The #1 Thing That Kills New Airlines Is Where To Send Planes During The Off-Season

I saw a headline that the ‘new Norwegian long haul’ Norse Atlantic is “Eye[ing] Cash-Rich Premium Leisure Passengers With New Routes to Barbados and Jamaica” but the interesting thing is what they’re eyeing those destinations for. They want to… stop hemorrhaging cash across the Atlantic in wintertime.

Some airlines are silly ideas from the start. A local business leader decides the best opportunity for a new airline happens to be flying from their city. But even where there are good ideas for an airline – an underserved market, a new product, a lower fare that stimulates demand – many such markets aren’t good all year round. And upstarts have a more difficult time since it’s harder to diversify their flying across more routes and established bases of customers.

The challenge any new airline faces, starting up to serve a highly seasonal set of routes, is what do you do during the off-season?

The biggest issue that low cost carriers have faced across the Atlantic is that US-Europe is highly seasonal. It’s almost impossible to lose money during the summer (almost: American Airlines found that they couldn’t actually make money flying Philadelphia – Bologna). But you need to make enough money during the summer to tide you over for those lean winter months.

  • Low cost carriers just starting up don’t really have immediate other places to send the planes. American Airlines, at least, can in theory reduce capacity to Europe in the winter when far fewer people want to travel and fares plummet… and send those planes across the Pacific as part of their joint venture with Qantas since Australia/New Zealand – U.S. peaks when Europe is at its absolute bottom.

  • An attraction of newer widebody aircraft like 787s and Airbus A350s is lower operating costs per seat mile than earlier large jets. But you still need to be able to fill them for the economics to make sense! Longer range narrowbodies like Airbus A321XLRs will be cheaper to operate still, with fewer seats to sell. That’s how American thinks it can make some transatlantic routes year-round rather than seasonal.

  • Historically, established legacy airlines have had managed business travel contracts that helped sustain them in wintertime. Business may shut down over the holidays but still continues over winter overall in a way that leisure doesn’t. That’s a little harder now with such business travel not fully recovered from the pandemic.

If you have cheap enough aircraft – for instance Norse Atlantic has Boeing 787s from defunct Norwegian that they aren’t paying much for – you could in theory park some planes over the winter and save on fuel expense. But while you might reduce hours for crew somewhat, you’re still going to need to pay crew too. Otherwise your crew will leave and you’ll have to start fresh (and have startup training costs) every summer.

That’s why Norse tried flying to South Florida in winter. That wasn’t about bringing Americans to Europe in winter, it was about bringing Europeans to Florida. It’s why European carriers often fly to the Caribbean. These aren’t perfect substitute markets. Many of them don’t work or last. But it’s an attempt to find someplace where they’ll lose less money in wintertime.

It’s also why major airlines start sending widebodies to places like Cancun in the winter. That’s not really because so many people want to travel to Mexico that they need big jets. In fact they’d often rather fly two narrowbodies for less than one widebody while offering more schedule choice. But it’s a place they can send the plane that it’ll lose less than sending it across the Atlantic.

Ultimately you need somewhere to fly planes when demand for your core routes dries up. For years Avatar Airlines (which struck me more as a walking poster child for securities fraud than a viable startup) wanted to fly Boeing 747s domestically. And maybe you could fill planes to Las Vegas on Thursday afternoon, back Sunday, and get really low unit costs. But what’s going to happen to those same planes flying on Wednesday? You want the biggest plane you can fill.

Regional jets are less expensive to fly than larger narrowbodies but they are more expensive per seat. Twenty years ago one of the (many) major problems that United Express carrier Atlantic Coast Airlines faced trying to go it alone as Independence Air is that they were a low fare airline with high unit costs – they couldn’t compete with United at Washington Dulles head-to-head using regional jets.

Large aircraft are great when you fill them, but whatever aircraft size you have you need to be able to fill them, not just in peak season but year-round.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Back in the 80s/early 90s, Some UK charter airlines during the low winter season would have agreements with US, Canadian and even South Pacific carriers.
    As a few examples
    Britannia would send 767s down under as extra capacity for Australian and New Zealand carriers.
    Air2000 would send 757s to Canada to work with Canada3000 etc for snowbird flights.
    Then there would be the haaj flights which were not always a good source of income.
    Airlines like ambassador struggled to find sources for the winter months and invariably collapsed,

  2. “It’s also why major airlines start sending widebodies to places like Cancun in the winter. …it’s a place they can send the plane that it’ll lose less than crossing the Atlantic.”

    I still think you have to cross the Atlantic to get to Cancun.

  3. Norwegian Air used to fly narrowbodies to/from NYC/BWI to Guadeloupe/Martinique due to the latter being within the EU and doing so with the open skies agreement.

    Can’t imagine it was very profitable. Flew on Jetblue to Guadeloupe in December and it was $250 r/t including taxes.

  4. You could certainly argue that this obvious economy reality favors larger airlines that can have more robust networks, with good seasonal alternatives.

    Even large-ish airlines can run into trouble this way. Think Alaska. Obviously, they have plenty of demand for flights to Alaska in summer. And people from the lower 48 want to fly into their SEA hub at that time, too. But there’s no leisure demand to these destinations in winter. Hence their pioneering flights to Mexico and — after safety concerns diminished this market — to Hawaii. And now they’re stuck with their largest operations in two declining cities: Seattle and Portland. Sometimes size matters.

  5. you are so correct about Avatar being just an open hole to securities fraud. Remember their CEO Mr Barry did fed time for the same scam at People’s Express. I worked for them for a year-unpaid–and we tried to oust him to no avail. His brother in law is CFO and corp lawyer…still tiring to recoup $ for himself and friends from the Family Express downfall.

  6. Sort of an aside to the main point of your post, but the, “lets get a few business owners together and start an airline” worked a lot better in smaller cities when there were still 19 passenger turbo props in service. It’s a whole lot harder to fill today’s RJ or larger equipment, not to mention pay a crew in the current environment to allow a business plan like that to pencil out.

  7. Has anyone ever tried an aircraft sharing system? i.e. airline A runs an aircraft US -> Europe in the summer and then airline B runs that same aircraft Australia -> US in the winter. You’d have to change the livery between seasons but I imagine that’s an easy operation?

    In practice, this is what big airlines (per your American Airlines example) do when they reallocate capacity but it seems like there should be a way to do this _without_ requiring megascale airlines. It also allows specialization in markets: a European airline might know that market and be able to serve it really well and then an Australian airline can bring their similar market expertise to the utilization of the same metal.

  8. @Ben – “Has anyone ever tried an aircraft sharing system? i.e. airline A runs an aircraft US -> Europe in the summer and then airline B runs that same aircraft Australia -> US in the winter. You’d have to change the livery between seasons but I imagine that’s an easy operation?”

    What you describe was common during the 60s through 80s The arrangement is referred to as either wet-leasing (carrier A leases to carrier B with crew), or dry-leasing (carrier A leases to carrier B without crew).

    It was uncommon for aircraft to undergo repaint due to the short duration of those seasonal leases. The leasing carrier usually applied title stickers. Here is an example from the photo archive:

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