Which 2014 airline start-ups in the Americas will survive?
Avaido Partners Managing Director Shakeel Adam was interviewed by Runway Girls' Maryann Simson. Here are some of the thoughts Shakeel shared. Click here for Maryann's full article.
In our experience, most airline start-ups fail for the simple reason that people underestimate the complexity of this business. Very few start-up projects actually come from a proper understanding of a gap in the market.
American West Jets and Airline 4.0 plan to laungh from Las Vegas McCarran airport. In our view, there is already so much capacity in and out of Las Vegas, so the question becomes: who are you trying to serve, inbound or outbound?
American West Jets has announced plands to serve South America, Central America and Australia as well as setting up a second base in Florida to serve West Africa. We think they will do too much too quickly and get in trouble.
Airline 4.0 has announced plans to become the fourth largest airline in the US. The airline has not yet announced destinations or aircraft choice, but has signaled it will position itself as a “premier global lifestyle airline.”
There is not much we can say about this project because there isn’t enough to go on. Our concern would be that they will probably make the common error of growing too big, too fast.
Simson writes "In South America, mergers have left viable gaps in the market. AeroLap Paraguay Airlines will base operations at Asuncion Airport and already has a few Boeing 767-300ERs in storage at Kansas City International in anticipation of launch. Though first flight has been pushed back several months, it does appear to be a pretty sure thing. The airline-to-be is looking at a partnership with Air Europa to open up routes to Madrid." In our view, there is definitely a gap in in the southeast corner of South America following recent consolidation in the region as well as multiple failures. As LATAM and Avianca have grown, smaller airlines in Paraguay and Uruguay have shut down. Most South American airlines fly to Madrid, but we think Aerolap have a good chance at success if they keep their overhead costs low. They also need regional network feed, either by themselves or with partners, and they will have a fight on their hands with LATAM, Avianca and Aerolineas Argentinas.