27 SEPTEMBER 2021

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Article from BTNews 27 SEPTEMBER 2021

Airline start-ups

Cirium, the airline data provider, reports in its Ascend data programme that since the start of the pandemic at least 68 airlines have either entered or exited bankruptcy protection and/or have been liquidated.

On the positive side Ascend is also aware that no less than 120 airline start-ups, both passenger and cargo, have been announced between January 2020 and August 2021.

Prior to Covid-19 the number of airline start-ups had remained stable annually since 2013. Going into the pandemic, it sees a significant increase in start-ups. The failure of incumbent carriers exerts negative pressure on both aircraft market values and lease rates with an influx of aircraft back into the market.

Europe is the largest region for freight-only start-ups (nine airlines), followed by Asia Pacific (eight airlines).

The Open Skies policy within the EU and with the US makes it easier for start-up airlines to operate freely within Europe and to the US.  Several Aircraft Crew Maintenance Insurance (ACMI) start-ups in Europe, such as Heston Airlines and Airseven, are exploiting opportunities for power-by-the hour leases to acquire aircraft at relatively low risk, which they then use to provide capacity to airlines who are themselves short of capacity. More than 50% of the new start-up airlines are acquiring aircraft on lease. This allows new carriers to better mitigate the risk of overcapacity and minimize the capital initially required to acquire aircraft.

Cirium points out that starting an airline during a pandemic comes with its own set of challenges such as getting government approval, meeting competition from incumbent airlines and the short-term demand volatility induced by the Covid-19 pandemic situation and associated government policies. The pandemic has taken a heavy toll on the aviation industry. But the number of start-up airlines far outweighs the number in bankruptcy/administration, thereby demonstrating that opportunities continue to arise from a crisis.

www.cirium.com

https://heston.aero

https://airseven.dk

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