Wot's the latest with Gold Airways?
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Originally Posted by Chocks Away
At least he's got off his ass and done something Apophis!
Better than what you have to "put up" or offer to make the world a better place...
When was the last time you flared your nostrels, breathed in deep the fresh air and kept the dream alive? Make things happen, help, or get out of the way, I believe the saying is.
(...and I've nothing to do with Ansett too.)
Sadly
, this Pprune site and especially the Downunder section, has denigrated into a pityfull mess of negativity, backstabbing and sniping.
"...out of a box" , as in "no further work required", product complete on purchase... a complete package.
On a better note. Jens: You're spot on with the fuel and hedging, as I helped sway my last company across to "piggyback" off a major players' fuel account ... saving AUD$200/hour operating cost.
Best of luck
Better than what you have to "put up" or offer to make the world a better place...
When was the last time you flared your nostrels, breathed in deep the fresh air and kept the dream alive? Make things happen, help, or get out of the way, I believe the saying is.
(...and I've nothing to do with Ansett too.)
Sadly
, this Pprune site and especially the Downunder section, has denigrated into a pityfull mess of negativity, backstabbing and sniping."...out of a box" , as in "no further work required", product complete on purchase... a complete package.
On a better note. Jens: You're spot on with the fuel and hedging, as I helped sway my last company across to "piggyback" off a major players' fuel account ... saving AUD$200/hour operating cost.
Best of luck
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Load Factor
Thanks for the heads up on Compass Air Ace.
You are not far off the mark actually. Load factors do need to take into acount the type of aircraft you operate. If load factors are consistently at 70% on average, you could extrapolate this to choosing a different aircraft type providing it didn't impact on your peak loading times, subject to route by route market forces, of course. The Gold Airways model can accommodate any of the A320 family aircraft, but to make a mixed fleet of the same family work you need to juggle your sectors so that a replacement aircraft is available on the tarmac that can handle the boardings. This can be at odds with delivering the service with a competitive edge. Thus if you operated an A320 and an A321 side by side, there would come a time when you could not accommodate all the passengers in a one way swap to the A320 because there aren't enough seats. Going for a smaller aircraft then has its own problems as you may need more of them to improve your service delivery at peak times. And at peak times, airport slots are limited, as you know. The Airbus A320 family concept is workable provided you stick to doing it the way Airbus suggest and that then yields good results. Compass I sold seats below cost, it would appear, and that does bring break even load factors beyond the nose of the aircraft and multiple collapses are not impossible to visualise in those circumstances.
In respect of the comment about equity, that is fundamental. Of course the drivers in the product development can be manipulated so that if an investor wanted to, we could bring the Gold airways staged development forward. That would mean that we could compete with a high value product and service delivery very quickly. That means extra cash. This is the case with Virgin America. However, it is not an efficient use of investor's money unless you can see direct tangible benefits. Hence you tend to find airlines starting on a shoe-string budget then, when they've learned to walk, exploiting their industry debut with vigor - usually with huge marketing budgets and securing future aircraft orders.
Regards
Jens
You are not far off the mark actually. Load factors do need to take into acount the type of aircraft you operate. If load factors are consistently at 70% on average, you could extrapolate this to choosing a different aircraft type providing it didn't impact on your peak loading times, subject to route by route market forces, of course. The Gold Airways model can accommodate any of the A320 family aircraft, but to make a mixed fleet of the same family work you need to juggle your sectors so that a replacement aircraft is available on the tarmac that can handle the boardings. This can be at odds with delivering the service with a competitive edge. Thus if you operated an A320 and an A321 side by side, there would come a time when you could not accommodate all the passengers in a one way swap to the A320 because there aren't enough seats. Going for a smaller aircraft then has its own problems as you may need more of them to improve your service delivery at peak times. And at peak times, airport slots are limited, as you know. The Airbus A320 family concept is workable provided you stick to doing it the way Airbus suggest and that then yields good results. Compass I sold seats below cost, it would appear, and that does bring break even load factors beyond the nose of the aircraft and multiple collapses are not impossible to visualise in those circumstances.
