Cheap money and parked aircraft prompt avalanche of airline start-ups

April 1st 2022

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The jury is out on how many of the dozens of airlines planned for launch will survive. Read More » That is the view of veteran industry identity, Air Lease Corporation’s executive chairman Steven Udvar-Házy. He is right.

It is estimated close to 130 hopefuls worldwide are preparing or are prepared to take to the skies for the first time. That investors should see opportunity in the pandemic crisis is expected. The planet is awash with aviation expertise, from unemployed pilots and engineers to other specialists in the sector either working reduced hours or being furloughed as a result of COVID-19.

Suddenly, all these leased or retired aircraft have become available, ripe for a good deal. In the Asia-Pacific, planned carriers have jumped on the bandwagon, including Greater Bay Airlines in Hong Kong and Bonza in Australia. In 2022, they may attract pilots, maintenance engineers and cabin crew as well as aircraft at a good price, but an airline start-up comes laden with risk.

Firstly, most of the region’s new airlines have had to postpone launch dates, sometimes several times, because of the emergence in the last 18 months of new COVID-19 strains and travel restrictions imposed by some Asian governments.

Extra months without flying and no paying passengers add up to costs that can never be clawed back, a big drain on cash. Secondly, when new airlines finally can fly they will be entering markets mostly on the verge of recovery. They will be competing with established carriers that have spent the last two years fighting for their very lives. They will be doing everything they possibly can to fight off new competition and capture the passengers they need to recover from the pandemic.

Also, we don’t know about the depth of management expertise at some of the start-ups. Do the C-Suites have airline experience, an extremely complex business? Do their carriers have sufficient funds to operate if another variant of the virus emerges; a situation that is certainly not out of the question. So, all in all, the answer to the question of how many recent new carriers will survive in the long-term is easy to answer. Only a few.

TOM BALLANTYNE
Associate editor and chief correspondent
Orient Aviation Media Group