8 ms·

There'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 bi

by peckrob 13y ago

There'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 ago
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) 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.
- peckrob 13y ago
  > It's just that there doesn't seem to be enough demand to sustain an entire airline dedicated to the idea. Yeah, this is kind of what I meant. The only people capable of doing this are the majors (and then only on a small handful of mostly-Transatlantic routes). Every attempt so far at building a whole airline around the idea of not competing on price has met with failure. And, as a sidenote, I really want to take that BA JFK-LCY flight sometime, if for no other reason than it uses the old Concorde flight numbers.
  - cjrp 13y ago
    Interesting thought, could a newcomer have operated the LCY-JFK service with the same level of success? Or does it need BA's brand behind it to even get off the ground. P.S. Happy to see fellow aviation geeks here on HN
    - justinsb 13y ago
      It's not just the BA brand though for business flights; it's the "enterprise deals" with the companies that are paying for the seat, the businessperson's preference for earning points they can redeem for a nice holiday, and the onward network for connections. I'm not sure in the case of LCY<->JFK the connection network is really a factor, but I think the other two things sunk MaxJet, Eos and Silverjet. (It probably didn't help that they all launched around the same time as well!)
      - ubernostrum 13y ago
        That flight really is all about O&D between two huge financial centers. But on the off chance someone actually wants to connect on this side of the pond, I guess they use the fact that JFK is an AA hub (which is in oneworld along with BA, as well as in the immunized TATL joint venture with them).
  - gaius 13y ago
    I did that a couple of times back in the day. The plane would take off with just enough fuel to get to Ireland, where you would do US immigration while it refuelled, then on to New York, and straight off the plane without any queuing. I think the airline was EOS or Silverjet or something.
netcan 13y ago
Hard, risky. Not impossible though. https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1380052800000&chddm=1623041&chls=IntervalBasedLine&q=NASDAQ:RYAAY&ntsp=0&ei=yK5BUuCpO4GDwAPsnwE https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...
gnufied 13y ago
A classic example I have is, KingFisher Airlines (http://en.wikipedia.org/wiki/Kingfisher_Airlines http://en.wikipedia.org/wiki/Kingfisher_Airlines). As an outsider the promoter not only lost the airlines but had to part with large chunk of shares from parent UB group as well just to keep it afloat for awhile. Airlines indeed seem like a tough business to enter in.
sharkweek 13y ago
I would assume these margins get even thinner and customer service even worse in the future as most people really do just go to a referral site, grab the cheapest flight and call it a day (I mean honestly, where I'm currently at in life, I don't need comfort on a flight, I just need to get from point a to point b as cheaply as possible and I assume this applies to 80% of people flying). I was just on a Frontier flight a few months ago where nothing but water was free and they were being EXTREMELY strict about carry on size, which produced probably a dozen or so more $25 bag checking fees from people boarding. I have to expect these fees will only continue to grow in order to make up for lost profits on the original sale
- arethuza 13y ago
  One solution to the carry on size restrictions: wearable luggage!! http://www.skyscanner.net/news/best-wearable-luggage-jackets-reviewed-beat-airline-baggage-charges http://www.skyscanner.net/news/best-wearable-luggage-jackets...
  - Groxx 13y ago
    That bagket video is... wow.
- sliverstorm 13y ago
  I'm not looking forward to it. Flying has already gotten devilishly uncomfortable (my knees run into the seat in front of me) and while I would pay for a little bit more comfort, I can't figure out whether it's just impossible to find such airlines/seats, or if they just don't exist on the trips I make.
  - joonix 13y ago
    Pretty much every airline offers exit row seats for something like $25 more or an "Economy Plus" that's a step up from economy but far from first class.
  - deleted 13y ago
    [deleted]
Aqua_Geek 13y ago
> […] I know there is no way it would be successful. Here’s an interesting article on a new airline that seems to be doing pretty well: http://www.bbc.co.uk/news/business-23959197 http://www.bbc.co.uk/news/business-23959197. Granted, it’s a very different kind of airline that Flohr is creating.
- notahacker 13y ago
  Making a profit in business aviation like VistaJet is trying to do is potentially even harder than making a profit in the airline industry though...
jskonhovd 13y ago
We definitely need something like that in the Southeast. Our infrastructure is so awful. My dream would be high speed rail between all the major cities and SEC colleges, and Panama City.