In respect of the comment about equity, that is fundamental. Of course the drivers in the product development can be manipulated so that if an investor wanted to, we could bring the Gold airways staged development forward. That would mean that we could compete with a high value product and service delivery very quickly. That means extra cash. This is the case with Virgin America. However, it is not an efficient use of investor's money unless you can see direct tangible benefits. Hence you tend to find airlines starting on a shoe-string budget then, when they've learned to walk, exploiting their industry debut with vigor - usually with huge marketing budgets and securing future aircraft orders.
Regards
Jens
Last edited by Jens_Buche; 28th Jun 2006 at 03:06.
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Hello Apophis
I can confirm we advertised for expressions of interest for positions with Gold Airways. We've identified many good people with excellent credentials. In time, we'll contact these applicants and invite them to interviews. However, all applicants were made aware of our position so there was nothing unethical or sinister about what we were doing.
Part of a business plan is to identify the resources available to run the airline. Whilst the pace with which we have been moving along has been a little slow, we've called for those expressions in line with the anitcipated start date. The start date keeps moving ahead of us because we have largely been altering the model to keep pace with the dynamics of the industry. You cannot ignore the fact the JetStar is now out there and that Ozjet is still there, albeit doing charter. So we have to take that into account.
If you have any more issues on your mind about Gold Airways, I would appreciate being allowed to comment on them.
Thanks
Jens
Part of a business plan is to identify the resources available to run the airline. Whilst the pace with which we have been moving along has been a little slow, we've called for those expressions in line with the anitcipated start date. The start date keeps moving ahead of us because we have largely been altering the model to keep pace with the dynamics of the industry. You cannot ignore the fact the JetStar is now out there and that Ozjet is still there, albeit doing charter. So we have to take that into account.
If you have any more issues on your mind about Gold Airways, I would appreciate being allowed to comment on them.
Thanks
Jens
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Yeah well I've got a very deep drawer full of "out of the box" even "turnkey" business plans for aviation enterprises, some of them bankable.
All need various "market forces" to become aligned, realigned, appear, disappear and so on, but they also need real equity. The intelectual property may notionally be worth squillions but an investor would be betting on its ultimate worth.
As Air Ace avers the magic break even number is 70% (to be more accurate 68% is the number given that the travelers by type and time over a sufficiently large population and size of aircraft, are essentially random) assuming the average per seat cost is recovered within that parameter.
In very simple terms the first step is to research the "number" of travellers available, apply the aircraft "size" (seating capacity) and calculate he number of flights needed to produce a 68% seat load factor, then calculate the fare required to break even on the utilisation produced.
Of course peak schedule times, aircraft size and type and other factors are brought to bear but that is the simplicity of it.
Coupled with an underlying axiom, frequency frequency, frequency forcing the choice of type to smaller, more efficient or bigger conundrum which brings you up against the cost per seat mile equation.
Never told you it was easy.
Second step is to research the "affordability" of the fare in the market researched and adjust the above numbers and aircraft type until it comes in to or stays out of focus.
You then, either have a business plan or you do not.
However in the broadest sense
All other things being equal the number of seats that you can expect to fill under normal conditions is relatively independant of the fare as that relies on largely random events in so far as when a passenger needs/can afford to fly and why in relation to each ones personal life events current at the time..
It means if you heavily discount some seats against the average seat cost at the 68% break even number, then you need to get an equivalent premium fare to offset it. Or if you go up the market and sell premium class seats at economy fares, the calculations get a bit more complicated but the basic underlying premise remains.
IMHO the single logical failure of the Ozjet plan was that it was in effect trying to sell economy fares with a premium class seat the filling of which was required to break even. All the toss about cheap airframes compensating for extra fuel flow and maintenance was just that, it's all about seat mile costs.
Bryan was down the other end of the spectrum needing 114% to break eve.
Fuel hedging is a necessary instrument but if you are relying on your success in that to make a profit then you are not in the airline business you are in the hedge market. And if you are good at that you should just concentrate on the futures market, there is hugely less risk and you can close out and walk away if it gets to hard, which is a bit different from walking away from an airline.
The "profit" is in the single %age points you can get above the 68%.
