So you’ve decided to start an airline. This is a big decision to take on a project that will
quickly take over your life! But how do you actually go about it, and where do you begin?
Well, the first thing to do is develop a robust business plan for your airline.
You should consider the four critical stages of planning, better known as what, where, how,
and why. Your business plan could make all the difference between your airline
becoming the next big deal or simply another casualty of a ruthless industry,
itself littered with failures throughout its history.
Getting these first critical decisions right will improve your chances of succeeding and
perhaps ensure your airline's survival chances in the future. Once you have rigorous and
comprehensive answers to all four key stages, it will be time to draft your business plan.
Your business plan will act as the shop window for your airline that you will present to potential
investors; a document that can allow people to see whether your offering is attractive enough
to entice others inside and, hopefully, to part with their hard-earned dollars.
After all, unless you have bottomless pockets, you’ll be reliant on others to
provide additional funding and investment to get your airline off the ground.
The first of the critical issues to address when you consider starting an airline
is 'what'? What do you want to achieve exactly? Is it possible, cost-effective, safe, or even legal?
Focussing on developing your initial idea is all very well, but being flexible to change
and ready for setbacks will be useful characteristics in your planning toolkit
as you progress. You should develop a detailed concept of what you want to do with your airline.
What are your goals, and what do you need to achieve them.
Do you want to start a small carrier and get bigger over time?
Or do you simply want to remain small and niche? Remember, many airlines survive because they stay
small. Or maybe you want to be a feeder carrier or a regional operator? Or perhaps you want to become
a short, medium, or even long-haul operator, flying the big jets to faraway destinations!
You should decide if your airline will be a scheduled carrier,
a charter operator, or a combination of both. You might want to avoid the complications
of fare-paying passengers altogether and specialize in the carriage of cargo only.
In principle, these are all feasible ventures, but focusing on just one market segment initially
and doing that well will be crucial before you even consider growing your business.
Once you have an established, well-developed concept of what you want your airline to be,
you can progress to the next stage of the process.
Where you want to fly sits snugly alongside the ‘what’ question addressed above.
You should be considering your proposed route structure,
selecting your hub airports and your home base from the outset. Ask yourself if you want to be a
point-to-point carrier or whether a hub-and-spoke operation might suit your airline better.
Remember that some airports you may wish to serve will be slot constrained
and you may not be allocated a workable set of slots for your airline.
So, just be prepared for some tough negotiating if that’s the case!
Recent startup airlines which appear to be making early progress with network planning
are Breeze and Avelo in the US. These carriers have been selecting point-to-point routes to
develop their business. On the other hand, PLAY in Iceland is aiming to build a viable
hub-and-spoke network using Keflavik Airport as its hub, offering decent levels of connectivity
for passengers traveling between the United States and Europe via Iceland.
Are you considering entering an existing market where you will compete with others,
or will you target new, emerging markets, opening up regions and routes that would otherwise remain
unserved? Australia’s Bonza and new US airline Breeze are two examples of this.
Bearing in mind that you will require aircraft, crew, ground handling, maintenance provisions,
and other services at each base you open dictates that you simply should not consider
opening up a plethora of routes that are entirely unlinked to each other in any way.
Startup airlines regularly focus early operations on a single or minimal number
of bases to start before they even consider expansion. An excellent current example of
this is the new Flybe operation. This new carrier (revived from the ashes of another
carrier of the same name) has limited its initial operation to just Birmingham and Belfast City.
No doubt routes will be picked up and dropped from these bases in the early
stages as Flybe refines its model. Yet, by staying small initially,
the airline hopes to avoid having a dispersed network and fleet, which stretches resources
and ultimately leads to operating a wide range of loss-making routes, just as its predecessor did.
While the 'what' question may have been based on intangibles,
such as desire or ambition, the 'where' decisions will be primarily based on data and information.
Detailed route analysis using modeling and forecasting will be a prerequisite here.
It will be imperative to have all your facts in numeric form
so that forecasting and projections can be produced to act as your road map as you develop.
Route and network development consultancies can assist you in this process, as can the planning
departments of airport authorities, as well as the leading commercial aircraft manufacturers.
Even a decision to fly a new 200-seat jet from point A to point B will find you with offers from
all of these sources - each undoubtedly willing to provide planning assistance,
particularly if there is something potentially in it for them!
So don't be afraid to ask for help from those who know their industry best.
Network planning requires solid research using multiple data sources,
thinking creatively, and forecasting as accurately as possible.
It also requires a strong gut instinct about what will work and why.
For low-cost and ultra-low-cost carriers especially,
predicting market growth through stimulating demand is often essential.
For many thin routes, this is crucial to make them viable, without which they would be too small.
Network planning isn't just a one-off process. It also requires continual market awareness
to check what is happening to avail of more opportunities as they arise. No matter the work,
not all routes will succeed. If they all did, an airline wouldn't be experimenting enough!
When considering the question of 'how', there are various points to consider.
Will you select just a single aircraft type, or does your plan call for several types?
Startup airlines have often seen success when focussing on a single type of aircraft.
Southwest, Ryanair, or Wizz, are all good examples of this.
Selecting the correct aircraft type for your operation will be of utmost importance.
Too small an aircraft, and you could be passing up the opportunity to fill more
revenue-producing seats. Too large an airplane, you could risk flying around half-empty planes,
burning fuel, and losing money quickly.
Getting this balancing correct is imperative to ensure your business plan's economics are correct.
Your airline is financially viable so that your airline’s survival is assured,
at least in the initial startup phase. Again, aircraft manufacturers' marketing departments
will be happy to assist in this process if there might be an aircraft sale for them!
Starting an airline is not easy; otherwise, everyone would be doing it, right? With
chances of failure and financial ruin, it’s important to ask yourself why you’re doing this.
Why do you want to put yourself through months, if not years, of stress just to get to your
airline's inaugural flight, let alone what may come afterward? Starting an airline simply as
a vanity project has been repeatedly shown to be not enough reason to build a sustainable business.
You’ll need a good degree of passion, enthusiasm, resilience, and ambition to make
this all come together. Without established motives and deeply embedded aspirations,
you may as well stop planning before you even get started.
It should be obvious, that, when it comes to airline startups,
you shouldn’t expect to run a profitable business for several years at the very least. Startup
costs alone are far more considerable than even your forecasts will tell you.
You need to make provision for this, given the multitude of setbacks that will undoubtedly come
your way throughout the startup process whether it be war, a pandemic, or just plain bureaucracy.
Without comprehensive and credible plans in place, you are setting yourself up for a rapid
and expensive fall. Any cracks in your business plan will quickly widen, be stretched to critical
levels, and may simply just bring your whole project crumbling down before you even get going.
Yet, knowing what you want to do, where you intend to do it, how you intend to achieve it,
and perhaps most importantly, why you are setting off on this arduous process will
either attract investors to you or conversely confine your plans to the drawing board.
In the next episode of this series, we’ll look at airline funding and financing.
For now, we’ll leave you with this question: What kind of airline would you want to start? Where
would it fly? And what aircraft would you choose to start with? Let us know by leaving a comment.