14 ms·
Starting an Airline
- heatherph 13y agoThis seems like a potentially clever way to grow their customer base.
- eterm 13y agoThis isn't Boeing starting an airline, it's advice to others starting airlines.
- chrisseaton 13y ago...who would buy airplanes, increasing their customer base.
- mpeg 13y agoI know what you mean, but, just to nitpick, most small airlines will lease the planes
- jacquesm 13y agoFrom people who bought the airplanes...
- jessaustin 13y agoYes, of course, the theory is clear. I still can't help suspecting that this whole "Startup" organization is a boondoggle so somebody's brother-in-law can be a VP in charge of something harmless. At Boeing's scale, purchases (or leases) of new (or at least new enough to affect demand for new) planes by investors who can't hire their own experienced airline executives will necessarily be a drop in the bucket.
- notahacker 13y agoExperienced airline executives often use outside consultants for specific areas of expertise, and national governments have a fondness for starting airlines and purchasing multiple new aircraft. It's probably the only marketing division of Boeing that turns a profit :)
- bulte-rs 13y agoEven an airplane that is leased is built on specs by the "end-user"; analogue to a house which owned by the bank (by mortgage).
- stephenc_c_ 13y agoYes, and in giving this advice they are forming a positive association between the entrepreneur and Boeing.
- prawn 13y agoSurprised that I had to read so far down the comments to find someone who saw how this best applied to HN. Then surprised again that a few of the respondents still missed it when it was explained. It's someone with a product for sale to a category of businesses, helping people start more of those businesses. Similar approach could be taken by more entrepreneurs, especially those looking for good blog content.
- squidi 13y agoThe airline industry has the lowest return on invested capital of any industry: http://centreforaviation.com/images/stories/2013/jul/05/ROIC4.PNG http://centreforaviation.com/images/stories/2013/jul/05/ROIC... This analysis from McKinsey is worth a read: http://www.iata.org/whatwedo/Documents/economics/Profitability-and-the-air-transport-value-chain-final.pdf http://www.iata.org/whatwedo/Documents/economics/Profitabili...
- leokun 13y agoIt's very strange given how necessary air travel is. It still surprises me how need and margins are inversely related (luxury goods have high margins, commodities low), but it makes sense. It's the price. The price of travel is so high for most consumers that they're going to optimize on price at the sacrifice of everything else. The cost of flying and operating an airline is so expensive that airlines also optimize on costs and prices. Virgin stands out as trying to change, that, but otherwise for everything economy class it's a race to the bottom. Looking at prices you'd think we value things we need lower than things we want.
- iand 13y agoGoods in high demand attract new suppliers who compete on price and so margins fall.
- jusben1369 13y agoActually it's commoditization. There is very little differentiation in airline flying - particularly domestic in the US. So they get stuck competing on price. Imagine you're flying from NY or BOS to SFO. You have two choices. Pay around $500 per ticket with some price shopping. Have a horrible experience of cattle herding, no food choices, small seats. Or spend $2500 or something insane for slightly larger seats. Weird how there isn't an option for $500, $800, $1500 just like there's a Corolla, Camry, Avalon or Lexus. Now, the airlines will tell you that's because people just care about price and only price and that's why soon you'll need to drop quarters in to use the bathroom. But that's just opportunity to me. There are about 800 places you can improve the flying experience from the minute you hit the curb to bundled in Uber to and from to wide seats (vs just extra legroom) to food to entertainment to dedicated standing areas to "kids focused flights" (parents embrace business travelers avoid) to baggage rules........
- acomjean 13y agoWill there be airplane purchases involved? at least they give a handy price list. http://www.boeing.com/assets/pdf/commercial/startup/pdf/business/prices.pdf http://www.boeing.com/assets/pdf/commercial/startup/pdf/busi... These planes aren't cheap. More than a AWS, digital ocean and a linnode combined!
- mhewett 13y agoThey don't sell the 757 any more?
- Thieum22 13y agoProduction ended in 2004 -> http://en.wikipedia.org/wiki/Boeing_757 http://en.wikipedia.org/wiki/Boeing_757
- ihsw 13y ago757s were discontinued. http://www.flightglobal.com/news/articles/sales-drought-takes-757s-scalp-172670/ http://www.flightglobal.com/news/articles/sales-drought-take...
- Ocerge 13y agoNope. The 757 is really inefficient (RB211 engines are serious overkill). It's unfortunate, because as an aviation enthusiast, I love nothing more than rocketing off the runway on a 757.
- patmcguire 13y agoMan, if Boeing can price out starting an airline, there's no excuse for making somebody call for price on a SaaS product.
- tnuc 13y agoThe link shows purchase price, I like it. What is fails to show is fuel usage, operating costs, maintenance and all the other things that will bankrupt you if you aren't careful.
- bulte-rs 13y ago
- wookiefeet 13y agoFinally, my plans for Hyperloop Air will become a reality
- ewood 13y agoThis is very cool. I'm sure I'm not the only one who has fantasized about starting an airline and doing it 'right' after an annoying flight. Probably not going to happen but at least I can read about it now.
