Boom of new airlines taking advantage of the “golden opportunity” in current aviation market
The pandemic caused the most turbulent period in the history of commercial aviation.
However, in the last year, dozens of new airlines have sprung up around the world, with their expectations for air traffic to take off.
“It’s a very good time to open an airline,” assures Bjorn Tore Larsen, CEO of Norse Atlantic Airways.
“There is a lot of pent-up demand. People have not been able to travel for two years or more, especially between continents.”
→ Norse Atlantic announces flights between London and New York starting in August.
Norse Atlantic Airways, one of the start-up airlines, will begin flying between Europe and North America on June 14 after acquiring aircraft at low prices and securing good slots at airports such as Gatwick in London and JFK in New York.
“The stars aligned”
The Norwegian firm received more than 3,000 applications for its first 50 pilot vacancies.
“These are brand-new aircraft,” Larsen explains, as he points to the fleet of Boeing Dreamliner aircraft on the runway at Oslo Airport.
“We bought these aircraft at a very cheap price that no one could have achieved before.”
Norse will compete with established multinationals such as British Airways and Air France. But Larsen sees only benefits in creating the airline from scratch.
“We’re not inheriting any systems,” he explains. “We can start this airline exactly the way we would like to.”
The entrepreneur, who also runs a shipping company, told the BBC that although he is passionate about aviation, he has never been tempted to start his own airline before because of the high risks involved: stiff competition, high aircraft prices and difficulties in hiring staff and finding landing and takeoff slots.
“When the stars aligned last year, I saw it as a once-in-a-lifetime market opportunity,” he says. And he’s not alone.
Some go out of business, some come in
The International Air Transport Association (IATA), the trade body representing the aviation industry, described 2020 as “the worst year on record.”
With flights grounded, global passenger numbers fell 60% from 4.5 billion in 2019 to 1.8 billion in 2020.
This resulted in the bankruptcy of 55 airlines that year. Surprisingly, however, 32 new ones were established at the same time, IATA said.
→ Aerus, la nueva aerolínea mexicana que iniciará sus operaciones en 2023.
As demand had dropped and much of the aircraft remained grounded, new entrepreneurs were able to buy them at lower prices. The airport space that became available was also available for use and staff were looking for work.
In 2021 the global number of passengers recovered slightly to 2.3 billion, another 35 airlines closed and 57 new ones opened.
Debuts have taken off in most regions of the world. Avelo and Breeze operate in the U.S. and will be joined later this year by Alaska’s Northern Pacific.
Pilots and crew available
Iceland is home to Play and Niceair, while Australia’s Bonza and India’s Akasa will start flying soon.
“The airlines have never experienced a situation like the last two years,” says aviation expert Hans Joergen Elnaes of the consultancy Winair.
Parallel to the market contraction, “there has been a situation of a large number of available aircraft and very attractive lease rates,” he explains.
Elnaes points out that since 2020, new airlines are also easily attracting cabin crew and pilots, as many lost their jobs in the pandemic.
He thinks, however, that the window of opportunity has now passed, particularly when it comes to securing cheap financing.
“The exceptional offers to lease aircraft were in 2021. Those days are long gone.”
Both Norse and Play will operate low-cost transatlantic flights.
Latin America and Spain
In Latin America, there are also some examples.
The Colombian airline Ultra Air, founded by local entrepreneurs, started operations in March this year.
This Medellin-based low-cost airline has 4 aircraft and 9 routes to 7 destinations.
Ultra Air, recently embroiled in a controversy for alleged misleading advertising, seems to have consolidated its position; in fact, last week it announced that it will apply to expand its offer with new domestic routes.
In Ecuador, Equair, based in Quito, debuted last January and has carved a niche in the country’s domestic market competing with the local subsidiaries of Avianca and Latam.
Ecuador’s third-largest airline -with 13% of seat supply- operates six daily flights on the air bridge between Quito and Guayaquil, in addition to two connections to the Galapagos Islands.
And it is also looking to expand its horizons: it has announced charter flights to Punta Cana (Dominican Republic) and Willemstad (Curaçao) for July and August.
Less than a year ago, Jetsmart Peru (local subsidiary of the Chilean-based low-cost Jetsmart) and the Brazilian ITA were also born.
And in Spain, four airlines have emerged in this particular period: Surcar and Canarian Airways in the Canary Islands, and UEP and Islas Air in the Balearic Islands.
Two problems facing airlines
As coronavirus travel restrictions are lifted worldwide, global passenger numbers are rising sharply.
In March the figure was 76% higher than the same month last year, according to the latest IATA report. The organization does not yet expect, however, that the pre-pandemic peak of 2019 will be reached until 2024.
And, just as the coronavirus crisis fades, airlines run into another unforeseen problem: the war in Ukraine.
Ukraine is too dangerous to fly over, while Russia has closed its airspace to Western airlines, adding hours to some routes between Europe and Asia, making them less profitable.
An even bigger obstacle is global oil prices, which have soared, doubling the cost of jet fuel since last year.
IATA director general Willie Walsh has suggested that, as a result, a rise in fares is “inevitable”.
By BBC
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