36 start-up airlines line up for take-off. Part 3: Africa, N America
While most of the airline industry is working out how to survive the next two years, burdened by massive debt and confronting an uncertain world still deeply challenged by COVID, would-be airlines are queuing up to enter one of the least profitable industries in commercial history. After 42 startups in the last 18 months, there are at least 36 still to come. Why?
Perhaps startup conditions are more fertile than ever before. The barriers to market entry have always been relatively low; today, much more so. Survival conditions might be another matter though.
Speaking to CAPA Live on 12-May-2021, Air Lease Corporation's executive chairman Steven Udvar-Házy identified the raw ingredients for making a new airline as: "cheap money, capital, cheap aircraft, and pilots".
"Today we have relatively easy access to capital. There's venture money that's available", said the 50-year aviation industry veteran, adding, "There's good young used aircraft at reasonable prices, and there's plenty of pilots and flight attendants that are looking for work. That's a temptation to start a new airline."
Mr Udvar-Házy might have added there are also lots of lessors keen to place surplus existing orders somewhere. According to CAPA's databases, 42 start-up airlines launched operations between Jan-2020 and 12-Jun-2021.
At least 36 more are actively planning to launch within a timeframe of 12 to 24 months, of which 13 are based in Europe, eight in Latin America, eight in Asia Pacific, four in Africa, and three in North America.
This is Part 3 of the three part CAPA report looking at these 36 start-up airlines, in Africa and North America.
- Despite the challenges faced by the airline industry, there are 36 start-up airlines yet to launch, in addition to the 42 that became active between January 2020 and June 2021.
- The factors contributing to the rise in start-ups include easy access to capital, availability of cheap aircraft, and a surplus of pilots and flight attendants.
- The start-up airlines are spread across different regions, with 13 in Europe, eight in Latin America, eight in Asia Pacific, four in Africa, and three in North America.
- Some of the planned start-ups include FlyWestAf in Gambia, Green Africa in Nigeria, Zambia Airways, and SkyBird Airlines in Egypt.
- In North America, three start-ups are planning to launch: Connect Airlines in Canada, Avatar Airlines in the US, and Breeze Airways, backed by David Neeleman, the founder of JetBlue and other airlines.
- The success of these start-ups remains uncertain, with factors such as competition, route economics, management team, and capital structure playing a crucial role in determining their fate.
Summary
- There are 36 global start-ups yet to launch, in addition to 42 new airlines that became active between Jan-2020 and 12-Jun-2021.
- Of those, 13 are based in Europe, eight in Latin America, eight in Asia Pacific, four in Africa and three in North America.
- "The jury's still out" on whether all these start-ups will succeed, according to Air Lease Corporation's Steven Udvar-Házy.
- This, Part 3 of a three part series, looks at the Latin American and Asia Pacific wannabes.
For Part 1 of this report, please see Part 1: Europe
For Part 2 of this report, please see Part 2: LatAm, AsiaPac
36 start-up airlines line up for take-off. Part 3: Africa, N America
Africa: four planned start-ups
FlyWestAf
FlyWestAf is a proposed Gambian low cost airline to be based at Banjul Yundum International Airport.
Westaf Gambia initially plans nine major destinations in West Africa, including Dakar, Bissau, Conakry, Freetown, Abidjan, Monrovia, Praia and Bamako, with a fleet of five DHC-8-400s.
It originally aimed to launch services by May-2021 but this has been delayed, and a revised launch date has not been advised.
The small team also has plans for FlyWestAf Algeria, noting that "A 100% Algerian charter operator on African soil will reduce the costs associated with charter operations (Ferry Flight, deposit, crew, etc.) and thus develop the market share for external demand which is experiencing strong growth in West and Central Africa." There is no launch date provided.
Green Africa
Planned since 2016, Green Africa is a Nigerian full service start-up airline to be based at Lagos Murtula Muhammed International Airport.
It has taken delivery of three ATR 72-600 aircraft, including two leased from ACIA Aero Leasing, and plans to deploy up to 15 ATR 72-600s by Dec-2022.
According to the CAPA Fleet Database, Green Africa has 50 unconfirmed orders for Airbus A220-300s and for Boeing 737 MAX aircraft.
After delaying its originally intended 2020 launch, the airline then planned to launch routes from Lagos to Abuja, Akure, Enugu, Ilorin, Owerri and Port Harcourt on 24-Jun-2021, before adding two or three more bases in Nigeria over the next 18 months.
Green Africa began ticket sales through its official website on 25-May-2021. However, on 18-Jun-2021 it postponed its launch until Jul-2021, due a delay in receiving its AOC.
Zambia Airways
The original Zambia Airways was established in 1964, but ceased operations in 1995. Zambian Airways replaced Zambia Airways as the national carrier of Zambia, but later suspended services in 2009 citing financial difficulties.
The Zambian Government planned to relaunch Zambia Airways in 2016 as part of a programme to boost tourism, and allocated USD300 million to start-up capital.
