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Airline Start-up

 

So you are planning to start a new airline?

Boeing 767

Before we start let's take a look at why new airlines fail. There are obviously many reasons why an airline fails but the two main reasons, and perhaps the ones that you have the greatest influence over, at least at the start, are your airline management team and capitalisation. These two elements are essential ingredients to get right if your airline is to succeed, if either item is lacking your are destined to failure!

So now we've got over the gloom & doom, what do you need to get going on this exciting and rewarding adventure?

  1. an idea / dream / vision / niche market
  2. solid aviation business plan
  3. experienced management team
  4. more than adequate funding
  5. certification
  6. aircraft selection
  7. suppliers

The Idea

If you are reading this page we can assume you already have this. It will no doubt change and develop over time but it's your starting point and the reason you have made this undertaking.

Business Plan

Unless you have unlimited resources, this document will be the most important element of your start-up. No business plan or a poorly written one will result in no focus, no investment and no airline!

A well written and presented business plan will attract interest from potential investors, members of your management team and suppliers (Aircraft Lessors, CAA/FAA, Airports etc.).

Management Team

Depending on your current experience and situation, you will need to gather an experienced management team, some you will bring on board straight away, others will join along the way.

As you are reading this we will assume your airline management experience is limited, therefore, you will need to bring someone in who will have the necessary experience to take your airline from an idea to take-off. Also, any potential investor may well want to impose their own personnel on you in exchange for their cash!

Start-up Funding

Unless you have unlimited funds you will need to find investors, which is a challenging undertaking. This is particularly true in today's market, where investors view the airline industry as a long-term high risk venture.

Once your business plan is ready, you have a only a small window of opportunity to raise the initial investment, especially if your target market is seasonal and operations need to start by a certain date. Otherwise, it could be another season before you start and by then another airline may have filled your market!

Where to find the money? This can be raised through different sources, such as investment houses, banks, government & local grants and individuals (wealthy ones of course!). An Initial Public Offering (IPO) should not be considered by a start-up airline. Try to keep the number of investors to a small group. To find out more about financing an Airline Start-up, aircraft purchase or business plan development please review our Airline Financing page.

A.O.C. Certification

Aviation certification - Air Operator's Certificate (AOC) - primarily exists to ensure that the methods and procedures undertaken by all operators of commercial aircraft meet minimum safety standards, as defined by each government Aviation Authority (CAA or FAA etc.).

You will need to contact your countries regulatory body to see what is required for your airline. Most countries require that a minimum safety, financial and ownership rules are met and adhered to. Certification can take between 9-18 months to achieve, from initial application to receiving certification.

Aircraft Selection

A major step in your aircraft selection process is identifying the needs of your intended routes (airfield characteristics, ETOPS etc.). Issues such as capacity (passenger & cargo), utilisation and range are all factors in your selection. In addition, engine type may also play a role in your airframe selection.

Another issues to take into consideration is regulatory, such as noise, airframe age and let's face it... certain types are just not welcome anymore!

Suppliers

Another important group that you may need to target your business plan towards are your suppliers... aircraft lessors and airport authorities. For other services you may need a line of credit, such as fuel suppliers, FBO stations, maintenance facilities etc.