dz09
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Starting A New Airline

Tue Oct 24, 2006 11:34 am

How much of an investment is required to start a new airline. Anybody intrested in starting an new airline? I am thinking of an LCC serving international destinations like London, Paris, Spain and the carribean.
 
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legacyins
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RE: Starting A New Airline

Tue Oct 24, 2006 11:41 am

 
futurecaptain
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RE: Starting A New Airline

Tue Oct 24, 2006 11:41 am

Quoting DZ09 (Thread starter):
How much of an investment is required to start a new airline

Think tens of millions minimum to start up a carrier such as what you want. Perhaps even hundreds. Not to mention the high risk of starting an airline today.

Quoting DZ09 (Thread starter):
Anybody intrested in starting an new airline?

This is A.net. We are buying an italian carrier last I heard. (today)  Wink

Quoting DZ09 (Thread starter):
I am thinking of an LCC serving international destinations like London, Paris, Spain and the carribean.

You have big dreams. Get it off the ground and we'll talk.
AirSO. ASpaceO. ASOnline. ASO.com ASO. ASO. ASO. ASO. ASO.
 
dz09
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RE: Starting A New Airline

Tue Oct 24, 2006 12:03 pm

I am thinking about a flat rate business model, say $500 economy, $1000 business class, from the east coast and $700/$1,500 for the west coast all year round. We can codeshare with B6 for domestic routing. We can ask Mr. Soros who financed B6 to do the same with A-net airways.
 
futurecaptain
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RE: Starting A New Airline

Tue Oct 24, 2006 12:30 pm

Quoting DZ09 (Reply 3):
I am thinking about a flat rate business model,

While good in theory, this has not worked very well for many pax airlines. You will need some deeply discounted fares to use in your marketing schemes and to talk about. $99 to Paris and such. While technically you would only have to sell 1 seat at this price, such marketing schemes are effective and need to be used for brand recognition. EVERY person I talk to tells me WN flies from X to Y for only $29.....sure, if you are that lucky person. I've never paid that price, but nevertheless alot of people talk about them.

Then you will need some higher prices for your big-profit seats (as I like to call them  Smile ) While a good average fare may be $500, the last minute walk-up man who absolutely positively needs to be in NY by tonight or else needs to be charged a high fare to maximize revenue and take advantage of the poor situation.


Just my 4 cents. Keep em coming.
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Stealthz
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RE: Starting A New Airline

Tue Oct 24, 2006 1:01 pm

There is an old joke..

How much money does it take to run an airline?

All of it!!

And there are enough former airline operators and investors out there to prove that point.
If your camera sends text messages, that could explain why your photos are rubbish!
 
CO7e7
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RE: Starting A New Airline

Tue Oct 24, 2006 1:06 pm

Quoting DZ09 (Reply 3):
I am thinking about a flat rate business model, say $500 economy, $1000 business class, from the east coast and $700/$1,500 for the west coast all year round.

If you do that... i promise to be your most loyal customer! Big grin

This is probably a great idea, but wonder if it would really work out in reality.

-Zaki
 
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N328KF
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RE: Starting A New Airline

Tue Oct 24, 2006 1:09 pm

Quoting StealthZ (Reply 5):
How much money does it take to run an airline?

All of it!!

I always liked "How do you make a small fortune in the airline industry? Start with a large one." I've heard it attributed to Buffett, but it may predate him.

[Edited 2006-10-24 06:09:44]
When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' -Theodore Roosevelt
 
nzrich
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RE: Starting A New Airline

Tue Oct 24, 2006 6:32 pm

Quoting N328KF (Reply 7):
Quoting StealthZ (Reply 5):
How much money does it take to run an airline?

All of it!!

Or the one

How do you become a millionaire in the aviation industry ..By starting as a billionaire and owning a airline..
"Pride of the pacific"
 
dz09
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RE: Starting A New Airline

Sun Oct 29, 2006 9:40 am

Quoting Nzrich (Reply 8):
How do you become a millionaire in the aviation industry ..By starting as a billionaire and owning a airline..

