The issue of a public company seeking an investment to start has long been one of credibility. Just as today we seek to explore who is behind a mining company, what expertise they have and what they are dealing with and how they are dealing with it, before we buy the mining shares, investors must be savvy about the airline's business plan and who is lending credibility to it.
Thus to simply make a prospectus and put it into the market may not be enough to realistically attract interest. You need to have a person of some respect and notoriety behind it. However, without a thoroughly researched business plan, having a person of notoriety is not enough.
In the case of Ozjet, for example, both aspects are not particularly strong in my view and it will be an uphill battle for that proposed airline to succeed with that legacy even if it does initially fly. Based on what I can see from press reports, the company's owners have no firm business plans and their credibility must be in doubt when you see the company has employed 60 people and yet their website provides no access. I find this quite strange sort of behaviour.
In respect of the contribution founders make, I think generally the intellectual property is exchanged for founders interest in shares which will usually realise with an initial public offering (IPO). I still believe that founders shares are the best share to have. These can be distributed on the basis of responsibility, period of contribution and intellectual value. However, it is rare for founders to complain about "equitable distribution" as that is usually negotiable.
Just going back a step to the Ozjet situation, the problem this entrant will create for Australian aviation investment will be predicated on its failure. If the airline fails before start up then investors generally may not judge the industry by it. If it fails after start up, investors may think twice about further investment in the industry as the Compass I & II and Impulse had failed before and the stigma of a 2/3 airline Australia remains.
Ozjet does have the option of going public (requires change of company type), requiring it to be reasonably successful within the first couple of years. Having now pitted itself against the golden triangle market leaders (Virgin Blue and Qantas) I would think investors would be rather coy.
I was wondering when this Gold Airways was starting up. Their website is still not allowing access but judging by its presence, it looks like it is still going ahead. I think it will be the grand new challenger when it finally gets up. Not sure if they need a lawyer though Gaunty.
