Global Airlines wants to be a London-based long haul airline. They have an ex-Singapore Airlines Airbus A380 and say they have a deal for three more A380s. They’ve talked up a 2024 launch and say they will fly daily to New York and four times a week to Los Angeles this coming summer and want to serve “every continent.”
They announced an Amex partnership over the summer, but all that it seemed to be was that they would.. accept American Express? And they launched a Laurent Perrior partnership where they promised to serve top notch champagne in economy “if [they] can make it work” (they can’t). They’ve made themselves look silly. But it isn’t the overclaiming that’s why they’ll fail. It’s the business model of flying Airbus A380s as a startup.
- Too big a plane. The challenge with flying large aircraft is that they’re great on routes where you can fill the planes at decent fares, since the biggest planes have the lowest cost per passenger to operate. You can fill a plane from Las Vegas to just about anywhere on a Sunday, but what about Wednesday? An Airbus A380 has proven to be too much capacity to fly every day.
- Nowhere to go in the off-season. It’s easier to find places to send smaller planes in the off season. Transatlantic markets are hot in the summer, and dead in the winter. It’s one thing if you need to find somewhere that won’t burn cash with a narrowbody plane. Finding somewhere counter-seasonal to schedule an Airbus A380 is nearly impossible.
- Too small an airline. It’s also hard to be a small airline, with just a single frequency in a market. Different customers want to fly at different times, and airlines with more flight options earn a disproportionate share of business. Those larger carriers with more flights also can give passengers greater comfort about backup options should their plans change, or should there be weather or mechanical cancellations.
- Can’t wrestle away loyal flyers especially premium flyers. Those large airlines also have an existing customer base, and in the case of major carriers not called American, they usually have big corporate contracts that are tough to shift business away from on a one-off basis. New carriers also tend to have difficulty getting into the most desirable airports, so they might fly from Gatwick or even Luton in London.
There’s a graveyard littered with airlines who saw a big market like London – New York and said “if we can just get 1% of that market, we’ll make money.” Remember EOS, MaxJet, and SilverJet?
- Won’t have a meaningful cost advantage and not just because it’ll be hard to fill an Airbus A380 every day, year round (so the more expensive aircraft gets amortized across lower passenger numbers). The cost advantage of low cost carriers and new airlines isn’t as significant when flying long haul compared to doing short trips.
I love to see the aspiration of offering a truly quality product across all cabins. The Airbus A380 is a fantastic aircraft from a passenger perspective. And if they’re able to launch they’ll help drive down fares across the Atlantic. But that’s not great for their business and whether they can figure out a way to minimize losses over the winter to make it to summer 2025 and beyond.
WHY SO NEGATIVE AT THIS STAGE?
Why not give it a chance?…you cant tell the future…maybe their business model will work…you can come back with your expertise in 2025
From Laker to Highland Express to Oasis Hong Kong, there has never been a longhaul LCC venture built around large aircraft that didn’t fail quickly and spectacularly. It is impossible to believe these guys know anything the others didn’t.
Why can’t AA have corporate contracts?
Air Tahiti Nui seems to make it work with a fleet of only 4 787’s. Granted, they have a destination like Tahiti to shuttle tourists to and from.
Unless it’s really a plastic bank card with taxpayer-subsidized airline features, and not actually an airline company that courteously accepts V/MC/AmEx payment.
@ Gary — Unless one is flying in J or F, I’m not so sure the A380 is “a fantastic aircraft from a passenger perspective.” At least not from my perspective. It’s too big, too crowded — a Tenerife waiting to happen.
That is one benefit of the A321LR — fewer seats to fill; easier to shift destinations in the Winter.
The only airline that seems to have cracked the long haul, low cost model is French Bee with its all A350 fleet.
I have flown on the A380 several times, always in coach. I soon will be flying on one again. It is a reasonably comfortable airplane, at least as configured by several east Asian airlines. Because of four engines and other costs, it is not an easy airplane to make a profit on but a lot of the owners of the A380 have them back in the air making money.
