start up airline business plan

Simple Flying

How to start an airline: part 2 - developing a business plan.

It's time to plan your new airline - the operations, destinations, and fleet.

Welcome Aboard

So you have decided to start an airline. This is a big decision to take on a project that could quickly take over your life. But how do you actually go about it, and where do you begin? The process involved in starting an airline can be rewarding, enjoyable, and hopefully profitable too. But it can also be frustrating, fraught with challenges, and the next setback will always remain just around the next corner. But if you are determined to do this, let’s take a closer look at how you might go about achieving your goal.

The four key stages of planning

The first thing to do is develop a robust business plan for your airline . You should consider the four critical stages of planning, better known as what , where , how , and why . Your business plan could make all the difference between your airline becoming the next big deal or simply another casualty of the ruthless airline industry, itself littered with failures throughout its history.

Getting these first critical decisions right will improve your chances of succeeding and perhaps ensure your airline's survival chances in the future. Once you have rigorous and comprehensive answers to all four key stages, it will be time to draft your business plan.

Your airline business plan will act as the shop window for your airline that you will present to potential investors ; a document that can be peered throughout to see whether your offering is attractive enough to entice others inside and, hopefully, to part with their hard-earned dollars.

After all, unless you have bottomless pockets, you will be reliant on others to provide additional funding and investment to get your airline off the ground. We shall explore the whole issue of budget and finance in greater depth in the next part of this series.

The first stage of planning - What?

The first of the critical issues to address when you consider starting an airline is ' what '? What do you want to achieve exactly, bearing in mind that this may not be possible, cost-effective, safe, or even legal?

Focussing on developing your initial idea is all very well, but being flexible to change and ready for setbacks will be useful characteristics in your planning toolkit as you progress. You should develop an exact, detailed concept of what you want to do with your airline. What are your goals, and what do you need to achieve them.

What are your aims and ambitions? Do you want to start small and get bigger, or do you simply want to remain small and niche? Remember, many airlines survive because they stay small. Or are your aspirations to become a feeder carrier possibly, or a regional operator . Do you want to scale things up to become a short, medium, or even long-haul operator, flying the big jets to faraway destinations?

Is your airline going to be a scheduled carrier, a charter operator, or a combination of both? You might want to avoid the complications of fare-paying passengers altogether (often referred to in the airline world as ‘self-loading freight’) and specialize in the carriage of cargo only.

In principle, these are all feasible ventures, and the industry has successful examples in each sector. Honing on just one market segment initially and doing that well will be crucial before you even consider growing your business.

Once you have an established, well-developed concept of what you want your airline to be, you can progress to the next stage of the process.

The second stage of planning - Where?

Where you want to fly sits snugly alongside the ‘ what ’ question addressed above. You should be considering your proposed route structure , selecting your hub airports and your home base from the outset. You need to decide whether you wish to focus on being a point-to-point carrier or whether a hub-and-spoke operation might suit your airline better.

Remember that some airports you may wish to serve will be slot constrained, so a quick initiation into that airport's slot allocation process will be necessary. You may not be allocated a workable set of slots for your airline, so be prepared for some tough negotiating.

Recent startup airlines which appear to be making early progress with network planning are Breeze and Avelo in the US, selecting point-to-point routes to develop their business. PLAY in Iceland is aiming to build a viable hub-and-spoke network using Keflavik Airport (its home base) as its hub facility, offering decent levels of connectivity for passengers traveling over Iceland between the United States and Europe

Are you considering entering an existing market where you will compete with others, or will you target new, emerging markets, opening up regions and routes that would otherwise remain unserved by other carriers, such as Bonza , the excitable new startup in Australia?

Bearing in mind that you will require aircraft, crew, ground handling, maintenance provisions, and other services at each base you open dictates that you simply should not consider opening up a plethora of routes that are entirely unlinked to each other in any way.

Startup airlines regularly focus early operations on a single or minimal number of bases to start before they even consider expansion. An excellent current example of this is the new Flybe operation starting operations shortly. This new carrier (revived from the ashes of another carrier of the same name, which failed at the start of the pandemic) has limited its initial operation to just two small UK bases - Birmingham and Belfast City .

No doubt routes will be picked up and dropped from these bases in the early stages as Flybe refines its model. Yet, by staying small initially, the airline hopes to avoid having a dispersed network and fleet, which stretches resources and ultimately leads to operating a wide range of loss-making routes, just as its predecessor did.

While the 'what' question may have been based on intangibles, such as desire or ambition, the 'where' decisions will be primarily based on data and information.

Detailed route analysis using modeling and forecasting will be a prerequisite here. It will be imperative to have all your facts in numeric form so that forecasting and projections can be produced to act as your road map as you develop.

Route and network development consultancies can assist you in this process, as can the planning departments of airport authorities , as well as the leading commercial aircraft manufacturers.

Even a decision to fly a new 200-seat jet from point A to point B will find you with offers from all of these sources, each undoubtedly willing to provide planning assistance, particularly if there is something potentially in it for them. So don't be afraid to ask for help from those who know their industry best.

James Pearson , Simple Flying's very own in-house route and network planning expert, provides the following helpful advice for anyone considering a potential new airline's route structure -

Network planning requires solid research using multiple data sources, thinking creatively, and forecasting as accurately as possible. It also requires a strong gut instinct about what will work and why.

For low-cost and ultra-low-cost carriers especially, predicting market growth through stimulating demand is often essential. For many thin routes, this is crucial to make them viable, without which they would be too small.

Network planning isn't just a one-off process. It also requires continual market awareness to check what is happening to avail of more opportunities as they arise. No matter the work, not all routes will work or are expected to work. If they did, an airline wouldn't be experimenting enough.

The third stage of planning - How?

When considering the question of ' how' , there are various points to consider. Will you select just a single aircraft type for your operation, or does your plan call for several types? Without delving too deeply into economic theory relating to the principle of economies of scale, startup airlines have often seen success when focussing on a single type of aircraft - Southwest , Ryanair, or Wizz, all being good examples.

Selecting the correct aircraft type for your operation will be of utmost importance. Too small an aircraft, and you could be passing up the opportunity to fill more revenue-producing seats. Too large an airplane, you could risk flying around half-empty planes, burning fuel, and losing money, and lots of it.

Getting this balancing act is imperative to ensure your business plan's economics are correct. Your airline is financially viable so that your airline’s survival is assured, at least in the initial startup phase. Again, aircraft manufacturers' marketing departments will be all too eager to assist you in this process if there might be an aircraft sale or two for them!

The fourth stage of planning - Why?

Starting an airline is not easy; otherwise, everyone would be doing it, right? Going into the startup process thinking your airline will be flying before you know it would be foolhardy and misguided. You should give a great deal of consideration to why you wish to do this.

Why do you want to put yourself through months, if not years, of stress just to get to your airline's inaugural flight, let alone what may come afterward? Starting an airline simply as a vanity project has been repeatedly shown to be not enough reason to build a sustainable business.

You will need a good degree of passion, enthusiasm, resilience, and ambition to make this all come together. Starting an airline for fun is not a ‘thing’ in itself. You may have good intentions, grand designs, and enormous ambitions for your airline. Still, without established motives and deeply embedded aspirations, you may as well stop planning before you even get started.

And to address the 'elephant in the room' when it comes to airline startups, don’t expect to run a profitable business for several years at the very least . The startup costs involved in getting a new startup airline flying are far more considerable than even your forecasts will tell you. You need to make provision for this, given the multitude of setbacks that will undoubtedly come your way throughout the startup process.

As mentioned earlier in this article, If you are starting an airline simply to get rich quickly, you seriously need to rethink your whole ethos.

Failing to plan is planning to fail

Without comprehensive and credible plans in place, you are setting yourself up for a rapid fall. Any cracks in your business plan will quickly widen, be stretched to critical levels, and may simply just bring your whole project crumbling down before you even get going.

Yet, knowing what you want to do, where you intend to do it, how you intend to achieve it, and perhaps most importantly, why you are setting off on this arduous process and profoundly personal and life-changing journey will either attract investors to you or conversely confine your airline plans firmly to the drawing board.

Head in the air but feet on the ground

So, in summing up, be very clear about what you are aiming to achieve. Have big ideas and even bigger goals, but wherever your airline planning takes you, keeping your feet firmly on the ground will serve you well. Because remaining grounded throughout the planning process at all times, will hopefully ensure that your airline startup does not!

Next time, we shall look at airline funding and financing. Join us for 'How to Start An Airline: Part 3 - Finances', coming soon.

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Airline Business Plan

Free Business Plan Template

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How to Write An Airline Business Plan?

Writing an airline business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the entire business plan is ready and summarizes each section of your plan.

Here are a few key components to include in your executive summary:

Introduce your Business:

Start your executive summary by briefly introducing your business to your readers.

Market Opportunity:

Airline services:.

Highlight the airline services you offer your clients. The USPs and differentiators you offer are always a plus.

Marketing & Sales Strategies:

Financial highlights:, call to action:.

Ensure your executive summary is clear, concise, easy to understand, and jargon-free.

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2. Business Overview

The business overview section of your business plan offers detailed information about your company. The details you add will depend on how important they are to your business. Yet, business name, location, business history, and future goals are some of the foundational elements you must consider adding to this section:

Business Description:

Describe your business in this section by providing all the basic information:

Describe what kind of airline company you run and the name of it. You may specialize in one of the following airline businesses:

• Full-service carriers
• Low-cost carriers
• Regional airlines
• Charter airlines
• Cargo airlines
• Describe the legal structure of your airline company, whether it is a sole proprietorship, LLC, partnership, or others.
• Explain where your business is located and why you selected the place.

Mission Statement:

Business history:.

If you’re an established airline service provider, briefly describe your business history, like—when it was founded, how it evolved over time, etc.

Future Goals

This section should provide a thorough understanding of your business, its history, and its future plans. Keep this section engaging, precise, and to the point.

3. Market Analysis

The market analysis section of your business plan should offer a thorough understanding of the industry with the target market, competitors, and growth opportunities. You should include the following components in this section.

Target market:

Start this section by describing your target market. Define your ideal customer and explain what types of services they prefer. Creating a buyer persona will help you easily define your target market to your readers.

Market size and growth potential:

Describe your market size and growth potential and whether you will target a niche or a much broader market.

Competitive Analysis:

Market trends:.

Analyze emerging trends in the industry, such as technology disruptions, changes in customer behavior or preferences, etc. Explain how your business will cope with all the trends.

Regulatory Environment:

Here are a few tips for writing the market analysis section of your airline business plan:

• Conduct market research, industry reports, and surveys to gather data.
• Provide specific and detailed information whenever possible.
• Illustrate your points with charts and graphs.
• Write your business plan keeping your target audience in mind.

4. Airline Services

The product and services section should describe the specific services and products that will be offered to customers. To write this section should include the following:

Describe your services:

Mention the airline services your business will offer. This list may include services like,

• Passenger flight
• Baggage handling
• In-flight services
• Seating options
• Loyalty programs
• Special assistance

Quality measures

: This section should explain how you maintain quality standards and consistently provide the highest quality service.

Additional Services

In short, this section of your airline plan must be informative, precise, and client-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

Unique Selling Proposition (USP):

Define your business’s USPs depending on the market you serve, the equipment you use, and your unique services. Identifying USPs will help you plan your marketing strategies.

Pricing Strategy:

Marketing strategies:, sales strategies:, customer retention:.

Overall, this section of your airline company business plan should focus on customer acquisition and retention.

Have a specific, realistic, and data-driven approach while planning sales and marketing strategies for your airline business, and be prepared to adapt or make strategic changes in your strategies based on feedback and results.

6. Operations Plan

The operations plan section of your business plan should outline the processes and procedures involved in your business operations, such as staffing requirements and operational processes. Here are a few components to add to your operations plan:

Staffing & Training:

Operational process:, equipment & software:.

Include the list of equipment and software required for the airline, such as aircraft, baggage handling systems, flight operations systems, revenue management systems, etc.

Adding these components to your operations plan will help you lay out your business operations, which will eventually help you manage your business effectively.

7. Management Team

The management team section provides an overview of your airline business’s management team. This section should provide a detailed description of each manager’s experience and qualifications, as well as their responsibilities and roles.

Founders/CEO:

Key managers:.

Introduce your management and key members of your team, and explain their roles and responsibilities.

Organizational structure:

Compensation plan:, advisors/consultants:.

Mentioning advisors or consultants in your business plans adds credibility to your business idea.

This section should describe the key personnel for your airline business, highlighting how you have the perfect team to succeed.

8. Financial Plan

Your financial plan section should summarize your business’s financial projections for the first few years. Here are some key elements to include in your financial plan:

Profit & loss statement:

Cash flow statement:, balance sheet:, break-even point:.

Determine and mention your business’s break-even point—the point at which your business costs and revenue will be equal.

Financing Needs:

Be realistic with your financial projections, and make sure you offer relevant information and evidence to support your estimates.

9. Appendix

The appendix section of your plan should include any additional information supporting your business plan’s main content, such as market research, legal documentation, financial statements, and other relevant information.

• Add a table of contents for the appendix section to help readers easily find specific information or sections.
• In addition to your financial statements, provide additional financial documents like tax returns, a list of assets within the business, credit history, and more. These statements must be the latest and offer financial projections for at least the first three or five years of business operations.
• Provide data derived from market research, including stats about the industry, user demographics, and industry trends.
• Include any legal documents such as permits, licenses, and contracts.
• Include any additional documentation related to your business plan, such as product brochures, marketing materials, operational procedures, etc.

Use clear headings and labels for each section of the appendix so that readers can easily find the necessary information.

Remember, the appendix section of your airline business plan should only include relevant and important information supporting your plan’s main content.

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks and automatic financials make it easy.

This sample airline business plan will provide an idea for writing a successful airline plan, including all the essential components of your business.

After this, if you still need clarification about writing an investment-ready business plan to impress your audience, download our airline business plan pdf .

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Frequently asked questions, why do you need an airline business plan.

A business plan is an essential tool for anyone looking to start or run a successful airline business. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your airline company.

How to get funding for your airline business?

There are several ways to get funding for your airline business, but self-funding is one of the most efficient and speedy funding options. Other options for funding are:

• Bank loan – You may apply for a loan in government or private banks.
• Small Business Administration (SBA) loan – SBA loans and schemes are available at affordable interest rates, so check the eligibility criteria before applying for it.
• Crowdfunding – The process of supporting a project or business by getting a lot of people to invest in your business, usually online.
• Angel investors – Getting funds from angel investors is one of the most sought startup options.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your airline business?

There are many business plan writers available, but no one knows your business and ideas better than you, so we recommend you write your airline business plan and outline your vision as you have in your mind.

What is the easiest way to write your airline business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any airline business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software .

How do I write a good market analysis in an airline business plan?

Market analysis is one of the key components of your business plan that requires deep research and a thorough understanding of your industry. We can categorize the process of writing a good market analysis section into the following steps:

• Stating the objective of your market analysis—e.g., investor funding.
• Industry study—market size, growth potential, market trends, etc.
• Identifying target market—based on user behavior and demographics.
• Analyzing direct and indirect competitors.
• Calculating market share—understanding TAM, SAM, and SOM.
• Knowing regulations and restrictions
• Organizing data and writing the first draft.

Writing a marketing analysis section can be overwhelming, but using ChatGPT for market research can make things easier.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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How to Create an Airline Business Plan

Blog > how to create an airline business plan, table of content, introduction, executive summary, market analysis, business description, business structure and organization, marketing and sales strategy, fleet and operations, financial projections, funding and investment, risk analysis and mitigation, regulatory and legal compliance, sustainability and environmental, our other categories.

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Reading Time : 14 Min

Business plan 101.

