Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Starting an Airline

boeing.com

Post reply on HN
Print view View original

31–40 of 234 posts

Re: Starting an Airline

#31

Post by rokhayakebe »

pkorzeniewski wrote: post #22

It blows my mind how people start such big businesses. You must build an airport, hire stuff, buy planes, meet many legal requirements and so on, all costing tens of millions of dollars, and on top of that, it must be profitable. This gives some insight, but still it's terryfing. I feel so small.

I always thought I was very ambitious, granted "my ambitions far exceeded my talents."

When I stood there under the Eiffel Tower, I felt like I never had a grand thought in my life. To think that massive undertaking started in someone's head is just humbling.

So I feel you. I feel so small.

Re: Starting an Airline

#32

Post by arethuza »

pkorzeniewski wrote: post #22

It blows my mind how people start such big businesses. You must build an airport, hire stuff, buy planes, meet many legal requirements and so on, all costing tens of millions of dollars, and on top of that, it must be profitable. This gives some insight, but still it's terryfing. I feel so small.

You don't need to buy planes - leasing is a pretty common option - there are even lease options ("wet leases") that cover the plane, crew, maintenance and insurance:

http://en.wikipedia.org/wiki/Aircraft_lease#Wet_lease

e.g. EasyJet started with 2 wet leased 737-200s:

http://en.wikipedia.org/wiki/EasyJet#Origins

Re: Starting an Airline

#33

Post by masklinn »

pkorzeniewski wrote: post #22

It blows my mind how people start such big businesses. You must build an airport, hire stuff, buy planes, meet many legal requirements and so on, all costing tens of millions of dollars, and on top of that, it must be profitable. This gives some insight, but still it's terryfing. I feel so small.

> You must build an airport

Most definitely not.

You do need to rent or buy space (and ideally slots) at a bunch of airports. You can also lease planes.

Re: Starting an Airline

#34

Post by rayiner »

pkorzeniewski wrote: post #22

It blows my mind how people start such big businesses. You must build an airport, hire stuff, buy planes, meet many legal requirements and so on, all costing tens of millions of dollars, and on top of that, it must be profitable. This gives some insight, but still it's terryfing. I feel so small.

The key observation is that the airport is built on credit (by the government, not the airline, using bonds), and the airplanes are usually either bought on credit or leased (in which case they are built by the airline on credit).

It's an illustration of why banks and bank debt are so important in our economy! This capital-intensive sort of business doesn't happen by an entrepreneur writing a $1 billion check from funds he has on hand.

Re: Starting an Airline

#35

Post by cjrp »

jusben1369 wrote: post #18
leokun wrote: post #12

Earlier quoted context omitted.

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. Wei…

Do they not do economy plus (or equivalent)? I mostly fly internationally (not a lot of domestic flying in England) and there's usually the option of spending an extra ~£100 on a LHR-EWR return for extra legroom seats. I couldn't justify the jump to Business/First, but £100 over 15hrs of flying is a no-brainer.

Re: Starting an Airline

#36

Post by cjrp »

MarkTanamil wrote: post #28
pkorzeniewski wrote: post #22

It blows my mind how people start such big businesses. You must build an airport, hire stuff, buy planes, meet many legal requirements and so on, all costing tens of millions of dollars, and on top of that, it must be profitable. This gives some insight, but still it's terryfing. I feel so small.

You don't need to build an airport, you rent space in existing airports. Renting in the main city airports is very expensive but the ones further out aren't so bad.

Some actually pay the airline to service them, as is the case with some of the Ryanair routes.

Re: Starting an Airline

#37

Post by Aqueous »

masklinn wrote: post #33
pkorzeniewski wrote: post #22

It blows my mind how people start such big businesses. You must build an airport, hire stuff, buy planes, meet many legal requirements and so on, all costing tens of millions of dollars, and on top of that, it must be profitable. This gives some insight, but still it's terryfing. I feel so small.

> You must build an airport Most definitely not. You do need to rent or buy space (and ideally slots) at a bunch of airports. You can also lease planes.

I mean, it's hard to say that getting terminal real estate is any easier than building an airport would be :-)

Re: Starting an Airline

#38

Post by tnuc »

acomjean wrote: post #8

Will 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!

The link shows purchase price, I like it.

What is fails to show is fuel usage, operating costs, maintenance and all the other things that will bankrupt you if you aren't careful.

Re: Starting an Airline

#39

Post by philwelch »

leokun wrote: post #12
squidi wrote: post #4

The 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…

Not strange at all if you know a little economics--actually it's encouraging. In an efficient market with perfect competition, economic profit (i.e. profit after opportunity cost) will be 0.

Re: Starting an Airline

#40

Post by lallysingh »

bulte-rs wrote: post #29
jusben1369 wrote: post #18

Earlier quoted context omitted.

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. Wei…

Problem with this is that airplane configurations are not easily changed; and accomodating 3 different sizes of seats with the risk of having to sell bigger seats for lower prices.... is not worth taking for most airlines (especially low-cost carriers)

Looks like a market opportunity for quickly-reconfigurable seats.
Post reply on HN