There are over 150 airlines planned for operations but yet to start trading. Europe is the most popular destination for budding Aviation leaders, however the past decade has seen an increase in start-ups from all over the world.
In 2023, around 19 new airlines were launched globally. These included several notable entrants such as Uzbekistan’s Centrum Air, Malta’s Valletta Airlines, Nigeria’s NG Eagle, and the luxury boutique airline BeOnd from the Maldives. Despite the economic challenges in the aviation industry, new ventures continued to emerge, driven by both regional and international opportunities.
In 2023, a total of 19 airlines shut down globally due to financial hardships, market pressures, and operational issues. Key closures included major players like Viva Air Colombia, Go First, and Air Moldova, alongside smaller carriers such as Niceair and Fly Gangwon. These shutdowns were influenced by factors like rising fuel costs, competition, and regulatory challenges. Several other regional airlines, like Equair and Aeromar, also ceased operations
VHR looked at the reasons behind the success and failures of start-up airlines.
4 Factors Determining the Success of a New Airline
1. Lack of Resources
Flyr, a Norwegian low-cost airline, launched in June 2021 with ambitions to become a significant player in the budget travel market. However, by early 2023, Flyr ceased operations after less than two years. Despite initial optimism, the airline struggled with liquidity issues, exacerbated by the pandemic's lingering effects on travel demand and rising operational costs. Flyr's small fleet and limited route network made it particularly vulnerable to fluctuations in passenger numbers.
In January 2023, the company filed for bankruptcy following unsuccessful attempts to secure further funding, and all flights were canceled, marking the end of its short-lived operations.
2. Internal Operations
Infamous start-up ValuJet lasted only three years. Notorious for its dangerous cost-cutting measures, the carrier prioritised finances over worker and passenger safety, which ultimately led to its downfall. Staff received scant and infrequent training, contract workforces were improperly managed, internal communication was inconsistent and the company’s entire fleet of aircraft was purchased already used from other carriers
In addition to poor operations, the airline neglected to listen to customers, market experts and industry authorities. In 1995, the military refused ValuJet's bid to fly military personnel over safety worries, and the FAA wanted the airline to be grounded. However, the fatal crash of Flight 592, which exploded in Florida due to faulty oxygen generators that were scheduled to be removed, saw the grounding of all flights in 1996.
3. Planning
A sustainable business plan is key to launching any new venture, but planning is particularly vital to building a successful airline. Boeing lists the following considerations for potential CEOs before take off:
· Market analysis
· Competitor analysis
· Branding and positioning
· Operational strategy
· Management team experience and fit
· Exploration of risks and obstacles
· Financial projections
· Implementation strategy.
In April 2016, start-up FlyKiss met its end before it had even begun operations. The carrier was designed to connect cities with limited travel links, however a confused proposition of non-stop and one-stop services, longer flight times due to indirect routes, and a niche of a few small city destinations in England and France served only by 49-seater jets did not receive enough demand to launch. FlyKiss had sold several tickets well in advance, leaving multiple passengers in the lurch when it was cancelled.
4. Differentiation
Launching in June 2018, a new Canadian low-cost airline from parent company WestJet, was voted the world’s best start-up airline by CAPA Centre of Aviation. Swoop won the title for creating a brand within a brand by successfully introducing the ultra-low-cost model in Canada on a large scale.
Swoop’s business model is based on ‘ultra-customisation’ to make travel more affordable and accessible to individuals and families of all income levels. Passengers only pay for their seat, with complete control over adding in-flight food, Wi-Fi or check-in baggage for an additional cost if desired. Swoop’s personalisation model empowers customers to travel the way they want, every time they fly. Fuel efficiency is favourable to consumers looking to minimise their carbon footprint, and further helps cut costs and deliver customer savings.
To thrive in competitive environments, start-ups must find a true gap in the market and capitalise on it with unique services that add value to the customer experience. Differentiation of brand and business model saw Swoop transport circa 1million passengers during its first year of service.
Explore the Aviation Challenges & Market Report for 2020.
