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Let's Start an Airline-Hypothetically
- Thread starter Astra Guy
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bart
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Absolutely. It's a deal.
Hypothetically that makes me your first customer.
Theoretically, congratulations are in order.
On a more serious note, I spoke with an old B-school professor the other day. We ran an airline biz simulation one semester, I asked him to see if he still has the software for it. If he does, I will make it available to you to see if it might help with modelling the effects of the decisions you guys make.
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Publishers
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bobbysamd
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Additional considerations
We need a competent CEO and Chairman. Could we lure Herb away from SWA? If he feels he has a happy bunch right now, wait 'til he meets our group.
I know that Frank L. and Stephen W. are available. Uncle Frank is dying to "run something" again.
What about regional service to feed our hubs? We have agreed not to contract-out that part of the operation, so say good-bye to Mesa, TSA, et al, nor were we going to get into any scope controversies. Therefore, I have a two-pronged suggestion, based on my experience as an instructor of Alitalia students at FSI and Mesa students at its school (and please read on - it isn't what you're thinking).
Of course, we need experienced and typed pilots to get going, and we'll likely need them for a number of years. But, once we have enough money in the bank (or have leveraged-out our assets enough to have that money), why not follow the European and Asian example and start up our own in-house flight academy? We would solicit for high-quality applicants, select the ones who have the best qualities and/or potential, and train them using our LOFT philosophy, at our expense! We would provide housing and board in our modern dormitory and pay them a modest per diem. Selected line pilots would live with our students to serve as TAC officers. No restriction on age, within reason; you wouldn't want to enroll someone at age 58 if he must retire at age 60, though that person could be offered a position elsewhere in the company, with pay and hours structured in such a way that he/she can earn money and still draw Social Security.
After these students are trained, they would be assigned to our very own fleet of regional-type equipment. As they gain seniority, they would go to mainline, with no flowthrough, flowback, backflush, no worries!
Academy instructors would be primarily line pilots who are assigned tours to teach our students. Of course, they would hold their seniority and receive their same guarantees as if they were flying the line. I would propose opportunities for street-hire instructors, primarily to bring in fresh input and points of view to avoid the incestuous-type staleness, dogmatism and dilution of knowledge that is common with schools that hire only their own graduates. Outside instructors would be given opportunities to interview as pilots for our airline.
I feel that training our own pilots would establish loyalty to our company early on, and paying them well and treating them well will maintain that loyalty.
We need a competent CEO and Chairman. Could we lure Herb away from SWA? If he feels he has a happy bunch right now, wait 'til he meets our group.
I know that Frank L. and Stephen W. are available. Uncle Frank is dying to "run something" again.
What about regional service to feed our hubs? We have agreed not to contract-out that part of the operation, so say good-bye to Mesa, TSA, et al, nor were we going to get into any scope controversies. Therefore, I have a two-pronged suggestion, based on my experience as an instructor of Alitalia students at FSI and Mesa students at its school (and please read on - it isn't what you're thinking).
Of course, we need experienced and typed pilots to get going, and we'll likely need them for a number of years. But, once we have enough money in the bank (or have leveraged-out our assets enough to have that money), why not follow the European and Asian example and start up our own in-house flight academy? We would solicit for high-quality applicants, select the ones who have the best qualities and/or potential, and train them using our LOFT philosophy, at our expense! We would provide housing and board in our modern dormitory and pay them a modest per diem. Selected line pilots would live with our students to serve as TAC officers. No restriction on age, within reason; you wouldn't want to enroll someone at age 58 if he must retire at age 60, though that person could be offered a position elsewhere in the company, with pay and hours structured in such a way that he/she can earn money and still draw Social Security.
After these students are trained, they would be assigned to our very own fleet of regional-type equipment. As they gain seniority, they would go to mainline, with no flowthrough, flowback, backflush, no worries!
Academy instructors would be primarily line pilots who are assigned tours to teach our students. Of course, they would hold their seniority and receive their same guarantees as if they were flying the line. I would propose opportunities for street-hire instructors, primarily to bring in fresh input and points of view to avoid the incestuous-type staleness, dogmatism and dilution of knowledge that is common with schools that hire only their own graduates. Outside instructors would be given opportunities to interview as pilots for our airline.
I feel that training our own pilots would establish loyalty to our company early on, and paying them well and treating them well will maintain that loyalty.
Shadow...my man! I can see you have gathered a number of links that might prove invaluable. I appreciate the legwork you have done for our little group...great enthusiasm!
Bart,
You are absolutely right about being the first customer...and I had not looked in our passenger database when I quoted the specifics of your options. As a first time customer with us we now think it is appropriate to upgrade you to business class in both directions...on us. Welcome aboard! And sure if the software is available we would love to see it. Sure we can't entice you to join us? We need a financial type to help decifer what the others on the board will propose.
Publishers...thanks for offering the spreadsheet. That too could be a great tool in helping to form educated decisions. We sure could use that along with Bart's software offer. Sure you don't want to join our group? We seem to be building enthusiasm and individuals willing to put forth effort here.
Bobbysamd,
Another set of great ideas, all of which seem to have merit for us down the road. We will probably have to prove something to the industry before we can sway Herb away...there may be a Herb within our own organization, waiting to rise to the occasion. I think you are on target with the instructing side as well as recruitment for possible newcomers and training them to our methods. Great solid ideas from where I sit.
And for enigma....well you haven't missed anything if you have read the posts. It is pleasantly surprising how much interest there is in something that seems so far out but then again feels so right.
Much, much more work lies ahead. Admittedly I haven't been around much...been out there cheating death again in my flying job and just got connected in the hotel on a dialup...man, am I spoiled!
We need talents and contributions from others to help accelerate the process...but then again we don't need to feel we have to be in a hurry...just on target and deal with factors that we know of first and the others that follow in sequence.
First we zero in on our target market...city pairs and see where there might be targets of opportunity. Once we have the city pairs figured out then we determine the route structure....# of flights from each city and where they should logically be paired up with. Somehow discern gate fees, fuel hedging technics and come up with realistic $/gallon at each location. Determine the airframe....once these questions are answered then we can begin to work on the staffing side, from top to bottom...in all categories.
One last thing...we must keep in mind that what we are going to offer is above the rest in terms of customer service, equipment, quality of people employed and the rest will take care of itself.
Thanks for all of the input. I will try to spend more time in the next few days to get to some of what Shadow has uncovered. I encourage everyone to check out the links he has brought forward and then we can discuss what we have learned and make suggestions accordingly.
Bart,
You are absolutely right about being the first customer...and I had not looked in our passenger database when I quoted the specifics of your options. As a first time customer with us we now think it is appropriate to upgrade you to business class in both directions...on us. Welcome aboard! And sure if the software is available we would love to see it. Sure we can't entice you to join us? We need a financial type to help decifer what the others on the board will propose.
Publishers...thanks for offering the spreadsheet. That too could be a great tool in helping to form educated decisions. We sure could use that along with Bart's software offer. Sure you don't want to join our group? We seem to be building enthusiasm and individuals willing to put forth effort here.
Bobbysamd,
Another set of great ideas, all of which seem to have merit for us down the road. We will probably have to prove something to the industry before we can sway Herb away...there may be a Herb within our own organization, waiting to rise to the occasion. I think you are on target with the instructing side as well as recruitment for possible newcomers and training them to our methods. Great solid ideas from where I sit.
And for enigma....well you haven't missed anything if you have read the posts. It is pleasantly surprising how much interest there is in something that seems so far out but then again feels so right.
Much, much more work lies ahead. Admittedly I haven't been around much...been out there cheating death again in my flying job and just got connected in the hotel on a dialup...man, am I spoiled!
We need talents and contributions from others to help accelerate the process...but then again we don't need to feel we have to be in a hurry...just on target and deal with factors that we know of first and the others that follow in sequence.
First we zero in on our target market...city pairs and see where there might be targets of opportunity. Once we have the city pairs figured out then we determine the route structure....# of flights from each city and where they should logically be paired up with. Somehow discern gate fees, fuel hedging technics and come up with realistic $/gallon at each location. Determine the airframe....once these questions are answered then we can begin to work on the staffing side, from top to bottom...in all categories.
One last thing...we must keep in mind that what we are going to offer is above the rest in terms of customer service, equipment, quality of people employed and the rest will take care of itself.
Thanks for all of the input. I will try to spend more time in the next few days to get to some of what Shadow has uncovered. I encourage everyone to check out the links he has brought forward and then we can discuss what we have learned and make suggestions accordingly.
This is one of the best threads I have seen on this board in years.
What about flight attendants? Can we call them stewardesses again? I'm assuming they will all be female. Is there a legal way to insure this? Maybe we could start a religion along the right lines or something.
Maybe we could go in with Hugh on a deal.
What about flight attendants? Can we call them stewardesses again? I'm assuming they will all be female. Is there a legal way to insure this? Maybe we could start a religion along the right lines or something.
Maybe we could go in with Hugh on a deal.
Speedtree,
I like the way you think. We could probably woo some FAs/Stewardi away from another msn web board called Sky High Angels...even have pics, etc. There is one board within their board called the Mile High someting or other. As one old geezer told me in a QB meeting "Astronomy is the study of heavenly bodies!" You know it is hard to get these QBs to talk much...LOL
We'll put bobbysamd, our current legal guhru, on the legal issues of well, you know...using discriminating taste, as it were.
I like the way you think. We could probably woo some FAs/Stewardi away from another msn web board called Sky High Angels...even have pics, etc. There is one board within their board called the Mile High someting or other. As one old geezer told me in a QB meeting "Astronomy is the study of heavenly bodies!" You know it is hard to get these QBs to talk much...LOL
We'll put bobbysamd, our current legal guhru, on the legal issues of well, you know...using discriminating taste, as it were.
Publishers
Well-known member
- Joined
- Sep 20, 2002
- Posts
- 1,736
Start Up Costs
One thing you ahve to do is put together a budget of start up costs for the airline. This amount will be capitalized with the gain of certification.
When I used to do it, we could get a certificate for about $500k and it took about 6 months. That was doing it the really cheap but effective was. After ValuJet crash, that number changed to about $1.1m and over a year for final certification.
The question is what amount of money do you want to spend on all these other things prior to certification.
The spreadsheet that I have goes over the startup costs and increases as you go. It also looks at the various aircraft and figures how many crews you need for the flying projected. It has been some time since I messed with it but it was a good starting place.
We need to look at startup funding as well as whether we intend to go public soon or involve the public with funding through equipment trusts.
When I did this, we had a professional certification team. That team manned all the mandatory positions plus all the crew positons for the proving runs. Our people conducted the first traininng classes for flight attendants and our students had an average of twelve years in the industry.
You also need some professional manual writers. It is not enough to try and copy other books. It si an art and then the people involved need to read them.
This approach will allow your core real people to concentrate on what your real objective is. Setting up the business side. All the people I had are going to resign at certification so you need to have the back ups, the real people for the jobs, working on the policies and procedures and the planning. Ecxecutives need to address all the route and airport issues.
I think you will find this method the most cost efficient in the long run.
One thing you ahve to do is put together a budget of start up costs for the airline. This amount will be capitalized with the gain of certification.
When I used to do it, we could get a certificate for about $500k and it took about 6 months. That was doing it the really cheap but effective was. After ValuJet crash, that number changed to about $1.1m and over a year for final certification.
The question is what amount of money do you want to spend on all these other things prior to certification.
The spreadsheet that I have goes over the startup costs and increases as you go. It also looks at the various aircraft and figures how many crews you need for the flying projected. It has been some time since I messed with it but it was a good starting place.
We need to look at startup funding as well as whether we intend to go public soon or involve the public with funding through equipment trusts.
When I did this, we had a professional certification team. That team manned all the mandatory positions plus all the crew positons for the proving runs. Our people conducted the first traininng classes for flight attendants and our students had an average of twelve years in the industry.
You also need some professional manual writers. It is not enough to try and copy other books. It si an art and then the people involved need to read them.
This approach will allow your core real people to concentrate on what your real objective is. Setting up the business side. All the people I had are going to resign at certification so you need to have the back ups, the real people for the jobs, working on the policies and procedures and the planning. Ecxecutives need to address all the route and airport issues.
I think you will find this method the most cost efficient in the long run.
Publishers,
It sounds like your spreadsheet could be very helpful in establishing a number of financial considerations.
As for the going public question let's go on this premise. We have five private investors, who have agreed within themselves to get this thing off of the ground while providing an equal share of monies throughout what now will be six years. Each in their own right have been very financially savvy and have given to philanthropic causes in the past and continue to do so. They each have an axe to grind with a legacy carrier, in one way or another. In each case either they themselves, or one of their immediate family members has been unfairly treated while working for a legacy carrier as an employee. They have no intentions of ever going public.
Due to the unfair treatment in the past they are now on a mission. They desire to prove that an airline can be financially successful while providing the best in customer service, uphold the highest standards in safety and reliability, and still treat their associates well. This is similar to JetBlue with a twist.
They are willing to give this board a year or longer, if necessary to get this act together.
It sounds like your spreadsheet could be very helpful in establishing a number of financial considerations.
As for the going public question let's go on this premise. We have five private investors, who have agreed within themselves to get this thing off of the ground while providing an equal share of monies throughout what now will be six years. Each in their own right have been very financially savvy and have given to philanthropic causes in the past and continue to do so. They each have an axe to grind with a legacy carrier, in one way or another. In each case either they themselves, or one of their immediate family members has been unfairly treated while working for a legacy carrier as an employee. They have no intentions of ever going public.
Due to the unfair treatment in the past they are now on a mission. They desire to prove that an airline can be financially successful while providing the best in customer service, uphold the highest standards in safety and reliability, and still treat their associates well. This is similar to JetBlue with a twist.
They are willing to give this board a year or longer, if necessary to get this act together.
Shadow,
From what I have gleened from your research and from other sources I believe the 757 is the best choice. However, we should be willing to entertain other options if someone can come forward with an airframe that fills the bill of seating capacity, range, efficiency and reliability that beats this aircraft.
Let's presume this. Our investors are all American. They would reluctantly consider the Airbus series if we can prove undeniably that it beats the Boeing in all of these areas.
They want to keep their and ultimately our money in the states. They are just patriotic that way. Buy Amerucun!.....you know the mentality.
From what I have gleened from your research and from other sources I believe the 757 is the best choice. However, we should be willing to entertain other options if someone can come forward with an airframe that fills the bill of seating capacity, range, efficiency and reliability that beats this aircraft.
Let's presume this. Our investors are all American. They would reluctantly consider the Airbus series if we can prove undeniably that it beats the Boeing in all of these areas.
They want to keep their and ultimately our money in the states. They are just patriotic that way. Buy Amerucun!.....you know the mentality.
Turbo,
But....but...but....we don't have any employees yet...only a partially filled board. The whole point of this is to setup an airline where there would be no reason for any NMB involvement. If, after our study and business plan is drawn up it is not viable to succeed with our expectations intact then we will only have the board members to sever. And they all have a contract with the founders, iron-clad.
Heck we would even bet that besides the furloughed pilots we could woo many from their current jobs in other carriers, and not starting at the bottom, either. The model will be that solid.
I do however, understand your cynicism.
