airlinecapital

[deleted by moderator -- solicitations to invest violate TOS of FlyerTalk]

[This message has been edited by richard (edited Jan 03, 2004).]

daysleeper

If you are a venture capitalist and desperate, post on Flyertalk.

richard

A solicitation for investment is not an acceptable post for FlyerTalk.

--richard, moderator

richard

Turning to a discussion of the subject, I might invest in such an airline, speaking theoretically as an excercise.

I think the future of air travel belongs to low fare airlines. Cherry pick profitable routes and you could create something along the Southwest Airlines model.

As usual in the airline business, barriers to entry are in general low, so your profit margins will always be under fire.

stut

Well... Charter airlines have been selling low-cost seats on long-haul flights for some time now from Europe. These are now turning their hand to the 'low-cost' business by selling direct. Sometimes on charter flights, sometimes by setting up their own scheduled airlines.

For example, at http://www.jmc.com/, you can buy charter seats from the UK to Cuba, the Dominican Republic, Cuba and Mexico.

http://www.britanniaairways.com/ fly from the UK to Gambia, Barbados, Jamaica, Bahamas, Florida...

http://www.corsair.fr/ fly from France to Madagascar, Kenya and the French DOM/TOM.

There are many more...

csb

This is going to sound horribly elitist, but that won't make it wrong.

I am guessing that a high percentage of Southwest customers would never consider a vacation to Europe, much less Asia or Africa. They are quite content with Orlando, Branson and Vegas.

Don't believe me? Most figures put American passport ownership at between 10 and 20 percent. Or in other words, between 80% and 90% of Americans never bother to get a passport during their lifetimes.

http://www.gyford.com/phil/writing/2...ny_america.php

magexpect

And this is probably the reason why the majority of the population remains ignorant and backward...

A little fresh air would not hurt...

Braindrain

I thought it was from all the in-breeding.

(Watched way too much Jerry Springer, for entertainment of course!)

pynchonesque

And you know this because... it's an easy stereotype?

Er,

1. You are confusing dynamic outcomes (expensive travel leads to low passport ownership) with exogenous givens (it's not set in stone that few people would have passports).

2. What the statistic actually means is 80-90% of Americans do not have passports at a given moment.

As for investing in airlines, it has, save for the exceedingly rare exception, been a terrible idea. In fact, I can think of few worse industries to invest in.

[edited for ubb quoting]

[This message has been edited by pynchonesque (edited Jan 04, 2004).]

Factotum

Count me in with the horribly elitist bunch. A few months ago I took a Southwest flight because, quite simply, none of my usual airlines covered the route satisfactorily. Consistent with the few other Southwest flights I've taken, the clientele was... distinctly different. Now, don't get me wrong - plenty of accomplished travelers fly, even prefer, Southwest - but judging from the conversations I overheard most of the passengers were just average folks looking for cheap seats for their once-a-year flight to Florida, or Vegas, or Scottsdale, Arizona. Note that since the passport-to-citizen ratio in the USA is well below 50%, average folks do not, by definition, fly transoceanic routes.

I would not invest at this time in a new carrier whose specialty is low fares on long-haul international flights. Quite honestly, with a few exceptions (N. America to JNB, DXB, or SYD) the "regular" airlines are doing that job quite well. Some, such as Aer Lingus, are already positioning themselves as international LCCs. (Icelandair has been doing this for years.) Furthermore, there just isn't room for fares to come down much more on many routes (please explain how you will carry people from JFK-LHR for less than $99 each way and still make money); an international low-fare airline wouldn't be that much of a revolution.

Conclusion: The market is already adequately served in the USA. The concept may be more viable in Canada, or on flights between Europe and the Middle East.

[This message has been edited by Factotum (edited Jan 04, 2004).]

csb

Without a profit-generating J or F cabin no less--if we're talking about a truly LCC on the Southwest model.

airlinecapital

Listen guys, a few points:

1. This would be based out of Sydney, Australia

2. It would be two class.

3. B747-400s are really cheap at the moment.

4. All well funded airline start-ups have done well.

5. Start-ups have a massive cost advantage over the incumbents if structured correctly.

WHBM

Anyone from the industry can give you quick reasons why low cost and long haul don't mix - which is why there aren't any.

1. Long haul relies on a much higher percentage of connecting traffic than short haul - low costs don't do connecting traffic.

2. Major long haul airlines have already done a much better job on low costs tickets at the "back of the bus" than these same airlines do on shorter runs.

3. Single-purpose long haul airlines (whether high fare or low fare) have been tried and consistently failed. Even examples like Freddie Laker's Skytrain operation ended up with a business class.

4. Much less ability to improve aircraft productivity by quicker turnarounds etc, as long haul productivity has always been consistently higher.

BigLar

This actually struck me recently as a viable proposition:

1. 747's are available at reasonable prices.

2. Niagara Falls Airport has one of the longest runways in the world, and is almost unused.

3. Stick to one route - NF-LGW, say.

4. The customer draw area within 100 miles includes Buffalo, Toronto, Rochester, Erie, maybe Cleveland. They will come - I recall flying BUF-EWR on People Express,and a third of the plane was Canadians.

5. Make sure the price differential is enough to draw them. Like Y for $600-800 (walk-up), J for $1800, F for $3000. Appropriate discount for advance purchase - keep the fare structure simple.

6. Sell tix internet only.

7. Flight crew are available - contract out maintenance.

Back-of-the-envelope calculationsindicate it would make money. I don't have the few millions needed to get started.

dcmike

What was the story with Peoples Express? I know they did well for awhile with transatlantic flights, but eventually went out of business. I can't find the history on the web.