Recent BA A380 LHR to ORD. Economy, upper deck window seat in the back. Most comfortable coach flight ever.
Huge gap between me and the fuselage including a storage bin next to the window (!).
Wonderful experience on an incredible machine.
It seems that the biggest reason was four engines instead of two. Tell me why I’m wrong please!
At last someone who has pointed out the practical problems this venture faces.
Airline economics is all about minimisingcosts and maximising revenue, on the scout side as I understand things they want a superior product, on the revenue side they are constrained by the competiron personally I don’t see how they are going to pass the CAA financial review withoit some heroic assumptions
I undertand they have engaged HiFly to assist, from experience Hifly are one of the top operators who can make things work but you pay for quality
A380s are coming back on line due to the shortage of capacity and the huge backlog of orders i agree economy on an a380 is a interesting experience
I wish these guys well though I do wonder who is advising them
More reasons they will fail:
6) no connecting traffic. Only Emirates can fill huge planes like that, and that’s because of massive connecting traffic through their megahub.
7) strategically they are locked in to those few routes, their competitors know it. So competitors can simply take a loss on their competing routes until Global is bankrupt, and there’s no counter move Global could possibly do. AA can obviously sustain long term losses. A startup cannot.
8) they probably overestimate the average airfare they can get. With such a large plane and a big increase to capacity on the route, fares will have to go way down to fill the last seats, and they will need to offer lower fares from the beginning just to entice people away from competitors.
The problem.with a lot of these people who wrote about buisiness, most times get it wrong ,give the man buisiness a chance and stop write negatives about it
While I agree with most of the premise, the inane and vacuous cheap shot (not to mention incorrect) was not needed.
A380.. Luton ?! I think not….
6 – Gatwick only has one A380 gate and it is in permanent use by Emirates
@Jason Brandt Lewis that is true but also applies to the 787 and others. I think the CEO of this ariline claims to have more space in Econ on the seat config. Cant remember the details on that. Gary made very valid points. It is so difficult to get people to fly a new airline of any kind. There is tremendous competition to London. He wants to see alot of premium space from what I read so far.
@Ian Virtually every new airline fails. The success rate is very low. Gary stated the facts of the route itself. AIrlines that claim to reinvent things, usually fail. Even ultra low cost carriers like Norweigen Air have gone bust. He may have a few planes costly on maintaince that they have to fill going against BA, Virgin, AA? How?
@robertw —> However…an A380 seats 303 people in Economy on British Airways, 341 on Qantas, 343 on Singapore, 371 on Lufthansa, and — depending upon configuration — between 338 and 557 pax in Econ if you’re on Emirates. That is a lot of butts in seats. Coupled with four engines AND an LLC model of service means that the NEED for revenue pax in seats is higher than on more traditional models. In other words, it’s easier for Emirates to make a profit flying an A380 than it would be for Global.
Compare that, depending upon configuration and model, with 136 or 154 on a 787-8, or 127 (-9) or 165 (-10) on BA; 166 (-9) on QF; 301 (-10) on SQ; 231-247 (-9) on LH; or 199-262 (-9) and 304 (-10) on Etihad (Emirates doesn’t have 787’s in their fleet). Couple that with the greater efficiency of modern engines (and needing only two of them), and it would seem to me it’s easier to turn a profit with a 787 (or A350) than an A380 — even for an LLC, let alone a traditional carrier.
I think that we should be extremely happy when somebody, even a dreamer, trying to do something different in the aviation industry. The current aviation industry is managed by accountants that woke up in the morning just to understand how to steal you another penny. If you have to travel standing up like in a bus, or crammed with other 600 people in a cage, or spend days on a chair in an airport or land 200 mph from where you have to go in a place forgotten by humanity… they don’t care. So go Global! It is not finished until is finished. Ready to be your customer number 1. Ah, btw I Love A380.
In light of what’s happening with Bamboo Airways people should recognize the importance of a logical business model for starting an airline.