Sir Richard Branson made that comment. I just wonder how he made his billions, if it is not through his airline.

After my rather pleasant trip with jet blue, i think that the money people behind B6 should definitely invest in a LCC for transatlantic flights. I know that this is not in B6 business model, but they can surely create a new company and share and codeshare with B6 infrastructure. I am thinking about 3 destinations to start, LGW, CDG and FRA, all from JFK. With the ever expanding B6 network, this would be perfect.
 
luv2fly
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RE: Starting A New Airline

Sun Oct 29, 2006 10:11 am

Quoting DZ09 (Reply 9):
I am thinking about 3 destinations to start, LGW, CDG and FRA, all from JFK. With the ever expanding B6 network, this would be perfect.

And which airline is going to sell B6 there route authority for JFK to LGW?
You can cut the irony with a knife
 
DesertAir
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RE: Starting A New Airline

Sun Oct 29, 2006 10:20 am

One day I had an idea for an airline the I find interesting. Thinking about the Central Valley of California and the termoil of service that has existed to smaller communities like Stockton since Deregulation, I have often wondered if the non-profit corportation could be founded to run a commuter airline. Everyone from the Top down would be retired and former airline workers that are on pension. Everyone would recieve minimum wage for their work and service would be provided to underserved cities to major airports. I recognize that this may be considered off topic.
 
dz09
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RE: Starting A New Airline

Sun Oct 29, 2006 10:20 am

Quoting Luv2fly (Reply 12):
And which airline is going to sell B6 there route authority for JFK to LGW?

I do not understand why US airlines have to buy these routes from another airline. We see UK airlines starting service to the US without having to buy routes from anybody. I admit that getting a slot at LGW is going to be tough. If Mr. Soros decides to fund the new airline (Atlantic Blue Airways!), it is almost impossible to get a slot in the UK. He took the bank of england to the cleaners!
 
luv2fly
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RE: Starting A New Airline

Sun Oct 29, 2006 10:30 am

Quoting N328KF (Reply 7):
I always liked "How do you make a small fortune in the airline industry? Start with a large one." I've heard it attributed to Buffett, but it may predate him.

It was Buffett who said it.

Quoting DZ09 (Reply 9):
Sir Richard Branson made that comment. I just wonder how he made his billions, if it is not through his airline.

No SRB does not get credit for this one.
You can cut the irony with a knife
 
bongo
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RE: Starting A New Airline

Sun Oct 29, 2006 11:08 am

Quoting DZ09 (Thread starter):
How much of an investment is required to start a new airline.

Depend on many many things such as Size of the company, type of fleet, just to name a few  Smile
MDE: First airport in the Americas visited by the A380!
 
luv2fly
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RE: Starting A New Airline

Sun Oct 29, 2006 11:09 am

Quoting DZ09 (Reply 13):
I do not understand why US airlines have to buy these routes from another airline. We see UK airlines starting service to the US without having to buy routes from anybody.

Not from LGW you have not! DL just bought UA's authority from JFK to LHR - now to be flown to LGW for Millions!
You can cut the irony with a knife
 
dxBrian
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RE: Starting A New Airline

Sun Oct 29, 2006 11:14 am

Ever hear of the Virgin record label, and Virgin record stores?

Quoting DZ09 (Reply 9):
Sir Richard Branson made that comment. I just wonder how he made his billions, if it is not through his airline.
 
dz09
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RE: Starting A New Airline

Sun Oct 29, 2006 11:21 am

Quoting DxBrian (Reply 16):
Ever hear of the Virgin record label, and Virgin record stores?

Yes I do, but I still think he made his millions and created all the other ventures with the airline money.
 
dxBrian
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RE: Starting A New Airline

Mon Oct 30, 2006 2:31 am

From the Virgin website:

Back in the early 80s Richard Branson was probably best known for Virgin Records - the legendary record label that signed major names like the Rolling Stones, Janet Jackson and The Human League. In 1984, much to the horror of his directors, Richard announced to the world that a high quality, value for money airline would begin operating within three months. Three months, some licences, staff and an aircraft packed with celebrities later, Virgin Atlantic Airways was born. By the end of the decade we had flown over 1 million passengers and started shaking up services onboard by being the first airline to offer individual TVs to their business class passengers.