The airline industry has experienced exponential growth and transformative changes over the years, making it an attractive sector for entrepreneurs seeking to launch their own airlines. However, navigating this competitive landscape requires a well-crafted and comprehensive airline business plan. In this guide, we will walk you through the essential steps and key components of creating an effective airline business plan that will lay the foundation for your success in the aviation industry. As a trusted startup consultant service provider, Stellar Business Plans is here to support you in turning your aviation dreams into reality.

An executive summary serves as the snapshot of your entire airline business plan . It succinctly outlines your airline’s vision, goals, financial projections, and growth strategies. This section sets the tone for the rest of the plan, capturing the attention of potential investors and stakeholders.

Example: “Skyline Airways is a visionary airline committed to redefining air travel by providing unparalleled luxury and convenience to business and leisure travelers. Our strategic expansion plans and commitment to customer satisfaction make us a strong contender in the aviation industry. This executive summary outlines the key components of our business plan, showcasing the promising potential of Skyline Airways.”

Stellar Business Tip: Keep your executive summary concise yet impactful. Highlight the unique selling points of your airline and emphasize how it addresses the pain points of customers.

Understanding the dynamics of the airline industry is crucial for making informed decisions. Conduct an in-depth market analysis, including market trends, target customer segments, and competitor landscape. Utilize relevant statistics and data to present a comprehensive overview.

Example: “The global airline industry is projected to witness substantial growth in the coming years, driven by increasing disposable incomes, growing tourism, and expanding business travel. According to the International Air Transport Association (IATA), global air passenger numbers are expected to double in the next two decades, reaching 8.2 billion by 2037.”

Stellar Business Tip: Leverage market research and industry reports to substantiate your claims. Show that your airline’s strategies are well-aligned with market opportunities.

This section delves into the core aspects of your airline, including your mission, unique selling proposition (USP), and the services you will offer. Introduce your airline’s history and highlight significant milestones that demonstrate your readiness for success.

Example: “FlyRight Airlines was founded with a vision to revolutionize the travel experience for passengers through exceptional customer service and innovative technology. Our commitment to punctuality, safety, and personalized service sets us apart from competitors. As an industry-disruptor, FlyRight Airlines has been recognized with the prestigious ‘Best Customer Service’ award for three consecutive years.”

Stellar Business Tip: Showcase your airline’s achievements and accolades to build credibility and confidence among potential investors and partners.

Outline the legal structure of your airline and discuss the management team’s roles and expertise. Provide an organizational chart to showcase the hierarchy and responsibilities of key personnel.

Example: “SkyJet Airways is registered as a private corporation in accordance with aviation regulations. Our management team comprises seasoned professionals with extensive experience in the aviation and hospitality industries. John Smith, our CEO, brings over 20 years of leadership experience in major airlines, ensuring efficient operations and strategic decision-making.”

Stellar Business Tip: Highlight the expertise of key team members and their significant contributions to the success of your airline.

Develop a robust marketing and sales strategy to attract and retain customers. Utilize data-driven insights and statistics to demonstrate the effectiveness of your marketing initiatives.

Example: “SkyGlide Airlines’ marketing strategy focuses on digital channels, social media, and influencer partnerships to reach our target audience effectively. Our market research indicates that millennial travelers heavily influence travel decisions, and thus, we invest significantly in social media marketing and user-generated content to create brand loyalty.”

Stellar Business Tip: Showcase your understanding of your target market’s preferences and how your marketing efforts align with their expectations.

Detail your fleet composition and specifications, including aircraft types and capacities. Discuss aircraft maintenance and safety procedures, emphasizing your commitment to ensuring a reliable and secure airline.

Example: “AirWings Fleet consists of modern and fuel-efficient aircraft, including Airbus A320neo and Boeing 787 Dreamliner, ensuring a comfortable and eco-friendly flying experience. Our partnership with leading maintenance providers guarantees the highest standards of safety and reliability, with regular maintenance checks and adherence to regulatory guidelines.”

Stellar Business Tip: Focus on the safety and comfort features of your fleet to instill confidence in your airline’s operations.

Create comprehensive financial projections based on market research and sound assumptions. Utilize charts and tables to present revenue forecasts, cost structures, and projected profitability.

Example: “Our financial projections anticipate steady growth, with projected revenue of $100 million in the first year, reaching $500 million by the fifth year. This growth will be supported by a robust marketing strategy, optimized operational costs, and an expanding customer base.”

Stellar Business Tip: Provide a clear breakdown of revenue streams and cost drivers to demonstrate your financial stability and growth potential.

Explain the initial investment required to launch and operate your airline. Showcase your budget for start-up costs and capital expenditures, providing clarity to potential investors about the financial requirements.

Example: “AirSprint Airways requires an initial investment of $50 million, which will cover aircraft acquisition, staff training, marketing campaigns, and administrative expenses. We are seeking strategic investors who share our vision of transforming air travel and are committed to long-term partnerships.”

Stellar Business Tip: Clearly articulate your funding needs and explain how the investment will be utilized to drive the growth of your airline.

Identify potential risks in the airline industry and outline your risk mitigation strategies. Present contingency plans to assure stakeholders of your preparedness for challenges.

Example: “SkyWings Airlines has conducted a comprehensive risk analysis, identifying potential risks such as fuel price volatility, geopolitical tensions, and regulatory changes. Our risk mitigation strategies include hedging fuel costs, diversifying routes, and maintaining strong relationships with aviation authorities to navigate regulatory changes smoothly.”

Stellar Business Tip: Address potential risks proactively and demonstrate your airline’s ability to adapt to unforeseen circumstances.

Discuss the licensing and certification requirements necessary for operating an airline. Show how your airline will comply with aviation authorities and regulations.

Example: “AviaJet is committed to maintaining the highest standards of safety and compliance with all aviation regulations. We are currently in the process of obtaining an Air Operator’s Certificate (AOC) and expect to launch operations after receiving all necessary approvals from the Civil Aviation Authority.”

Stellar Business Tip: Emphasize your commitment to adhering to all legal and regulatory requirements to gain trust from investors and passengers.

Impact Promote sustainability initiatives and demonstrate your commitment to reducing the airline industry’s environmental impact. Showcase your airline’s dedication to adopting eco-friendly practices.

Example: “EcoFlight Airlines is dedicated to minimizing our carbon footprint and preserving the environment. We are investing in modern, fuel-efficient aircraft, adopting sustainable inflight practices, and exploring alternative fuels to achieve carbon neutrality by 2030.”

Stellar Business Tip: Highlight your airline’s commitment to sustainability, as it aligns with the growing eco-consciousness of travelers.

Creating an airline business plan requires careful planning, extensive research, and a clear vision of your airline’s future. By following this comprehensive guide, you are equipped to build a solid foundation for your airline’s success. Stellar Business Plans is here to provide you with expert guidance and support in crafting an impressive business plan that will impress investors and stakeholders. Together, we can embark on a journey to make your airline a soaring success. Get ready to take flight with Stellar Business Plans!

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Updated On : September 2, 2023

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Airline Business Plan: Writing Effective Airline Business Plans

To write a successful airline business plan , you must take several important trends in the airline industry and broader economy into account. What affect will these important trends have on the new airline?

• Continuing volatility in oil and other commodity markets
• A decline in personal disposable income as the economy slows
• Anxiety over flying and travel restrictions as a result of terrorist attacks and war
• Recent financial hardships and bankruptcies of major airline companies

Important Airline Business Plan Questions to Answer

To write a convincing aviation business plan and successfully launch your new airline, you must have confident answers to the following questions:

• What is the market demand for your new airline business?
• How will you prove the feasibility of your new airline?
• What kind of financing will you need, and how much?
• What types of investors will you seek capital from?
• What relevant past experience does your management team have, which you can leverage in your business plan?
• What strategic partnerships will you forge?
• What is your marketing plan and how will you grow your airline’s customer base?
• What are your airline’s future financial projections?
• What is your new airline’s “unfair competitive advantage” and how will you create barriers to entry?

How to Finish Your Airline Business Plan in 1 Day!

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Airline Business Plan FAQs

What is the easiest way to complete my airline business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Airline Business Plan.

What is the Goal of a Business Plan's Executive Summary?

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of airline you are operating and the status; for example, are you a startup, do you have an airline that you would like to grow, or are you operating a chain of airlines?

Other Helpful Business Plan Articles & Templates

What Boeing wants you to know about starting a new airline, according to its step-by-step guide

• Boeing runs a program that helps innovators launch new startup airlines — and become potential customers
• The program, StartupBoeing , offers a detailed framework  for anyone looking to get into the airline business. The company says it will work closely with serious parties to help get their airline running.
• While the COVID-19 pandemic has devastated airline industry, most experts anticipate a full recovery once treatments or vaccines are available.
• Visit Business Insider's homepage for more stories .

The airline business is notoriously fickle.

Back in 2007, Warren Buffett, chair of Berkshire Hathaway, said that "if a far-sighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down." About a decade later, he reversed his position and invested heavily in US airlines, only to dump his holdings this April as  stocks plummeted amid the COVID-19 pandemic.

Such about-faces are understandable. Despite the difficulties of the airline business — an ongoing boom-bust cycle as demand mirrors the larger economy, intensive regulation, tremendous capital expenses, exposure to volatility in fuel prices, and even financial pain caused by bad weather — airlines can be profitable. With the right business model in the right market, they can prove downright lucrative.

Even today, as the coronavirus pandemic obliterates airline budget sheets and knock carriers into bankruptcy, investors see opportunities. Take David Neeleman, founder of JetBlue and Brazilian carrier Azul, who's getting ready to start his third airline, Breeze (albeit with a launch date delayed to next year).

Boeing, of course, is all for new airlines who might want to spend a big pile of money on its planes. Which explains why, since 2006, it has run a program aimed at helping new potential customers get off the ground. 

StartupBoeing reserves its substantial support for serious enterprises, but it's not overly discriminating: It puts much of its advice on its website, for free, for anyone looking to get airborne. 

So if you see a space in the market for a new airline and you think you have the stomach for one of the world's toughest industries, here's what Boeing thinks you — perhaps its next big customer — need to know. 

Before anything else, Boeing suggests making sure you know what you're getting into.

As a first step, Boeing invites prospective airline innovators can reach out to the StartupBoeing team.

Encouraging new airline startups is certainly a self-serving example of working to create your own demand — or in this case, facilitate it — but Boeing is blunt about the challenges.

"Starting an airline is tough. Running a profitable airline is even tougher," the planemaker says on its website . "Few businesses have as many variables and challenges as airlines."

The first actual step: market analysis.

Some questions to ask yourself: Why start an airline? Is there a need for another one? What can your airline do that others aren't doing? What kind of market can it serve?

There's no point in starting a company if you don't know where it will slot in among competitors, and who its customers will be. That's why Boeing suggests studying the commercial aviation market closely before starting to invest. 

The company publishes regular, comprehensive reports on commercial market outlook, forecasted air cargo demand, and the outlook of the aircraft financing market (more on that in a bit).

Additionally, there are consultants and agencies around the world which specialize in the commercial aviation market who can help get new airlines off the ground, so to speak.

Next, you'll need to master the operating environment.

Along with the challenges that come with starting any business, new airlines have a whole set of unique hurdles. For one thing, the rules are many, and unforgiving.

"Startup airlines must be aware of and operate within a framework of regulations, standards and guidelines," Boeing says on its startup website.

You'll have to be up to speed on the Freedoms of the Air, a set of regulations dating back to 1944, which dictate where a country's airlines are allowed to fly or land. Same for ETOPS requirements, a collaborative set of standards that determine how airlines plan routes, are universal. 

Safety standards, required training and equipment, labor laws, tax rules, security requirements, fuel and supply procurement, and more, can all vary on the federal, state, or local level. Once you've decided on your market, you'll have to find a way to operate within all of these frameworks.

You have a grasp of the market, you understand the operating environment — now it's time to create your business plan.

A solid business plan is key to launching any startup. Boeing says it will provide free review services for new airline business plans and financials:

"We offer constructive suggestions, question assumptions, and challenge the entrepreneur to prove the concept just as prospective investors might."

If you need help getting the initial plan drafted, Boeing says it can recommend advisors around the world.

According to Boeing, the airline business plan should consider the following:

• Analysis of the market and competition
• Brand positioning
• Description of the business and opportunity
• Details about the operation
• Management team biographies
• Discussion of risks and obstacles
• Pro forma financial statements/projections
• Capitalization plan
• Brand development
• Implementation strategy

The business plan is a success, and you've raised the money you need to get started. Now comes the fun part: picking your aircraft.

At this point, you'll have selected your target markets and frequencies. Based on analyses of air traffic and route/schedule planning, you're now positioned to pick the airplane type to get started with.

Naturally, Boeing recommends buying Boeing. 

If your business plan calls for high capacity or long-range aircraft, Boeing or its European rival Airbus are essentially the only options. Boeing's smallest current plane, the 737 Max 7, can hold up to 172 people and fly more than 3,800 miles without stopping.

If you're looking to start with lower capacity or shorter flights, though, you may be better off looking at a planemaker that produces regional jets or propeller planes, such as Embraer, Mitsubishi Regional Jet, or ATR. 

For something in-between, you could also look at the unique Airbus A220. The plane, which was first conceived by Canada-based Bombardier before being sold to Airbus, can carry anywhere from 100 to 160 passengers, and fly nearly 3,000 to 3,300 nautical miles.

As part of the aircraft decision, you'll have to decide whether to buy or lease planes, and whether to get them new or used.

How you source your aircraft can be crucial to your fledgling airline's long-term success.

Whether to pay outright or finance, buy or lease, likely depends on your initial capital and business plan. If you're a startup airlines looking to lease, Boeing says it will help you find leasing partners.

Of course, the decision could come down to availability. Planemakers often take orders years in advance, and contractual agreements with top airline and lessor customers often dictate delivery availability for smaller players.

Similarly, a lack of the right type of plane on the used market or from a leasing company could force you to be flexible.

It's finally time to get airborne — and now the real work begins.

You've sourced your planes, secured your regulatory approvals, hired your staff, locked down your routes, gates, and landing slots, and sold your seats. It's finally time for your first flight.

Don't think you can rest, though. Keeping an airline running — and turning it profitable — is an endless endeavor.

Staying up to speed on market shifts and regulatory changes, managing disruptions to normal service, and simply keeping things running smoothly will be plenty to keep you and your team busy.

So will dealing with your aircraft.

Planes need ongoing inspections and maintenance. Pilots need to continue refreshing their skills on actual planes and in simulators. Flight attendants need their own certifications. 

Boeing has an entire division — Boeing Global Services — which brings in billions of dollars each year offering maintenance, data analytics, supply chain resources, and other services to current and former customers. (Airbus and other companies provide similar aftermarket services for aircraft owners, too.)

You've brought your imagined airline to life, a tremendous accomplishment by itself. Keeping it going and expanding will be plenty to keep you busy.

• Main content

How to Start an Airline: A Quick-Reference Guide

Are you an avid flyer with an entrepreneurial spirit? Do you obsess over the economics of aviation and wonder if you could introduce a new airline model to the market yourself? Well, if you think you have what it takes to start an airline, you have made it to the right place. In this article, we will go over all the essential steps required should you want to see new customers board your from-scratch airline. 

The Business Plan

If you are like me, every time you fly an airline you view their decisions and practices with a critical eye. Why do some airlines charge ancillary revenues, and some allow you to check bags for free? Is there any economic sense behind why you pay for checked bags but not carry-ons? Ultimately, the promotions airlines run, the fares they charge, the quality they offer, etc. are all guided by a business plan . 

A simple Google search will tell you that a business plan is a “formal written document containing the goals of a business, the methods for attaining those goals, and the time-frame for the achievement of the goals.” For an airline, a business plan is meant to attract private investors to help bring the airline to fruition, meaning it must be robust and well-thought-out. The most important details a business plan must contain are the why and the how : What gaps exist in the airline industry (the premise—why—for the idea), and how will the airline fill the gap?

A well-developed business plan will contain a sophisticated analysis of competition in the industry, often localized to airports the airline will call home, focus city, or hub. This analysis typically breaks down what current airlines charge, where they fly, and how well they perform financially.   