But....but...but....we don't have any employees yet...only a partially filled board. The whole point of this is to setup an airline where there would be no reason for any NMB involvement. If, after our study and business plan is drawn up it is not viable to succeed with our expectations intact then we will only have the board members to sever. And they all have a contract with the founders, iron-clad.
Heck we would even bet that besides the furloughed pilots we could woo many from their current jobs in other carriers, and not starting at the bottom, either. The model will be that solid.
I do however, understand your cynicism.
Publishers
Well-known member
- Joined
- Sep 20, 2002
- Posts
- 1,736
funding
Without knowing the funding, it is hard to come up with the aircraft plan. Why?
Look at the history books. Many of our competitive carriers started when there were cheap aircraft available. Those that did not came from deals with aircraft manufacturers. Such an example would be Jetblue who put together a sweetheart package for the Airbuses.
If we really want to legitimately start an operation, we need to look at the desert and see what is out there. If there are a bunch of idol 737-300's, then we need to look at those.
Perhaps what we need to see is how much our "investors" have to put up. Is it unlimited or is there some cap?
Without knowing the funding, it is hard to come up with the aircraft plan. Why?
Look at the history books. Many of our competitive carriers started when there were cheap aircraft available. Those that did not came from deals with aircraft manufacturers. Such an example would be Jetblue who put together a sweetheart package for the Airbuses.
If we really want to legitimately start an operation, we need to look at the desert and see what is out there. If there are a bunch of idol 737-300's, then we need to look at those.
Perhaps what we need to see is how much our "investors" have to put up. Is it unlimited or is there some cap?
Publishers
Well-known member
- Joined
- Sep 20, 2002
- Posts
- 1,736
point
757 may or may not be the aircraft, the question is can you afford them. That was my original question. Are they available at a reasonable cost in the number you need. Have they been on a maintenance program compatible with yours. Do you even have one. What does the manuals say we have.?
757 may or may not be the aircraft, the question is can you afford them. That was my original question. Are they available at a reasonable cost in the number you need. Have they been on a maintenance program compatible with yours. Do you even have one. What does the manuals say we have.?
Run head to head with SWA in the West using 717's which can be picked up for about $22 million with 80 seats. Call it a no frills Midwest Express.
Any takers....Call it the new PSA....
Use ERJ-135's with 19 business class seats for regional service. The margins are high enough to support such and operation. Already have the numbers. Code share with DL, NWAC and CO to sell first class connection seats at LAX. Average fare for OO and AE out of LAX is about $79 a seat each way. This kind of config would cost about $39 each way for the airline with 10-15% profit margin.
As for the 717. Due to the short hops, your margin would be 7-9% using SWA's fare structure. Of course, you could charge a $5 premium for the space and comfort giving you a 10-15% margin, but no one really cares about comfort anymore do they.... Yeah right.
Biggest savings come from a new staff resulting in lower wages, better fuel consumption, and high aircraft utilization. Of course you could use CRJs in a 40 seat config with better leg room, but the costs are a smidgen higher for regional ops.
Oh yeah, and the stews.... Short Skirts and Go Go Boots.
Any takers....Call it the new PSA....
Use ERJ-135's with 19 business class seats for regional service. The margins are high enough to support such and operation. Already have the numbers. Code share with DL, NWAC and CO to sell first class connection seats at LAX. Average fare for OO and AE out of LAX is about $79 a seat each way. This kind of config would cost about $39 each way for the airline with 10-15% profit margin.
As for the 717. Due to the short hops, your margin would be 7-9% using SWA's fare structure. Of course, you could charge a $5 premium for the space and comfort giving you a 10-15% margin, but no one really cares about comfort anymore do they.... Yeah right.
Biggest savings come from a new staff resulting in lower wages, better fuel consumption, and high aircraft utilization. Of course you could use CRJs in a 40 seat config with better leg room, but the costs are a smidgen higher for regional ops.
Oh yeah, and the stews.... Short Skirts and Go Go Boots.
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