Startup Airlines: Why they’re going bananas…

July 6, 2021

While the airline industry tries to find a way out of their debts and confront a challenging comeback brought on by the disastrous Pandemic, they are still faced with competition from start-up carriers.

Historically, not many venture into airline business. But there are those with courage and ambition who believe in their vision for an airline company that can break through these barriers and become successful.

In spite of all these challenges, brave entrepreneurs from around the world still see opportunities for success within this industry despite what may seem like insurmountable difficulties before them.

Case in point:

There have been 42 startups in the last year and a half. There are 36 MORE slated to take to the skies.

All in spite of Covid.

Why? And maybe more

Barrier of Entry for New Airlines are the Lowest in Years?

Steven Udvar–Házy, aviation legend and executive chairman of Air Lease Corporation says access to the basic 'ingredients' to start up a carrier make it easy to get in the game:

"Today we have relatively easy access to capital. There's venture money that's available", said the 50-year aviation industry veteran, adding, "There's good young used aircraft at reasonable prices, and there's plenty of pilots and flight attendants that are looking for work. That's a temptation to start a new airline."

Staying in the game is another matter...

There's a Surplus of Planes...Owners and Lessors Want These Planes Back in Service

Think about it: Tons of planes sit in storage and in dry-weather boneyards. New jets haven't been delivered. The owners of these aircraft lose money with them sitting in the desert.

They need customers. They need them now. And they seem ready to make deals...

Mr Udvar–Házy might have added there are also lots of lessors keen to place surplus existing orders somewhere. According to CAPA's databases, 42 start-up airlines launched operations between Jan-2020 and 12-Jun-2021.

At least 36 more are actively planning to launch within a timeframe of 12 to 24 months, of which 13 are based in Europe, eight in Latin America, eight in Asia Pacific, four in Africa, and three in North America.

It's One Thing to Start an Airline...But Who Becomes Profitable, and Who Goes Under?

The airline industry doesn't exactly have a stellar track record when it comes to carriers actually succeeding. In fact, it's typically the opposite.

Udvar–Házy looked back on the U.S. airline deregulation in the late 1970's. As a result, there were some 120 new start-up airlines.

Of those...

3 remain...

"Now, maybe things won't be that bad", he said, "but there's a great temptation now to start a new airline, with a young workforce that's not unionised, at a much lower labour cost, and relatively young used aircraft like A320s, 737-800s, in some cases Embraers or A220s".

The temptation is easy.

The profit is not.

[Source and Quotes:]

From Around the Tarmac & Lobby...

The NTSB is searching the ocean floor to find the wreckage (and black boxes) of the Transair Cargo Flight 810 737 that crashed off the coast of Oahu last week.

Delta Air Lines and Virgin Atlantic will return to London Heathrow's Terminal 3 starting July 15th as air travel continues to grow towards normal levels.

Airline travel credits for services such as Expedia continue to confuse and anger travelers as the policies seemingly change by the minute.

Amazon Prime Air and others are searching desert boneyards (such as Pinal Air Park) looking for cargo jets to purchase to meet their demands.

United Airlines has suspended planned service in to Santa Maria Airport (SMX) citing Covid recovery as the reason.

Ibom Air has pressed 2 new Airbus A220s in to service with plans to bring more A220s online in the 4th quarter of 2021.

Frontier Airlines has made its inaugural flight to The Bahamas with plans to expand as it sees big growth in the market.

Sun Country Airlines will add 2 new routes from Minneapolis (MSP) to Asheville Regional Airport and Palm Beach International Airport as it rides growing momentum.