Why do so many people try to start an airline ?
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Why do so many people try to start an airline ?
Every year in Europe (and I include the UK) there are people with the idea of starting an airline. Some are dreamers who stop trying within a month once they realise what's involved - these are usually never heard of in the public domain. Others go a lot further, become publicly visible, and may even get to the stage of flying passengers commercially. A very large number of these attempts shut down less than 3 years after the date they flew their first commercial passenger flight.
Airlines are not great technical innovators. Yes, there may be small ways you can tweak things - maybe a new carrier wants to be the one who uses AI a little bit more when setting fares.... but it is still a fairly generic business. Particularly in Europe where there are still many airlines so competition remains fierce and niches are few (yes, I know N. America has far fewer carriers so greater possibility to find a niche). Margins in Europe seem slim - so hardly a way to get rich quick for an ambitious entrepreneur. Airlines that get bought out within 5 years of startup by a larger airline are rare. European commercial aviation has been on a long term consolidation trend for many years.
There's even the old saying about a billionaire starting an airline being the fastest way to become a millionaire
Of course I'd like to see new airlines with new ideas start up - innovation and competition is always good, but whenever I see a new fledgling carrier my first thoughts are a sinking feeling in my stomach as I wonder what on earth this new firm possibly has to offer, and then once they've done a few proving flights to go and buy a ticket to fly with them before they go bust.
So why do people start airlines ? Particularly in Europe. What drives them to believe they can thrive where many other attempts have died ? Even after some kindly well-meaning adviser has had a "friendly chat" and tried to steer them in a different direction... many still persist - why ?
Answers on a postcard...
Airlines are not great technical innovators. Yes, there may be small ways you can tweak things - maybe a new carrier wants to be the one who uses AI a little bit more when setting fares.... but it is still a fairly generic business. Particularly in Europe where there are still many airlines so competition remains fierce and niches are few (yes, I know N. America has far fewer carriers so greater possibility to find a niche). Margins in Europe seem slim - so hardly a way to get rich quick for an ambitious entrepreneur. Airlines that get bought out within 5 years of startup by a larger airline are rare. European commercial aviation has been on a long term consolidation trend for many years.
There's even the old saying about a billionaire starting an airline being the fastest way to become a millionaire
Of course I'd like to see new airlines with new ideas start up - innovation and competition is always good, but whenever I see a new fledgling carrier my first thoughts are a sinking feeling in my stomach as I wonder what on earth this new firm possibly has to offer, and then once they've done a few proving flights to go and buy a ticket to fly with them before they go bust.
So why do people start airlines ? Particularly in Europe. What drives them to believe they can thrive where many other attempts have died ? Even after some kindly well-meaning adviser has had a "friendly chat" and tried to steer them in a different direction... many still persist - why ?
Answers on a postcard...
As G'Kar once said " we all do what we do for the same reason: because it seemed like a good idea at the time."
Also, possibly money laundering. But the first is far more prevalent.
Also, possibly money laundering. But the first is far more prevalent.
It's the same as everywhere I suppose, people want to be their own boss, think they can do it better than the incumbents, get left holding the baby when others fall away, think they've spotted a gap, etc
And are there any more than any other business sectors, or do we just think so because it is an area we are familiar with?
And are there any more than any other business sectors, or do we just think so because it is an area we are familiar with?
I do like the story from Branson where his flight to a ski trip was cancelled so he went down the way, found a charter operation, chartered a plane and then came back to the gate and sold seats to pay off the charter and made a few bucks for his trouble. I think there was more work after that.
and a great deal of it went to International tax lawyers and financial engineers
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I guess it's the same reason people start a business in any sector. They believe they can do it better or at least want a piece of the pie. I don't know if the failure rate is that much higher than other sectors. There are reports saying new restaurants fail (figures from 30% to 80% of new restaurants fail in the first 12 months). In the US, the stat is 1 in 5 companies fail in the first year and half within 5 years.
Aviation holds a special magic for a lot of people and that helps draw people in I guess. But we should also be grateful people are willing to take those risks. Sometimes it doesn't work out but still leaves us better off.