- blackaspen 13y agoAnything that encourages people to pursue different airline models intrigues me. Air travel is still the fastest for anything over 500 miles.
- pkorzeniewski 13y agoIt blows my mind how people start such big businesses. You must build an airport, hire stuff, buy planes, meet many legal requirements and so on, all costing tens of millions of dollars, and on top of that, it must be profitable. This gives some insight, but still it's terryfing. I feel so small.
- MarkTanamil 13y agoYou don't need to build an airport, you rent space in existing airports. Renting in the main city airports is very expensive but the ones further out aren't so bad.
- cjrp 13y agoSome actually pay the airline to service them, as is the case with some of the Ryanair routes.
- TheCondor 13y agoThose are the exceptions to the rule. How many planes and routes do you need to even merit consideration at a major airport? To organically grow, you'd need to find desirable and under served routes between smallish airports, build a loyal following, then maybe you take a risk, borrow money and attempt to move mainstream. Not impossible but it seems like you'd need just tons of money. Is there much room for value add and innovation? The most obvious area I can think of off the top of my head would be an airline that did all their own security and skipped tsa but I don't know if that's allowed and I think the work would be akin to building your own airports.
- deleted 13y ago[deleted]
- rokhayakebe 13y agoI always thought I was very ambitious, granted "my ambitions far exceeded my talents." When I stood there under the Eiffel Tower, I felt like I never had a grand thought in my life. To think that massive undertaking started in someone's head is just humbling. So I feel you. I feel so small.
- bencollier49 13y agoAs a study in starting an airline, Richard Branson's biography is well worth a read.
- ben1040 13y agoI love that quote of his, where he says the easiest way to become a millionaire is to start out a billionaire and go into the airline business.
- ghaff 13y agoAnother good one is An American saga: Juan Trippe and his Pan Am empire. A decent chunk of the book is essentially the other side of the story that is portrayed in the Aviator (i.e. Trippe trying to get monopoly status for Pan Am's international routes).
- sxcurry 13y agoAgreed, especially the part where he describes how he called up Boeing and asked how to buy a 747. Great book.
- benholmen 13y agoWhich biography is that? I see a few on Amazon.
- bencollier49 13y ago"Losing My Virginity".
- winslow 13y agoHah that is an clever, witty, and awesome title.
- johnmurch 13y agoAlthough going big is interesting, I am surprised no one has brought up http://www.surfair.com http://www.surfair.com when thinking about starting an airlines. They seem to be doing well and although i do not have a membership (live on the east cost) I think it would be interesting to do the same thing from DC to NYC to Boston as I would be down for that!
- peckrob 13y agoThere's a saying in the airline industry that goes something like this: "What's the fastest way to become a millionaire in the airline industry? Start with a billion dollars." I don't work in the airlines, but I'm a private pilot with lots of friends and family who do work or have worked in the airlines (and in the aviation industry in general). Expenses are high and often unpredictable, and profits are low. A lot of airlines operate on incredibly thin margins, where only one problem could push them into bankruptcy. Back in 2008, Frontier Airlines had to go into bankruptcy (and was ultimately acquired by Republic) due to a dispute with its credit card processor. http://en.wikipedia.org/wiki/Frontier_Airlines#Bankruptcy_and_acquisition_by_Republic http://en.wikipedia.org/wiki/Frontier_Airlines#Bankruptcy_an... Competition is also fierce and is almost entirely price-based. While there have been a few attempts at competing on other metrics (there were several attempts to start business-class only airlines in the late 90s and early 2000s) have almost universally failed. In fact, the only one I can think of currently is OpenSkies, and it is backed by a major airline (British Airways). It's also (as you would expect) a very complex regulatory and legal environment. Simply getting off the ground can take years of work. I have idly thought about a small airline that would connect a handful of smaller towns across the Southeast that lack affordable or convenient air service to larger airports, where they could interconnect with the majors. But when I even begin to look at the numbers, despite what an exciting idea I think it could be, I know there is no way it would be successful.
- selectodude 13y ago>In fact, the only one I can think of currently is OpenSkies, and it is backed by a major airline (British Airways). OpenSkies is three-class service now. And pretty much just boils down to the name of the BA route between NY and Paris-Orly without the need to connect via LHR. Pretty bizarre, if you ask me.
- ubernostrum 13y agoWhile there have been a few attempts at competing on other metrics (there were several attempts to start business-class only airlines in the late 90s and early 2000s) There are still business-catered offerings, they just tend to be a division of a parent (legacy) carrier. US Airways and Delta's "shuttle" offerings between major business destinations on the east coast stand out as an example. A couple of the large airlines do still have all-business-class flights, too (BA's oddball little transatlantic A318, to take an example; Singapore's "longest flight in the world", which is about to be discontinued, is another one, using specially configured A340s). It's just that there doesn't seem to be enough demand to sustain an entire airline dedicated to the idea.
- cfesta9 13y agoUh, I'm just gonna go find a cash machine.
- loceng 13y agoSmart. Facilitating the process of creating new customers for you.
