Why Start-up Airlines are not Successful
Where are the start-up airlines? Start up airlines battle the
challenges of rising fuel prices, lack of airport gate and competition
from the major carriers.
With the big carriers cutting routes and increasing airfares, this should be the ideal time for start up airlines to set cut rate fares and serve smaller airports that are eager for more flights as in the case of Southwest Airlines in 1971 and Jetblue in 2000.
It is not so today as rising fuel prices has eaten deep in the airlines' profit and also the smaller airports have low passenger traffic thus leading to cutting routes by the major carriers on grounds that they are unprofitable.
In this reality airlines must fly full planes to make a profit. How would a start up airline set cut rate fares in the face of expensive fuel and unprofitable airports? They would have to contend with the major domestic carriers who have taken over almost all the airport gates. Investors are now scared and wary of lending to an airline project.
According to an aviation consultant, Micheal Boyd, setting up an airline is a very capital intensive venture..he concluded by saying that there is no market for new start-ups.
Many start up airlines have failed even before starting, a start up airline in Nigeria, Air Midwest failed to commence operations in 2010 due to some financial crises, so also Afrijet failed less than a year after commencing operations because of its inability to meet its leasing obligations. Even our domestic airlines are also struggling due to cut throat price of jet fuel and under capitalisation as well as mismanagement on the part of the management also other failed start ups outside Nigeria are Skybus Airlines, ATA Airways, MAX Air etc.
Air Nigeria has also joined the club of failed airlines in Nigeria thus making the air travel much more expensive. that is due to the exit of Dana Air as a result of the June 3rd crash and First Nation due to lack of aircraf
Even the most successful start up, Virgin America that commenced operations in 2007 has failed to make a profit 5 years after.
Several airlines are still struggling to post a profit years after their start up. Kingfisher in India, commenced operations in 2005 and has been posting losses since then. It is currently at the verge of collapse.
With the rate at which some major carriers are filling for Brankrupcy protection, Chapter 11 and some ceasing operations due to the realities on ground. How would a start up carrier succed?
With the big carriers cutting routes and increasing airfares, this should be the ideal time for start up airlines to set cut rate fares and serve smaller airports that are eager for more flights as in the case of Southwest Airlines in 1971 and Jetblue in 2000.
It is not so today as rising fuel prices has eaten deep in the airlines' profit and also the smaller airports have low passenger traffic thus leading to cutting routes by the major carriers on grounds that they are unprofitable.
In this reality airlines must fly full planes to make a profit. How would a start up airline set cut rate fares in the face of expensive fuel and unprofitable airports? They would have to contend with the major domestic carriers who have taken over almost all the airport gates. Investors are now scared and wary of lending to an airline project.
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| Virgin America is a US start up that has failed to make a profit |
According to an aviation consultant, Micheal Boyd, setting up an airline is a very capital intensive venture..he concluded by saying that there is no market for new start-ups.
Many start up airlines have failed even before starting, a start up airline in Nigeria, Air Midwest failed to commence operations in 2010 due to some financial crises, so also Afrijet failed less than a year after commencing operations because of its inability to meet its leasing obligations. Even our domestic airlines are also struggling due to cut throat price of jet fuel and under capitalisation as well as mismanagement on the part of the management also other failed start ups outside Nigeria are Skybus Airlines, ATA Airways, MAX Air etc.
 |
| Air Nigeria folded up, due to massive debt. It started in 2004 and has failed to make a profit |
Air Nigeria has also joined the club of failed airlines in Nigeria thus making the air travel much more expensive. that is due to the exit of Dana Air as a result of the June 3rd crash and First Nation due to lack of aircraf
Even the most successful start up, Virgin America that commenced operations in 2007 has failed to make a profit 5 years after.
Several airlines are still struggling to post a profit years after their start up. Kingfisher in India, commenced operations in 2005 and has been posting losses since then. It is currently at the verge of collapse.
With the rate at which some major carriers are filling for Brankrupcy protection, Chapter 11 and some ceasing operations due to the realities on ground. How would a start up carrier succed?
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