That's the basic rationale behind the heavily discounted and conditioned apex fares, trying to run an operation on these fares as primary revenue is doomed to failure as is a full premium fare. We have seen examples of both recently.
The statistically iron bound laws of random behaviour are ignored at your financial peril. You can fiddle around the edges, even take the odd gamble to suss a market, but the house always wins.
If Gold are having trouble finding an equity partner, and they WILL get lots of tyre kickers because these guys have guys travelling the world, and I have flown a few of them of them around, whose FULL time job is hunting out "deals", its because Gold appear to be trying to find a partner who will allow Gold to bet with the partners money against the "house".
Now, if Gold were to stump up the "house margin" win lose or draw as collateral they might get a taker but he will want mostly all the chips. The long suffering individual consultants may or may not recoup their time and or get a job, but it is not the same as money in the bank.
All need various "market forces" to become aligned, realigned, appear, disappear and so on, but they also need real equity. The intelectual property may notionally be worth squillions but an investor would be betting on its ultimate worth.
As Air Ace avers the magic break even number is 70% (to be more accurate 68% is the number given that the travelers by type and time over a sufficiently large population and size of aircraft, are essentially random) assuming the average per seat cost is recovered within that parameter.
In very simple terms the first step is to research the "number" of travellers available, apply the aircraft "size" (seating capacity) and calculate he number of flights needed to produce a 68% seat load factor, then calculate the fare required to break even on the utilisation produced.
Of course peak schedule times, aircraft size and type and other factors are brought to bear but that is the simplicity of it.
Coupled with an underlying axiom, frequency frequency, frequency forcing the choice of type to smaller, more efficient or bigger conundrum which brings you up against the cost per seat mile equation.
Never told you it was easy.Second step is to research the "affordability" of the fare in the market researched and adjust the above numbers and aircraft type until it comes in to or stays out of focus.
You then, either have a business plan or you do not.
However in the broadest sense
All other things being equal the number of seats that you can expect to fill under normal conditions is relatively independant of the fare as that relies on largely random events in so far as when a passenger needs/can afford to fly and why in relation to each ones personal life events current at the time..
It means if you heavily discount some seats against the average seat cost at the 68% break even number, then you need to get an equivalent premium fare to offset it. Or if you go up the market and sell premium class seats at economy fares, the calculations get a bit more complicated but the basic underlying premise remains.
IMHO the single logical failure of the Ozjet plan was that it was in effect trying to sell economy fares with a premium class seat the filling of which was required to break even. All the toss about cheap airframes compensating for extra fuel flow and maintenance was just that, it's all about seat mile costs.
Bryan was down the other end of the spectrum needing 114% to break eve.
Fuel hedging is a necessary instrument but if you are relying on your success in that to make a profit then you are not in the airline business you are in the hedge market. And if you are good at that you should just concentrate on the futures market, there is hugely less risk and you can close out and walk away if it gets to hard, which is a bit different from walking away from an airline.
The "profit" is in the single %age points you can get above the 68%.
That's the basic rationale behind the heavily discounted and conditioned apex fares, trying to run an operation on these fares as primary revenue is doomed to failure as is a full premium fare. We have seen examples of both recently.
The statistically iron bound laws of random behaviour are ignored at your financial peril. You can fiddle around the edges, even take the odd gamble to suss a market, but the house always wins.
If Gold are having trouble finding an equity partner, and they WILL get lots of tyre kickers because these guys have guys travelling the world, and I have flown a few of them of them around, whose FULL time job is hunting out "deals", its because Gold appear to be trying to find a partner who will allow Gold to bet with the partners money against the "house".
Now, if Gold were to stump up the "house margin" win lose or draw as collateral they might get a taker but he will want mostly all the chips. The long suffering individual consultants may or may not recoup their time and or get a job, but it is not the same as money in the bank.
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Jens,
What's your guestimate on a start-up date? You've been at this thing for a long time now and, whilst aknowledging starting up an airline is no simple task, after a long enough period of time people will eventually suggest that you either "sh#t or get off the pot".