- Aloha 13y agoI've thought about starting an airline - an all inclusive fare type deal - also no carry on bags.
- ghaff 13y agoGood luck with that :-) Frequent travelers, i.e. the people who airlines massively depend on for their profits, hate to check luggage.
- pbj 13y agoThere was a fascinating article on HN a few months ago (don't have the link handy at the moment) about how most major airlines make less than 25 cents profit on each ticket sold. It's pretty mind blowing when you consider the entire industry operates on such margins.
- lamby 13y ago"Make something people want", they said.
- Goosey 13y agoOne of my favorite childhood games was Aerobiz [1]. Probably not an accurate simulation of starting an airline, but that is what this submission made me think of. [1] http://en.wikipedia.org/wiki/Aerobiz http://en.wikipedia.org/wiki/Aerobiz
- devd 13y agoAnother good game - Simutrans - http://www.simutrans.com/en/ http://www.simutrans.com/en/
- Shenglong 13y agoHere's an investment banker joke I've been hearing oddly often recently: "How do you get a million dollars?" -> "Invest a billion dollars in the airline industry". On a more serious note: there's a lot of talk on this page about the finance and logistics of starting a company like this - but I think the human factor is also worth mentioning. I fly a moderate amount, and whenever I have an hour or so to spare on a layover, I try to find interesting people to talk at the bar. While I've had varying levels of success, last layover at O'Hare, I spoke to a pilot who had been with a major airline for about a decade. Having seen "Catch Me If You Can" and surmising that the situation must have changed, I asked him about his job. That was the most dismal response I've received from that question. We talked for about half an hour about how terribly pilots are treated, and how (maybe a bit of an exaggeration) a good number of beginner pilots for airlines are on food stamps because they're paid so poorly. I asked about benefits, and his response was, "just about every benefit you can think of is basically unusable." I asked him why he did it, and he told me that flying was like a drug. Pilots are responsible for lives, and I'd feel a lot safer if my pilot was paid enough to survive. Yet, with dwindling margins and a thriftier consumer base, it's going to take a lot to disrupt this industry. In reality, I don't see anything major happening without some drastic innovation that cuts associated costs significantly in order to build up that margin.
- xonev 13y agoI have a friend who's a beginner pilot for a regional airline (American Eagle). He doesn't fly more than 80 hours a month and he only gets paid for the hours he's actually flying, but he has to be on call a lot (sometimes on call in the airport). And yeah, he makes like $20k a year, I think. He was so upset with the airlines that he quit (also trying to save his marriage). But he loves flying so much that he went back to the same airline, and had to start over again at the bottom of the seniority ladder. He says that flying is so much fun that he just thinks it's great that he gets paid to do it instead of having to pay to do it, ha. Still, though, he's enrolled in classes again so that he won't have to pay off his student loans because he can't afford the payments.
- seanmcdirmid 13y ago
- cbr 13y agoThe problem with starting an airline is that the pilot's union has the leverage to capture all profits: http://philip.greenspun.com/flying/unions-and-airlines http://philip.greenspun.com/flying/unions-and-airlines The key issue is that you don't just need to be certified to fly a 737, you need to be certified to fly a 737 for a specific airline. This makes strikes extremely powerful because you can't easily hire replacements.
- jonnathanson 13y agoThere's been a big boom in small, regional jet airlines over the last few decades (Low Cost Carriers, or LCCs, sometimes known as Low Cost Regional Carriers). A lot of companies saw what Southwest and JetBlue were doing and figured they could do the same on a smaller scale: control costs by flying limited routes and serving smaller markets, where they could outcompete the bigger carriers on price [1]. Then, if things went well, maybe expand from there. It's an incredibly crowded field now, and even many of the LCCs themselves collapsed. [1] It seems a little counterintuitive, but in the airline business, there is almost a reverse economies-of-scale effect. This is because routes can't be flown on demand, but must be scheduled, and so you're maintaining a fixed supply while dealing with variable demand. You don't have a lot of fantastic levers to pull to deal with fluctuations in real time, because you can't redirect inventory (planes, crews, etc.) on demand, and canceling flights causes chain reactions across hubs and spokes. This is why a lot of the big carriers have been cutting flights and routes like crazy in recent years. Faced with undersupplying or oversupplying the market -- and faced with all their other enormous costs -- they'd rather bet on undersupply. Passengers these days aren't incredibly loyal to any given airline, and they're very price conscious. They won't give you credit for having a bigger network; all they care about is getting from A to B right now, and finding the best price in so doing. So having a bigger network can often be a liability.
- ballard 13y agoVirgin started with one plane. 1. Uno. In fact, starting with a fraction of a plane / plane-on-demand would be even less risk.
- rivo 13y agoMy co-founder and I have a combined 20+ years of experience in the airline software industry. When we set out to start our own business, it was clear that we were not going to sell to airlines. Too many legacy systems, too much historically grown cruft, needless complexity, too many individual requirements but no money to pay for it. Plus they're distributed all over the world so selling to them is very costly. It's a shame because we would have had a big head start in terms of domain knowledge.