Aviation holds a special magic for a lot of people and that helps draw people in I guess. But we should also be grateful people are willing to take those risks. Sometimes it doesn't work out but still leaves us better off.
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I guess it's the same reason people start a business in any sector. They believe they can do it better or at least want a piece of the pie. I don't know if the failure rate is that much higher than other sectors. There are reports saying new restaurants fail (figures from 30% to 80% of new restaurants fail in the first 12 months). In the US, the stat is 1 in 5 companies fail in the first year and half within 5 years.
Aviation holds a special magic for a lot of people and that helps draw people in I guess. But we should also be grateful people are willing to take those risks. Sometimes it doesn't work out but still leaves us better off.
Aviation holds a special magic for a lot of people and that helps draw people in I guess. But we should also be grateful people are willing to take those risks. Sometimes it doesn't work out but still leaves us better off.
1) The successful entrepreneur from another sector who thinks, without any additional knowledge, that their skills are transferable to the airline sector.
2) The airline operations expert who knows everything about operating aircraft but absolutely nothing about the economics of operating aircraft
3) The aviation hobbyist whose hobby somehow grew and got out of hand.
I have read some absolute horror stories of business plans which probably shows that neither the funder or the funded understands the business they are getting into which is why we have such entertaining threads on pprune.
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Paxing All Over The World
It is a good question. We do not see many new shipping lines, cruise lines or car companies start ups - that make it. The costs associated with carrying fare paying passengers are high - as it is for 'Planes and Trains and Automobiles'. Perhaps not enough advice is taken? Perhaps the advisors want to make money and cannot do so by saying, "Don't be crackers!"
The airline world has been in consolidation for - what - 20 years?
The airline world has been in consolidation for - what - 20 years?
I fear we have already had the golden age of enterprise. It's so complex these days to start any kind of business, especially one that is highly regulated, capital intensive, technologically advanced, international almost by definition, and subject to so many external factors as an airline.
The last two successful British airlines started from scratch were Virgin (1984) and EasyJet (1995) and both were started 40 and 30 years ago by men with an existing reputation and consequent access to financial support and thus could employ teams of people. Most airlines operating now were formed from other airlines, or by large corporations. As a consequence, consolidation is all that's likely to happen, as has happened in numerous other industries (car manufacture, aircraft manufacture, bus operation, shipping, etc).It's a sad reflection of the way the world works now that new entrants are likely to be few and far between.
The last two successful British airlines started from scratch were Virgin (1984) and EasyJet (1995) and both were started 40 and 30 years ago by men with an existing reputation and consequent access to financial support and thus could employ teams of people. Most airlines operating now were formed from other airlines, or by large corporations. As a consequence, consolidation is all that's likely to happen, as has happened in numerous other industries (car manufacture, aircraft manufacture, bus operation, shipping, etc).It's a sad reflection of the way the world works now that new entrants are likely to be few and far between.
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I think some of the following may have already collapsed, but you've actively got FlyPOP, Sentra Airways, Hans Airways and Global Airlines all trying to start-up in the same market - UK>Middle East, particularly from the Midlands/North West. Whilst each one has many a flaw, the fact that four unrelated start-up attempts have all identified the same gap at the same time suggests to me that if they put their heads together and pooled their resources they might actually be on to something.
Being an avid Aviation lover and I chose this as my Career from the early 1970's
Growing up with my first flights on British Eagle, BUA, Caledonian, Air Spain, Court Line, Wardair, Monarch, Laker,
Donaldson BEA Airtours, British Midland, Air Europe, you name em' !
and then ended up working with some of them...
I've always thought that if I won the seriously big Mega Millions on the Lottery would I like to start up my own airline in the UK ?
If I did (I likely would be quite mad I hear you all cry) then I would like to look at starting an Airline that goes back to basics offering Passengers a decent product, and showing them some respect.
IE; Hold Luggage and seat allocation included, hot meals on flights sat in a Comfy seat, all with decent leg room.
The thought of starting a 'Leisure' airline was always my desire, but these days here in the UK there are few non-integrated Tour Operators left who you could sell seats and a charter series to.
