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How Did Airline Startups Compare to Failures Since the Pandemic’s Start

Jay Shabat
October 6th, 2022 at 2:32 PM EDT

Travelers check-in for Play Airlines flights

The world has another new passenger airline. Sri Lanka’s Fits Air, born from a cargo airline, began offering low-fare flights from Colombo on Wednesday. It aims to compete with long-troubled SriLankan Airlines, a state-backed entity.

Fits Air is hardly alone. Despite a grave pandemic that all but froze worldwide air travel, the past three years have produced a bumper crop of new passenger airlines, some launching even during the depths of the crisis. Conversely, the number of major airlines that disappeared during the pandemic is surprisingly low. In June, IATA counted 66 new passenger airlines born in 2020 and 2021, not much less than the 80 airline deaths it recorded during the same period. In 2019, the industry saw 34 births and 54 deaths. Importantly though, many of the departed carriers were small, some with just a handful of planes.

Bankruptcies, to be sure, have been plentiful. Large and influential carriers including Aeromexico, Avianca, Garuda Indonesia, Latam Airlines Group, Norwegian Air, Philippine Airlines, SAS, Thai Airways, Virgin Australia, and Virgin Atlantic Airways all sought court protection from their creditors. But all are still flying today, courtesy in some cases of generous government aid. Billions in government support, meanwhile, prevented many of the world’s other airlines from having to enter bankruptcy.

Others like Britain’s Flybe, Mexico’s Interjet, Slovenia’s Adria Airways, and South Africa’s Comair really did disappear altogether. Remarkably though, no airline of major international significance went away. Some like Alitalia were essentially reincarnated in new clothing. In several cases, airlines closed subsidiaries or joint ventures — Cathay Pacific’s discontinuance of the Cathay Dragon brand, for example. AirAsia shuttered its Japanese airline. Virgin Australia waved goodbye to its Tigerair unit. Bankrupt South African Airways, aside from vastly scaling down its network, closed its low-cost carrier, Mango.

More interesting and influential are the newcomers. In the U.S. alone, Breeze Airways and Avelo Airlines, both low-cost carriers, entered the scene. Canada welcomed Jetlines and Lynx. Latin America has its share of startup airlines, including Colombia’s Ultra Air, Ecuador’s Equair, and Arajet of the Dominican Republic. Akasa Air has grand ambitions in India. Flyr and Norse Atlantic Airways are challenging Norwegian Air and SAS in Scandinavia. Lift, Green Africa, and Ibom Air are all new to Africa. There’s VietTravel in Vietnam, another low-cost carrier. There are newbies in the premium space too, like Taiwan’s Starlux and South Korea’s Air Premia.  

To be clear, many of these startups, while launching their first flights during the crisis, were in the planning stages well before. That’s also true of some new airline subsidiaries like Zip Air, a unit of Japan Airlines.

The party isn’t over. Australia’s Bonza and Malaysia’s MYAirline are two examples of airlines that haven’t launched yet but hope to start flying this year. Flybe is back. India’s Jet Airways, which died before the pandemic, wants to come back. The Saudi Arabian government plans to launch a new airline. Same for the Nigerian government, with the backing of Ethiopian Airlines. According to a Bloomberg report this week, even Mexico is considering the option (hay caramba).   

Early in the pandemic, it looked like airline entrepreneurs were getting their timing just right. Oil prices had fallen dramatically, as had other input costs from planes to people. Few expected Covid to suppress demand for two full years. But it did, and the cost of everything quickly reversed — expenses in fact skyrocketed. Today, startups like Sri Lanka’s Fits are having a fit over new challenges, from weak local currencies to high inflation. Demand, however, is stronger than ever in most markets. So, apparently, is the desire to start an airline.

Jay Shabat
October 6th, 2022 at 2:32 PM EDT

Photo credit: Travelers check-in for Play Airlines flights Airline Weekly / Edward Russell

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