What chance is there of a new UK start up airline?

[AirportsEd]

What do you think the chances are of us seeing a new UK start-up airline in a couple of months time?
One that has no debt hanging around its neck, can access a glut of available aircraft while lease prices are down to about 60% of what they were just two months ago and fuel is at a rock-bottom price.
And lots of experienced staff from all 'trades' available too...?
Is there a hope?
Ed

[spacedog]

What do you think the chances are of us seeing a new UK start-up airline in a couple of months time?
One that has no debt hanging around its neck, can access a glut of available aircraft while lease prices are down to about 60% of what they were just two months ago and fuel is at a rock-bottom price.
And lots of experienced staff from all 'trades' available too...?
Is there a hope?
Ed

In a word NO.

Not unless you wish to loose all your money.

[pug]

In a word NO.

Not unless you wish to loose all your money.

Maybe not in a couple of months, but I suspect there might be someone out there watching how this unfolds and what the incumbents are doing. The longer this goes on, the more likely there will be a gap to fill when a solution to all this is eventually found - the current airlines will have a lot of lost ground to make up so it could provide rich pickings for anyone with the knowledge and funding.

[Dannyboy39]

What basis are you judging lease prices being 60% down?

[The Foss]

Ready and waiting with zero hours contracts and other forms of social dumping

[alm1]

What basis are you judging lease prices being 60% down?
They are down up to 100% - Norwegian gets to keep their aircraft for free because there is nowhere better for lessors to place them.

[jamestkirk]

My prediction is that the large airline (EZY, RYR) survivors of this will maximise on any perceived profitable routes.

The smaller regionals (Eastern, Logan etc) will corner the UK'ish market and I believe when the dust has settled, collaborate to make any new competition difficult.

IMO it will put a potential airline investor off. For example the administrators were trying to sell flybe as a going concern. Hands up here who would buy that at the moment or the foreseeable future.

[TelsBoy]

What chance is there of a new UK start-up airline? About as much chance as Jeremy Corbyn being Prime Minister.

Fully agree with jamestkirk 's prediction.

[LGS6753]

Any new start-up, even with cheap fuel, cheap aircraft, plentiful slots and "flexible" crew will face two big hurdles - marketing recognition and the competition from very affluent, powerful and experienced competitors wanting to keep them out.

[PilotLZ]

I think that there will indeed be such startups coming up as early as next year, making use of the abundance of available aircraft and qualified personnel. But most probably not in the UK. My bet is Eastern Europe due to the lower taxes, lower labour costs, less strong competition and somewhat less uncertainty in the political and regulatory future coming with Brexit. Most probably, those will be ACMI companies providing cheap capacity to scheduled carriers in Europe and beyond. Making use of such a company during periods of high workload or while your aircraft are in maintenance is often a lot cheaper than expanding your own fleet and hiring extra personnel and it will make sense to larger airlines who won't be willing to take the risk of expansion/restoration to pre-crisis fleet sizes just yet.

[AirportsEd]

Hi DB39,
The 60% figure that I used was that mentioned by OAG earlier today, but as you can see, alm1 explains that, for some, it's even cheaper than that right now. Of course, everyone needs that kind of help right now...
Before I posted I had thought about the existing airlines 'hoovering up the pieces' but wondered if they would have the confidence / cash to be anything other than completely risk averse in the short term.
I wondered if that might provide an opening for a, by comparison, currently cash rich organisation - and that might mean one that is not currently in the airline business - seeing an opportunity, if only in the domestic market to begin with. Time will tell I guess.
Ed

[pug]

Any new start-up, even with cheap fuel, cheap aircraft, plentiful slots and "flexible" crew will face two big hurdles - marketing recognition and the competition from very affluent, powerful and experienced competitors wanting to keep them out.

Fair point, but hypothetically if this goes on for a year or so, these airlines will only have so much in reserve before they have to make significant operational cutbacks just to stay in business, more so than already announced. Hence my view that it would potentially clean the slate and make it more attractive for a newcomer.

Obviously I hope it doesn’t come to that, but there isn’t a clear end in sight for aviation at the moment, and it doesn’t hurt to try to find some optimism despite this bad situation.

[Superpilot]

Trivia time...Name me the last wholly British owned and based airline that launched?

