How do startup airlines decide on fleet?

[briansommers 74]

So a new airline starts up. How do they decide lets say B1900D vs Q400 or old 732's vs 737ng, etc

 

money? pax demand?

 

would it make sense to use a 752?

 

Thanks.

[Woozie 732]

well, i was never part of an airline startup, so no expert here, but i assume the decision will be based on the following factors:

 

- PAX or Cargo ops

- charter or scheduled service

- Domestic, international short haul or long haul/intercontinental flights

- experience of their maintenance partner

- fuel consumption and costs / spare part availability

- capability of the target airports

- wet/dry lease feasibility or possible deal with an aircraft manufacturer

 

Dont think it makes sense to go for a 752 as they are no longer being produced.  

[jason99vmi 157]

I think its mainly based on the last bullet from Lars.   If you're a startup you mostly likely need to start generating revenue and can only do this by finding aircraft up for lease and low cost.  And once you start generating revenue you can put in orders for newer aircraft. 

 

Can look at current ones like WOW and Eastern. 

[briansommers 74]

OK, thanks.

[fluffyflops 1,857]

You look at if you can get a flight school in new Zealand or Oxford to provide you with a hearty and steady supply of 21 year old kids that have just done a ski season in Meribel. normally called Harriet, Charlie and Edward with middle class or better still wealthy parents that have remortgaged the house to pay for a license and then get them to work for peanuts for 3 years until they can go to BA. Then realising you can't crew all the flights and loose 200 million on cancellations

 

You then buy a load of 320s and away you go... Sound familiar??

 

 

 

Or I forget in the case of a few African airlines you get foreign aid from the UK and USA and buy a completely pointless fleet. Ie Iraqi and Eritrean.

[Chock 17,769]

<p>If you are really interested in knowing more about that kind of thing, the magazine Airliner World covers a lot of that stuff, with a comprehensive round up off what airline is buying what, and who is doing what deal with whom: <a data-ipb="nomediaparse" href="http://www.airlinerworld.com/">http://www.airlinerworld.com/</a></p>

It's an interesting read if you like siming airliners, as it provides a good insight into operations, not least because, beyond the business news side of it all, it invariably has interesting articles about aircraft, airport and airline operations. For example, the most recent issue has a very in depth article on how British-based regional carrier FlyBe, managed to go from multi-million pound losses since it was floated in 2010, to several million pounds profit last year, thanks to a very clearly identified niche to aim for (basically operating low cost, not always full economical airliners on short regional routes which don't seem attractive to major airlines, but offering code-sharing connection deals with those majors to ensure their passengers could get good connecting flights to the regions).

 

When FlyBe were losing money, much of that was down to the fact that their Embraer jets were too expensive to run on short low density flights, whereas their Bombardier Q400s were ideal, so they came up with a clever scheme where they swapped their E-Jets with another airline which had Q400s that didn't suit their needs, thus both airlines were happy and didn't have to wait to order new aircraft or go for some expensive leases. Thus there is still room for some clever business management in the airliner world.

 

What that tells you, which of course you'd guessed, is that choosing the right aircraft is critical. In another recent article, Airliner World reported on how Air Baltic became the launch customer for the brand new Bombardier CS 300 (in December 2016) because they could not make a decent profit on their routes with the B737s they had. Additionally, their new CS 300s allow them to make inroads into other profitable European charter flights because the CS 300 has an incredibly economical long range.

 

So when it comes to starting up an airline, it can mean a substantial initial outlay unless you go about it in a sensible fashion. Way back when I used to be a writer for the Guardian, I recall interviewing Stelios Haji-Ioannou, who is of course the guy who started EasyJet. Back then, when he was literally just starting his airline up, he told me that in spite of him being esentially a very rich Greek Cypriot businessman who came from a family of shipping magnates, when he was starting out with EasyJet, it would begin with two wet-leased B737-200s (a wet lease is where you rent a plane, typically for 12 months, from another operator, who provides the plane, crew, insurance etc, and you just pay for the hours it is operated). After 12 months, EasyJet was in a position to know that their routes were viable, so they then 'bought' some new aircraft, however, these were still technically not the property of EasyJet until the following year because until then, EasyJet had not been granted an Air Operator's Licence. So there's a lot of stuff going on behind what you see taxying up to the gate.

