Earlier quoted context omitted.
...who would buy airplanes, increasing their customer base.
I know what you mean, but, just to nitpick, most small airlines will lease the planes
From people who bought the airplanes...
Starting an Airline
11–20 of 234 posts
Re: Starting an Airline
#12The airline industry has the lowest return on invested capital of any industry: http://centreforaviation.com/images/stories/2013/jul/05/ROIC... This analysis from McKinsey is worth a read: http://www.iata.org/whatwedo/Documents/economics/Profitabili...
It's very strange given how necessary air travel is. It still surprises me how need and margins are inversely related (luxury goods have high margins, commodities low), but it makes sense. It's the price. The price of travel is so high for most consumers that they're going to optimize on price at the sacrifice of everything else.
The cost of flying and operating an airline is so expensive that airlines also optimize on costs and prices.
Virgin stands out as trying to change, that, but otherwise for everything economy class it's a race to the bottom.
Looking at prices you'd think we value things we need lower than things we want.
Re: Starting an Airline
#13Will there be airplane purchases involved? at least they give a handy price list. http://www.boeing.com/assets/pdf/commercial/startup/pdf/busi... These planes aren't cheap. More than a AWS, digital ocean and a linnode combined!
They don't sell the 757 any more?
Production ended in 2004 -> http://en.wikipedia.org/wiki/Boeing_757
Re: Starting an Airline
#14This is very cool. I'm sure I'm not the only one who has fantasized about starting an airline and doing it 'right' after an annoying flight. Probably not going to happen but at least I can read about it now.
Re: Starting an Airline
#15Will there be airplane purchases involved? at least they give a handy price list. http://www.boeing.com/assets/pdf/commercial/startup/pdf/busi... These planes aren't cheap. More than a AWS, digital ocean and a linnode combined!
They don't sell the 757 any more?
757s were discontinued.
http://www.flightglobal.com/news/articles/sales-drought-take...
Re: Starting an Airline
#16Anything that encourages people to pursue different airline models intrigues me. Air travel is still the fastest for anything over 500 miles.
Re: Starting an Airline
#17The airline industry has the lowest return on invested capital of any industry: http://centreforaviation.com/images/stories/2013/jul/05/ROIC... This analysis from McKinsey is worth a read: http://www.iata.org/whatwedo/Documents/economics/Profitabili...
It's very strange given how necessary air travel is. It still surprises me how need and margins are inversely related (luxury goods have high margins, commodities low), but it makes sense. It's the price. The price of travel is so high for most consumers that they're going to optimize on price at the sacrifice of everything else. The cost of flying and operating an airline is so expensive that airlines also optimize…
Goods in high demand attract new suppliers who compete on price and so margins fall.
Re: Starting an Airline
#18The airline industry has the lowest return on invested capital of any industry: http://centreforaviation.com/images/stories/2013/jul/05/ROIC... This analysis from McKinsey is worth a read: http://www.iata.org/whatwedo/Documents/economics/Profitabili...
It's very strange given how necessary air travel is. It still surprises me how need and margins are inversely related (luxury goods have high margins, commodities low), but it makes sense. It's the price. The price of travel is so high for most consumers that they're going to optimize on price at the sacrifice of everything else. The cost of flying and operating an airline is so expensive that airlines also optimize…
Actually it's commoditization. There is very little differentiation in airline flying - particularly domestic in the US. So they get stuck competing on price. Imagine you're flying from NY or BOS to SFO. You have two choices. Pay around $500 per ticket with some price shopping. Have a horrible experience of cattle herding, no food choices, small seats. Or spend $2500 or something insane for slightly larger seats. Weird how there isn't an option for $500, $800, $1500 just like there's a Corolla, Camry, Avalon or Lexus. Now, the airlines will tell you that's because people just care about price and only price and that's why soon you'll need to drop quarters in to use the bathroom. But that's just opportunity to me. There are about 800 places you can improve the flying experience from the minute you hit the curb to bundled in Uber to and from to wide seats (vs just extra legroom) to food to entertainment to dedicated standing areas to "kids focused flights" (parents embrace business travelers avoid) to baggage rules........
Re: Starting an Airline
#19Will there be airplane purchases involved? at least they give a handy price list. http://www.boeing.com/assets/pdf/commercial/startup/pdf/busi... These planes aren't cheap. More than a AWS, digital ocean and a linnode combined!
Man, if Boeing can price out starting an airline, there's no excuse for making somebody call for price on a SaaS product.
Re: Starting an Airline
#20The airline industry has the lowest return on invested capital of any industry: http://centreforaviation.com/images/stories/2013/jul/05/ROIC... This analysis from McKinsey is worth a read: http://www.iata.org/whatwedo/Documents/economics/Profitabili...
It's very strange given how necessary air travel is. It still surprises me how need and margins are inversely related (luxury goods have high margins, commodities low), but it makes sense. It's the price. The price of travel is so high for most consumers that they're going to optimize on price at the sacrifice of everything else. The cost of flying and operating an airline is so expensive that airlines also optimize…
>> "It's very strange given how necessary air travel is"
I haven't given this much thought but a lot of it isn't necessary at all.
1. Vacations abroad - vacation in your own country or take a boat
2. Business - a lot of business can now be conducted online which previously required air travel
I'm sure those two things alone make up a vast portion of the consumer air travel market.