE: Funds Needed For An LCC To Start?

Sun Mar 28, 2004 1:26 am

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.
EGYPT: A 7,000 Year Old Civilisation
 
backfire
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Joined: Fri Oct 06, 2006 8:01 am

RE: Funds Needed For An LCC To Start?

Sun Mar 28, 2004 1:50 am


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.
 
AirplanePeanut
Posts: 407
Joined: Mon Mar 08, 2004 12:00 am

RE: Funds Needed For An LCC To Start?

Sun Mar 28, 2004 2:04 am

If You Were ValuJet, You WOuldnt Nedd ANy Money-LOL




AP
..
 
COEWR
Posts: 225
Joined: Sun Oct 05, 2003 5:05 am

RE: Funds Needed For An LCC To Start?

Sun Mar 28, 2004 2:21 am

and someone has to say it so don't flame me...

if you could get NW to sell off a few DC-9s I'm sure they would be cheap cause they are old...Speaking of which when are they gonna get rid of those things??? lol

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