Due to your reputation in the maintenance side of the industry, you obviously have plenty of sceptics. Personally, I wish you all the luck in the world. I like to believe that your venture will succeed so as to perhaps provide more job security for those of us who continue our chosen careers at the whim of bean counters. History however, suggests that, unless you have a team of investors with mountains of money to throw away, gold airways will remain a pipe dream. Pure and simple.
Life post Ansett hasn't been kind to you Jens. In that I simpathise with you. However, you will not be held in very high regard if your venture is not a genuine one. So I would suggest that you consider your position carefully before giving people hope where none exist's.
All the best.
What's your guestimate on a start-up date? You've been at this thing for a long time now and, whilst aknowledging starting up an airline is no simple task, after a long enough period of time people will eventually suggest that you either "sh#t or get off the pot".
Due to your reputation in the maintenance side of the industry, you obviously have plenty of sceptics. Personally, I wish you all the luck in the world. I like to believe that your venture will succeed so as to perhaps provide more job security for those of us who continue our chosen careers at the whim of bean counters. History however, suggests that, unless you have a team of investors with mountains of money to throw away, gold airways will remain a pipe dream. Pure and simple.
Life post Ansett hasn't been kind to you Jens. In that I simpathise with you. However, you will not be held in very high regard if your venture is not a genuine one. So I would suggest that you consider your position carefully before giving people hope where none exist's.
All the best.
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Parrhresiastes
Your comments are well put and very valid Parrhresiastes. Gold Airways is not, however, having trouble finding an equity partner, in fact finding a suitable equity partner requires expressions of interest to be sought first and your'e only really in trouble if you consistently get a no once the plan has been hatched to them. Thus we are nowhere near having any sort of trouble - we just haven't really had the chance to expose our plan to those who may be interested.
Nevertheless, it is very much like playing roullette. At this stage we've been fairly selective whith whom we are dealing so let's just say its all happening in the high-rollers' private room rather than in the games room of the casino. Tyre kickers can expect some pretty complex background checks.
Much has been done to protect the venture consultants interests but it is a risk you take. We've avoided making it too difficult for for the investors to allow the consultants to take a slice of the action based on the vesting of founders shares and taking up key positions (for those who want them) for salary. An investor would want the founders to stay because they know the inner workings of the model. That's not to say other talent is not employed to make the plan work more efficiently once the airline is flying.
Good comments Parrhresiastes.
Regards
Jens
Nevertheless, it is very much like playing roullette. At this stage we've been fairly selective whith whom we are dealing so let's just say its all happening in the high-rollers' private room rather than in the games room of the casino. Tyre kickers can expect some pretty complex background checks.
Much has been done to protect the venture consultants interests but it is a risk you take. We've avoided making it too difficult for for the investors to allow the consultants to take a slice of the action based on the vesting of founders shares and taking up key positions (for those who want them) for salary. An investor would want the founders to stay because they know the inner workings of the model. That's not to say other talent is not employed to make the plan work more efficiently once the airline is flying.
Good comments Parrhresiastes.
Regards
Jens
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Chockchucker
Hello Chockchucker,
OK, our basic constraint is with Melbourne Airport which requires us to give 6 months notice of start up. At this stage they have already constructed the new check in areas which VirginBlue will use for a short time until the construction is completed to expand T3 - that's behind schedule. (These are opposite Obriens Pub in the terminal). So whatever we do it will be at least 6 months before we fly and unless we can pull a rabbit out of a hat with the airport I cannot see that changing. They will certainly want to know when we are funded. We are not interested in flying earlier unless we have had time to roll out our 2-3 month marketing campaign. With it being June 2006 already I am not optimistic about starting in 2006. The problem with rolling on like that is that your business plan has to be continually updated and your market watch intensified.
Timing is very important, planning is also very important. Unless you are actually doing this sort of work you don't appreciate why it takes so long.
An airline can typically take 3-4 years to get off the ground, and then only with money.
Intrepreneurial stewardship of the most recent airline failures in Australia leads me to believe that it is time to change the way we are doing things. That's the difference. If you are prepared to think along the lines you suggest, no amount of money will save an airline in Australia. It's proven by history that you have to get out of neo classical thinking to make it work.
