How to Start an Airline in 7 Easy Steps!

It’s often said that you’re either a genius or completely mad if you want to start an airline. So for those geniuses or whack jobs out there, how exactly do you start your own airline?

But it’s not just about starting your own airline, it’s about running it well and making sure to always stay one step ahead of the competition. One wrong step and you can easily join the long list of airlines that have failed for one reason or another.

7. Have an Interest in Aviation

Though obvious and often overlooked, any prospective airline entrepreneur should have an interest in aviation, just as a prospective tech entrepreneur should have for the tech industry, or a media entrepreneur for the media industry.

Most prospective airline entrepreneurs have subscriptions to a few aviation magazines, and regularly read aviation news sites. This is so they can both maintain their interest in the industry, as well as keep an eye on the latest trends.

Contrary to how prospective entrepreneurs in other industries may work in the industry before setting up on their own, the most successful airline entrepreneurs have never worked in an airline before they set up their own.

Just look at someone like Richard Branson and Virgin, David Neeleman and his dozens of airlines (starting with Morris Air, including others like TAP Air Portugal, Breeze and JetBlue) or Freddie Laker and Laker Airways.

Though it may seem counter-productive, this is done because many airlines have clauses in their contracts stating senior management (who have the knowledge of how to run an airline and a strong reputation) can’t leave to start their own airline, effectively killing that idea in the crib.

Plus, it can take nearly 20 years to rise that high, if not longer.

Despite this, some prospective airline entrepreneurs have experience as pilots, with them usually being former military aviators or just amateur pilots. Southwest’s Rollin King is perhaps the best example of an amateur pilot-turned-airline entrepreneur.

Whilst it’s not a prerequisite, some aspiring airline entrepreneurs do get experience beforehand, mainly by running air charter operations that lay the groundwork for the airline yet to come…

6. Pick a Niche

Just as with starting any other business, to give your airline the best chances of succeeding, you should make sure it fits into a niche you believe will allow it to take off (no pun intended).

In the airline industry, there are dozens of different types of airline. Your first job will be to pick one:

• Low cost carrier (LCC) – a “no-frills” airline focused on having the lowest possible ticket price, so they undercut the more established competition
• Regional – an airline that focus on short-haul flights of no more than 4,000 km (2,500 mi; 2,150 nmi)
• National – an airline that typically focuses on medium-haul, transcontinental routes of no more than 7,000 km (4,350 mi; 3,775 nmi)
• International – an airline with several billion dollars in revenue performing all types of flights
• Cargo – an airline that transports freight and other goods rather than passengers

As you choose your niche, you will want to begin considering where you will be based, both in terms of your corporate headquarters and your main hub.

For many startup airlines, they choose to save money by combining their hub and corporate headquarters into one. Their ground crews and aircraft are in hangars just off the runway, whilst the backroom staff are in an office on the airport’s premises.

Most startup airlines do this with the intention of moving out once the airline is operational and profitable, usually moving to a nearby major city with better business infrastructure.

However, your hub will almost entirely be based on which niche you choose:

• Low-cost carriers tend to be based out of smaller airports in large cities, as to minimize their costs, savings which they then pass on to their customers.
• Regional carriers, as the name would suggest, tend to be based out of smaller regional airports, usually in a secondary city
• National airlines, are often based out of five major airports in its home country, though the airport they choose is typically number four or five
• International airlines, as a general rule, are based out of the country/state’s main airport as this is where the majority of international flights originate or terminate at
• Cargo airlines, on the other hand, can be based at almost any airport with a cargo terminal, including regional, city, municipal, national and international airports, mostly due to which cargo aircraft they fly the most

5. Find a Wealthy Backer

Starting an airline is not cheap. Airport fees, marketing and staff costs pale in comparison to the cost of acquiring your aircraft, be them as leases or outright.

And though major aircraft manufacturers like Boeing and Airbus have startup airline units that aim to give new players brand new aircraft at reduced costs, it could still cost you upwards of $100 million to get yourself started. If not more.

Unless you’re a Saudi prince, a Russian oligarch or the son of Elon Musk, chances are that you don’t have that kind of money. Thankfully, this doesn’t end your aspirations of becoming an airline entrepreneur, and there’s actually a few ways you can go about doing this…

The first (and most common) is to approach an investor/investments company that specializes in the aviation industry, and offer a percentage of the company in exchange for the necessary funds.

Naturally, due to the nature of their business, these investors receive proposals for dozens of startup airlines in need of funding, almost all of which end up in the bin. To get their money, you’ll need to really tell them how your airline will be different.

And more importantly, what will happen to them if they don’t back you.

The other main way is to be backed by a wealthy investor/group of investors who know the founders. If you were fortunate enough to be born into a wealthy family, consider asking them to put up the money for your venture.

Chances are, however, that you weren’t born into a wealthy family.

Perhaps you went to an Ivy League school (or the equivalent for another country) and call upon wealthy classmates to buy a minor share in your venture, just as Juan Trippe did when forming Pan Am.

Or maybe you used to work with high net worth individuals (HNWIs) in industries like banking or Wall Street and have a ream of clients who might be willing to fund your airline based on their personal relationship with you.

4. Get Regulated

Due to the safety concerns involved, the aviation industry as a whole is tightly regulated to ensure that corners aren’t cut at the expense of safety. As such, before you can even consider making your maiden flight, you’ll need to be regulated in some way or another.