Ethiopian Airlines and Zambia's Industrial Development Corporation (IDC) signed an agreement in Aug-2018 to relaunch Zambia Airways, with IDC taking 55% of the equity and Ethiopian Airlines holding 45%.
Zambia Airways received an AOC in Sep-2020, when it said that it was aiming to operate a fleet of 12 aircraft by 2028. However, its planned launch was postponed, and a revised launch date has not been advised.
SkyBird Airlines
SkyBird Airlines is a proposed Egyptian charter airline to be based at Cairo International Airport. It was founded in 2018 by both Saudi and Egyptian partners.
It plans to offer services to Europe from Sharm el Sheikh and Hurghada, as well as services to Saudi Arabia, Kuwait and other regional destinations from Cairo. It had planned to begin service operations in 2019 after it received an AOC from Egypt's Ministry of Transport, but this was delayed.
On 1-Mar-2021 SkyBird Airlines announced that it had signed a contract to acquire one A320 aircraft, marking its first fleet acquisition. However, a revised launch date has not been advised.
North America: three planned start-ups
Connect Airlines
Connect Airlines is a proposed airline brand to be launched in Canada by Waltzing Matilda Aviation, which is a US licensed charter operator of Cessna Citation Bravo aircraft.
Connect Airlines will operate DHC-8-Q400 turboprop aircraft from Toronto City Billy Bishop Airport, Canada, to destinations in the Northeast and Midwest US. It will offer a premium service to business passengers between the US and Canada.
It aims to begin operations in Oct-2021, subject to regulatory approvals.
Avatar Airlines
Planned for at least a decade, Avatar Airlines is a proposed US ultra low cost start-up to be based at Las Vegas McCarran airport, operating Boeing 747 aircraft.
Avatar's roots trace back to the defunct Family Airlines, which was first proposed in the early 1990s.
In Nov-2019 Avatar said that it was expecting to handle more than five million passengers in its first year of operations, with 14 aircraft operating to/from Los Angeles, Las Vegas, Orlando, Dallas, New York, Chicago, Philadelphia, Tampa, San Francisco and Phoenix.
It also said that it aimed to market itself to budget travellers in markets where it could achieve close to 100% load factors. It planned a Fly Free Club for members who pay a one-time entry fee, annual membership and taxes for each flight. It also planned to make nearly all areas of its aircraft available for advertising.
Its website says that it is projecting regular fares up to 50% less than the competition, with economy fares starting at USD19, and not exceeding US99, when purchased 30 days or more in advance.
Avatar is planning a high density seat configuration and to lease the 747's cargo space wholesale to freight operators. It aims to transition to the 747-8 after three years.
In Jul-2020 it set out plans to raise USD300 million through a private placement by Oct-2020, later extended to Apr-2021. Media reports posted on Avatar's Facebook account suggest that it only received its first investment towards this total in May-2021, but they do not indicate a revised deadline.
In Oct-2020 it issued a letter of intent to British Airways to purchase 26 Boeing 747-400 aircraft, offering BA a 22% stake in the company. In Nov-2020 it offered to buy Thai Airways' 10 747s and also offered a partnership, including codeshare.
In Oct-2020, Avatar Airlines expected to launch from 2H2021, but its Facebook account currently says that the airline now plans to start flight operations in Apr-2022.
Breeze Airways
Breeze Airways, formerly known as Moxy Airways, is a low cost start-up based in Salt Lake City, Utah, operating point-to-point services between secondary airports.
It is backed by private investors, including David Neeleman, the founder of JetBlue, Azul and WestJet. Mr Neeleman is also CEO of Breeze.
It has a firm order for 60 A220-300s, scheduled for delivery from Oct-2021 to 2026. Meanwhile, it has a fleet of 10 leased Embraer E190/195 aircraft and plans to increase this to 13 this summer.
Breeze launched operations on 27-May-2021 with flights between Charleston (South Carolina), Tampa (Florida) and Hartford Bradley (Connecticut).
According to OAG, Breeze is also serving Akron-Canton (Ohio), Fayetteville Northwest Arkansas, Louisville Muhammed Ali (Kentucky), Norfolk International (Virginia), and Tulsa International (Oklahoma), as of the week commencing 21-Jun-2021.
Breeze's website indicates an increase from eight to 16 destinations, focusing on the south and east of the US and routes with no current nonstop service.
"The jury's still out" on whether all these start-ups will succeed
At the CAPA Live event in May-2021, Air Lease Corporation's Mr Udvar-Házy questioned how many of the new airlines would remain. He recalled that US aviation deregulation in 1978 led to 120 new start-up airlines - of which perhaps two or three are left.
"Now, maybe things won't be that bad", he said, "but there's a great temptation now to start a new airline, with a young workforce that's not unionised, at a much lower labour cost, and relatively young used aircraft like A320s, 737-800s, in some cases Embraers or A220s".
Mr Udvar-Házy noted the factors that Air Lease Corporation (ALC) looks at before supporting a start-up with leased aircraft.
