Idea: How About a Long-Haul Low-Cost Superjumbo?

It all started last night when I was reading a Business Week article entitled, The A380: A New Way to Travel? We’ve all heard about this huge revolutionary plane that only the really wealthy will afford to fly in its first days.

I was curious to find out how many airline companies have ordered the Airbus 380 and went on its Wikipedia page for more information. While reading about the Very Large AIrcraft, a piece of information caught my attention:

Courtesy: frielp

“The A380’s upper deck extends along almost the entire length of the fuselage, and its width is equivalent to that of a widebody aircraft. This allows for a cabin with 50% more floor space than the next-largest airliner, the Boeing 747-400, and provides seating for 525 people in standard three-class configuration or up to 853 people in all economy class configuration.”

So far, all the airline companies that are operating the A380 seem to be focused on the standard-three-class configuration and from a quick research so are the next companies waiting in line for their aircraft.

This observation sparkled an idea and I gave myself a quick assignment to determine wether there was an opportunity waiting to be exploited

Environmental Scanning

The state of air travel

Without any elaborate research from reputable firms, it’s easy to gather that with the rising prices of fuel, the global recession (economic downturn but a recession nevertheless, read why), the general inflation, air travel is becoming very expensive to the point where USA Today asked: “Will fares go so high that only the rich can fly?”

One fact remains though: people still need to fly to visit family and friends or to go on holidays. Even if fares do get out of hand, people will fly less and so the demand will drop but it will never die.

I should add that although most people genuinely care about the effect air travel has on the environment, the great majority will not sacrifice that lifelong planned trip to Paris or that last visit to a relative about to pass away. So, unfortunately, for a long while, air travel will still impact the planet negatively. Even Al Gore simply can’t travel from LA to NYC by bicycle to save our planet.

The other crisis hitting air transportation is the mess that’s currently going on at airports: delayed flights, lost luggage, poor service, security processing nightmares and so forth.

Passengers want to travel at affordable prices, get to their destinations on time and have a pleasant experience in the process.

The state of the airline industry

Airline companies are going bankrupt left, right and centre. At last count, one company a week bit the dust in the US! There are a lot of reasons why airlines are in trouble but overall it’s due to bad business moves.

It’s no secret that some were greedy and when the bottom fell, it was too late. After all, Southwest is doing fine because it stuck to its core business and had good foresight by fuel hedging for instance.

As long as people are still taking planes, the airline business will still be here it’s just that only the best players will survive the current crisis.

The mission of the industry analysis is to look at (with an objective eye) who failed, who succeeded and what it takes to succeed in this fiercely competitive business and draw some lessons.

For instance, airline companies focusing on the high end segment, those focusing on the lower-price (JetBlue, Ryanair, Southwest) and charter airlines seem to be doing well showing us that those companies that are specialized fly well.

The Opportunity

Reading about the Airbus A380 and its 853 seating arrangement in all economy configuration and noting the state of travel and of the airline business creates an opening that could unravel an entrepreneurial opportunity.

Somehow flying 853 people from one destination to another will make a single ticket fare low? How many people every summer fly into Paris from the same destination? How many people fly to Cancun in winter months? How many people fly to Orlando? How many people will fly to Johannesburg or Cape Town in 2010 to attend the World Cup Football?

Would an A380 low-cost charter airline make sense?

Ideasmithing

This is the most fragile stage for any entrepreneurial idea. Experts weigh in, the lack of data (something that has never been tried before has 0 data), critics air their views, friends laugh off the concept mentioning that the person can barely make his or her car payments and they want to start an airline company, family politely wish the person well while internally wondering what illegal substance he or she’s on and if the entrepreneur is swayed easily and quickly, the idea just dies off as quickly as it sprung up.

Let’s assume that I decide to pursue this idea, do my due diligence and exploit this opportunity. What would I do?

1) No, I would not write a business plan first. I would define the concept in one sentence. If this tagline is easy to understand and shows the uniqueness of the idea, we’re off to a good start.

The ability to turn an idea from an abstract notion to a tangible concept is a hard task. Some good ideas never make it because they were poorly presented. If the public (your future customers), the media (your promoters), investors and banks (your backers), your employees (your partners) cannot understand what the idea is all about, they won’t buy in.

2) I would consult industry professionals, conduct my own research on the inner workings of the business with my unique concept in mind. Again, a reminder: sometimes industry professionals are too immersed in the business that an odd and outside idea that seems to simplistic will be dismissed within seconds.

Do you imagine the first entrepreneur to start an airline company? I would not want to be in his shoes!

I would try to find a way to make flying A380 with 800 passengers affect the single ticket fare. I would find out if first of all the A380 is the perfect aircraft or if I should stick with the 747, if it’s better to lease or buy, if it’s better to go through major airports or smaller (if the Super Jumbo can land there!), how I could reduce the operating costs without sacrificing the service level and basically how to make the ticket so cheap by using structural advantages that no other long haul low cost carriers can achieve.

3) Assuming that the idea seems feasible, I would realize that with my own money, I would not get anywhere and that banks and investors would laugh me out of the room if a non-industry insider pitched them an idea in a business that’s facing major turbulence.

I would heed my own major principle: never to run after investors and other financial backers but instead make them run after me to invest in my venture.

I would use the media to my advantage to become a well-known entity in the airline industry and the mainstream. I would for instance become a low-cost travel advocate or I would establish an entrepreneurial record that I would publicize making me a recognized businessperson who’s taken seriously.

In other words, I would make my idea and myself credible without somehow revealing my plans so that entrepreneurs or companies with better access to capital can hi-jack my idea.

I would even take up a job with in the airline industry where I would be guaranteed to gather a lot of knowledge but also meet people who could become partners or employees.

To beef up my credentials, I would probably do a business degree too from a prestigious school where not only would I get a respected paper but also make friends with people with access to money and connections.

4) I would eventually use my contacts and my months of fine-tuning my business plan to expose the concept one credible investor who believes in the concept and who believes in me. This type of investor would also need to be influential, meaning that whatever he touches gets the attention of other investors, the media and the industry invested in.

This investor would have seen that I devoted a great portion of my life to the concept, that I am willing to let more knowledgeable people take off the control if need be and basically do for the good opportunity that it is (investors in my opinion are entrepreneurs too as their risks are also crazy high!).

The attention would surely attract other investors and moneylenders and with God’s blessing, the media can tout the merit of my concept thus creating goodwill with my future customers.

Conclusion

How long would this whole process take? Minimum five years. The more money an idea requires to turn into reality, the longer it will take to pull off assuming that the entrepreneur is recognized figure or has no access to large sums of money.

Such big and revolutionary ideas are not for the faint-hearted. While getting this concept off the ground, another entrepreneur or company can market it before I do and by the time I arrive to the tarmac, he, she or it would have taken off with my passengers with my now not so fashionable world’s largest aircraft.

My apologies to sound off on a negative tone but entrepreneurship is not like a Disney story where the ever happily after always occurs. All the time, money and energy invested would have not gone to waste. There are so many opportunities in the aviation and airline industries that can be exploited any time. I would take a week break to cry myself a river and let another idea come to me.