How can a new start-up succeed?
 

My brother has come to me after having a discussion with a very wealthy (and business savvy) Chinese friend who is in love with Australia, aeroplanes and money..

IF an investor was prepared to look into commencing a regional sized operation in Australia and approach the start-up with an open checkbook, how and where could such an operation succeed (from an aviation perspective more than a business management sense)

I understand the basics, aircraft type to meet operational requirements, check and training etc, the question is more along the lines of service needs (i.e where IS a service needed) and establishment requirements other than regulatory ones.

p.s I'm not getting involved other than offering information 2nd hand, it's only preliminary reconnaissance.

Hempy,
A million bucks for an AOC, just to start, can you imagine anyone with any business sense considering that?
Then the $$$ really starts, a hundred grand just to get an aircraft on an AOC, that price climbs proportional to the size and complexity of the aircraft,
Could you imagine any transport business outside aviation who would pay a hundred grand before they could use a particular truck?
It currently costs my company over twenty grand just to give a pilot a job on a simple piston twin, that doubles or triples if your looking turbine or jet.
Aviation in Australia is finished mate, tell your friend to save their money or if they are really determined take their money to New Zealand.

Thorn Bird,

I appreciate the struggles, but I guess it's all about scale. This guy gambles $3 mill over a weekend..

Surely, given the nature if our continent, regional aviation isn't dying, it's just being badly mismanaged. The need has to be there, it's just not being properly met? Or am I completely wrong and people in country areas are just going to need to catch a bus in 10 years? In that case, I'll tell him to invest in bus lines!!

It could work - if the operator is savy and smart enough! Right plane / Right place it could work.

Then again - I'm into Buses / Coaches and there is definite room to expand!

Is this another one of those Chinese dreams just to get permanent residency in Australia? I have been approached by several of so called rich chinamen over the years to sell my business so they can get permanent residency to move over here. It is not a bad thing because i have been offered some absolutely ridicoulus prices to sell but I am proud to be an Aussie so i am staying. As far as Tony Rabbit lets me.
I have tried to succeed in aviation but my millions ran out too quick.....:{

No mate, he doesn't need nor want Australian residency...he's a bit too 'upscale' for that. It simply is what it is, an enquiry into validity.

Well, I am in aviation and am working on my second million dollars.


I gave up hope of ever making the first, so am going straight for the second.

ascend charlie is a bloody novice. :E I'm on my 7th million. having failed every previous time...

if the guy is serious why not by Rex or an established airline like them?

Look it takes x amount of $$$ to set up an airline of any dimension then that investment needs to have a reasonable rate of return proportionate to the risk. If you don't have that basic philosophy then any decision to enter aviation is not of a sound mind.
There's plenty of savvy people about in aviation that's never the issue take JB for Eg this guy seems switched on savvy in the ways of aviation here in Oz but his Co & every other Co involved in aviation is either getting very little return for their investors or are bleeding dollars quicker than a ruptured aorta & it's not thru lack of trying either!
Actually having the clout by way of bucket loads of cash behind you is usually not the problem it's the continuous hurdles that Co's of any description have to jump over here in Oz that sees them bleed out well before the life blood of the Co (enthusiasm) is exhausted.

I said it in another thread, fools & their money are soon parted when it comes to aviation in this backward thinking joint !

Advise yr friend that gambling is a far better way of getting a reasonable return financially or even enjoyment wise, at least you have a zillion to one chance but with aviation here you are doomed before you even get off the ground!

Wmk2

Might not be to late to pick up the pieces of Vincent Aus

Ok, so it seems that there is simply no way to build and operate a profitable regional airline in Australia regardless of the ability of it's management. Obviously costs are higher than customers are prepared to remit, even if 'a' demand is there. Fair enough.

'Hempy' it's got nothing to do with 'demand', there's plenty of demand there for sure the demand for cheap fares with all the trimmings & lots of flights to chose from that's the demand, trouble is the Airlines are their worst own enemies, they are shooting themselves in the foot daily with ludicrous cheap fares that are unsustainable just to undercut their competitors trying to drive them out of business & the fools at the top of some Airlines are trying to make it work by thinning out the cost of doing business, IE less staff more work. It's like the structure of a bridge, you can design a bridge of lessor material to do the same job 'cause it's all about cost but you keep taking out a little bit of the structure here a little bit of the main support there & the next thing you know you have a collapsing bridge/defunct Airline or one that is struggling to hold its own weight never one the weight of it's customers.

Stick with the fundamentals of life, invest where there is a future where people have foresight even a slight one (not found here in Oz) & aviation isn't one such business as there's no vision, Govts & their greedy grubby corrupt ways have killed off any vision we are ever likely to have here.!


Wmk2

That would be a cheap shot compared to his aviation gamble. And I guess his gambles have some chance of winning, unlike his proposed gamble in aviation?

