Northern Pacific Airways is a new transpacific long haul airline that wants to the be Icelandair of the Pacific. They plan to fly Boeing 757s as a low cost carrier starting this year with flights to Asia (e.g. Tokyo, Seoul) via Anchorage to mainland U.S. cities like Los Angeles, New York, Las Vegas and Orlando.
I began skeptical of the business model. The more I see, the more it seems like ‘business model’ is the least of this effort’s problems.
After announcing a revenue-based frequent flyer program that they’re calling a cryptocurrency they’re trying to raise money direct from the public in the form of an investment kickstarter, with the promise of free travel, elite benefits and… free booze for investors?
They blasted their email list with an investor pitch.
- Through June 3 they’re offering investments at a 20% discount off of their claimed $350 million valuation (publicly promoting a down round before they even launch?)
- They’re offering perks to investors like free booze on board for a year for kicking in $250; elite status for dropping $500; and $1000 worth of travel for a $1000 investment.
- For bigger investors you can name a Ravn Alaska Dash 8, name a Northern Pacific 757, or – for $5 million – have them paint a plane however you wish.
As One Mile at a Time points out, they claim they’ll have 6.5% of the transpacific market by 2025 which seems insane.
Their claimed valuation, by the way, is 3 times the market cap of Mesa Airline’s (at $113 million). Northern Pacific’s valuation is more than the market cap of Thai Airways and AirAsia combined. It’s half the value of oneworld member Finnair.
That all sounds like Avatar Airlines which says they plan to be valued at over $1 billion and offered to sell jobs to pilots for $75,000. (Need I mention that their founder went to prison for tax and securities fraud related to raising money for Avatar?)
Aside from the challenges in starting up an airline generally,
- There’s going to be very little demand for connecting from major U.S. cities to Tokyo or Seoul, when passengers can already fly non-stop.
- Boeing 757s are cheap but narrowbody aircraft with a narrow fuselage is hardly ideal for passengers over long distances.
- Anchorage itself is highly seasonal, and seeing vastly-increased competition in recent years.
- Plus long haul low cost carriers don’t have a strong track record of success.
So there are many reasons be be skeptical of the effort even if they didn’t seem to be incorporating the worst elements of businesses like Avatar Airlines which take a sixteen year old’s dream carrier off of airliners.net and marry it with an SEC criminal complaint waiting to happen.