Gone are the days when airlines struggled just to stay afloat aloft. Gas is plentiful and affordable, and profits are soaring. So why aren’t there more startup airlines available?
Bankruptcies and consolidations of existing airlines may be scaring off would-be entrepreneurs, although the typical triggers of price overreaches and abandoned regions by the bigger airlines haven’t spurred many to action.
The predominant problem seems to be the maturity of the industry, and the streamlined nature of the business overall. Four major carriers control 85 percent of the market share, so the battle for entry really boils down to one of real estate access.
Alex Wilcox, once an intern at Southwest and an executive for JetBlue and Virgin Atlantic Airways Ltd., has found real estate available at airports in need of shorter flights. His new venture, JetSuite, has developed a business model based on charging travelers no more than $1 per mile of the flight and flying routes the larger airlines have abandoned. Most flights max out at $300.
The company bought 10 Embraer E-135s that had been part of the now-defunct American Eagle fleet, then spent $1 million each to retrofit them with new seats, wifi, power outlets, and other amenities. They’re focusing on providing expedited service, specifically targeting travelers who don’t want to deal with security delays at larger airports, and amenities typically found only in charter jet service in order to compete for customers.
Still, Wilcox cites the scarcity of gate space and terminal facilities as his biggest battle. “Capital is available, gas is cheap, airplanes are available. The biggest barrier, I think, is airport real estate. The legacies have definitely staked their claims, and no one’s tried to break that up in a meaningful way in a lot of these hubs,” he told Bloomberg Technology.
Ultimately, Wilcox is confident in the chances of a new U.S. airline appearing in the skies sometime soon. He says it’s “inevitable,” given the opportunities being created by industry consolidation, and aided by the gradual “cost creep” the other airlines are experiencing. We could see some new blood in the airline industry in the coming years.
What are your airline preferences? Would you ride a new startup airline if it were available, or would you stick with the old tried-and-true airlines? Let us hear from you in the comments below, on our Facebook page, or in our Twitter stream.
Photo credit: Anthony92931 (Wikimedia Commons, Creative Commons 3.0)