But beyond the initial why , there needs to be a heightened focus on how exactly the airline fills the existing gaps. These gaps will look very different depending on the type of airline you want to run. A commercial airline will obviously fill price or service gaps, but a charter airline may try to offer a subscription service to target wealthier customers who don’t have many choices at present.

The business plan will also demarcate the type of service you wish to offer, and the route structure you will implement at the onset. Will you have a single hub and numerous spoke routes? Will you fly point-to-point with rock-bottom prices like Skybus attempted to do in the late 2000s?

Airports range in size and market potential and are limited by gates and slots. Choosing the right base airport will have large implications on the size and scope of your airline. Serving the “correct” destinations from your base is another important matter; justifying your routes to investors will require detailed analysis, numbers, and financial projections.

Business Plan - other considerations

One of the other key considerations in a business plan is the type of aircraft you wish to operate. For airlines like Southwest and Ryanair, the Boeing 737 family is the only aircraft they operate. This aids in the standardization of training and maintenance fleet-wide, keeping operating costs low. For legacy carriers like Delta and United, their fleet is huge and varied with aircraft from Embraer, Airbus, and Boeing all in the fleet. You may also just be considering starting a small airline—and thus only desire small aircraft. All of these options are important for consideration.

When choosing the type of aircraft to operate, it is critical to consider fuel economy and cost. The Boeing 737 MAX is arguably the most fuel-efficient aircraft on the market today but it comes at a steep price. New startup airlines such as Avelo Airlines decided to lease used 737-700 aircraft to save money, but other airlines may opt to purchase new planes directly from Airbus, Boeing, or other manufacturers.

Importantly, consultants who you may work with on a business plan will offer guidance on what aircraft would suit your plan the best. As an example, for a high school project, I worked with StartupBoeing to write a mock airline business plan for a low-cost airline based in San Bernardino. StartupBoeing obviously has expertise with Boeing aircraft, and like any group associated with an airline manufacturer, encouraged me to use Boeing aircraft and offered data on the financial performance and economics of Boeing aircraft specifically.

Business plans not only shape the present to sway investors but are helpful in informing the future. Successful airline business plans will outline growth strategies and opportunities. After all, isn’t the main goal of running an airline to turn a profit? Turning a profit may be hard to come by with such a small initial operation, but with new hubs, routes, planes, or staff, growth is possible. How will you grow your airline?  

Beyond the framework of your airline being outlined in the business plan covering strategy and service, you’ll need to highlight important financial information using modeling. How many passengers do you expect to carry, and how much revenue will that bring in?  What costs will you incur, and how much will fuel cost you? Southwest Airlines is notorious for hedging jet fuel and famously got a deal for jet fuel in the early 2000s for rock-bottom prices. If the costs are calculated correctly and the future balance sheet looks clean, you’ll secure the much-needed investment to pursue your airline further.

With a solid business plan, strong financial backing, aircraft in order, and slots obtained, one of the next logical steps is to name the airline. Many airlines, like Breeze Airways, decided on a name late in the process. Key tenets of the business plan were made public well in advance of the inaugural flight, and for years the Airline was referred to as Moxy—with the only known details being the airports served, planes acquired, and pricing scheme.  

A strong name is essential not only for marketing but visibility as well. Many of the modern names today ooze elegance—"StarLux" for example—and others reflect elements of laid-back fun: "PLAY Airlines".

Certification

With a name and plan in pocket, obtaining the necessary certification to take to the sky is the logical next step. Aviation is guided by a single large principle: safety. Flight attendants give a safety briefing every flight, and as the airlines always say, safety is our number one priority. Evidently, airlines have to verify that they are safe first before they take to the sky; certification is the way to do this.  

Ultimately, an airline must acquire an Air Operator’s Certificate (AOC). Regulations vary by country and the governing body, but the requirements typically remain the same. In the United States, the Federal Aviation Administration (FAA) is responsible for overseeing and handing out such certificates. The American Code of Federal Regulations notes that the following requirements must be met for most AOCs:

• Sufficient personnel with the required experience for the type of operations requested.
• Airworthy aircraft, suitable for the type of operations requested. At least one aircraft must be in the fleet to obtain an AOC.
• 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.
• The appointment of key accountable staff, who are responsible for specific safety-critical functions such as training, maintenance and operations.
• Carriers Liability Insurance (for Airlines) – Operators are to have sufficient insurance to cover the injury or death of any passenger carried.
• Proof that the operator has sufficient finances to fund the operation.
• The operator has sufficient ground infrastructure, or arrangements for the supply of sufficient infrastructure, to support its operations into the ports requested.
• The certificate is held by a legal person who resides in the country or region of application (for EASA).  

Additionally, Simple Flying notes that supplemental information is required by the airline when submitting an application for the AOC. This includes: 

• The organization of the company
• Where the operation will be based and the location of the business
• The intended AOC management structure
• The competence of the individuals who will be working for the operation
• How the AOC will be financed
• What sort of operation is required
• What aircraft will be operated
• What geographical area is operated in

Finally, following this, an airline must obtain an Operator Certification from the FAA.

Next, airlines must hire the necessary staff to conduct operations. This goes beyond just internal staff on the business side; airlines require operations staff at the airport to ensure flights can board, load baggage, check in customers, clean cabins, cater food, etc. The quality of this branch of staff can have a major impact on the image of your airline. 

Some low-cost airlines dedicate less attention to the customer-facing aspect of operations, while JetBlue famously spent significant amounts of money on flight attendant training to ensure they had the best staff possible upon launch. Ryanair follows a self-handling model, where they train their own staff in-house and don’t rely on a third-party source. Other times airlines will be forced to use external staff at large airports where they otherwise don’t have an established presence. 

Final Steps

With staff hired and the necessary certifications obtained, the airline can start working towards the final steps prior to launch. Most importantly, the airline needs to build a presence in the press and market themselves favorably. After all, customers will tend to choose airlines that have a good reputation, and often airlines begin with no reputation at all due to poor marketing. The internet and social media have made marketing significantly easier; if your airline has substantially lower fares than the competitor, this is something to market beforehand. Use bright colors and a fun name? You might attract new customers who want a more fun flying experience.

The key to good marketing is targeting the right customer base. A leisure airline will want to target leisure travelers primarily, and a legacy airline like Delta has to consistently cater to a mix of leisure and business travelers. Knowing your competition will be key since you can outmarket their weakness. Are you offering a new nonstop route that another established airline at your home base doesn’t offer? Are you offering a new class of service your competitors don’t offer?

The airline will also have to hire remaining staff positions. Beyond the customer-facing roles and business operations side, the airline will need lawyers, engineers, route planners, HR managers, and more. Make sure you leave no role unfilled! As with customer-facing roles, recruiting the right staff goes a long way. If you can use data effectively, you might be able to find the next untapped route to boost profit, or effectively advocate for slots at airports you want to serve in the future.   

At this point, the airline is ready to launch. You have the planes, staff, certifications, financial backing, customer base, and airport approval. Now it is time to market the launch date and plan an equally suitable party. Lavish is good here: airlines often give out gifts, food, drinks, and other goodies at inaugural flights. Maybe your CEO can give a speech to rile up the crowd, but ultimately, your goal here is to convince the airport and its passengers that your airline deserves its gates and slots. In other words, the market deserves your airline because it is innovative and adds something that currently is lacking. 

Your product is not first sold when a passenger sits down and judges the seat, but when they come to the gate for the flight and staff speak on behalf of the airline.

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Airline Business Plan Sample

FEB.01, 2021

Do you want to start an airline company?

An airline business provides air transport to passengers on a national and international level. The business is undoubtedly much more profitable than other usual businesses. However, it comes at the cost of a difficult startup.

Starting an airline business is an inevitably expensive venture. The costs of jets, the salaries of qualified and experienced pilots, salaries of the crew, charges paid to the airport, payments to government and travel agents combined make a huge cost.

Therefore, if you are exploring how to build an airline business plan, you must first make sure that you will be able to manage a large team and expenses. To start this business, the first step would be creating a business plan. In this blog, we’re providing a business plan for airlines written for the startup, Bruce Airlines.

Executive Summary

2.1 the business.

Bruce Airlines will be a registered and licensed aviation business startup headquartered in Charlotte. The business will be owned by Bruce Greg, former COO of Aer Lingus.

2.2 Management of Airline company

Managing an airline company demands a lot of experience and expertise. Because the slightest mistake of anyone can lead to huge money and even life losses. In this airline business plan executive summary pdf we’ll be providing all details about Bruce Airlines. So you would have complete knowledge of what to include in your starting up airline business plan.

To manage an airline company, you’ll be needed to employ aviation attorneys, schedule coordinators, aviation technicians, flight attendants, pilots, and administrative staff.

To ensure the smooth running of business’ operations, Bruce Airlines will offer just 45 destinations across the globe in the initial phase.

2.3 Customers of Airline company

The customers of our airline will mainly be businesspersons and officers who need to travel internationally. Moreover, the general public and tourists will also be our target customers.

2.4 Business Target

Our target is to cover the startup expenses within two years of the launch. Moreover, we also aim at earning a net profit margin of $27k per month by the end of the second year and $49k per month by the end of the third year.

Company Summary

3.1 company owner.

Bruce Greg completed his pilot training at American Airlines Cadet Academy at the age of 21. After that, he did an MBA from Harvard University and joined Aer Lingus as a company manager. He served at several managerial posts and eventually became the company’s, Chief Operating Officer. He served as COO for six years and then decided to launch his own airline.

3.2 Why the airline company is being started

Bruce has always been associated with the airline business. He decided to launch his own airline to be an entrepreneur and earn the most by utilizing his skills and experience.

3.3 How the airline company will be started

Step1: Creating A Business Plan

The first step before starting an airline company is to create a business plan for airlines company. Bruce studied several examples of business plans for airlines and developed his start an airline business plan himself. We are providing the business plan he created in this sample business plan airline company.

Step2: Acquiring Required Licenses & Permits

Step3: Establish Headquarter, Values & Services

Bruce Airlines will be headquartered in Charlotte. The company will come into contact with airports and the government to negotiate the fee for hangars and for scheduling flights and routes. Meanwhile, the company will define its services, values, and customer care policies to get recognized.

Step4: Hire The Staff

To run an airline company, you need to hire a large staff. Due to the responsible and delicate nature of work, Bruce decided to recruit staff after rigorous testing and interviewing. The list of staff he’ll hire will be given in the upcoming sections along with their job descriptions and salaries.

Step5: Promote & Market

To attract customers amid huge competition, it is essential to develop an effective marketing strategy. And to come in contact with stakeholders who can indirectly promote your company.

Step6: Establish Online Presence

In this era, it is really important to establish a strong website presence. Bruce decided to launch a website that provides electronic ticketing and flight booking system to facilitate his customers.

Like all other airlines, Bruce Airlines will also be offering four travel classes. The services and luxuries associated with each class are listed here. If you want to build your own airline you can take help from this business plan template airlines.

• Economy Travel Class: This will be our basic class consisting of normal quality seats, foods, and extras for those looking for economical travel. The leg space, seat width, and screen size will be a lot lesser than all other classes. However, it will be adequate for a short flight.
• Wider and Comfortable Seats
• Quality foods and refreshments
• 16-inch entertainment screen
• Extra things including hot towels, toothbrushes, headsets, etc.
• Extra Comfortable Seats (More width, inclination)
• High-quality foods and refreshments
• 20-inch entertaining screen
• Extra things including eye masks, headsets, towels, and others.
• High priority check-in security
• High priority baggage handling
• Mini-Suites with privacy doors and noise-dampening curtains
• Storage compartments
• 26-inch entertainment screen
• Personal wardrobe
• Comfortable seat that reclines into super-comfy bedding with temperature control
• Finest foods and drinks made by world-renowned chefs
• Amenity kit including toothbrushes, face creams, lip balms, ear-plugs, and other things.

Marketing Analysis of Airline Company

Marketing analysis is a very important part of airlines business plan template. It analyzes the target market and target customers. Moreover, it also explains how much price you should set to meet your financial goals while attracting more customers than your competitors.

In this starting an airline business plan we are providing the marketing analysis done for Bruce Airlines. Here we have analyzed the global market trends for this business and the general groups of people that can be considered as potential customers.

If you are looking for how to write a business plan for an airline you can take help from airline business models pdf.

5.1 Market Trends

According to IBISWorld, more than 22k global airline businesses are running in the United States, employing more than 2.5 million masses. According to the same source, the business holds a huge market size of $686 billion.

Despite that the industry is already quite large, still, It is expected to grow more in the coming years. The growth is forecasted based on the surge in travel activities and expansion in the middle-class population in the coming years.

5.2 Marketing Segmentation

5.2.1 Business Persons

This group of our customers comprises of businessmen and women who need to travel to several countries as part of their business. This group is expected to avail of our first class and business class travel tickets. As this category usually arrange business trips and meetings, therefore, we expect this group to avail our services in groups.

5.2.2 Foreign Officers

Our second target group comprises high officials who need to travel on regular basis to meet their job responsibilities. This group is also expected to avail of our first class and business class travel tickets.

5.2.3 Tourists

Our third target group will comprise tourists who board airplanes frequently to reach out to remote locations. This category is expected to travel mostly in economy and premium economy class.

5.2.4 General Public

Lastly, general people who have to travel far-off places on an urgent basis will also be our target customers. This group is expected to avail mostly our economy class service.

5.3 Business Target

• To earn a profit margin of $49k per month by the end of the third year
• To achieve an average rating above 4.77 by the end of the second year
• To achieve a CSAT score above 92 by the end of the first six months
• To increase our travel destinations from 45 to 55 within three years of our launch

5.4 Product Pricing

Our prices will lie within the same ranges as that of our competitors. However, we will offer several discounts in the startup phase.

Marketing Strategy

Bruce Airlines will come up with several competitive aspects to get ahead of its competitors. In this airline marketing strategy pdf we’re providing the marketing strategy of Bruce Airlines. So that you can have help in making your own airline marketing business plan.

6.1 Competitive Analysis

We expect to get popularity among our customers due to the following competitive aspects.

• Electronic booking and ticketing facility
• Additional amenities
• Discounted rates in the first two months
• Dedicated flight attendants
• Highly customer care oriented policies

6.2 Sales Strategy

To advertise our startup, we’ll

• Promote our services through travel agent companies , social media campaigns, and Google Local ads services.
• Offer a 30% discount on the economy, premium economy, and business class tickets for the first two months of our launch.
• By launching our frequent-flyer program for privileged and loyal customers.
• By making our website SEO and by investing in artificially intelligent chatbots.

6.3 Sales Monthly

6.4 Sales Yearly

6.5 Sales Forecast

Personnel plan

An airline company needs a lot of staff to manage operations. Therefore you should make a detailed list of required employees with their job descriptions as you write a business plan for an airline.

7.1 Company Staff

Bruce will be the CEO himself. The staff he’ll hire is listed below:

• 1 Chief Operating Officer
• 5 Pilots with ATP certifications
• 9 Flight Attendants
• 2 Airline Operations Agents
• 3 Avionics Technicians
• 3 Airline Station Agents
• 1 Aviation Attorney
• 2 Sales Executives
• 1 Social Media Manager
• 6 Security Officers
• General Cabin Crew

7.2 Average Salary of Employees

Financial plan.

The airline company is not like other usual businesses. Starting and running an airline business is extremely expensive due to the high costs involved in

• Purchasing Airplanes
• Recruiting highly qualified pilots
• The fee paid to the government and airports
• The fee paid to travel agents
• Frequent loss due to empty seats
• Salaries of a large workforce
• Maintenance costs
• Money spent on marketing and advertisement

Therefore due to the high costs involved in airline operations, you need to be very much careful in managing your finances. Your financial plan for this business must draw a trajectory to earn targeted profits despite these huge expenses.

As Bruce had all the knowledge to create a financial plan, he carried out this task himself. In the case of your startup, if you are not a professional financial analyst, you must hire the services of one. To get a rough idea of what to expect from your professional financial plan writer , we are providing the financial plan of Bruce Airlines in this starting airline company business plan.

8.1 Important Assumptions

8.2 break-even analysis.

8.3 Projected Profit and Loss

8.3.1 profit monthly.

8.3.2 Profit Yearly

8.3.3 Gross Margin Monthly

8.3.4 Gross Margin Yearly

8.4 Projected Cash Flow

8.5 Projected Balance Sheet

8.6 business ratios.

All tables in PDF Download Airline Business Plan Sample in pdf Professional OGS capital writers specialized also in themes such as drop shipping business plan , import and export business plan , logistics business plan , airmall business plan and helicopter business plan .

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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How to Write a Startup Airline Business Plan

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How to create your own shoe line's business plan, how to write a business plan for an existing business.

• How to Write a Strategic Analysis for Business Organizations
• How to Write a Business Plan for an Acquisition

With more than $20 million in collective revenue each year, the U.S. airline industry is lucrative. Though lucrative, the airline industry has seen several fluctuations over the years, such as economic downfalls and air space issues that have affected industry achievements and profit. To ensure a productive and successful startup and maintain a positive existence in this demanding industry, your airline business will require a business plan.

Create a general business description of your business. Include the address and contact information for your airline’s headquarters. List the names and contact information for each of the airline’s owners and briefly describe each owner’s professional experience. Identify the legal structure of your airline, such as partnership or corporation, and outline the short- and long-term company objectives. Explain if your airline will handle private passenger flights, commercial flights or both. List your airline’s professional business relationships, such as the company attorney, insurance agent and accountant. Include the addresses and contact information for each professional.

Complete a marketing analysis for your airline. Include forecasts for your target market’s air travel, as well as information on the market’s demographic and income statistics. Complete a competitive analysis of the airline’s strongest competitor’s. Include fare comparisons, competition by airline route and schedules. Complete a SWOT analysis to identify your airline’s strengths and weaknesses. Provide information on your airplane capacities, maintenance costs, fuel efficiency and reliability. Create a list of ticket prices for your airline and categorize them by class, such as economy and business.

Develop a list of employees that your airline will require to maintain efficient operations. Categorize the employees by department, such as airline operations, customer service, maintenance and ground crew, and develop an organizational chart for easy reference. Create a detailed job description for each position and include the costs of each position, such as costs for salaries, benefits and training costs.

Provide information on your airline’s operations and location. List the fixtures, furniture and equipment that your airline will need to operate, including planes, lobby seating, airline ramps and computers. Identify the costs that are affiliated with the airline, such as utilities, taxes, certification and licensing requirements. Determine if your airline will purchase, rent or lease its equipment and include the costs for each item.

Create a risks and mitigation plan for your airline business. List the external risks of your business and identify the strategies your airline will use to neutralize those risks. Address safety, weather, terrorism, economic fluctuations and fuel costs.

Develop your airline’s implementation schedule. Define the process that your airline will follow to launch and grow the business. Categorize the phases as 0 to 12 months, 12 to 18 months and three to five years. Include your strategies for funding, aircraft sourcing, staffing, facilities, certification and flight operations.

Complete a personal financial statement for each of the airline’s owners. Include a balance sheet, income statement and cash flow statement for the airline business. Provide accurate figures and make realistic assumptions, when necessary, that are based upon your marketing analysis.

Create an appendix for your airline business plan. Provide any documents that support and prove the information within the business plan. Include documents such as taxes, bank statements, aircraft certification, facility purchase contracts, job descriptions, organizational charts and insurance policies.

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Writing professionally since 2004, Charmayne Smith focuses on corporate materials such as training manuals, business plans, grant applications and technical manuals. Smith's articles have appeared in the "Houston Chronicle" and on various websites, drawing on her extensive experience in corporate management and property/casualty insurance.

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• How to Start an Airline Company
• Growth Hacking Blog
• Entrepreneurship

Are you interested in starting your own airline company? With the number of people flying worldwide each year and a booming global economy, there is never a better time to enter the air travel and business world. Starting an airline can be intimidating, but with some research and preparation, it doesn’t need to be overwhelming. This blog post will attempt to simplify the process by introducing steps from developing your business plan, seeking out investors, obtaining legal authorizations, and launching your first flight. Read on if you want more information about how to start an airline company!

Developing the Business Plan

The first step to starting an airline business is developing a comprehensive business plan . The business plan should include detailed information about the company, such as its mission, vision, and goals. It should also identify the target market, competitor analysis, and financial projections. The plan should include a detailed marketing strategy that identifies how the company will reach potential customers and operational strategies such as fleet size and route selection. Additionally, it is important to create an organizational structure outlining the roles and responsibilities of individuals within the company.

The business plan should also include a budget for launching the airline company and sustaining its operations for a certain period. This budget should cover all costs associated with starting the business, including aircraft acquisition, staff salaries, training, hangar rentals, ground support services, insurance premiums, fuel costs, etc.

Developing a comprehensive business plan is one of the most important steps for launching an airline business and should not be overlooked. It is essential for airline entrepreneurs to thoroughly research all aspects of the company to maximize its potential for success. As the business plan is a road map for launching the airline company, it needs to be as detailed and accurate as possible. If done correctly, it will serve as the foundation of your business. With careful planning, dedication, and perseverance, creating and launching a profitable airline business is possible.

Seeking Investors

Once the business plan has been created , the next step is to seek out investors who can provide funding for the launch of the airline company. It is important to carefully research potential investors to identify those who share your vision and goals for the whole business model. Investing in a startup airline business can be highly risky, so it is essential to find investors familiar with this type of venture and understand its potential rewards.

When approaching potential investors, preparing a detailed presentation outlining all aspects of the business plan, including financial and ticket sales projections, target market analysis, and marketing strategies is important. Additionally, it may be beneficial to create a portfolio or website showcasing any experience working in the aviation industry and successes within other businesses owned by the entrepreneur.

Once a potential investor has been identified, it is important to negotiate the terms of the investment, such as repayment timeline and interest rates. It is essential to ensure that all agreements are in writing and clearly outline the expectations for both parties. Additionally, providing incentives for investors, such as options for early redemption or profits sharing plans, may be beneficial.

Securing investments from venture capitalists or other investors can be an effective way to fund the launch of an airline business. However, it is important to thoroughly research each potential investor before entering into any financial agreement to maximize the chances of success for the startup airlines business venture.

Want to launch your own airline company and make your mark in the aviation industry?

Contact growth hackers  , gaining legal authorization.

The next step for starting an airline company is to gain legal authorization from the relevant authorities. Depending on the jurisdiction, it may be necessary for major carriers to file paperwork and obtain certificates or licenses to operate an air carrier . Additionally, some states require airline companies to provide a security bond and financial statements detailing the business’s current situation.

To ensure that all documentation is filed properly and following local laws, seeking experienced legal counsel specializing in aviation law can be beneficial. An attorney can help guide entrepreneurs through obtaining proper authorizations and advise them on any potential issues or challenges that could arise during this stage. It is also important to research any additional regulations regarding aircraft operation, safety protocols, and insurance requirements.

Finally, before launching an airline business, it is important to register the company with the Federal Aviation Administration (FAA). This step involves submitting paperwork to obtain an Air Carrier Certificate. An air operator certificate is also necessary for a business to operate and transport passengers. Additionally, it may be necessary to apply for additional permits depending on the nature of services provided by the airline, such as cargo or commuter operations.

Gaining legal authorization is a critical part of starting an airline company. Filing all necessary documents per local laws helps ensure that a business meets all safety and operational requirements while also protecting the interests of employees and customers. With careful planning and dedication, entrepreneurs can successfully navigate this process to launch their new venture.

Acquiring Aircrafts and Facilities

Once all legal documents are filed and approved, the next step for starting an airline company is to acquire aircrafts and facilities. This process involves obtaining necessary equipment such as airplanes, air traffic control systems, and even terminals or hangars if required. Additionally, it is important to consider any maintenance needs that may arise to keep the fleet of planes in working condition.

When selecting aircraft for a business, it is essential to consider the type of services being offered and customer preferences. For example, long-haul flights require larger planes with more seating capacity, while regional airlines may opt for smaller jets that require less fuel and can be operated by low-cost carriers or on shorter routes. Purchasing used airplanes from other companies or leasing companies is also possible to save money.

In addition to aircraft, entrepreneurs should also consider other facilities and resources such as flight training schools, navigation systems, and any customizations necessary for the fleet. It is also important to investigate potential partnerships with airports and other airlines in a particular market to secure more favorable rates or access to certain services. Finally, it is essential to ensure that all equipment meets safety standards set by local aviation authorities.

Usually, acquiring aircrafts and facilities is one of the most expensive steps for starting an airline company. It is important to have a clear understanding of the services being provided by major airlines to make informed decisions when selecting airplanes and other resources.

Creating an Operations Plan

Creating an operations plan is key to the success of any airline company. An operations plan should provide a detailed view of the day-to-day tasks that must be completed to achieve your overall business objectives. It will guide your staff and other stakeholders, detailing all aspects of running your airline. Here are some key points for you to consider when creating an operations plan.

1) Understand Your Scope: Define what services the company will offer and what geographic area it will cover. This helps determine the size and complexity of the business model’s operation, which will inform many decisions going forward.

2) Resources & Requirements: Identify all resources that must be acquired to run the business. This includes technology, premises, personnel, and equipment. As today’s airline industry is highly competitive, it’s important to ensure that the company meets all the requirements of the industry and any local regulations.

3) Planning & Scheduling: Establish policies and procedures for managing operations of international flights, including scheduling of flights and crew rotations. Also, consider the need for customer service initiatives such as ticketing, customer relations, and ground transportation services.

4) Cost Control & Efficiency: Develop cost controls to ensure that operational expenditures align with overall budget goals. Also, identify opportunities to increase efficiency by reducing costs or streamlining processes. Suppose you need an expert opinion. In that case, you can consult independent advisors to help you identify areas of improvement and ensure compliance with local laws and regulations.

5) Risk Management: Identify potential risks that could affect the business operations and create a plan to mitigate them should they occur. This includes insurance coverage, legal compliance requirements, and contingency plans for unexpected events like bad weather or other disruptions.

6) Quality Control: Establish standards of quality for all aspects of the operations, ranging from customer service to flight safety, fleet management and maintenance. This helps ensure that the airline’s services are of the highest standards and its customers have a positive experience. When it comes to safety, the company should ensure that all employees are adequately trained and follow the procedures laid out by local aviation authorities.

By creating an operations plan that covers all these points, you will be well-positioned to launch a successful airline company. With clear objectives, strategies, and procedures, your business will have the best chance of achieving its goals. In addition, it will help to ensure that all parties involved understand their role and what is expected of them. This leads to greater efficiency and smoother day-to-day operations for your airline. Finally, with an up-to-date operations plan, you can adapt quickly as new opportunities arise or unexpected challenges appear. This makes it easier to stay ahead of the competition and keep your business running like clockwork!

Ready to soar to new heights? Start your own airline company today!

Work with growth hackers  , launching your first flight.

Launching your first flight is an exciting time for any airline business. It can be a daunting task, however, as several factors must be considered. Before you launch your service, it’s important to ensure that you have the right permits and licenses and staff trained in aviation safety measures. Once these items are taken care of, you must advertise your airline services and purchase aircraft or charters that comply with all necessary regulations.

If you plan on purchasing a fleet of aircrafts for your airline company, ensure they meet FAA requirements and any additional local standards for airworthiness. You should also ensure the planes are equipped with the latest navigation systems and emergency backup procedures to provide your customers with a safe, reliable service.

When advertising and launching your first flight, consider all the marketing channels available. This includes print, radio, television, and digital media. Ensure you have an attractive website with all your fares, destinations, and special offers clearly stated. Social media can also be a great way to connect with potential customers to inform them about your new airline company.

Once you’re ready to start flying passengers, don’t forget to register for fares in advance and create loyalty programs or specials for returning customers. Additionally, make sure that you keep track of customer feedback so that you can continuously improve upon their experiences flying with your airline company. Suppose you just can’t seem to keep up with the demand for flights. In that case, you might consider partnering with another airline company or expanding your fleet of aircrafts.

Launching your first flight can be intimidating, but it doesn’t have to be. By following the steps outlined here, you can ensure that your airline business gets off the ground safely and begins turning a profit quickly . With careful planning and preparation, your dreams of owning an airline company will soon become a reality!

Closing Thoughts About How to Start an Airline Company

Starting an airline company is a complex, risky endeavor not for the faint of heart. However, it can be done with enough dedication and commitment to following all of the steps required to go from concept to reality. It takes careful research into customer needs and wants as well as market conditions; understanding local regulations; having sufficient capital; executing a viable business plan; acquiring the right workforce; obtaining aircraft and insurance coverage; selecting reliable partners and suppliers or vendors; developing marketing strategies that effectively reach target customers; designing customer service policies that meet expectations, etc. All these components are essential in starting a successful airline company.

At the same time, while it is important to focus on details such as those mentioned above, entrepreneurs should not forget to take a step back and assess the overall landscape. As with any business venture, timing is key, and an airline company is no different. Therefore, entrepreneurs and established airlines should also consider future trends, such as changes in customer preferences or demand for certain routes that may impact their operations.

At last, having a great business idea and passion for the airline industry is also crucial. It is important to constantly learn and adapt to changes in the market while remaining focused on the mission and vision of the airline company. Any entrepreneur can succeed in starting an airline company with persistence, hard work, dedication, and patience.

So don’t wait any longer and take the plunge! With these tips, you can be sure to have a successful airline business. Good luck and happy flying!

Growth Hackers is an award-winning aviation marketing agency helping businesses from all over the world grow. There is no fluff with Growth Hackers. We help entrepreneurs and business owners start an airline company, increase their productivity, generate qualified leads, optimize their conversion rate, gather and analyze data analytics, acquire and retain users and increase sales. We go further than brand awareness and exposure. We make sure that the strategies we implement move the needle so your business grow, strive and succeed. If you too want your business to reach new heights, contact Growth Hackers today so we can discuss about your brand and create a custom growth plan for you. You’re just one click away to skyrocket your business.

Grow your Business Now  

Neha Jadeja

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That’s a great article as we are interesting to start airline business in East Africa Community countries. Very helpful!

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Starting up airlines: The grey art of business planning

Over the years we have been involved in numerous airline start-up projects, constructing business plans or critiquing others as part of due diligence. Here are some thoughts on the essentials of the process.

Imagination knows no bounds when it comes to start-up airline proposals. Examples of some of the more challenging ideas: converting a Mriya (a six-engine giant Soviet freighter) into a flying casino with round-the-world schedule, taking in London, Hong Kong and Las Vegas; buying up a fleet of obsolete DC-9s, attaching floats, building mid-ocean refuelling stations, and offering an exciting transatlantic service.

Such concepts were kerosene-fuelled nonsense of course. But, on the other hand, applying conventional wisdom to new projects sometimes betrays a failure of imagination, a lack of appreciation of how markets will react to new business models.

Some airlines that are now global leaders were almost strangled at birth. Back in the 90s many experienced UK-based analysts and financiers failed to understand the LCC concept, assuming that easyJet and Ryanair would go the way of the previous generation of independent carriers — Dan-Air and Air Europe — and be forced out of business by the all-powerful flag-carriers. Experts were wheeled in to apply their industry experience, usually gained at BOAC or perhaps Imperial Airways, to the upstarts: Southwest might well work in Texas, certainly not in northwest Europe.

Near identical attitudes were encountered when LCC start-up plans were first introduced in Asia and the Middle East. This is where much of our experience was gained in the 2000s — building from scratch business plans for Air Arabia, based at Sharjah in the UAE, and SpiceJet, where the original Indian investor group split into two and created IndiGo as well — two LCCs for the price of one.

There were many other projects which didn’t work — some didn’t deserve to work, others were frustrated by bureaucracy and vested interests — for example, Al Tayyar, a Saudia Arabian LCC start-up project, failed partly because the civil aviation authority opened up the (substantial) domestic market to new entrants but then imposed hideously complicated public service schedules on new entrants.

The LCC model has now gone global but there are still a lot of potential markets. For instance, Nigeria has great potential (woefully underserved local air demand, the Lagos-Abuja-Port Harcourt triangle, huge population, an emergent wealthy middle class, terrible surface transport, etc) for an indigenous LCC — and always will have, a cynic might add. We have worked on LCC start-up projects for the Nigerian and West African market, where it all looks so promising on paper but then local politics and conditions tend to frustrate.

Consultants do not start airlines; entrepreneurs do. No one is going to invest in a start-up purely on the basis of a consultant’s analysis, no matter how brilliant. Investors and financiers need to believe in the ability of the airline sponsor to develop the plan, to feel fully confident that he or she can deal with the inevitable setbacks, that as well as commercial ability he/she has political skills. Ultimately, backers have to be confident that they will achieve their required RoI.

Airline entrepreneurs come in a wide range of personality types, from thoughtful introverts to hyperactive obsessives, but one characteristic usually impresses investors — willingness to take personal risks themselves, putting their own money into the start-up.

Entrepreneurs and consultants

It is the role of the consultant to turn the entrepreneur’s vision into a coherent form by subjecting it to the discipline of the spreadsheet. This is not always a smooth process. Quite often, the numbers just do not add up and often it’s difficult for enthusiastic airline proponents to accept this fact, which is why there has to be a good working relationship between the sponsor and the consultant.

Original concepts can be torn up and replaced with something sounder. Tony Fernandes’ original idea for Air Asia was as a full-service long-haul carrier before an ex-Ryanair adviser, Conor McCarthy, turned it into a short-haul LCC, luckily for Mr Fernandes.

Occasionally, investors understand the economics but make a political decision. As an example, our analysis of Air Lituanica presented to Vilnius City Council and Chamber of Commerce, containing some hardened businessmen with international experience, clearly showed that the proposed Regional Jet operation, no matter how efficient, would probably lose bucketfuls of money in the first three years before maybe, possibly, scraping break-even. Still local political and business interests prevailed — Lithuania was due to assume presidency of the EU, memories of Soviet occupation and fear of isolation from the West prevailed, the LCC newcomers in some Lithuanian markets, Wizz and Ryanair, could leave at any moment — so Air Lituanica was set up. It operated for about two years.

Consultants, with the exception of guru-types, normally come with clever models that can be adapted to different start-up projects. The basic purpose of any model should be to prove the basic concept through a detailed operational and financial projection of costs and revenues, with unit costs tested for accuracy, schedules for practicality and revenues for reasonableness. The model should be able to answer questions like: Can the start-up maintain a significant cost advantage against the competition and resist competitor reaction? Is the network scaleable? What is the best estimate of required capitalisation, taking into account start-up costs, capex, two or more years of operating losses, contingencies etc?

Aviation Strategy has its own specialised model, which evolved over many projects. It’s not particularly complicated, written in excel, with no black box equations, but it works. Extracts from the model are plastered over these pages. The key characteristics of our model are:

• It uses a bottom-up approach, going from individual routes to the network. The P&L numbers on page10 are the sum of dozens of individual route P&Ls. It can be run on an annual, seasonal or monthly basis.
• It is integrated, combining traffic, schedules, capacity, competition, pricing, operating costs, aircraft choice, utilisation, crewing efficiencies, aircraft financing options and capitalisation. All the elements are inter-connected. To illustrate: change market share on one route in Year 1 and the balance sheet in Year 5 changes (if you are anal enough to look at enough decimal points).
• It is flexible, designed to allow immediate testing of alternative assumptions. This is very important, as the robustness of any airline proposal can only be judged by stressing it. If you feel like, you can easily change, among many other things: market shares, demand growth, pricing by bucket, scheduled flights by route, aircraft type, average aircraft utilisation, fuel and other cost inputs, aircraft pricing, fleet lease/owned balance, debt/equity capitalisation, contingency, etc, etc. But make sure, for example, that if you decide to increase aircraft utilisation, you also check that the model doesn’t also show pilot hours exceeding regulatory limits.
• It is a low cost model, and is designed for LCC-types. But LCC-types have evolved from the classic narrowbody, short-haul only to: long-haul, regional, business-only, etc. The basics are that the airline has to fly one aircraft type only, and that it is essentially a point-to-point operation (the model is not suitable for complex hub and spoking).

Business Plan issues

Here are some of the issues and problems involved in building the business plan.

Forecasting revenues is always contentious. The first step is usually to come up with an estimate of the current core traffic, ie point to point only, on each route in the proposed network, using capacity schedules, CAA data, MIDT, whatever is available. If there is no air traffic, then be imaginative. The Indian bureaucracy provided a wealth of information for potential LCCs — meticulously compiled statistics on AC1 and AC2 (air-conditioned) train passengers throughout the sub-continent — the target customers who would be attracted by a reasonably priced air ticket for a 1½-hour flight rather than 14 hours in a train carriage.

How much of this traffic the new LCC could win depends on setting and maintaining fares at, say, 30-50%, below full service incumbents. Again, any data source that is available is used to estimate the incumbent’s average fare, or fares — for instance, standard, peak and discount. To get to the traffic estimate for the LCC, the model requires that you input your estimates for market capture, market stimulation, market diversion (from other modes). This forces the forecaster to be explicit about the relationship between pricing and volumes on each route. It also enables assumptions to be challenged on a detailed level; routes differ — price-sensitive leisure routes can usually be stimulated, business-orientated routes may be price-inelastic; the incumbents may be entrenched or vulnerable.

Having come up with a first estimate of traffic by route, the next step is to build the schedule. Inputting frequencies by route generates the seat capacity on each route (depending of course on the size of the aircraft deployed) by year, by season, by month. The aim is to achieve a frequency which generates slightly more seats than the predicted passenger volumes. Load factor is an output, not an input, in our model.

So now we have the passenger revenues by route (simply average LCC fare by generated traffic) volume. Add in ancillaries and others (more of this later) and we have total revenue.

The key cost drivers emerge from the traffic and capacity analysis — Passengers, RPKs, Flights and Flight/Block Hours, which directly or indirectly distribute costs among the network’s routes.

The total block hours generated by the network each year is used to provide the fleet plan — simply by dividing the total hours by a target annual utilisation per aircraft (this will have to be refined later when a detailed schedule has been drawn up). A similar process generates the number of cockpit and cabin crew required, as well as inputting into the requirement for line engineers.

Aircraft questions

A key question: to lease or to buy? In general, an owned fleet will work out less expensive in terms of interest/rental payments over time, and many investors prefer ownership as it puts some fixed assets on the balance sheet. Although a start-up is unlikely to achieve deep discounts from the OEMs, they can be surprisingly generous if they perceive major growth potential.

On the other hand, operating leasing, if that option is available, makes sense in terms of preserving precious capital for developing the operation — a starting fleet of four new narrowbodies will use up about $60m of capital if purchased (assuming 70% debt) whereas operating lease deposits would only be about $4m.

On the issue of aircraft choice, the model can inform the decision process. If the OEMs’ presentations of their competing offers — different types, different pricing, different operating claims — can be distilled down to a some basics — price, seating, MTOW, maintenance costs, fuel burn -then these data can be inputted to the model and a quick estimate of the viability of various options outputted. On a high level, this can be very useful as a negotiating tool.

What should be an obvious comment about the most important cost element, fuel: use the most recent, or the last 12 month average, adding in taxes and delivery charges at the main airports, and stick to this per gallon or per litre cost throughout the forecast period. Adjusting the unit cost to reflect “oil market forecasts” produces nonsense. Scenarios can be run on different kerosene prices, but then you also have to estimate the elasticity effect, how much of a price change is absorbed by the passenger and how much by the company (a clue: about 50/50).

Airport related costs — landing changes, passenger and aircraft handling — can make or break an LCC start-up. The rates that can be achieved at a regional or secondary airports (as opposed to Heathrow or Frankfurt) may bear no relationship to the rack rates or those published in online databases. For the purposes of modelling you can use target rates but be prepared to justify how the discounts are arrived at. Or use the model in discounted rates/ guaranteed traffic growth negotiations with the airport management.

Overhead in an LCC operation is mostly management. Imputing each position and annual employment costs focuses the mind on what “lean management” really means. As a rule of thumb, the number of total employees per aircraft should work out in the mid 30s for a short haul LCC, otherwise it isn’t an LCC.

Quality rather than quantity of managers is critical, and this has proved problematic. Note that FastJet, in its original form, was staffed with managers recycled from other failed start-up airlines who then preferred to stay at London Gatwick rather than basing themselves in Tanzania. Indigo, the LCC private equity fund, may have found a solution by utilising ex-Ryanair expertise. Ex-pat talent returning home worked brilliantly when Rakesh Gangwal was enticed from US Airways to IndiGo, the Indian LCC.

Having sorted out all the revenues and costs, the next big question is how to turn a loss-making airline, which it will be in its early years into a profitable one, which investors tend to insist on. In terms on modelling, there is only one basic way to turn a loss-making start-up into a profitable airline — the growth in unit revenue has to exceed the change in unit cost. As the airline grows, marginal changes in load factor, or yield, can translate into large change in profit margins — if unit costs are rigorously restrained.

But, after the first two years, it is difficult to find economies of scale — the company should have been set up with a low proportion of fixed to variable costs, and should have started using best industry practices, so unit costs cannot be expected to fall significantly. Although It may just be possible to ramp up utilisation rates if the airline has been set up with spare capacity in order to ensure a regular, reliable operation in the early days — an important consideration.

The revenue side of the business plan/forecast is inevitably more speculative than the cost side. Still the combination of the sponsors’ local knowledge and the consultants’ expertise should give solidity to the forecast. Beware the line that refers to ancillary revenue or just other revenue. In the model, this is often just a simple number based on other LCCs’ reported unit ancillary income or a small percentage figure. It is worth checking how much this revenue line, which generally does not have a linked cost line, is driving the start-up’s profitability. If it is substantial, make sure that you understand exactly what “ancillary” means.

Finally, there is the LCC’s all-important capitalisation. Inadequate capitalisation causes bankruptcy. The quantum of equity and debt provided has to cover start-up costs, all capex, working capital, cash losses over at least two years, contingency, etc. Our model signals insufficient capitalisation simply by working out when the start-up is about to run out of cash and alerting the planner with a mild electric shock.

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How To Start An Airline Business

An in-depth overview.

No matter what time of year or state of the world and its economy. Starting an airline is going to be a considerable investment of time, money and require a large amount of capital. Just like any other startup, you’re going to need a business plan. However unlike most startups, airlines do tend to have more moving parts and obstacles to add to the equation. Having a thorough business plan that tackles important aspects such as:

• Executive summary
• Industry and target market
• Competitive analysis
• Opportunity
• Service offering
• Marketing and distribution plan
• Operations plan
• Management team
• Risks and mitigation plan
• Financial and operating projections
• Implementation schedule
• Capitalization plan

Will only assist with maneuvering through those challenges by solidifying the right contacts, certifications and approvals for helping get your airline business into service in a reasonable amount of time. Some requirements may even be needed before properly drafting up your business plan. While some areas of certification will require proof of funds or capital. However, having these markers in place will only make going through the entire process a little bit smoother.

If despite these factors, you’re still determined to learn more about how start an airline. Then the following information will be beneficial in commencing your journey and having a chance at success along the way. With the current state the world is in right now. Starting an airline may or may not be as challenging, considering the recent changes to the travel industry and added health / safety protocols.

It should be noted that this is a very complex area of discussion. It’s an industry that goes through many changes and can be adjusted or updated almost yearly or more. The country you live in can also change how this process works, so please use this as a general guide as opposed to a rule book.

What to Know About How to Start an Airline Company

1.) airline market analysis & industry overview, 2.) understanding your operating environment, 3.) aircraft sourcing & selection, 4.) commencing operations of your airline, things to also consider, additional resources.

Although it is considered a worthy component. A business plan is only one important aspect of what you will need to prepare in order to begin the process of starting an airline. Below is a brief overview of the other important components that you will require, in order to gain approval and successfully launch your airline business.

Part of analyzing the market, is understanding what niche or consumer need that your company can fulfill. When entering into such a competitive space. You’re going to want to have your ducks in a row. Competition is going to be very fierce and unless you bring something fresh or unique to the table. You are going to have a hard time surviving against other carriers of the same size or larger.

A few questions you may want to consider asking yourself or your team are:

• Do you see a need that your airline can fulfill?
• What does the competition currently look like?
• What does your airline provide to the market that is beneficial or unique?
• What services do you plan to offer? (charter, passenger service, cargo etc.)

Another thing you may want to consider when analyzing the market is the frequency of flights at the airport you wish to operate from. If you’re a well-known or full service carrier, traveling in and out of high traffic airports may not be a problem. If you are new however, that may be an issue. It might be more effective to operate out of an airport or hub that is not as busy. Not only does this give you more opportunity to handle your operations with care and at an optimal level. It also allows you that extra interaction with your customers, which in turn helps them to get to know you better as a new carrier.

They say, an aircraft on the ground is an aircraft at a loss . Which for many startup airlines seems to be a challenge, if not thought about beforehand (or discussed in their plan). Keep in mind that no matter how many hours your aircraft is in the air. There are still many fixed costs that need to be taken care of each month. Natural disasters and world economic crisis are other challenges that have made it difficult for airlines to stay afloat. Events like 9/11 have not only increased restrictions on travel, but have also imposed new security guidelines, safety protocols and operating costs.

For more on the commercial aviation market. You can visit the links below from IATA & Boeing. These sources help detail the type of information you will want to look at before starting your business plan.

Some of the information that you can find includes analysis of:

• Commercial market outlook
• Airport, country & regional data
• Air cargo forecast (worldwide)
• Domestic passenger markets
• Demographic trends
• Finance market outlook

IATA Market Analysis Reports | Boeing Market Analysis

For a broader view of what is projected to change in the coming years within the industry. See this article on the 7 trends that will reshape the airline industry by the Boston Consulting Group.

Once you’ve had a chance to look at the market and start forming ideas as to your approach and where you might fit in. You will want to start looking into your operating environment. This includes the different standards, government & federal regulations, rights or certificates etc. that you will require in order to legally open your doors and get your aircraft into the air.

Some of these certificates and regulatory requirements include:

• Economic Authority (DOT)
• Safety Authority (FAA)
• Part 135 Air Carrier & Air Operator Certification
• Part 121 Air Carrier Certification
• Airline Operator Certificate (AOC)
• Airworthiness Certification

Some other areas to consider when looking into your operating environment include; maintenance, repair, employees, training, fuel and more.

International Traffic Rights

The Freedoms of the Air was formulated in 1944 and is an international civil aviation agreement which consists of nine freedoms. This allows permission for a particular airline to enter into a country’s airspace. ETOPS (Extended-range Twin-engine Operational Performance Standards) is another program and set of standards where you will need to gain approval. ETOPS , is essentially a certification that allows Twin-engine aircraft to travel on particular flight routes that may be further than 60 min from the closet airport / hub that can accommodate an extended diversion or emergency landing.

These are just a few examples of the rights and regulations that you will need to have in order to advance your business plan and achieve the goals you have set forth in reaching. The information above should give you an idea of the regulatory standards within the environment you are looking to get involved in. Pair that with tax laws, labor laws, regularly changing safety standards etc. And it may start to sound quite overwhelming.

However, once you gain an understanding of your operating environment. The requirements needed for that environment and how to navigate seamlessly with your team. You will then be in a position to start taking more action on the steps in your business plan, to begin operating your airline as envisioned.

