It is a tough gig starting up an airline in the best of times. Airlines are murderously expensive, highly competitive, and sensitive to economic downturns. But running an airline has an allure that running a factory making paper napkins doesn’t. That’s one reason why airline entrepreneurs pop up like mushrooms. But would you be game enough to startup an airline in 2020? Possibly not, but there are a few factors that could persuade you.
The cheapest money you’ll ever find
Money is cheap these days. It has never been so affordable. That makes it an excellent time to borrow, in theory at least. Lenders might be looking for investment opportunities, but they are not in the business of throwing money away. Your proposed airline might look good on paper, but investors and lenders have traditionally been wary of the airline industry.
In an era when capital intensive airlines are mostly losing money hand over fist, you’d need to be a highly persuasive type to convince your average lender to pump money into a startup airline these days. But never say never.
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Boeing will take your call
There are some arguments you could take to the negotiating table. It’s not just money that’s cheap; there are quite a few surplus aircraft on the market right now. Grounded airlines are busy handing back leased aircraft. You could fire off an email to AerCap or Air Lease Corporation. If you’d prefer new aircraft, orders at both Airbus and Boeing are down and expected to stay down for some time. They’d probably also welcome your phone call.
Boeing even has a dedicated unit to helping ‘intrepid entrepreneurs’ startup airlines. They have quite a handy section on their website for people with Willie Walsh dreams. Of course, it’s really all about you buying a few shiny new Boeings.
You can cherry-pick the best routes
While this sounds all a bit pie in the sky, a few factors are working in the intrepid entrepreneur’s favor. With so many airlines grounded and airports underutilized, a startup airline could begin on a high note by cherry-picking the traditionally juiciest routes. Instead of having to focus on skinny commuter routes in the midwest, there’s room to spare on usually lucrative east coast routes.
How established players like United or Delta respond is another issue. They’d probably ignore you for a while, too busy trying to stem their own financial bleed.
Of course, this is easier said than done. While the financial pickings might be leaner running your startup out of Jefferson City Memorial Airport than say, JFK, Jefferson City is probably also less of a headache.
Plenty of skilled staff around, but still …
Naturally, you’ll need staff. Fortunately, it’s an employer’s market right now in the airline industry. Once CARES Act funding winds up, there will be tens of thousands of well trained and experienced ex-airline employees on the market. You’ll be able to pick up cabin crew, ground crew, and pilots in no time.
Undoubtedly, your employees, their unions, the lenders, and the world in general, will expect you to stay in the air for more than a week or two. Airlines can make money, some even do, but it’s a tough business. In times like these, it’s almost impossible to wring a profit from airlines, no matter how many green ticks there are in the business plan.
Despite the availability of employees, cheap planes, and inexpensive financing, you’d have to be a brave person with a lot of money to burn to startup an airline in 2020. Way beyond the intrepid entrepreneur stage. Somewhere out in the realm of fearless or crazy brave.