It’s time to plan your new airline – the operations, destinations, and fleet.
So you have decided to start an airline. This is a big decision to take on a project that could quickly take over your life. But how do you actually go about it, and where do you begin? The process involved in starting an airline can be rewarding, enjoyable, and hopefully profitable too. But it can also be frustrating, fraught with challenges, and the next setback will always remain just around the next corner. But if you are determined to do this, let’s take a closer look at how you might go about achieving your goal.
The four key stages of planning
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 the ruthless airline 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 airline business plan will act as the shop window for your airline that you will present to potential investors; a document that can be peered throughout 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 will be reliant on others to provide additional funding and investment to get your airline off the ground. We shall explore the whole issue of budget and finance in greater depth in the next part of this series.
The first stage of planning – What?
The first of the critical issues to address when you consider starting an airline is ‘what‘? What do you want to achieve exactly, bearing in mind that this may not be 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 an exact, detailed concept of what you want to do with your airline. What are your goals, and what do you need to achieve them.
What are your aims and ambitions? Do you want to start small and get bigger, or do you simply want to remain small and niche? Remember, many airlines survive because they stay small. Or are your aspirations to become a feeder carrier possibly, or a regional operator. Do you want to scale things up to become a short, medium, or even long-haul operator, flying the big jets to faraway destinations?
Is your airline going to be a scheduled carrier, a charter operator, or a combination of both? You might want to avoid the complications of fare-paying passengers altogether (often referred to in the airline world as ‘self-loading freight’) and specialize in the carriage of cargo only.
In principle, these are all feasible ventures, and the industry has successful examples in each sector. Honing 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.
The second stage of planning – Where?
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. You need to decide whether you wish to focus on being 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, so a quick initiation into that airport’s slot allocation process will be necessary. You may not be allocated a workable set of slots for your airline, so be prepared for some tough negotiating.
Recent startup airlines which appear to be making early progress with network planning are Breeze and Avelo in the US, selecting point-to-point routes to develop their business. PLAY in Iceland is aiming to build a viable hub-and-spoke network using Keflavik Airport (its home base) as its hub facility, offering decent levels of connectivity for passengers traveling over Iceland between the United States and Europe
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 by other carriers, such as Bonza, the excitable new startup in Australia?
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 starting operations shortly. This new carrier (revived from the ashes of another carrier of the same name, which failed at the start of the pandemic) has limited its initial operation to just two small UK bases – 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.
James Pearson, Simple Flying’s very own in-house route and network planning expert, provides the following helpful advice for anyone considering a potential new airline’s route structure.
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 work or are expected to work. If they did, an airline wouldn’t be experimenting enough.
The third stage of planning – How?
When considering the question of ‘how’, there are various points to consider. Will you select just a single aircraft type for your operation, or does your plan call for several types? Without delving too deeply into economic theory relating to the principle of economies of scale, startup airlines have often seen success when focussing on a single type of aircraft – Southwest, Ryanair, or Wizz, all being good examples.
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, and lots of it.
Getting this balancing act 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 all too eager to assist you in this process if there might be an aircraft sale or two for them!
The fourth stage of planning – Why?
Starting an airline is not easy; otherwise, everyone would be doing it, right? Going into the startup process thinking your airline will be flying before you know it would be foolhardy and misguided. You should give a great deal of consideration to why you wish to do 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 will need a good degree of passion, enthusiasm, resilience, and ambition to make this all come together. Starting an airline for fun is not a ‘thing’ in itself. You may have good intentions, grand designs, and enormous ambitions for your airline. Still, without established motives and deeply embedded aspirations, you may as well stop planning before you even get started.
And to address the ‘elephant in the room’ when it comes to airline startups, don’t expect to run a profitable business for several years at the very least. The startup costs involved in getting a new startup airline flying 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.
As mentioned earlier in this article, If you are starting an airline simply to get rich quickly, you seriously need to rethink your whole ethos.
Failing to plan is planning to fail
Without comprehensive and credible plans in place, you are setting yourself up for a rapid 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 and profoundly personal and life-changing journey will either attract investors to you or conversely confine your airline plans firmly to the drawing board.
Head in the air but feet on the ground
So, in summing up, be very clear about what you are aiming to achieve. Have big ideas and even bigger goals, but wherever your airline planning takes you, keeping your feet firmly on the ground will serve you well. Because remaining grounded throughout the planning process at all times, will hopefully ensure that your airline startup does not!
Source: Simple Flying