That's sewn up with both TUI and Jet2 Holidays.
Excel, Monarch and Thomas Cook are gone, as are all of the UK's main charter airlines from the past 30 years.
Although Thomas Cook Scandinavia lives on as Sunclass Airlines, whose roots go back to the 1960's with Scanair and Conair, and they still use their old call sign 'Viking and same DK flight code.
Condor Germany still lives on too, with a strong loyal brand.
Foreign outsiders in more recent years, such as Small Planet, Germania, Smartwings, and then Enter Air all have picked over the bones of what was left in the UK Holiday Charter Market.
So yes, just maybe I would be quite mad to think of starting up a UK Holiday Airline.....
Growing up with my first flights on British Eagle, BUA, Caledonian, Air Spain, Court Line, Wardair, Monarch, Laker,
Donaldson BEA Airtours, British Midland, Air Europe, you name em' !
and then ended up working with some of them...
I've always thought that if I won the seriously big Mega Millions on the Lottery would I like to start up my own airline in the UK ?
If I did (I likely would be quite mad I hear you all cry) then I would like to look at starting an Airline that goes back to basics offering Passengers a decent product, and showing them some respect.
IE; Hold Luggage and seat allocation included, hot meals on flights sat in a Comfy seat, all with decent leg room.
The thought of starting a 'Leisure' airline was always my desire, but these days here in the UK there are few non-integrated Tour Operators left who you could sell seats and a charter series to.
That's sewn up with both TUI and Jet2 Holidays.
Excel, Monarch and Thomas Cook are gone, as are all of the UK's main charter airlines from the past 30 years.
Although Thomas Cook Scandinavia lives on as Sunclass Airlines, whose roots go back to the 1960's with Scanair and Conair, and they still use their old call sign 'Viking and same DK flight code.
Condor Germany still lives on too, with a strong loyal brand.
Foreign outsiders in more recent years, such as Small Planet, Germania, Smartwings, and then Enter Air all have picked over the bones of what was left in the UK Holiday Charter Market.
So yes, just maybe I would be quite mad to think of starting up a UK Holiday Airline.....
What I don't understand is why there is not more regional flying left? Like ATRs and then go intra Europe to smaller places and back. Plenty of airports are available. Just connecting major company sites should be a business? Aren't those eVTOL people claiming this all the time? Why doesn't this type of aviation exist anymore?
I think that in 20 years time, there will be precious few airlines left in Europe, and we will all be harking back to the "good old days" of the 2020s
Only a certifiable person would want to start an airline these days, the profit margins must be wafer thin... People expect to fly from UK to Ibiza/Greece/Turkey/Spain/Italy etc for well under £100, which is less than it was 30 years ago! inflation alone would mean that the minimum such a flight would cost should be somewhere around £350 now, probably more...no wonder you pay extra for a hold bag, a meal, etc...and with a 29 inch seat pitch, making anyone over about 6ft crippled by the time they get off the plane!
Flying in Europe short haul? no thanks, I'll take a Eurostar, and a TGV anytime...
Only a certifiable person would want to start an airline these days, the profit margins must be wafer thin... People expect to fly from UK to Ibiza/Greece/Turkey/Spain/Italy etc for well under £100, which is less than it was 30 years ago! inflation alone would mean that the minimum such a flight would cost should be somewhere around £350 now, probably more...no wonder you pay extra for a hold bag, a meal, etc...and with a 29 inch seat pitch, making anyone over about 6ft crippled by the time they get off the plane!
Flying in Europe short haul? no thanks, I'll take a Eurostar, and a TGV anytime...
I think some of the following may have already collapsed, but you've actively got FlyPOP, Sentra Airways, Hans Airways and Global Airlines all trying to start-up in the same market - UK>Middle East, particularly from the Midlands/North West. Whilst each one has many a flaw, the fact that four unrelated start-up attempts have all identified the same gap at the same time suggests to me that if they put their heads together and pooled their resources they might actually be on to something.
. They weren't really after the same gap - FlyPOP and Hans were looking at the Indian sub-continent, Sentra West Africa (Accra to start with) and Global are looking at the US.
It doesn't make money.