PPRuNe Forums - View Single Post - What chance is there of a new UK start up airline?
Old 14th May 2020, 11:54
  #25 (permalink)  
commit aviation
Join Date: Jun 2007
Location: uk
Posts: 304
Any new start-up would require capital and I am wondering why any investor would really want to invest in the aviation market at present. My thoughts for what they are worth:

Regulation: Pre Covid19 there were many battles around EC261. I believe consumers should be protected, however the current system is stacked very much against the airlines. On the railways in the UK, “delay repay” allows customers to get a percentage up to 100% of the fare back based on length of delay which strikes me as reasonable. With EC261 customers can get back considerably more than the actual fare paid.

Customers: I totally understand that customers want their money back rather than a credit note in the current economic recession (and the law is on their side) but this will push some travel companies over the edge.

Taxation: Aviation taxes vary by country – again UK has some of the highest which is likely to deter any UK start-up. Currently there is no VAT on aviation fuel and this is something I believe the rail sector and environmental lobbies are targeting.

Environment: The green lobby will be keen to focus on the improvements in air quality seen during the enforced close down. I do wonder if the governments reluctance to ride to the rescue might be in some way connected to this. A reduced level of flying could lead to a perceived improvement in environmental credentials?

Competition: there already is a high level of airline competition and consolidation, as already mentioned, seems likely. Outside of peak summer, supply exceeds demand which results in air fares at a level which are not sustainable. Hence why a number of airlines (admittedly in some instances with historic debt issues) have not survived.

There will be casualties as a result and the reduction in capacity will I suspect result in higher airfares in the medium term. This should lead to a more sustainable environment for those who continue. It should not be a monopoly as if airlines try to take too much of an advantage then the opportunity for new entrants will be created.

Consider the lack of government support, a customer base who want everything whilst paying very little, alongside unknown environmental challenges whilst operating within a (normally) highly competitive sector. To be honest if I had a billion to invest right now, I suspect I could probably find a better bet to get a chance of a return on my investment.
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