Regards
Jens
OK, our basic constraint is with Melbourne Airport which requires us to give 6 months notice of start up. At this stage they have already constructed the new check in areas which VirginBlue will use for a short time until the construction is completed to expand T3 - that's behind schedule. (These are opposite Obriens Pub in the terminal). So whatever we do it will be at least 6 months before we fly and unless we can pull a rabbit out of a hat with the airport I cannot see that changing. They will certainly want to know when we are funded. We are not interested in flying earlier unless we have had time to roll out our 2-3 month marketing campaign. With it being June 2006 already I am not optimistic about starting in 2006. The problem with rolling on like that is that your business plan has to be continually updated and your market watch intensified.
Timing is very important, planning is also very important. Unless you are actually doing this sort of work you don't appreciate why it takes so long.
An airline can typically take 3-4 years to get off the ground, and then only with money.
Intrepreneurial stewardship of the most recent airline failures in Australia leads me to believe that it is time to change the way we are doing things. That's the difference. If you are prepared to think along the lines you suggest, no amount of money will save an airline in Australia. It's proven by history that you have to get out of neo classical thinking to make it work.
Regards
Jens
Last edited by Jens_Buche; 28th Jun 2006 at 16:51.
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The title of this thread is "Wot's the latest with Gold Airways?"
It is not an opportunity to attack individuals personally.
Please adhere to the thread topic.
Sunny Woomera
It is not an opportunity to attack individuals personally.
Please adhere to the thread topic.
Sunny Woomera
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Thanks
Thanks Woomera,
I just want to point out a couple of things.
Firstly, my comment referring to "airline out of a box" is probably more to do with selling the concept of a packaged airline product to an investor. That is complete with business plan, operating procedures and people that can run the airline. Acquisition of aircraft is simply part of the plan and it is hatched with the right amount of money. Investors appear to like this concept.
That is all good and well and it takes a heck of a long time to get that information together. We set about to keep our work original, revisiting industry regulations, getting the assistance of the aircraft manufacturer and suppliers. However, there is more to it than making sure the financials and technical issues work out to be competitive. This brings me to my second point.
Part of the big picture is asking yourself, why are you doing this? How is this model going to be placed geopolitically and aeropolitically? What is the centric market focus and how is that going to be achieved? How will the other airlines react? Does the public really want this or is it just that we think it wants this? It would have been very easy for us to follow in the shoes of Ansett Australia because we were passionate about finding a replacement for it and the public were clearly affected by its collapse but, had we done so, we'd be just another statistic in Australian airline failures. Wrong model and wrong model for the new marketplace. We had to challenge the whole concept of the way Australians believed airlines should operate in Australia. This meant also challenging our own reasons for deciding to do something in a particular way. I know we did on many occasions come to the conclusion that if the numbers didn't stack up we'd scrap the plan and start again.
Regards
Jens
I just want to point out a couple of things.
Firstly, my comment referring to "airline out of a box" is probably more to do with selling the concept of a packaged airline product to an investor. That is complete with business plan, operating procedures and people that can run the airline. Acquisition of aircraft is simply part of the plan and it is hatched with the right amount of money. Investors appear to like this concept.
That is all good and well and it takes a heck of a long time to get that information together. We set about to keep our work original, revisiting industry regulations, getting the assistance of the aircraft manufacturer and suppliers. However, there is more to it than making sure the financials and technical issues work out to be competitive. This brings me to my second point.
Part of the big picture is asking yourself, why are you doing this? How is this model going to be placed geopolitically and aeropolitically? What is the centric market focus and how is that going to be achieved? How will the other airlines react? Does the public really want this or is it just that we think it wants this? It would have been very easy for us to follow in the shoes of Ansett Australia because we were passionate about finding a replacement for it and the public were clearly affected by its collapse but, had we done so, we'd be just another statistic in Australian airline failures. Wrong model and wrong model for the new marketplace. We had to challenge the whole concept of the way Australians believed airlines should operate in Australia. This meant also challenging our own reasons for deciding to do something in a particular way. I know we did on many occasions come to the conclusion that if the numbers didn't stack up we'd scrap the plan and start again.
Regards
Jens
