Factors to Consider When Starting up a Domestic Aviation Operation

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factors to consider when starting up a domestic aviation operation
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1. Introduction
When starting up a domestic aviation operation/public transportation service, it is essential to consider all the factors that will affect the operation, whether large or small. This document focuses on the factors the typical air carrier should consider. It is common for one to only think about the certification process and rules and regulations that must be followed to start an air carrier, but these are not the only factors that need to be well understood. Factors concerning the markets to be served, the need for the service, the competitive environment, the economics of the new operation, and the type of operation to be conducted must all be considered. This document is designed to help the new operator understand all these factors and how they will affect the certification process and the operation in general. This document is not a standalone guide to certification or Part 135 operations. It’s simply a detailed explanation for what must be considered along the way. Because the certification process is so involved, many times the operator will lose sight of the operation in an effort to meet FAA requirements. This explains why the author chose to write this document with regards to factors an operator must consider in lieu of the certification process itself. Factors concerning the FAA requirements will sometimes be invoked to better understand how they will affect the given factor, but a detailed explanation on the FAA rules and regulations concerning a specific subject is outside the scope of this document.
1.1. Purpose of the Document
This document is intended for people contemplating starting up an aviation concern. This is a wide ranging audience and the document will not cover every eventuality. A person starting up an operation in a single building at a non-towered airport flying one aircraft needs a far less complex operation than a regional operator flying into a dozen cities. However, this document should provide a framework from which a project plan tailored to the specific operation can be constructed.
This document has been assembled in order to illustrate at a high level the process of starting up a new aviation concern. It is aimed at individuals who want to know what is involved in aviation operations but who do not necessarily have a background in aviation. This document addresses not only the aviation specific issues but also will touch on general business and project management principles.
1.2. Scope of the Document
The document is quite detailed and some aspects may not be relevant to all readers. It is structured in a manner that it can be readily determined what information is relevant and what can be overlooked. The document is broken down into specific aircraft operation phases, being pre-start up, start-up, setting up the initial operation, expansion of operation, and winding down an operation. Each phase identifies key objectives and possible issues that can occur. Readers can determine if the information is relevant to them based on the phases of their operation and how far they plan to take the aircraft operation. This is particularly relevant to operators working for AOCs where various job position changes can mean involvement in different phases of aircraft operation. Although it is recommended that all information is read at least once!
While it is obvious that an aviation operation needs an aircraft to fly, the first stage of planning could be the deciding factor as to why an operation is successful or not. Ambitious aviation operations have failed to get off the ground because of poor planning, a lack of clear objectives, no identified target market, insufficient resource analysis, and so it continues. Though it is preferable to enter the aviation industry with a business already established, these decisions are no less important for an individual purchasing an aircraft for private use. This document aims to cater for aviation operations looking to move into the aviation industry through to the established small aviation enterprise. The intention is to provide guidance on all the various phases of aircraft operation, identifying possible pitfalls and providing solutions.
1.3. Background Information
With an understanding of the costs, commitment, and competition involved, and armed with the right resources and information, starting an airline can be a viable and rewarding venture.
An SIA study has shown that it is very difficult to change a customer’s existing loyalty to an established carrier. This illustrates the high level of competition and threat of substitute products in the industry. Failing to consider some of these aspects can lead to a new airline’s quick demise. New airlines tend to do best where they can meet a demand that is not being fully satisfied by existing services. A market analysis will help to reveal this and will allow a new airline to evaluate where and how it can be competitive.
The aviation industry is known for having a few dominant players. This is due to the effectiveness of mergers and acquisitions. Even some of the smaller airlines are actually subsidiaries of the larger ones. This suggests that competition in the industry is fierce and likely to be directed towards a new entrant. New airlines often fail to fully understand direct and indirect competition. It is also important for these new airlines to understand the needs and limitations of their prospective customers. These are varied and are usually based upon cost, frequency, journey time, comfort, and access.
An aviation company operates aircraft to transport passengers and/or goods. This is the primary source of income for the airline. As one of the most complex and costly industries, it is to be expected that the number of airlines that start up and fail is relatively high. It is necessary to consider the idea of establishing an airline very carefully and to be aware of the numerous costs and potential pitfalls that may be encountered.
2. Legal and Regulatory Factors
2.1. Compliance with Aviation Regulations
2.2. Licensing and Permits
2.3. Insurance Requirements
3. Financial Considerations
3.1. Startup Costs
3.2. Funding Sources
3.3. Revenue Generation
4. Market Analysis
4.1. Target Market Identification
4.2. Competitor Analysis
4.3. Demand Forecasting
5. Operational Factors
5.1. Fleet Selection and Acquisition
5.2. Staffing and Training Requirements
5.3. Maintenance and Safety Procedures
6. Infrastructure and Facilities
6.1. Airport Selection and Negotiations
6.2. Hangar or Terminal Facilities
6.3. Ground Support Equipment
7. Marketing and Branding
7.1. Brand Identity Development
7.2. Advertising and Promotional Strategies
7.3. Customer Relationship Management
8. Technology and Systems
8.1. Aviation Management Software
8.2. Reservation and Ticketing Systems
8.3. Communication and Navigation Equipment
9. Risk Management
9.1. Safety and Security Measures
9.2. Emergency Response Planning
9.3. Contingency Plans
10. Conclusion
10.1. Summary of Key Considerations
10.2. Next Steps