Once you have come to an understanding of your business’ focus and the opportunities you would like to take advantage of. Have thoroughly analyzed your market and competition. Finished planning and scheduling your route, analyzed traffic estimates etc. It should be somewhat clear as to the size and number of aircraft you wish to operate within your airline.

If you plan to serve a small capacity of passengers or travel over a short-range. You may want to look into a light jet, medium jet or a turboprop. However, if you’re looking to serve a large capacity of passengers or travel or a long-range. You might be better off looking into an Airbus or Boeing instead.

When you have figured out how many aircraft and the type you wish to contain in your fleet (new or used). At this point, you are going to need a broker or a supplier to help research and source these aircraft for you to lease or purchase outright.

Aircraft Management

Aircraft management is essentially the control and oversight of all services that are required to operate your aircraft. In many cases you’re going to have to hire more than one full-time pilot along with maintenance staff. It is also beneficial that your pilots and maintenance are already trained to operate and service similar aircraft that you will be purchasing. In addition to the above, you’re going to have to look into hiring; flight crew, avionics technicians, airline administrative support, sales management, flight dispatch, ground airport station attendants, airline ticket agents, passenger service agent, aviation attorney and more.

Besides having to decide between a large or a small management company. Determining what style of management you are looking for, is also important. For example, aircraft management can be handled from two different approaches. Charter or turnkey.

With charter aircraft management. The management company will provide chartering services, while the operator is able to maintain aircraft operations. Essentially working closely together. On the other hand, turnkey aircraft management allows the management company full control of the aircraft available. This means that they take full control of the operational and management responsibilities.

When locating a good aircraft management company. Try not to settle for any offer, but rather look for a company that has your best interest in mind and is willing to stick with you for the long haul. *Finding a team that understands your vision and supports your company direction is even better.

For more information on the buying or leasing process, be sure to click here for a fairly detailed guide . If you’re in need of a broker or supplier to assist with finding aircraft for your airline. Don’t hesitate to give us a call or send us an email .

Starting your airline, maintaining your airline and continuing your momentum as you progress through each year. Is quite challenging and a large reason why many startups do not succeed or turn much of a profit.

Once you open your doors, there is a good chance that you will cut deeply into your initial investment and capital quite quickly in the first few months. Despite what you may have forecasted in your business plan. There is a large possibility that you will need to spend more than anticipated to reach the targets that you initially set forth.

It will also be challenging to maintain a flight schedule with a full capacity of passengers on a consistent basis. Marketing, promotion and any other legitimate means that you can think of to spread the word about your business, will be essential to the growth of your airline. If and when you’re able to build a consistent customer base. You should then be able to start seeing some return on your investment. As an airline, this should be your main focus regardless of what type of airline you choose to operate.

As mentioned previously, an aircraft on the ground is an aircraft at a loss. However there are ways that you can make a profit whilst your aircraft is on the ground. Some of these methods include cargo / freight. Although keep in mind that if you choose to move cargo, there is a higher chance it will cause more wear and tear on your aircraft as opposed to passenger transport.

For assistance and to learn more information on how to start your airline and get it up and running. We recommend taking a look at what Boeing has to offer in this area. They can not only help get you to the point of approval, but can also help educate and instil confidence in your vision and plan along the way.

If you’re familiar with Startup Boeing and are looking for additional options. Contact us and we can see who we can put you in touch with.

• Fuel costs especially for startups can be quite high. In some cases, you may be looking at fuel costs taking up anywhere from 30-50% of your overall expenses.
• Many airline operators choose to lease rather than purchase their aircraft. It’s more cost effective up front to lease five aircraft than it is to buy five aircraft. Especially when you’re just starting out. Keep in mind, just like any business. The larger your order, the larger your potential for a bigger discount. *As per Boeing, leasing represents more than 40% of in-service commercial aircraft ownership.
• Both Boeing and Airbus are seeing an increase in cancellations. Thus allowing aircraft to be sold at larger than usual discounted prices to free up their backlog.
• The owner of Ryanair believes that once air travel is able to continue as normal. There will be a price battle among the already established players. Being a new airline might be difficult if you’re trying to compete in this price battle from the get go.
• As per Business Insider, Virgin America was one of the most successful startup airlines in recent history . Virgin began their operation with a single Boeing 747 airliner in 2007. They later grew and expanded their fleet as demand started to increase. Virgin was then acquired by the Alaska Air Group (Alaska Airlines) in December of 2016 and the department of transportation (DOT) issued an operating certificate for the combined airlines in January 2018.
• As a startup, it’s important to be aware of the level of competition you will be dealing with from full service carriers. It has been demonstrated, that legacy or full service carriers will try to squeeze out smaller low-cost carriers when given the opportunity. Other tactics include but aren’t limited to; reducing available seats and increasing airfares, slot sitting etc.
• 2020 is said to be the first time since the financial crisis in 2008 that the airline industry has seen such a decline. If you’re into stocks and understand the importance of buying low and selling high. Then this is not necessarily a bad time to get involved. The bigger question is, can you still make something that can sustain itself while being profitable during this time?
• An example of an actual airline business plan from a company in London, United Kingdom from Reference for Business.
• Here is another example of a business plan from Bplans . This plan was also created by another company and cannot be re-used. Right click the page to be prompted to download the document. *If you submit your email, they will provide you with explanations on how to fill out each section at a professional level.
• IATA’s Economic Performance of the Airline Industry.

For more information on the leasing process , navigate here. Or, click here to go back to the homepage .

Airline Start-up

Starting an airline requires a robust business plan, deep market understanding, and professional aviation expertise.

GH Aviation Consulting offers comprehensive support from the initial concept of a new airline through to fundraising, aircraft sourcing, and obtaining your Air Operator Certificate. Our team has extensive experience in market analysis, network and fleet planning, and financial modeling, informed by numerous past projects. We're also skilled in guiding carriers through the operational and commercial aspects of the implementation phase.

We collaborate closely with your team, making informed, data-driven decisions to enhance your project's appeal and success. Our detailed analyses and evaluations build confidence among investors and stakeholders.

How we can help

Business plan due diligence, aircraft operators.

You already have an existing business plan setup by your team? GH Aviation Consulting can provide a detailed evaluation of your business plan based on a methodology proven on a multitude of past projects. The review includes proofreading, checking numbers and estimates, but also global recommendations on the project development strategy.

Business plan / Fundraising

Starting an airline requires a solid business plan to attract funds and partners like lessors and suppliers. At GH Aviation Consulting, we provide a tailored, data-driven business plan service, drawing on our experience from numerous past projects. We have a strong track record in securing funding from investment banks, which can be a game-changer for your project.

Route studies

Aircraft operators - airports.

You might only need support on the market analysis side with specific route studies, or your business plan project is about expanding your existing network. GH Aviation Consulting can assess in details the potential for new routes considering existing operations & business model.

Aircraft evaluation

Choosing the right aircraft model and the right lessor/manufacturer is a key driver of the success of your airline project. Thanks to previous experience in a major aircraft manufacturer marketing team, GH Aviation Consulting can support you through the aircraft sourcing process, from the analysis of the offers to negociating the terms and conditions of aircraft supply.

AOC support & guidance

After the business plan is done and some funding is secured, getting the Air Operator Certificate is a very challenging activity that takes 9 to 18 months to be completed. GH Aviation Consulting has experience in leading and supporting several AOC projects up to their first commercial flight. We can help you steering the AOC project and facilitate key decision making in an informed and timely manner.

Airline management interim

GH Aviation Consulting staff can step in as interim managers (CCO, CFO) and lend our expertise in several key areas. This includes building a financial model, choosing sales channels and software, negotiating for airport slots, planning your first flight schedules, and setting up your ticket pricing and products. Our team knows what it takes to start an airline, and we're ready to guide you through each step

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Regional Airline Business Plan

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Puddle Jumpers Airline

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

Puddle Jumpers Airlines, Inc. is a new consumer airline in its formative stages. It is being organized to take advantage of a specific gap in the short-haul domestic travel market. The gap exists in low cost service out of Anytown, U.S.A. The gap in the availability of low cost service in and out of the Anytown hub coupled with the demand for passenger travel on selected routes from Anytown indicates that a new entrant airline could be expected to capture a significant portion of current air travel business at that hub.

The management of Puddle Jumpers is experienced in airline start-ups. Previously management grew Private Jet Airlines from a single Boeing 727 to a fleet of 16 MD80 series aircraft. Revenues grew to $130 million in a two year period four years ago.

Our research and projections indicate that air travel to and from Anytown is sufficient to provide a new carrier with excellent revenues in its first full year of operations, utilizing six aircraft and selected short-haul routes. These sales figures are based upon load factors of only 55% in year one. Second year revenues are expected to more than doublewith additional aircraft and expanded routes. Load factors for year two are 62%. The Puddle Jumpers plan has the potential for a more rapid ramp-up than was the case with Private Jet due to the nature of the routes and the demand for travel currently in the targeted markets served. In short, the frequency of flights needed to serve Puddle Jumpers’s target market exceeds the demand that dictated Private Jet’s growth.

These sales levels will produce respectable net profit in the first operational year and exponential growth in flight-year two. Profits in year one will be a modest percent of sales and will improve steadily with the economies gained in year two. The over-all operational long term profit target will be 16% of sales as net profit in years four and five. The company’s long term plan is part of the due diligence package. The first operational year is actually fiscal year two in this plan.

The first year of formative operations will burn cash until revenue can commence. This is due to the organizational and regulatory obligations of a new air carrier. Investment activity is needed to handle the expenses of this phase of the business.

The following chart illustrates the over-all highlights of our business plan over the first three years. Gross Margin here is quite high since the only costs included in this calculation are travel agent commissions, credit card discounts, and federal excise taxes. Travel agent commissions are calculated on 30% of sales even though management feels the actual number will not exceed 10% of sales.

NOTE: For display purposes in this sample plan, numerical values in tables and charts are shown in thousands (000’s).

1.1 Objectives

The Company has the following objectives:

• To obtain required D.O.T. and F.A.A. certifications on or before month eight.
• To commence revenue service on or before the end of year one.
• To raise sufficient “seed” and “bridge” capital in a timely fashion to financially enable these objectives.
• To commence operations with two McDonnell-Douglas MD-80 series aircraft in month one, four by end of month four, and six by end of month six of flight operations.
• To add one aircraft per month during year two for a total of 18 at year two end.

1.2 Mission

Puddle Jumpers International Airlines, Inc. has a mission to provide safe, efficient, low-cost consumer air travel service. Our service will emphasize safety as its highest priority. We will operate the newest and best maintained aircraft available. We will never skimp on maintenance in any fashion whatsoever. We will strive to operate our flights on time. We will provide friendly and courteous “no frill” service.

1.3 Keys to Success

The keys to success are:

• Obtaining the required governmental approvals.
• Securing financing.
• Experienced management. (Already in place).
• Marketing; either dealing with channel problems and barriers to entry; or solving problems with major advertising and promotion budgets. Targeted market share must be achieved even amidst expected competition.
• Product quality. Always with safety foremost.
• Services delivered on time, costs controlled, marketing budgets managed. There is a temptation to fix on growth at the expense of profits. Also, rapid growth will be curtailed in order to keep maintenance standards both strict and measurable.
• Cost control. The over-all cost per ASM (available seat mile) is pegged at 7.0 cents or less in 1996 dollars. This ASM factor places Puddle Jumpers in a grouping of the lowest four in the airline industry within the short-haul market. (US Air, the dominate carrier in the Anytown market, averages 12.0 cents per ASM by comparison). The only three airlines with lower operating costs also operate older and less reliable equipment, and even then the lowest short-haul cost in the airline industry is currently Southwest at 6.43 cents per ASM.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Puddle Jumpers International Airlines is being formed in July, 1996 as a South State Corporation. Its offices will be in Anytown. The founder of Puddle Jumpers is Kenneth D. Smith. Mr. Smith has extensive experience in consumer aviation. His bio as well as the backgrounds of all the members of Puddle Jumpers’s management team are enclosed herein.*

* Confidential and Proprietary information has been removed from this sample plan .

2.1 Company Ownership

Puddle Jumpers International Airlines, Inc. will authorize 20,000,000 shares of common stock. 1,000,000 shares are to be set aside as founder’s stock to be divided among key management personnel. It is also expected that management stock options will be made available to key management personnel after operations commence. It is expected that founders stock plus option stock will not total more than 15% of authorized shares.

Initial “seed” capital is to be attracted via a convertible debenture sold by Private Placement. This round of funding will have premium conversion privileges vs. later rounds and “bridge” capital. The company has plans to proceed to a public offering prior to initiating revenue service. The expected proceeds from the Private Placement are expected to be $300,000 at “seed” stage, $3.5 million in “bridge” funding and $10 million in I.P.O. proceeds (projected at $6 per share). Management cannot assure that an I.P.O. will be available at the time desired and at the price sought.

A sample of the offering proposed for “seed” investment is included with this plan.

2.2 Start-up Summary

In the second year of operations, Puddle Jumpers will expand revenue by adding flights to the most demanded and popular routes in current operation. This will serve to make our schedule the most convenient to these destinations, improving further our competitive advantage. The routes expected to be expanded first include Chicago, New York, and Anytown. Second level expansions would included Philadelphia, Dallas, Washington DC, Orlando and Detroit.

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2.3 Company Locations and Facilities

Management plans to lease a small office in suburban Anytown immediately upon closing “seed” funding.

The following sections describe the description of service, competitive comparison, technology, fulfillment, and future services.

3.1 Service Description

Puddle Jumpers is in the business of providing low-cost, “discount” air travel to selected destinations from the Anytown, U.S.A. hub. The service approach is “no frills” with emphasis on safe, courteous handling of domestic regional passenger travel.

All consumer surveys still indicate that the air travel customer’s preference is for “low fares.” However, he or she is not willing to compromise on issues of safety or on-time performance. Customers will however, settle for lower levels of in-flight service in order to reduce the cost of travel.

Puddle Jumpers provides precisely the level of service today’s air travel passenger demands.

3.2 Competitive Comparison

The primary competition in the Anytown market is US Air. US Air accounts for 86% of the air travel volume in this market. This is as high a single market dominance that exists in any US market. Also, this results in the highest fares in the nation for travel in-and-out of Anytown. 0% of air travel is at discount fares in Anytown.

Puddle Jumpers feels that we can obtain a significant portion of this business. Our costs will be lower than US Air (7 cents per ASM vs. 12 cents per ASM). US Air is already in financial difficulty due to “sins of the past.” Our costs will be significantly lower than “major” carriers such as Delta. This identifies a gap for only a “hub-based” short haul carrier in the Anytown market.

Operation of a single type of aircraft will have significant cost, maintenance, and training expense reduction.

Our aircraft will operate out of this single hub with high utilization based on price advantage. We will have an over-all competitive advantage since we don’t have aircraft or operations outside of our limited focus. Other airlines must maintain “system-wide” load factors and utilization, while Puddle Jumpers will operate profitably within our “niche” market. This will serve as a barrier to entry from other competitors once we are entrenched. It is unlikely that larger airlines will be able to compete with our low fares nor will they have the desire as they focus on more profitable “long-haul” routes with larger airplanes.

Puddle Jumpers will achieve its target of 7 cents or less per available seat mile by a combination of cost saving measures. Savings will come in the areas of labor costs and from operational economies. Puddle Jumpers will utilize its flight crews significantly more than its competition. Flight crew utilization will be 60% above industry average. Both pilots and flight attendants will be deployed an average of 85 hours per month vs. an industry average of 50-60 hours. The company will realize additional savings in the insurance and benefits areas by virtue of having fewer crew members.

Eliminating meal service in-flight will save approximately $3.00 per seat per flight. This will also increase airplane utilization due to no need for catering service while in port. It is Puddle Jumpers’s goal to utilize its fleet an average of 11 hours per day, 7 days per week.