by peckrob 13y ago

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 ago

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) 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.

peckrob 13y ago
> It's just that there doesn't seem to be enough demand to sustain an entire airline dedicated to the idea. Yeah, this is kind of what I meant. The only people capable of doing this are the majors (and then only on a small handful of mostly-Transatlantic routes). Every attempt so far at building a whole airline around the idea of not competing on price has met with failure. And, as a sidenote, I really want to take that BA JFK-LCY flight sometime, if for no other reason than it uses the old Concorde flight numbers.
- cjrp 13y ago
  Interesting thought, could a newcomer have operated the LCY-JFK service with the same level of success? Or does it need BA's brand behind it to even get off the ground. P.S. Happy to see fellow aviation geeks here on HN
  - justinsb 13y ago
    It's not just the BA brand though for business flights; it's the "enterprise deals" with the companies that are paying for the seat, the businessperson's preference for earning points they can redeem for a nice holiday, and the onward network for connections. I'm not sure in the case of LCY<->JFK the connection network is really a factor, but I think the other two things sunk MaxJet, Eos and Silverjet. (It probably didn't help that they all launched around the same time as well!)
    - ubernostrum 13y ago
      That flight really is all about O&D between two huge financial centers. But on the off chance someone actually wants to connect on this side of the pond, I guess they use the fact that JFK is an AA hub (which is in oneworld along with BA, as well as in the immunized TATL joint venture with them).
- gaius 13y ago
  I did that a couple of times back in the day. The plane would take off with just enough fuel to get to Ireland, where you would do US immigration while it refuelled, then on to New York, and straight off the plane without any queuing. I think the airline was EOS or Silverjet or something.

netcan 13y ago

Hard, risky. Not impossible though. https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1380052800000&chddm=1623041&chls=IntervalBasedLine&q=NASDAQ:RYAAY&ntsp=0&ei=yK5BUuCpO4GDwAPsnwE https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...

gnufied 13y ago

A classic example I have is, KingFisher Airlines (http://en.wikipedia.org/wiki/Kingfisher_Airlines http://en.wikipedia.org/wiki/Kingfisher_Airlines). As an outsider the promoter not only lost the airlines but had to part with large chunk of shares from parent UB group as well just to keep it afloat for awhile. Airlines indeed seem like a tough business to enter in.

sharkweek 13y ago

I would assume these margins get even thinner and customer service even worse in the future as most people really do just go to a referral site, grab the cheapest flight and call it a day (I mean honestly, where I'm currently at in life, I don't need comfort on a flight, I just need to get from point a to point b as cheaply as possible and I assume this applies to 80% of people flying). I was just on a Frontier flight a few months ago where nothing but water was free and they were being EXTREMELY strict about carry on size, which produced probably a dozen or so more $25 bag checking fees from people boarding. I have to expect these fees will only continue to grow in order to make up for lost profits on the original sale

arethuza 13y ago
One solution to the carry on size restrictions: wearable luggage!! http://www.skyscanner.net/news/best-wearable-luggage-jackets-reviewed-beat-airline-baggage-charges http://www.skyscanner.net/news/best-wearable-luggage-jackets...
- Groxx 13y ago
  That bagket video is... wow.
sliverstorm 13y ago
I'm not looking forward to it. Flying has already gotten devilishly uncomfortable (my knees run into the seat in front of me) and while I would pay for a little bit more comfort, I can't figure out whether it's just impossible to find such airlines/seats, or if they just don't exist on the trips I make.
- joonix 13y ago
  Pretty much every airline offers exit row seats for something like $25 more or an "Economy Plus" that's a step up from economy but far from first class.
- deleted 13y ago
  [deleted]

Aqua_Geek 13y ago

> […] I know there is no way it would be successful. Here’s an interesting article on a new airline that seems to be doing pretty well: http://www.bbc.co.uk/news/business-23959197 http://www.bbc.co.uk/news/business-23959197. Granted, it’s a very different kind of airline that Flohr is creating.

notahacker 13y ago
Making a profit in business aviation like VistaJet is trying to do is potentially even harder than making a profit in the airline industry though...

jskonhovd 13y ago

We definitely need something like that in the Southeast. Our infrastructure is so awful. My dream would be high speed rail between all the major cities and SEC colleges, and Panama City.