Cheers.
 
dz09
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RE: Starting A New Airline

Mon Oct 30, 2006 2:36 am

Quoting DxBrian (Reply 18):
Back in the early 80s Richard Branson was probably best known for Virgin Records - the legendary record label that signed major names like the Rolling Stones, Janet Jackson and The Human League. In 1984, much to the horror of his directors, Richard announced to the world that a high quality, value for money airline would begin operating within three months. Three months, some licences, staff and an aircraft packed with celebrities later, Virgin Atlantic Airways was born. By the end of the decade we had flown over 1 million passengers and started shaking up services onboard by being the first airline to offer individual TVs to their business class passengers.

Thanks. You learn something new everyday.
 
greasespot
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RE: Starting A New Airline

Mon Oct 30, 2006 2:40 am

Quoting StealthZ (Reply 5):
How much money does it take to run an airline?

All of it!!

Or how do you make a small fortune with an airline?

Start with a big one.

gs
Sometimes all you can do is look them in the eye and ask " how much did your mom drink when she was pregnant with you?"
 
Beaucaire
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RE: Starting A New Airline

Mon Oct 30, 2006 2:58 am

DZ09 ---
Yields on long-haul LCC flight products are too low as compared to short and medium distance flights.
A 500 $ ticket (round-trip that is..?) excluding taxes will only provide you a yield of max.50 $per customer.That is provided you fly in a relatively modern ,new and not maintenance intensive plane (A330,B767..)
All second-hand 747 on the market are basically too old and costly to operate.
But that plane can only make one round-trip ( US-Europe ) in 24 hours .
Yields on short-disctance LCC-flights are better ,since you can invoice each day several times customers at an average ticket-price of say 70 $/trip,multiplying revenue sources.
Please bear in mind the major part of Low-Cost airlines income like Ryanair,Easyjet or Air Berlin comes from flight-associated services (Service-charges on internet sale,commission on car-rental ,commission from JetA1 resellers,airport subsidies,on-board sale of drinks and food,publicity sale on inflight-entertainment,publicity in onboard-magazines etc,sale of additional assurances...)
So- the more pasengers you transport,the better are the chances you make money from these non-flight services.

AN example is a typical 1 hour flight from Rome to Grénoble on Blue-Express.

ROME - GRENOBLE € 89.00
(per persona)
Vol Date de à Départ Arrivée
BV1780 2 November 2006 ROME GRENOBLE 10:30 12:00


--------------------------------------------------------------------------------
Total pour le vol sélectionné
Tarif adulte/enfant 89.00
Taxes et frais d'aéroport 45.92
Airport tax (AP) 8.87
Security Charge (EX) 2.05
Surcharge (SU) 35.00
TNC passengers Service Charge (PS) 0.00
VAT 0.00
Total TAX 45.92

Tarif adulte/enfant € 134.92
Total pour1 passager

The surcharge (kerosene surcharge ) will basically yield more than the actual cost of the kerosine for that flight for one passenger.
So the more passengers you transport paying that surcharge,the more money you make.

[Edited 2006-10-29 19:13:00]
Please respect animals - don't eat them...
 
dz09
Posts: 360
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RE: Starting A New Airline

Mon Oct 30, 2006 3:10 am

Well I see companies like globespan, air madrid, air plus comet, corseair to name a few and wonder why not. These guys have been in business for a while and they seem to be making it. Everybody is taking advantage of the huge US market but american companies.
 
Beaucaire
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RE: Starting A New Airline

Mon Oct 30, 2006 3:17 am

Air Madrid have a very wealthy hotel group as funder.
They can sustain a lenghty implementation phase,since their backers have a long-term strategy-something typical US investors don't have -they have short-term ,quaterly result driven pressure .
I don't say it's not possible -but you need a patient investor with similar ,long-term philosophy.There are still niches -plenty-but a.net will not get you the right answers in a public dabate.
Please respect animals - don't eat them...
 
ossprey
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RE: Starting A New Airline

Mon Oct 30, 2006 2:15 pm

DZ07

I stumbled on your questions on A.net and as pointed as some of the responses are I may have a bit of insight as to the real cost of starting a LCC.
Those who work and believe they can make success, look for ones that could support such a venture. Those that heckle never try.