These factors include the competitive landscape, and whether competitors can simply allocate a certain percentage of their seat capacity to match their fares and other perks, such as frequent flyer miles.
ALC also looks at the new airline's management team, the economics of the route structure, the suitability of the selected aircraft types, the growth potential and capital structure.
Will all of the current batch of airline start-ups succeed?
"The jury's still out," according to Mr Udvar-Házy.
Appendix: Airlines that launched operations in 2020 and 2021 (for the full list of planned startups, please see Part 1. 36 start-up airlines line up for take-off. Part 1: Europe)
Airlines that launched operations in 2020 and 2021 (up to 12-Jun-2021)
|
Name |
Active
|
Business Model |
Main Hub |
Country/Territory |
Region |
|---|---|---|---|---|---|
|
1. M Jets International (Kargo Xpress) |
10-Jun-21 |
Cargo |
South East Asia |
||
|
10-Jun-21 |
Full service carrier |
Podgorica Golubovci |
Eastern/Central Europe |
||
|
3. ETF Airways |
04-Jun-21 |
Charter |
Eastern/Central Europe |
||
|
28-Apr-21 |
Low cost carrier |
Hollywood Burbank |
|||
|
20-Apr-21 |
Full service carrier |
La Seu d'Urgell |
|||
|
6. Aero K |
15-Apr-21 |
Low cost carrier |
|||
|
7. Sky Cana |
07-Apr-21 |
Virtual airline |
Santo Domingo Las Am's |
||
|
07-Apr-21 |
Cargo |
||||
|
9. EGO Airways |
30-Mar-21 |
Regional/Commuter |
Catania Fontanarossa |
||
|
10. Bees Airline |
18-Mar-21 |
Charter |
Kyiv Igor Sikorsky |
Eastern/Central Europe |
|
|
08-Mar-21 |
Cargo |
Liege |
|||
|
12. HiSky |
05-Mar-21 |
Low cost carrier |
Eastern/Central Europe |
||
|
13. Berniq Airways |
04-Mar-21 |
Full service carrier |
Benghazi Benina |
||
|
14. United Nigeria |
12-Feb-21 |
Regional/Commuter |
Enugu Akanu Ibiam |
||
|
25-Jan-21 |
Charter |
Hue Phu Bai |
South East Asia |
||
|
16. Jiangxi Int'l Cargo Airlines |
23-Jan-21 |
Cargo |
Nanchang Changbei |
||
|
15-Jan-21 |
Low cost carrier |
||||
|
18. Air Taxi India |
14-Jan-21 |
Regional/Commuter |
|||
|
19. China Northwestern Cargo Int'l |
08-Jan-21 |
Cargo |
Xian Xianyang |
||
|
20. OTT Airlines |
28-Dec-20 |
Regional/Commuter |
|||
|
21. Air Sial |
25-Dec-20 |
Full service carrier |
|||
|
22. flybig |
21-Dec-20 |
Regional/Commuter |
|||
|
23. OWG |
18-Dec-20 |
|
Montreal Trudeau |
||
|
17-Dec-20 |
Regional/Commuter |
Lusaka Kenneth Kaunda |
|||
|
25. LIFT Airline |
10-Dec-20 |
Regional/Commuter |
|||
|
26. Lone Star Air |
30-Oct-20 |
Full service carrier |
Monrovia Roberts |
||
|
27. Humo Air |
20-Oct-20 |
Full service carrier |
Tashkent Islam Karimov |
||
|
28. GullivAir |
09-Oct-20 |
Charter |
Eastern/Central Europe |
||
|
29. Sky Mali |
29-Sep-20 |
Regional/Commuter |
Bamako Senou |
||
|
30. Lulutai Airlines |
24-Sep-20 |
Regional/Commuter |
Nuku'alofa Fua'Amotu |
||
|
31. Lauda Europe |
14-Sep-20 |
Low cost carrier |
|||
|
32. Luebeck Air |
17-Aug-20 |
Regional/Commuter |
Hamburg Luebeck Blankensee |
||
|
33. AirGotland |
13-Aug-20 |
Virtual airline |
|||
|
34. flyBAIR |
18-Jul-20 |
Virtual airline |
Bern Belp |
||
|
35. Animawings |
18-Jul-20 |
Charter |
Eastern/Central Europe |
||
|
14-Jul-20 |
Low cost carrier |
||||
|
37. Air Falcon |
07-Jul-20 |
Cargo |
Lahore Allama Iqbal |
||
|
38. Zipair |
03-Jun-20 |
Low cost carrier |
|||
|
10-May-20 |
Cargo |
Zhengzhou Xinzheng |
|||
|
40. Hi Air |
10-Feb-20 |
Full service carrier |
|||
|
41. STARLUX Airlines |
23-Jan-20 |
Full service carrier |
|||
|
42. GS Airlines |
13-Jan-20 |
Charter |
Antananarivo Ivato |