All aircraft will be configured to a single coach seating capacity of 165 seats. This will maximize revenue on short-haul flights. MD-80 series will be the only aircraft operated by the company. We will eliminate the need to cross-train employees. We will also reduce the requirements for parts inventories.

Our state-of-the-art reservations system will save time, allow us to employ fewer reservationists, and save training costs for new reservation personnel. The reservations system is discussed further in the “Technology” section of this plan.

3.3 Sales Literature

All company literature is yet to be developed. This includes basic corporate identity material as well as advertising executions. First year projections include an expense item for this necessary development work.

3.4 Fulfillment

Aircraft will be obtained on a “dry lease” basis (without fuel) from one of several aircraft lessors at an approximate cost of $165,000 per month. Puddle Jumpers management has already been in contact with GE Capital Aviation Services. It is expected that GE Capital will have 80 MD 80 and/or MD 81 aircraft available for lease from Swiss Air over the next several years. Lease deposits, requirements and terms are as follows:

Generally, first and last month’s lease payments are required in advance. Lease is usually a five-year operating lease and most often qualifies as an expense item to the lessee. Terms of renewal are negotiable and no buy-out provision is included. There may or may not be an additional deposit required by the lessor as a maintenance reserve. Puddle Jumpers management feels that this will not be a requirement but is prepared to make such a deposit if it becomes required to obtain necessary aircraft for operations.

It is expected that up to 80 airplanes will be available over the next two years with an average of 120 days lead time required.

The advantages of utilizing McDonnell-Douglas MD 80 series aircraft, in addition to management’s knowledge and prior successful experience with the same aircraft at Private Jet, are outlined in the “Technology” section of this plan.

Our reservations system will be obtained from CMS at a cost of $200,000 for the software license and approximately $1,000 each for 50 reservation stations (including modem and monitor). The advantages of this system are outlined in the “Technology” section of this plan.

Outsourcing of services are as follows:

Maintenance:

All regular “A” and “B” maintenance will be performed by Puddle Jumpers personnel at our own leased facilities at each airport served. We will also have tools and parts inventory at each site. Puddle Jumpers management feels that it is both necessary and prudent in today’s regulatory environment to perform this regular and routine maintenance “in house”. Periodic “C” and “D” overhauls and major maintenance will be outsourced to Aero Corp. in Lake City, Florida. Labor costs are budgeted at $32 per hour. It is common for many carriers in the aviation industry (including some quite large ones) to “sub-out” “C” and “D” scheduled maintenance. Thus, it is not viewed as a competitive or regulatory disadvantage to Puddle Jumpers to do likewise.

Ground Handling:

Airplane parking services, baggage loading and unloading, and baggage and freight handling services will be outsourced at all airports other than the Anytown hub where these services will be performed by Puddle Jumpers personnel.

Food Service:

All condiments and beverages served on Puddle Jumpers flights will be purchased from in-flight food service providers.

3.5 Technology

All equipment and systems that will be utilized by Puddle Jumpers have been carefully and diligently evaluated. Management feels that it is an advantage to be starting an airline today vs. using many of the systems that burden even the largest domestic carriers with extra cost due to outmoded technology. The technological advantages to management’s choices are outlined below:

Airplane advantages:

In addition, the utilization of MD-80 series aircraft will avoid additional FAA compliance requirements mandated by the “Aging Fleet Program”. These requirements apply to aircraft 20 years older or more. Since most aircraft to be used by Puddle Jumpers were built in the 1982 to 1985 time frame they will not be subject to these mandates during the full initial five year term of their respective leases. Many Value Jet airplanes, by contrast, were built in the early 1970’s.

Since these aircraft were built in the 1980’s parts are still being manufactured and are readily available. Older aircraft often dictate that parts that are no longer manufactured are “cannibalized” from one aircraft to another or that old parts are “remanufactured” since new ones are non-existent. The safety risks are evident. Puddle Jumpers will be able to maintain an inventory of new replacement parts.

Perhaps most importantly, the MD-80 series aircraft is already “Stage 3” noise compliant. New FAA guidelines mandate that 50% of an airline’s fleet meet new noise emission standards by Dec. 31, 1996. Another 25% must qualify by Dec. 31, 1998 and the entire fleet must be in noise standards compliance by Dec. 31, 2000. Several domestic air carriers are already protesting that they can’t reasonably meet these standards but the FAA has demonstrated a past history of not bending on similar issues. Puddle Jumpers’s fleet will not be effected by these requirements since it will comply as soon as it begins flying. There will be no cost to upgrade or retro-fit required. Again, this fits Puddle Jumpers’s philosophy that the cheapest way to maintain aircraft is to adopt a “preventative” overview. All of the cost savings associated with the utilization of this superior aircraft are reflected in management’s projections.

Finally, management is well acquainted with all facets of operation of the MD-80 from prior experience at Private Jet. Such experience was completely satisfactory.

Reservations advantages:

The predominate reservations systems in the airline industry today, “Sabre” and “Apollo” are outmoded and obsolete. The major carriers are slow to change because of the huge capital requirement to “roll over” their entire reservations system at one time. Hence, they keep going with the old and outdated.

The CMS reservations system that Puddle Jumpers will use has three main advantages that all contribute to cost savings: 1) Speed, 2) Learning Curve, and 3) Integration. Since today’s PC’s operate so much faster than earlier versions Puddle Jumpers’s reservationists will be able to complete a typical reservation procedure up to 75% faster than industry averages. Most reservations will be completed in two minutes or less (as opposed to the frequent 8 to 10 minutes that almost everyone has experienced from time to time). The system simply searches and retrieves data so much faster. The result is not only higher levels of customer satisfaction but also substantial savings in communications cost to Puddle Jumpers.

Training costs are also reduced exponentially. There is characteristically high turnover among airline reservationists. “Sabre” and “Apollo” take two weeks to learn and master. Puddle Jumpers’s use of CMS will enable a basic computer literate employee to learn the system in only one day.

The CMS system also seamlessly integrates with other management information systems used by Puddle Jumpers. It is also designed to operate in a “ticketless” environment, something the other systems have difficulty accomplishing.

Operational advantages:

Over-all operations will be seamless from area-to-area of Puddle Jumpers’s management information systems as a whole. Most systems utilized by the major carriers today were put in place more than 20 years ago. Thus, there is a constant need for each operational area to “talk” or “re-transmit” essential data to one and other. Not only will Puddle Jumpers’s information systems operate “seamlessly” but they will also greatly enhance the ability to conform to all FAA compliance requirements. The biggest and toughest compliance issue facing carriers today is “record keeping.” It is not enough to comply, but one must be able to PROVE compliance as well as have full and clearly defined and documented internal accountability.

3.6 Future Services

Service will be one-class with all aircraft configured for a seating capacity of 165. Travel will be ticketless. Reservations will be handled predominately by our own reservation system (even though we’ve budgeted travel agent commissions on 30% of sales). In-flight service will be on a pay-on-demand basis. Paid service will be for alcoholic beverages only. No meals will be served on these short-haul flights. A snack of soft drinks and peanuts will be included in the fare structure. Seating will be open with no reserved seats. No frequent flyer or travel incentives will be offered.

Market Analysis Summary how to do a market analysis for your business plan.">

Anytown, U.S.A. is the best place in the continental United States to start an airline. Puddle Jumpers’s management decision to do just that is based upon extensive research compiled from The Department of Transportation O & D report data. This data provides a reliable source (based upon a compilation of actual airline arrivals and departures) of origination and destination demand by passenger, by day. The key measure of demand between any two given points in the grid is called “PDEW.” That is “passengers departed each way.” The PDEW compiles a total number of passengers on all carriers between two points, on average, each day. This total is irrespective of final destination.

The other keys factors that resulted in the choice of Anytown as a hub derive from management’s experience and knowledge in commercial aviation. Principal to the decision is an airline industry insider’s understanding of the problems that face US Air, the dominate carrier in the Anytown market. Also, the lack of availability of a true “discount” fare option to the Anytown traveler is pivotal.

Management is making the judgment that not only is the Anytown market vulnerable to a new carrier, but also that the ability of US Air to retaliate will be limited. Further, the likelihood of a major carrier to respond is unlikely. The only real threat would be another new entry. So the opportunity may best be described as one ready and waiting for the first entrant who arrives with a well conceived plan, sufficient industry experience, and with the required capitalization.

4.1 Market Segmentation

The airline industry is dominated by the major carriers. It is an industry characterized by merger, acquisition, and consolidation. Like so many other industries it has quickly evolved into an industry that has room only for major players and smaller “specialty” or “niche” participants. There are two specialty segments that have characteristically been exploited by new entrants. One is the “price” niche and the other is the “route” niche. One focuses on charging less, the other on providing either the only service between two given points (the “commuter” or “feeder” concept) or else superior or more convenient or less costly service between two heavily traveled destinations.

Short-haul carriers also may operate efficiently out of a single hub. This enables consolidation of services and economies of down-sized scale. At the same time, the revenues available from short hauls are comparatively higher than long hauls on a per-passenger-mile basis.

Short haul revenues are simultaneously high enough to build a substantial business in the hundred million dollar multiple range.

Thus Puddle Jumpers may be said to target the short-haul, single hub, discount fare market segment. This is a new segment defined by the demands of today’s traveler.

4.2 Service Business Analysis

The Federal Government de-regulated the airline industry in 1978. Prior to that time the government virtually guaranteed the profitability of the airline industry, at the expense of the consumer. Routes were restricted. Fares were fixed. Costs got out of control. Today some of the major carriers still continue to operate at less than optimum efficiency. This has spawned the success of various “discount” carriers, most notably Southwest, ValuJet, and the new U2 planned by UAL.

The low cost carriers have proven that they can operate profitably, can garner market share, and have even spawned an increase in travel by luring those who would previously have traveled by bus, rail, or automobile or who would not have traveled at all.

In 1994, ValuJet Airlines in Anytown experienced considerable success and enjoyed rapid growth. It has forced TWA to abandon its mini hub in Anytown and has grown to more than 40 aircraft in two years. Until recently, Anytown was the most expensive major city in the U.S. to fly to or from. This was due, in part, to the near monopoly condition engendered by Delta’s dominance of the Anytown market.

ValuJet remains the economic success model for start-up airlines, although Puddle Jumpers management feels that it should not be the operational model. ValuJet’s current problems are the result of unbridled growth without commensurate control.

Many major airlines today are experiencing significant losses. The management of Puddle Jumpers feels that these losses can be traced directly to the high cost of labor, operational inefficiency, and poor management. Management further believes that the major carriers cannot profitably compete against start-up carriers with limited and specific market focus and lower over-all cost structures.

In retrospect, de-regulation has succeeded in providing air travelers with better service but has not necessarily provided service at a lower price. In the recent times of financial trouble many airlines have complained of an under supply of air travelers, when in fact there is an under supply of affordable seats. It is Puddle Jumpers’s goal to provide these affordable seats while maintaining a profitable airline.

4.2.1 Distributing a Service

Sales of airline tickets have historically been either direct from the airline itself or through various travel agents. Modern computer technology and communications capability are changing the mix dramatically. Travel agents once accounted for 80% of ticket sales. This channel of distribution has been one of very high cost to the airlines. Travel agent commissions at one time became the highest individual cost item to an airline. Perks and incentives amounted to coercion and bribery. The airlines found themselves held hostage. Not until Delta boldly announced that commissions to travel agents would be held to 10% did the situation begin to change.

The physical cost of printing and distributing tickets is also substantial. Travel agents estimate that it costs them an average of $30 in total cost to originate an airline ticket. Many of them have begun to add their own service fees to the actual cost of a ticket.

Available technology has now afforded the opportunity both to sell one’s own tickets and to eliminate the physical ticket altogether. The critical element for both strategies to be successful for an airline is simply to create the demand for travel on one’s airline. If the airline makes it desirable for the consumer to want to fly it then it is just as easy to order tickets directly from the airline as it is from any other source. Puddle Jumpers will have fifty of its own reservations agents available via an 800 number (the service will be 24 hours from an available pool of 90 agents in total). In addition, we will have an Internet site where schedules are available and customers can book their own reservations and buy tickets via credit card.

Puddle Jumpers expects to sell as much as 90% of its air travel “direct” and “ticketless.” Even so, we have budgeted 30% of sales as subject to agent’s commission.

“Ticketless” travel has an additional advantage since Puddle Jumpers will not wait 30 days for collection of clearinghouse funds from other airlines on combined-carrier tickets. Also, it is not expected to be a competitive disadvantage for Puddle Jumpers’s passengers to connect to other airlines. They will want to fly Puddle Jumpers to available destinations to save money even if they need to buy a paper ticket on another airline. Puddle Jumpers flights will be listed in all available flight information systems.

4.2.2 Competition and Buying Patterns

The most critical factor for Puddle Jumpers or any new airline to overcome is the issue of brand awareness and name recognition. Customers prefer to fly with carriers they know and trust. There is little doubt that Puddle Jumpers will need to spend heavily and frequently to advertise and promote its product. The needed amounts are budgeted in this plan. The advantage is that local media can be utilized which is more cost effective on a per-impression basis. It can also be highly targeted. It has been proven in the past that market share can be achieved for a new airline.

Critical in today’s environment is safety. Consumers will switch for lower costs, but not at the expense of a perception of a safety risk, or not at the expense of expected on-time performance. Puddle Jumpers’s media executions will emphasize these two main themes.

In the Anytown market, Puddle Jumpers expects to appeal to a mix of business oriented travelers and personal travelers. One issue is whether or not “frequent flier miles” are needed to compete and sell tickets. Management feels they are not. Industry estimates show that as many as 10% of occupied seats on domestic flights are currently “no revenue” as a result of redemption of premiums earned. It is also very expensive for an airline to administer its frequent flyer program. Puddle Jumpers feels that our cost advantage in Anytown will outweigh the lack of “incentive” rewards. We expect that casual and personal travelers don’t fly often enough for “points” to be significant. At the same time Puddle Jumpers will initiate a concerted sales effort directly to all major corporations in the Anytown market. We hope to have business travel mandated by these corporations on a cost basis alone.

4.2.3 Main Competitors

The only significant competitor in the Anytown market is US Air. At one time Eastern and Piedmont dominated the market. Eastern went out and Piedmont was acquired by US Air. US Air is highly vulnerable because of its high operating costs. ASM short-haul cost of 12 cents is currently the highest in the US. US Air commands 86% of the Anytown air travel market. Delta is a distant second with 2%.

As a result, Anytown currently has the highest air travel costs in the country and 0% of air travel is at discount fares.

US Air’s problems can be traced to two main factors. The first is the fact that their growth strategy has been by acquisition. It is apparent that management paid too much for many small regional carriers and also that the consolidation of these carriers has not produced the operational cost advantages that were anticipated. Secondly, and most important, has been out-of-control labor costs. US Air’s stronghold is in the North East. The strongest labor unions are located in this part of the country and prior management has been completely ineffective in obtaining any concessions from these unions.

In spite of high costs, US Air has grown to become the nation’s sixth largest carrier. However, recent press articles indicate a large measure of uncertainty in their future path. Berkshire Hathaway has asked US Air to buy back its 10% stake in the airline. Stephen Wolf, US Air’s new chairman has stated that US Air needs to become a carrier “of choice” not merely “of convenience.” He said further that US Air must either buy another airline, be acquired itself, or form a partnership with another carrier. The question is WHO? No one in the industry wants US Air’s high cost structure. And even if a new owner could obtain concessions, who’s current routes are compatible with US Air? The management of Puddle Jumpers cannot identify a strategic suitor. TWA or Continental would be the most likely to acquire US Air from an economic standpoint but the routes don’t match well.

Puddle Jumpers concludes that the Anytown opportunity is likely to be free from imposing competition unless it comes from another start-up. If we are able to attack the market first with sufficient capitalization, we feel we will be difficult to overcome and should be able to build critical mass within two years.

