4 Start-up airlines to watch out for in 2022 and 2023

Image: Akasa Air

 

1. Bonza Airline

Founded by former Virgin Blue administrator Tim Jordan, Bonza is set to join the market as the latest addition to Australia’s low -cost carriers. Delays in delivering Bonza's Airline’s initial Boeing 737 MAX aircraft pushed back the Air Operator Certificate ‘AOC’ acquisition process, and the carrier is expecting to commence operations in September 2022. The operator is backed by Miami-based 777 Partners.

 

The issue remains as to how many airlines Australia can realistically support. Qantas and a newly Virgin Australia are competing on trunk routes, and Rex Airlines are using ex-Virgin Australia aircraft to enter the narrowbody market. In addition, Koala Airlines are looking to acquire the Boeing 737 MAX aircraft to join the competition.

 

It is notable that 777 Partners is working hard to replicate the business model of low-cost carrier Flair Airlines in Canada, and this has not been without its problems. Amongst other issues, the operation has encountered problems with foreign ownership rules and Cabotage.

 

The big questions for new entrants to the Australian market are these; How many new entrants can the Australian market take, and will they be gambling on stimulating traffic that major carriers have previously ignored?

 

2. Greater Bay Airlines

Hong Kong’s Greater Bay Airlines is positioned as a ‘value carrier’. Originally planning to commence operations in late 2021, ongoing travel restrictions brought about by China’s ‘zero Covid policy’ has caused several delays to launch. Once active, the operator would become Hong Kong’s eighth airline. The unescapable fact is that Hong Kong capacity is down. Specifically, it is down by around 80% in summer 2022 compared to 2019, and China’s aviation industry is having to take drastic measures to prove effective in difficult times. Hong Kong based competitor Hong Kong Airlines recently asked its A330 pilots to take up to 7 months unpaid leave, signalling little faith in the near-term prospects for the market.

 

This may prove an opportunity for a start-up like Greater Bay Airlines to hire staff in a cost-effective manner as they look to establish a route portfolio consisting primarily of Hong Kong to Southeast Asian destinations (and eventually incorporating Mainland services). That said, the last notable Hong Kong start-up, HK Express, was later acquired by Cathay Pacific.

 

3. AraJet

Whilst not strictly a start-up airline, the Dominican Republic based airline has made a notable switch from a charter model to an ultra-low-cost carrier (‘ULCC’) model. This appears to be aiming to exploit a geography that is generally underserved by low-cost carriers, with the airline identifying the Dominican Republic and wider Caribbean area as clear opportunities. We find the backing of aviation investors Griffin Global Asset Management and Bain Capital Special Situations particularly encouraging, as well as a strong leadership team with experience in other ULCCs, including Wizz Air.

 

Aviation intelligence from IBA Insight reveals that AraJet have an order for 20 Boeing 737 MAX 8 family aircraft, with the option to switch to Max 8200 aircraft. AraJet is anticipated to commence operations in Spring/Summer 2022.

 

4. Akasa Air

It’s been some time since we have seen a new start-up airline enter the Indian market, and many fledgling low-cost carriers struggled after commencing operations. This was particularly notable in the case of AirAsia. Akasa placed a substantial order for Boeing 737 MAX family aircraft at the Dubai airshow in late 2021, including options for MAX 8 and 8200 models. The Indian consumer is typically quite price elastic, and carriers typically struggle to pass on any substantial increases in input costs. With its investment in new generation aircraft and solid financial backing, we are looking forward to monitoring Akasa Air’s performance as it enters this challenging space. 

 

IBA Insight flexibly illustrates multiple asset, fleet, and market positions, actual and potential, to inform client choices and identify acquisition opportunities. Immediate access to crucial aircraft, engine, lease rate and fleet data eases appreciation of historic and future aircraft concentrations and operator profiles.

 

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