It is a greater failure to never try, than it is to try and not succeed.

From the link on your profile I see you are already in the family of aviator innovators. If you look to the company that engineered the Beech Model 18 D on floats that is part of my history.

If you are interested in becoming part of a LCC and it does not have to be from your home area contact me through this link.

It does not take 100M to start an LCC Charter air service but it does take more than 5M to get to operational. Continuing with a line of credit and building on revenue.

Ossprey
I love the touch of aluminum in the morning. Walk arounds in the snow pumping out floats polishing aluminum by hand!!NOT
 
Kevin777
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RE: Starting A New Airline

Mon Oct 30, 2006 2:41 pm

Quoting DZ09 (Reply 3):
I am thinking about a flat rate business model, say $500 economy, $1000 business class, from the east coast and $700/$1,500 for the west coast all year round.

As customer-friendly as a flat-rate business model sounds, this is the straight way to financial trouble! You have to have effective yield management to squeeze out pax' willingness to pay. Flat rate - among other things, yes, but still - killed Laker SkyTrain. IIRC a walk-up fare on Laker to London was exactly the same as a month before departure. But basically - NEVER go with a flat structure. It's got something to do with marketing, yes, but more to do with squeezing pax' wallets.

Quoting Nzrich (Reply 8):
How do you become a millionaire in the aviation industry ..By starting as a billionaire and owning a airline..

 rotfl 

Quoting Luv2fly (Reply 12):
And which airline is going to sell B6 there route authority for JFK to LGW?

Fly to STN, it' all right, and actually closer to London

Quoting Bongo (Reply 14):
Quoting DZ09 (Thread starter):
How much of an investment is required to start a new airline.

Depend on many many things such as Size of the company, type of fleet, just to name a few

It also depends a lot on legislation. Depending on which country your airline is incorporated it, you need to come up with financial guarantees as required by the authorities. In Denmark - and I think somewhat the same goes for the EU - the requirement is that as an airline, you have to have enough capital to go without a single cent income for three months and still remain solvent. Quite a lot.

As an example, I know that Danish charter start-up, Jet Time, with only two 733's, started with around 15 mill. Euros, okay, well above the required capital, but still..

Quoting DZ09 (Reply 22):
Well I see companies like globespan, air madrid, air plus comet, corseair to name a few and wonder why not. These guys have been in business for a while and they seem to be making it. Everybody is taking advantage of the huge US market but american companies.

Globespan has only been around for a few years, so difficult to tell yet, and Corsair sells a lot of charter, so doesn't really count in the scheduled sense.

This spring I was involved in a Scandinavian leisure start-up, that's still on the drawing board. It is a lot of work to start an airline, and we are not anywhere near being off the ground.

The funny thing is, that airlines make investors absolutely CRAZY!!! With a few exceptions, the airline industry has always made very modest returns on the high-risk capital invested. But the industry has got a sex appeal, that makes investors totally hooked on having an airline in their portfolio! That's also why there are so many failures in the industry, it is simply too easy to get risk-willing capital from investors lured by the sex-appeal..

GOTTA LUV THIS INDUSTRY!!!!  Smile  Smile  Smile

Kevin777
"I was waiting for you at DFW, but you must have been in LUV" CPH-HAM-CPH CR9
 
Beaucaire
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RE: Starting A New Airline

Mon Oct 30, 2006 5:15 pm

Quoting DZ09 (Reply 3):
I am thinking about a flat rate business model, say $500 economy, $1000 business class, from the east coast and $700/$1,500 for the west coast all year round.

Emirates are offering HAM-JFK roundtrips at 430 € all taxes included...
if you deduct the taxes- that does not leave a lot of yield for two long-distance flights...
Please respect animals - don't eat them...

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