[davidjohnson6]

Jota Aviation incorporated at Companies House on 24-Nov-2009 ?

[flyerguy]

The only ‘airline’ that could maybe come out of this would be on the Isle of Man. As the LPL/MAN loganair routes are only temporary and the island is keen to get flights back up and running to BHX when this is all over.


The idea of an airline based on the island came around about a week after BEs demise.

[SWBKCB]

The only ‘airline’ that could maybe come out of this would be on the Isle of Man. As the LPL/MAN loganair routes are only temporary and the island is keen to get flights back up and running to BHX when this is all over.


The idea of an airline based on the island came around about a week after BEs demise.

Would 'open skies' need to be changed for this to work?

[JSCL]

Would 'open skies' need to be changed for this to work?

Longer term, maybe. But I don't really think it makes a difference.

I think it is highly likely we might see a new operator be born on the Isle of Man.

[SWBKCB]

Without some licencing protection or PSO support, would they not run the risk of having their successful routes cherry-picked by larger operators with economy of scale?

[GROUNDHOG]

Pretty slim but how about the possibility of the Government nationalising one or more bankrupt carriers to create a new state airline?

[JSCL]

Without some licencing protection or PSO support, would they not run the risk of having their successful routes cherry-picked by larger operators with economy of scale?

There is nobody to pick that up, especially not on slim routes like Birmingham that BE previously only operated once per day. It's possible in the longer term like I said, but that would be the only benefits of openskies. OS could also hinder a new operator.

Pretty slim but how about the possibility of the Government nationalising one or more bankrupt carriers to create a new state airline?

I doubt that'll happen. Much better to start with a clean sheet.

[LessThanSte]

Any new start-up, even with cheap fuel, cheap aircraft, plentiful slots and "flexible" crew will face two big hurdles - marketing recognition and the competition from very affluent, powerful and experienced competitors wanting to keep them out.
This got me thinking. I understand that Easyjet effectively leases the 'easy' brand from Stelios - in other words, underneath the orange paint the airline itself could be anything. With that in mind, and with Stelios making threats left, right and centre, could the logical conclusion of his rantings to be rescinding (somehow) the brand lease to Easyjet, which becomes 'A N Other-Jet' whilst a new company, fully controlled by Stelios and with the easyjet branding, appearing?

I admit, I dont know any of the details about how the easyjet 'brand' works - specifically whether something such as the above is even achievable. But then most things are achievable with big enough pockets (e.g. to buy out of a contract!)

[frozenpilot]

I personally believe we will see confidence return quicker than we currently believe ( more so in certain sectors). If they are here by that time, my prediction would be;

- BA gaining an even stronger grip on the long haul sector out of Heathrow ( who knows Virgins fate, but it is highly likely with BA’s cash reserves and newly negotiated cost base, they will be well positioned to capitalise)
- Ryanair strangle the low cost market even more, benefit from cheaper fuel, I expect further Aircraft orders from a desperate manufacturer later this year. Love or loathe him MOL is key to the industry at this point, his hard nosed tactics of dismissing Governments threats of quarantine and flooding the market with cheap seats will accelerate confidence in the market over the next 6-12 months
- Wizz air getting bigger and will likely open new U.K. bases, particularly if easyJet do shrink and pull out
- Jet2 get a firm grip of the holiday/leisure market ( you can’t imagine LGW base anytime soon ) with their low cost base and a growing demand for ‘value’ package deals next year if/when we can be released upon our European counterparts
- Regionals either dominated by Eastern/Logan & Stobart... Or EasyJet stepping in with the A319’s ( already putting MAN-ABZ), Maybe BA via Cityflyer will gain an appetite for some of the profitable regional sectors.

It is hard to see where the gaps for a new carrier may appear ( without the failure of others ) but it is likely there will be some aggressive growth coming from those with strong balance sheets in the not too distant future. Right now there appears no light at the end of the tunnel ( although I read a ‘game changer’ antibody test is about to be put into production) we are creatures of habit, very predictable and currently in the midst of a scary outbreak that is perpetuated by awful media hype and scare tactics....

I strongly believe for those that have the reserves/support to get through the next few months will bounce back to growth. This will be aided by science, technology ( vaccine? ) and a better understanding on the virus.

[FRatSTN]

In short the answer to the original question I'd say is no.