To be regulated in the US, you will need to apply for a Part 121 Air Carrier Certification from the FAA, meanwhile in the UK, you’ll need to apply for an Operating License from the CAA.

Other countries and blocs, such as Canada, Australia and the EU all require prospective airlines to be regulated before receiving their air operator’s certificate (AOC) and the go-ahead to begin operations.

And though each country/bloc’s process is different, you’ll need to show that you and the team around you fit the following requirements:

• Sufficient personnel with the required experience
• Airworthy aircraft, suitable for the operations you’ll carry out
• Acceptable systems for the training of crew and the operation of the aircraft (Operations Manual)
• A quality system to ensure that all applicable regulations are followed
• Key staff in place (to oversee certain areas such as maintenance)
• Have carriers Liability Insurance (to cover the injury or death of any passengers)
• Proof that the operator has sufficient finances to fund the operation
• Proof the operator has sufficient ground infrastructure, or arrangements for the supply of sufficient infrastructure, to support its operations into the ports requested

Some regulators, such as the EU’s EASA, will also require you to reside in the country your airline is based out of.

In most cases, this is the longest step to accomplish as regulators are both thorough and inefficient, meaning you could spend up to two years before you receive and kind of greenlight.

If you intend to fly internationally, most countries you’ll fly to will regulate you in some way to conform to their own standards.

3. Hire Your Staff

Before you send your application off to the regulators, you’ll probably need to hire at least a few different employees, such as: Chief Pilot, Director of Operations and Director of Maintenance.

Additionally, most regulators like to see other roles filled such as a Safety Compliance Officer, Head of Technology and an IT Technician (to build/integrate your airline’s IT infrastructure), though these may not be necessary at the time.

The majority of your hiring, however, will come after you are regulated, including most of your pilots, cabin crew and technicians.

As you are starting from scratch, you may want to hire a mixture of relatively experienced and inexperienced staff to get the best “deal” so to speak.

The experienced staff could come from a variety of established airlines (Southwest, Delta, BA, Qantas, Lufthansa etc.) whilst your inexperienced staff come either straight out of school (or the military for pilots) or other defunct startup airlines.

You could then combine the best of both worlds from all the established – such as Southwest’s corporate culture, BA’s ticketing system and Lufthansa’s fastidiousness – and use the experienced employees to teach the inexperienced ones on the job.

When you are making your hires for your experienced employees, however, be careful to consider their employment history and their references, as if they aren’t good at their job, the people under them won’t be either.

Remember: poor pilots lead to crashes, poor cabin crew lead to angry customers and poor ground crew lead to poor safety standards.

2. Market Your Airline

As a startup airline, your main obstacles will be getting your name out there as literally nobody will have heard of you, and thus want to fly on you. No matter how good your ticket prices are.

Whilst you won’t be able to outspend the likes of Delta, British Airways or Qantas on marketing – they have entire departments and spend millions of dollars on advertising agencies to make sure you know their name – you can market your airline slightly differently.

Most startup airlines are strapped for cash, so their marketing campaign in the early is media-baiting.

Some startup airlines do this by hiring an airline veteran as their CEO, or by bringing on a well-known executive/backer as aviation media outlets (and to a lesser extent, general media outlets) love to report on these kind of events.

Whilst it won’t necessarily encourage people to book flights with you, the press coverage will certainly increase your brand recognition, if only by a small amount.

The second way startup airlines get press coverage is by having a CEO who constantly makes bizarre, and often controversial, statements, be it on Twitter or in a room full of journalists.

Perhaps the best airline CEO at doing this would be Ryanair’s Michael O’Leary who has become “Ryanair’s most effective marketing campaign” according to an industry analyst as he is constantly in the news for one reason or another.

And whether you love him or hate him, people do know who Ryanair is and who its CEO is. Can you say the same for Spirit?…

As your airline begins to grow, you can begin to spend money on actual advertising, such as on the TV or online, to compliment your media-baiting. Sponsored articles in aviation magazines will also make your name recognizable to industry professionals.

In keeping with the modern era, a well-designed website that allows people to book online is essential, as is an app with the same functionalities. A well-oiled social media page is a must-have too!

1. Start!

So, you’ve found a wealthy backer, picked your niche, got regulated, hired your staff and started marketing yourself. Congratulations. You have succeeded where so many others fail. Now all that’s needed is for you to actually commence operations. 

Yet this as straightforward as it may seem.

For starters, you’ll need to set your schedule and publish it ahead of time so potential customers have ample time to purchase tickets and make sure your aircraft are as full as possible.

Next, you’ll need to ensure that your aircraft and staff are in the right places at the right time. This may mean that you’ll have to fly positioning flights (moving aircraft from one airport to another with no passengers) at a loss.

Assuming your marketing has worked, and people have bought tickets on your flights, you can actually commence operations and become a bona fide airline people fly on!

Once you’ve commenced operations, you need to never forget your founding principles (whatever they may be) but also continue to innovate, as the airline industry is a very cut-throat one. Airlines who fail to adapt will almost certainly die out.

Many airlines also have a “How can we improve?” questionnaire on their website and/or at the end of their flights. Though many of these will be quite negative, you will certainly find what your customers want.

And who knows? Maybe you’ll find out how to innovate from your customers and use that to stay one step ahead of the big airlines!

Finally, don’t forget to expand. If you’re making a profit, add routes that will bring in even more money for you down the line, and cut those routes whose profitability is dwindling.

What do you think? Will you start an airline? Tell me in the comments!

Featured image courtesy of JetStar Airways via Flickr.