Hello, my name is Ben Lovegrove and in this video I'm going to talk about starting and
running an airline.
For some with a keen interest in aviation starting and running their own airline would
be the fulfillment of a long held dream.
If you're obsessed with aeroplanes what could be better than running a business that involves
flying passengers and freight.
The satisfaction of seeing your fleet (even if it's just one aircraft) and knowing your
company is making a profit must be immense.
But as we'll see starting an airline is far from easy, and running an airline, making
a profit, and maintaining momentum over several years is harder still.
Obviously, in a short video like this it won't be possible to cover all the aspects in detail
but we can take a very high level view of this idea.
A Brief Look At Airlines.
The word airline conjures up images of fleets of aircraft that cost tens of millions each
to buy and operate and which fly intercontinental routes.
However, some airlines consist of one or two small aircraft flying in-country with a small
team of pilots and administration staff running the show.
For example, the Austrian based People’s Viennaline once had a fleet of just two aircraft.
One of its routes used to be one of the world's shortest, with a flight lasting just eight
minutes.
They flew passengers from St. Gallen-Altenrhein Airport, Switzerland to Friedrichshafen Airport,
Germany, thus saving them from a 77 km road trip around Lake Constance.
However, the route has since been withdrawn and the airline has rebranded itself as simply
'People's'.
This is an example of how airlines have to quickly adapt to changes in demand if they
are to prosper.
Airlines are launched for a variety of reasons; someone spots a gap in the market, an obvious
need, or just has a new idea.
If you've read Sir Richard Branson's autobiography you may be aware that Virgin Atlantic Airlines
exists today due to an idea he had in 1984.
Branson was in Puerto Rico airport about to fly to the British Virgin Islands when the
flight was cancelled.
So he hired an aircraft and wrote "Virgin Airlines" on a blackboard, then invited other
delayed passengers to pay $39 for a seat to BVI.
It wasn't long before he had sold every seat and the idea for Virgin Atlantic Airlines
was born.
But this one rare example of a good idea developed by someone who had the capital and drive to
see it through.
Market Analysis & Research.
There is little point in starting any business without first doing the market research. To
do so is a gamble with the odds stacked against you.
Comprehensive market analysis will reveal areas that it might be possible to exploit
- put simply, a gap in the market.
Your market analysis should reveal the anticipated growth in passengers and freight in any given
region.
From this you can determine what type of aircraft would be most suitable to meet the expected
demand.
For example, most of the routes from one capital city to another are full and competition is
fierce.
However, there may be opportunities from regional airports feeding the major airports, or routes
from one regional airport to another.
Regions and Environments.
Having worked out where there is likely to be demand your next task is to research the
regulations, standards, and procedures for any airline in that region.
Remember that these regulations will apply whether you fly one aircraft or one hundred.
The aviation industry is highly regulated so being aware of all those that can affect
you is essential.
As well as local and regional regulations you'll also need to know your own rights,
particularly those pertaining to the nine Freedoms of the Air.
These were formulated and agreed at the Chicago Convention in 1944.
The Business Plan.
Now you've identified a demand that needs to be fulfilled and you're familiar with the
operating regulations in the country in question.
Next comes your business plan. This is another vital task that will take a considerable amount
of time and effort to complete.
However, it's essential not only so that you have a plan to implement but so that you have
a realistic plan that you can share with potential investors.
You may have seen the BBC TV program called Dragon's Den in which entrepreneurs pitch
their ideas to a panel of business gurus with the hope that they will be persuaded to invest
in the business and mentor the business owners.
These attempts frequently fail because the business owners have not done their homework
and cannot recall key figures from the business plan.
Your airline's business plan should cover everything; from the identified opportunities
to brand development, from risks and obstacles to operational procedures.
It should conclude with an investment figure i.e. how much money you’ll need to get this
airline off the ground (pun intended).
Sourcing Your Aircraft.
With your business plan complete and the capital in the bank it's time to start implementing
the plan.
The first task is to acquire your aircraft. This is the bit you've been looking forward
to!
There are several options for financing the aircraft and which you choose will depend
largely on your business plan and capital.
Most new airlines lease their aircraft since there is a glut, with many in storage.
Companies that own these aircraft have to pay for the storage and insurance so they
are keen to lease them to operators.
There are several types of lease, wetlease, operational, or financial.
If you have enough investment you can buy your aircraft outright.
Get Certified.
In order to operate as a airline you'll need the appropriate licence from the aviation
authority in the country in which you intend to operate.
For example, in the UK you'll need to obtain an Air Operators Certificate from the CAA.
This process may take several months and you cannot operate legally without it.
So it's a process that needs to be built into your project plan.
You’ll also need a 3 letter code from the ICAO which will be used to identify your aircraft
to air traffic controllers.
Getting Up & Running.
So now your aircraft are on the apron, you have recruited pilots to fly them, and all
the other staff required to run your business.
You have routes to fly and either passengers or cargo to carry.
For the first few months you'll eat into your capital as you pay all your overheads and
running costs, including salaries for pilots and all other staff.
Your business plan should have given you some idea of how much money you'll need to reach
each milestone.
But no matter how good your forecasts, in aviation the chances are that you'll need
more and more.
Aircraft don't earn any money if they're on the ground.
However, now that you're operating you can start invoicing for freight or you'll start
earning from carrying passengers.
Your next task is to keep your aircraft flying with full cargo holds or occupied seats.
If it works then you can start considering expansion but don't move too fast.
Your investors will be expecting a return on their investment and it would be a shame
to ruin your business's prospects by expanding too rapidly.
You'll still have a lot of running costs including maintenance and spares for aircraft, salaries,
fees, taxes, and so on.
Conclusion.
Given the difficulties in starting an airline it's surprising just how many are launched
each year.
In 2017 for example, 79 new airlines were launched globally but 25 went out of business.
Aviation is a constantly evolving industry and there will be more gaps in the market
to exploit by those watching and ready to move into action when they appear. A new small
airline due to launch in 2019 is Firnas Airways. The idea and development of this airline was
the subject of a Channel 4 documentary in 2018. It plans to operate a charter service
based at Oxford (Kidlington) Airport using a BAE Jetstream 31, which has 19 seats. So
2019 may be the year we see a new airline operating out of the UK.
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