You only need to look elsewhere, the US particularly, to see that consolidation is the way the industry has been heading for some time. Europe has actually been a bit behind the curve on that trend, no doubt driven by individual member states still each having their own national/legacy carriers, irrespective of their ownership structure. But even then there's been a lot of consolidation through IAG, Lufthansa Group, Air France/KLM... even Ryanair have joined the club with Lauda, Buzz etc.

Any new airline that would appear in the UK or Europe would almost certainly be from some sort of reform of one of those current big airline groups, and not a seperate newly founded airline. Covid-19 has and will just accelerate shaking the weaker players out as was already the natural course anyway.

[SealinkBF]

What do you think the chances are of us seeing a new UK start-up airline in a couple of months time?
One that has no debt hanging around its neck, can access a glut of available aircraft while lease prices are down to about 60% of what they were just two months ago and fuel is at a rock-bottom price.
And lots of experienced staff from all 'trades' available too...?
Is there a hope?
Ed

Interesting question. I think we might get something new given how much capacity may not return when we over this.

However a few things could mean it never happens:

- the public’s appetite for air travel
- the future size and shape existing airlines will be in, including oil hedging commitments which could make string airlines weak.
- some airports may not reopen so fewer opportunities

My money is on a new Loganair with franchise agreements with Eastern and Blue Islands and/or Aurigny.

[commit aviation]

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.

[AirportsEd]

Interesting replies…and too many good points made to reply to them all!

SealinkBF, I agree with those three points – and the order that you placed them in.

Commit - Yes, why would anyone want to invest. They are all fair points that you make.

I know we are living in exceptional times but I do wonder if there’s an organisation that currently makes its money elsewhere which can see a unique opportunity to get a foothold in the aviation business while some of the competition is, at best, treading water.

Perhaps it might only offer commuter services by picking up some domestic routes that are effectively unserved and could qualify for PSO funding. My guess is that we will see significantly more PSO routes in the UK before the year is out as the government pushes its connectivity hopes while trying to get the country’s economy back on its feet. Maybe it could lead to the birth of a new regional operator that starts with a handful of aircraft backed by some of that PSO money.

[PAXboy]

1) Warren Buffett is one of the smartest investors on the planet (whether you like him or not) has just dropped all air-related and (I think travel) stocks.
2) The CEO of Boeing (whether you like him or not) has said publicly that he expects a major USA carrier to fail during 2020.

[inOban]

A new entrant to any market must be bringing something innovative so that they can disrupt the status quo. A new product or a new way of delivering the product. The LCCs did that by offering low fares and making pax pay for what was previously included, etc.
i don't see any sign of anything novel which could let in a newcomer.

[AirportsEd]

Yes, PAXboy, I agree, there's no doubt that Warren Buffett is one of the smartest investors on the planet, but maybe there's someone closer to home - and younger - out there. The Boeing CEO may be right too, but I doubt the loss of a US major would necessarily hinder a UK start up.
inOban, Yes, it might take something new. Maybe starting on the back of PSO cash could provide that element.

[vikingivesterled]

A new entrant to any market must be bringing something innovative so that they can disrupt the status quo. A new product or a new way of delivering the product. The LCCs did that by offering low fares and making pax pay for what was previously included, etc.

The LCC's have become complacent and bloated adding more and more traditional services, admittedly for a price, ushered in by new sub-chiefs from outside the industry wanting to make their mark and earn bonuses. That might give space for a new ULCC sticking strictly to the original concept.

[Rigga]

About 15-18 years ago the market fo F100 dropped like a stone and a little consortium got 17 F100's with melted interiors out of the Nevada Desert for about 1m Euros each and kitted the interiors out and resprayed them for another 1m Euros each....The birth of Germania.

With the current sudden drop in market value of several dozens of fleet compatible jets they will likely be stored in some desert (or heavily paid to be scrapped by worried groups like IAG) - and with so many people laid off jobs where they think they could do better - I believe the makings of a new budget airline, or even a private airline, is in the offing....

[Alsacienne]

Atmosphere International anyone?

[Albert Hall]

In the regional sector I wouldn't be surprised to see Loganair, Eastern & BlueIslands do some sort of merger or an agreement to be closely linked.

I think you're likely to see two of them working together closely and the remaining one under some even more serious pressure. Just have a read of the Southampton thread!