 

What all that tells you, is that starting an airline is not simply a case of buying some old DC-3 and 'having a crack at it'. More typically, you would follow a known business model, in the case of Ryannair and EasyJet, they basically copied the strategy of Southwest Airlines. In doing that sort of thing, you essentially 'prove' you can make it work with a wet lease, then having done that, you can go on to either buy, or lease more airliners on favourable terms, because, having proved your model works, a lessor or aircraft manufacturer has a guarantee of sorts that you are going to be good for the money.

 

There are all kinds of complex deals where airline aircraft are concerned; a large proportion of the airliners sold are in fact bought by leasing companies, who then provide them to the airlines. That's even true of aircraft parts too, for example, many smaller Russian and Eastern European airlines do own their aircraft, but the engines on their aircraft are often owned by Aeroflot and leased to that airline, and the same is true in many western countries too.

 

Then of course there is 'code sharing'. Lots of small start up airlines will ostensibly look like bigger carriers (in that their aeroplanes will be wearing the livery of a large airline), for example, you might see a 'British Airways' Short 360 flying to the remote Scottish Islands, but in reality, it will be a flight operated on behalf of British Airways by a smaller company.

 

The point of all this is that when it comes to choosing an aircraft for a start up airline, it comes down to picking the type which is best suited to the small amount of routes you are intending to operate, and from there you might look at what other routes that type might feasibly also manage if you expand, or you might choose to go with something better suited to that new route you are planning, which is why leasing is so prevalent, because it is easier to switch aircraft types when you are leasing, which allows you to react to the market better.

 

Beyond all that, poilitics plays a part too. For example, you will note that many Arabic airlines do not buy Boeings, because Boeing is of course an American company, and that would not be popular 'back home'. Emirates and other Arabian airlines such as Etihad, could probably have used B-747-400s or 800s, but instead they bought A380s and A340s, and it was mainly political pressures which dictated that. Although interestingly, there have been two deals brokered recently with Iran which will see airlines in that country getting both B737s and A320s, so you might find that Donald Trump's bellicose stand on Iran may have to take a back seat when congressmen for the places where the Boeing factories start lobbying him to back off a bit in order to protect foreign trade, because they will be aware that EADS have their foot in that door too. And that's a big market, since there are a lot of old bangers such as B707s, 727s, Antonovs etc still flying around Iran, and they will need replacing soon, and if they get replaced, maybe a thawing of relations will see other US manufacturers being able to sell them replacements for the F-14s they have, which the US sold them when the Shah was still in power. Donald is used to telling people what to do at his own companies, but he is going to learn pretty quickly that even the President has to bow to such pressures, and he's not going to like it, but the airliner trade is big business, so he might have to lump it.

[klamal 282]

 

 

Beyond all that, poilitics plays a part too. for example, you will note that many Arabic airlines do not buy Boeings, because Boeing is of course an American company. Emirates and othe Arabian airlines such as Etihad, could probably have used B-747-400s or 800s, but instead they bought A380s and A340s

Emirates and Etihad both have bought Boeing 777's and lots of them(especially Emirates).

[Chock 17,769]

Yes that is true more recently, but I'm talking in general terms about how politics can dictate such things in order to answer the initial poster's question, which is why they initially bought a lot of EADS products, it was politics which dictated that, and it was in fact also politics which dictated them buying those Boeings, although I won't go into a long boring session about what was behind that one, although if you look at why Iranian airlines have recently ordered both A320s and 737s too, it provides a clue, and it relates to the crisis in Libya a couple of years back if you need another hint. :smile: