Airline start-ups in The Americas – who’s got a chance?

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Start-up enterprises in commercial aviation are in no short supply. Even if they can manage to secure millions in capital, only about one in 100 of them will ever make it to first flight, which can mean plenty of wasted time and energy on the part of interiors and IFEC stakeholders that are eager to get in on the ground floor of a good thing.

As managing director at Aviado Partners Consulting, Shakeel Adam has guided many would-be airlines through the months and sometimes years of strategy development, aircraft selection, network planning and financial analysis that comprise the numerous travails of a start-up endeavor.“Most of start-ups fail for the simple reason that people underestimate the complexity of this business,” he notes. “Very few start-up projects actually come from a proper understanding of a gap in the market.”

If we define start-up as an airline that is still in the process of formation (having not yet reached the point of first flight), then industry data-mine CH-Aviation reports that roughly 20 airlines around the world have announced an intent to launch since the beginning of the year. RGN put this list in front of Adam, asking him to share his thoughts on a few projects.

Two up-starts in the US have recently named Las Vegas McCarran International as their future home – American West Jets and Airline 4.0. American West Jets in March announced it would begin operations out of McCarran beginning in May 2014, though the airline has yet to start selling tickets for planned destinations like Brisbane, Pago Pago and American Samoa. The airline has acquired two aged L-1011 TriStar 500s (specifically for routes to Central America) and also plans to operate an MD-83 and a 747-400. L-1011s are still operated in parts of Asia and Africa, but they haven’t been a regular fixture in US operations for many years.

American West Jets also hopes to establish a second base at Orlando Sanford, from which it will serve airports in Jamaica and Aruba, plus destinations in West Africa.

“There is already so much capacity in and out of Vegas, so the question becomes: who are you trying to serve, inbound or outbound? Based on the airline’s announcements, one sees South America, Central America and Australia – then gets hit with “we’re going to set up a second base to serve West Africa”. It’s all over the place. I think they will do too much too quickly and get in trouble,” Adam ventures.

Airline 4.0., meanwhile, is claiming that it will soon be the fourth largest airline in the US – though its web site reveals less than a KGB agent. The company has not yet announced its intended destinations or aircraft selection, but has signaled it will position itself as a “premier global lifestyle airline.”

“There is not much I can say about this project because there isn’t enough to go on,” says Adam. “My concern would be that they will probably make the common error of growing too big, too fast.”

In South America, mergers have left viable gaps in the market. AeroLap Paraguay Airlines will base operations at Asuncion Airport and already has a few Boeing 767-300ERs in storage at Kansas City International in anticipation of launch. Though first flight has been pushed back several months, it does appear to be a pretty sure thing. The airline-to-be is looking at a partnership with Air Europa to open up routes to Madrid.

“There is definitely a gap in in the southeast corner of South America following recent consolidation in the region as well as multiple failures,” says Adam. “As LATAM and Avianca have gotten bigger, several smaller airlines in Asuncion and Montevideo have gone out of business. Everybody is offering South America to Madrid, but I think Aerolap have a good chance at success if they can keep their overhead costs really low. They also need regional network feed, either by themselves or with partners, and they will have a fight on their hands with LATAM, Avianca and Aerolineas Argentinas.”

(Photo above by Diacritica (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons)

 

1 Comment

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