:=

Think back to not so many years ago when Virgin Blue started. It started with quite a small amount of money. Sure it had backing should it have gone wrong, however the actual seed money was not significant in business terms.

Isn,t it a sad state of affairs for aviation in Australia !!!

You can just feel everyones disappointment with the industry with comments that show here.

I would love to see positive replies and attitudes to a fairly simple question on how to start an aviation business in Australia, but I know myself I do not think I will see it again.

I am an out of work CPL pilot [ but have other employment ] and can see my awesome dream of flying full time disappearing every day.

"Taily" your plagiarizing my post there I see!:E

"Adsie"..........this thread subject certainly isn't a "fairly simple question" if it where then there wouldn't be the mostly neg replies.
Sorry to see yr not working as a plane driver but at least you have the basics (license etc) & it's usually circumstances that hold most people back in yr situation not so much the job itself. Hope you find that pot of gold someday at the ever decreasing rainbow:ok:

"xxx" that was a different era back then, the aviation landscape has slipped a lot further down the slope towards the bottom these days, one can't compare what little fruit there is these days on the aviation tree to days of past sadly:-( What's left is mostly rotten fruit & any eatable pieces are being picked clean by the majors before the aviation tree dies altogether:-(
Planting a new aviation tree will only see it wither & die as there's not enough water ( high yield pax) to go around as it is.......I really gotta stop watching that Peter Sellers movie "Being there", well recommended watching:-):-)


Wmk2

The cost of regulatory compliance is unbelievable these days, and I fear, is only going to get worse. Aviation is a policy free zone so the regulator has a free hand to pursue its own agenda.

That said, Hempy, if your acquaintance is really interested the Vincent Australian operation is for sale. See Friday's Australian Financial Review for the advertisement. I presume it is the shell only but the ad seemed to suggest the AOC was still there. That would save an awful lot of money and time.

However, regional aviation is a knife-edge game with pax loads so price dependant and costs ever increasing. It is interesting watching the established players grimly hanging on to those routes where the majority of pax are business orientated and will pay full fare if required. An example, Rex operate 4 or 5 full or nearly full flights a day to Wynyard which services part of the NW coast of Tasmania but with a population of only 40k. However, it is also the service centre for the West coast and the mines there. Lots of miners flying home to the mainland and vice versa. It must pay for a lot of marginal routes.

When Virgin started Australia was a very different place. We were in the middle of the biggest mining boom in history. They also had the good fortune of Ansett falling over which handed them a market shar un-dreamed of by any start up.

Today the industry is saturated. If the big players cant turn a profit, even with their massive economies of scale, then a stand alone start up has no chance. It's much harder to turn a buck with a turbo prop than a 737 and bigger. The big boys also I imagine pay pump price for their fuel.

As it stands our population is 23.5 million. There is no more room for any new players till we hit 35 million at least and IMHO the key is the very fast train between Brisbane and Melbourne. Only then will regional centres grow to the point where they can sustain an airline service.

Albury/Woodonga with 1000,000+ people is probably the closest to having airline services to capital cities other than Melbourne and Sydney. But its still needs to double in size to at least 200,000.

Ballarat, Bendigo, Shepparton are growing cities that one day may have an interstate airline service but they all need investments in a new airport. There is a large untapped market in those cities. Our government, on both sides of the political spectrum don't seem to be interested in investment that doesn't pay dividends inside the current electoral cycle. Then there is the lack of capacity at the capital city airports. No room for new operators, services from regional centres even if their populations needed it.

Lastly, with a large percentage of young people, who's sole ambibition in life is to join the Centrelink queue, I believe Australia is headed for a large contraction in the economy unless we have a large immigration program of bright and willing workers.

A pretty sad state of affairs overall.

'Plovey' I think you will find that such routes ML- WYY that show good returns are due one main factor, there's no option (other than an all day/night ship adventure) so the Airlines have a captive market. I recall sometime ago that the route Kendell's used to have AD-Port Linc (Rex now) was one of their most profitable 'cause to drive was something like an 8 hr drive around the gulf compared to somewhere around 35 mins flying.

'gupy' I just noticed yr above post. Trouble is with the smaller regional centers they are simply too close to have an effective link to capital cities via air. When you take into account the time it takes to drive to the regional drome & arrange to book in await the flight fly to yr destination & collect bags arrange transport to yr final destination would often take longer than a rd trip with these centers now being serviced by mostly freeways & that doesn't take into acc WX issues that would ground a plane but not a car or traffic holding etc. This is the main reason why smaller airlines have failed to succeed, simply not worth it sadly. Yr right about the centerlink generation, Christ what a sad society we are heading for:-(


Wmk2

Idea
 

Hempy

PM me I have an idea for you friend............