4.2.4 Business Participants

The major air carriers in the U.S. are not the focus of this plan. They are not viewed as competition to a single hub, short-haul, low cost entrant. The following three airlines are worthy of study. Southwest as one to emulate. ValuJet as one to improve upon. US Air as one to learn from and avoid similar pitfalls.

Southwest Airlines is the model for operating a safe and successful discount carrier. Even though Southwest has the lowest cost per ASM in the airline industry for short-haul carriers they have never experienced a fatal crash in more than 25 years of operation.

ValuJet remains the financial model for a start-up airline. The return to initial investors and early shareholders has been outstanding. However, operations have been marginal and growth was too fast.

US Air is the model for classically mismanaged labor cost within the airline industry. This plan focuses on a deeper discussion of US Air in the “Competition” section. US Air controls an 86% market share in Anytown. Delta is second with 2%.

Puddle Jumpers management has studied extensively the history of the above three airlines. All three have grown to substantial revenue size amidst the major airlines. None of the three existed in the not-too-distant past. Puddle Jumpers has taken the best parts of each growth story, heeded the alarms and cautions, and learned from the outright mistakes. The result is the plan for Puddle Jumpers Airlines, the airline for today’s marketplace.

Strategy and Implementation Summary

Puddle Jumpers’s market presence will be achieved by relying on the strategy of identifying and serving a specialized niche market well.

• Media executions will utilize local media, which is highly targeted and cost effective on a cost-per-impression basis.
• Air operations will be centralized and cost effective.
• Reservations will be centralized and cost effective.
• Marketing will be media generated to the leisure market and combined media/direct sales generated to corporate accounts.

5.1 Marketing Strategy

Marketing is targeted locally. The advantage of a local and highly identifiable market is that media selections can be limited in scope. There is no need for a national media program to launch Puddle Jumpers. The most effective media is expected to be outdoor billboards. Private Jet relied heavily on a dozen well-placed billboards in and around its home hub to build a $100 million plus business.

Other media will be local spot TV on highly visible programs such as local news and sports. Also, local radio. Newspapers and other print will not be used.

5.1.1 Distribution Strategy

In addition to other marketing programs outlined the company will also market via the World Wide Web. We will establish our own website with reservation, purchase, and payment capability.

5.1.2 Pricing Strategy

Due to its low cost operating structure Puddle Jumpers will be able to offer service at less than 50% of the competitive airfares to our selected destinations from our Anytown hub. Projected fares are as follows:

The first column is for 14 day advance purchase. These fares are non-cancelable and non-refundable. The second column is for fares purchased inside of 14 days. The third column is current Day-of-Travel published average fare for all carriers.

5.1.3 Promotion Strategy

Promotion will be primarily outdoor advertising, radio and TV targeted at the Anytown business and leisure traveler.

In addition the company will employ a public relations firm for both consumer and financial purposes.

The combined amount budgeted for advertising, public relations, and reservations will be held under 15% of sales. Thus, the first year expenditure in these categories is expected to be $16.5 million. Past experience with Private Jet has demonstrated that this expenditure is sufficient to launch airline service in a single hub.

5.2 Sales Strategy

In order to attract the Anytown business traveler without the use of frequent flyer miles, the company will make direct sales contacts with the travel departments of Anytown based corporations and businesses. It is expected that our cost structure will be attractive to these businesses. Anytown is now the third largest banking center in the U.S. and the Anytown area economy in general is growing faster that the national average. We expect business travel to amount to at least 50% of our over-all revenue.

The sales personnel and salaries required to execute the direct sales strategy are included in these projections.

5.2.1 Sales Forecast

The company is forecasting very encouraging annual sales in year one of flight operations. Year two of flight operations sales are forecasted to more than double. Assumptions made for load factors are: 55% in year one, 62% in year two.

The year two numbers are based upon adding more flights and more airplanes to the routes already served. This will enable us to maximize profits within the market we have created without incurring the additional expense of opening new markets. It also allows for more controlled growth and eliminates the risks, early on, of the loss of control of operational procedures that can occur either with de-centralization or growth that is too rapid.

The basis of the sales projections illustrated in the table below have been outlined in the “Market Analysis” section of this plan.

The company has also prepared five-year projections that are based upon expanded service to additional market areas. This five year plan is a part of our due diligence package. Direct costs of sales are not included here but are instead reflected as a revenue discount in the projected P&L statement. These sales costs consist of travel agent commissions, credit card discounts, and federal excise taxes.

5.3 Milestones

The following table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation.

Management expects that the current regulatory climate will loosen shortly. We expect it to be a long-term advantage to well operated airlines. We feel that 1996 is the ideal time both to invest and to start an airline.

The costs of adding airplanes are figured on the basis of first and last payment in advance + one month’s lease payment.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

The management of Puddle Jumpers is highly experienced. There is no one on the management team who has not already performed his or her function for another airline. We are not in the business of training key people. We intend to hit the ground running with a highly qualified and experienced management team. Some of the individuals profiled are currently with other airline companies. They both know and respect Ken Smith and have expressed the desire to work for him and for Puddle Jumpers.

Ken Smith is both known and respected by the F.A.A. regional officers in Anytown as well as at the Federal level in Washington. He enjoys similar status with key D.O.T. officers. The management of Puddle Jumpers is well versed in all governmental approval procedures, having traversed them in the past to a full approval and operational status. We feel that the resumes of the key people enclosed herein will only enhance our ability to obtain required approvals. It is expected to be a necessity from this point forward to have such a management team assembled in order to obtain the government charters from the D.O.T. and from the F.A.A.

The bios of the management team follow.

6.1 Organizational Structure

The company will be organized into five major operational areas:

• Flight Operations.
• Maintenance.
• Customer Service.

Many of the specific positions and job descriptions are government mandated. Puddle Jumpers will fully comply with all such mandates.

6.2 Management Team

The following are the bios and ages of the key members of Puddle Jumpers’s management team:

KENNETH D. SMITH, President & CEO, 51

Ken Smith has 28 years of aviation experience beginning with his career in the U.S. Air Force, where he ultimately attained the rank of Captain. Ken was awarded the Distinguished Flying Cross, two Commendation Medals, and six Air Medals for his contributions as a pilot in the Vietnam War. When Ken left the Air Force in 1976 he was the Director of Flight Training Programs at the U.S. Air Force Academy in Colorado Springs. He has served as Chief Flight Instructor for Flight International Training School and as a pilot for Braniff Airlines. Ken then served as Executive Vice President and General Manager for Aerostar Airlines, leading a turn-around that enabled Aerostar to be acquired by Flight International in 1984.

Ken then became General Manager of Connie Jones Services, an air cargo airline which he expanded from five to twenty aircraft. He was then recruited by Aero Corporation where he became Vice President of Marketing for Aero’s worldwide aircraft maintenance services.

Ken became President and CEO of Private Jet in January 1991. In less than two years Ken’s leadership took Private Jet from a single aircraft to a fleet of 15 and revenue of more than $130 million dollars.

Ken then helped Eagle Airlines start-up and has also served as a consultant to the start-up of Nations Air.

JAMES B. JONES, Executive Vice President, 49

Mr. Jones has thirty years of flying experience including distinguished military service. He has been chief pilot, Director of Operations, and General Manager of Air Nevada Airlines, a commuter carrier. He has also served as Director of Operations and Director of Training for Eagle Airlines.

GREER CLARK, Vice President, Operations, 56

Mr. Clark has taken early retirement from Delta Airlines. He has since served as Chief Pilot for America International Airlines, and as Vice President, Operations for Private Jet and for Eagle Airlines. Currently, he is Manager, Flight Test for ValuJet.

DON ADAMS, Vice President, Maintenance, 47

Mr. Adams is an Aeronautical Engineer from Australia. He has served as Vice President of Ansett Airlines. He was Vice President of Technical Services for Intercredit Corporation, an aircraft leasing company. Currently, he is Vice President of Avitas, one of the world’s leading aviation consulting companies. He is presently on loan to the National Transportation Safety Board investigating the American Airlines B757 crash in Columbia.

BRUCE WING, Vice President, Finance, 50

Mr. Wing is a CPA who has been a Vice President with First Chicago Bank. He has previously served as CFO of United Express, the commuter division of United Airlines as well as CFO of Private Jet.

PAUL BERRY, Director of Operations, 57

Mr. Berry is a retired Air Force Colonel. Colonel Berry served as General Swartzkoph’s Tanker Task Force Commander for Desert Storm. Mr. Berry is currently Director of Operations at America International Airlines.

TERRY MCADAMS, Chief Pilot, 57

Mr. McAdams served as a pilot with Eastern Airlines for more than 25 years. He later served as Chief Pilot for Private Jet and is the Chief Pilot for ValuJet. Mr. McAdams is typed on the B727, DC-9, and MD-80 aircraft.

SALVATORE DIANGELO, Director of Maintenance, 41

Mr. Diangelo has been in aircraft maintenance in the military, at People’s Express Airlines, and at Continental Airlines. At Continental Mr. Diangelo was responsible for preparing the maintenance budget for the entire fleet. He has also served as Director of Maintenance for ValuJet.

CALVIN COBLE, Director of Quality Assurance, 42

Mr. Coble served his apprenticeship in the military. He is qualified as a Class III Inspector, which requires both extensive training and recommendation from his peers at the FAA. Mr. Coble has served as Director of Quality Assurance at Shannon Aerospace, a large maintenance facility operated by Lufthansa and Swiss Air in Shannon, Ireland.

JIM BEND, Director of Marketing, 49

Mr. Bend has over fifteen years as Regional Sales Manager for Eastern Airlines. He received numerous awards for his sales performance while at Eastern. He has also served as Director of Sales at Private Jet.

JUDY LAND, Director of Reservations, 38

Ms. Land has more than 10 years experience as Reservations Manager at Eastern Airlines. She has also helped with design and implementation of the reservations system at Private Jet and at World Technologies. She has received numerous awards for her motivational training seminars.

MARY ANN BENNETT, Director of In-flight Services, 43

Ms. Bennett served as a flight attendant at Eastern Airlines and went on to open her own travel agency. She joined Private Jet as a supervisor of flight attendants and was later promoted to Director.

6.3 Personnel Plan

The following table illustrates personnel needs and growth plans for both key executives and category needs by group. It is expected that all key executives will participate in the company’s stock option plan as well.

Financial Plan investor-ready personnel plan .">

Adequate financing is essential for a start-up airline. Our strategy remains a “seed” to “bridge” to “IPO” progression. This has served as a successful model for airline starts in the past. Because of the amount of capital required to start an airline management feels it is restricted to this funding path. Once four to six airplanes are up and flying the company can continue to operate profitably for an indefinite period of time in the event additional capital becomes unavailable on attractive terms.

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. They key underlying assumptions are:

• We assume a slow-growth economy, without major recession.
• We assume of course that there are no unforeseen changes in technology to make products immediately obsolete.
• We assume access to equity capital and financing sufficient to maintain our financial plan as shown in the tables.

7.2 Key Financial Indicators

In the airline business the most important measurements are cost per Available Seat Mile and the System Utilization Factor. If seat costs are kept below 7 cents and utilization is at 50% or better, the airline will operate profitably.

7.3 Break-even Analysis

When we take out all operational costs for flying aircraft and include only fixed overhead and aircraft leases the company can break even on the first six airplanes by maintaining sales just over $2 million per month or approximately $24 million in year one. This is less than 25% of our expected sales forecast but it indicates that the company could survive without adding planes and routes for an indeterminate period with load factors of less than 15%.

7.4 Projected Profit and Loss

Our profits improve from a low percent of sales in year one to a modest percent of sales in year two and are expected to peak at a respectable percentage in year three and thereafter. In gross numbers, we create healthy profit in the second operational year.

7.5 Projected Cash Flow

This business plan cash flows positively from the initial infusion of investment forward. It will continue to produce cash as long as sales targets are met. Borrowing may only be required if seasonal fluctuations occur or if expansion plans are further accelerated.

The chart below illustrates the accumulation of first year cash during formative stage.

7.6 Projected Balance Sheet

The projected balance sheet illustrates the growth of the net worth of the business and may also be utilized to estimate future stock values based upon industry multiples.

NOTE: For display purposes in this sample plan, numerical values in tables and charts are shown in thousands (000’s). 

7.7 Business Ratios

The important business measurement ratios are presented here based upon projections for Puddle Jumpers. Business ratios for the years of this plan are shown below. Industry profile ratios based on the NAICS code 481111, Scheduled Passenger Air Transportation, are shown for comparison.

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UK startup lifts lid on plan to turn human waste into jet fuel

Low-cost airline Wizz Air puts in 525,000-tonne order for product of Firefly’s proposed refinery in Essex

Aircraft could one day take off on fuel made from human waste under plans revealed by Wizz Air and the British sustainable aviation company Firefly to build a commercial refinery in Essex.

Firefly, based in Bristol, said it had developed a process to convert treated sewage into sustainable aviation fuel , or SAF.

The low-cost airline Wizz said it was investing by placing an order – potentially worth hundreds of millions of pounds – for up to 525,000 tonnes of Firefly’s waste-based fuel over the next 15 years.

Firefly has now signed agreements with industrial partners for a pilot refinery in Harwich that would take “biosolids” from Anglian Water and turn it into aircraft fuel. Airlines will have to ensure that a minimum proportion of fuel burned is certified sustainable in the coming decade, with the EU mandating at least 20% SAF by 2035, and the UK expected soon to announce a mandatory 10% by 2030.

There are various ways of making SAF but most are much more expensive than normal kerosene jet fuel, with a limited supply of waste feedstocks such as used cooking oil.

Firefly’s chief operations officer, Paul Hilditch, said converted sewage should be cheaper and more abundant, providing up to 5% of airlines’ fuel needs in the UK. The process uses biosolids, the water industry term for the final product in the treatment process. “It’s crumbly – like compost or wet chocolate cake,” he said. “There’s millions of tonnes of the stuff. And it has no intrinsic value.”

The company has produced small test quantities of SAF that he said were “chemically indistinguishable” from jet fuel, with a residue that can be used as a soil enhancer. The fuel is still in a regulatory testing process, and Firefly is still to secure the investment it needs to build a full-scale factory.

However, its chief executive, James Hygate, said it was confident it could be delivering commercial supplies of SAF by 2028-29. He said the first facility in Harwich would serve London airports and there was potential for two more in the UK.

“We’re turning sewage into jet fuel and I can’t think of many things that are cooler than that,” he commented.

Wizz Air’s corporate and ESG officer, Yvonne Moynihan, said: “Alongside fleet renewal and operational efficiency, SAF plays a crucial role in reducing carbon emissions from aviation.”

She said Wizz’s investment in Firefly was a “perfect pair-up for a low-cost airline” and the carrier aspired to use 10% SAF across its entire operation by 2030, although it would need “a significant ramp-up of production and deployment”.

The UK government has said it expects five commercial plants to produce SAF in the UK to be under construction by 2025. However, campaigners have said even using human waste for aviation was not truly sustainable.

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Matt Finch, of the thinktank Transport & Environment UK, said sewage could also be used to make biomethane and there was direct competition for its use: “What’s the best use of this biomass hasn’t been clarified … It’s another conundrum.”

About 87% of UK water companies’ biosolids are currently spread on farmland. Cait Hewitt, of the Aviation Environment Foundation, said: “It’s not to be sniffed at, given that this is truly unavoidable waste, but not great either given it’s already in use as fertiliser.”

She said any test for the carbon credentials of alternative fuels should ask: “Has the producer done something to draw down additional CO 2 from the atmosphere? Otherwise it’s nothing near a net zero solution.”

Hilditch said the use of biosolids for muckspreading on farms was of low value, and the residue from the sewage-to-fuel process would still be available to improve soil.

Many other countries simply incinerated human waste, meaning that converting it to jet fuel could also have other benefits in terms of efficient disposal, he added. “It’s not just the UK of course. Anywhere in the world where there are people, there’s poo.”

• Airline industry
• Airline emissions
• Air transport
• Travel and transport
• Travel & leisure

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