It costs a lot to start and operate an airline in the United States. If you are considering this line of business, have it in mind that you will need money – and lots of it.
Note that the exact cost of starting this endeavor will depend on the size, where you’re operating, and which airport. It can be anything between $50m to $200m. Truth be told, the exact cost is often underestimated when starting an airline.
If you check history, you’ll find hundreds of paper airlines that never saw the light of day; airline plans that sunk into the deep sea of planning without actualization.
As such, when it has to do with starting an airline, the adage of ‘planning for the worst and hoping for the best’ should be in your mind. Don’t forget to accumulate as much cash as you can lay your hands on, especially within the early stages.
Estimated Cost Breakdown for Opening an Airline Company
- Business Registration Fees – $2,500.
- Legal expenses for obtaining licenses and permits – $34,300.
- Marketing, Branding, and Promotions – $25,000.
- Business Consultant Fee – $50,500.
- Insurance – $5 million.
- Rent/Lease – $3 million
- Operational Cost (salaries of employees, payments of bills et al) – $9 million
- Equipment and Furnishing – $1 million
- Airplane (leasing agreements) – $85 million
- Website: $2,500
- Opening party: $8,000
- Miscellaneous: $2 million
Ongoing Expenses for Running an Airline Company
- Fuel Costs
- Aircraft Maintenance
- Employee Salaries and Benefits
- Airport Fees and Charges for landing, parking, and terminal usage.
- Insurance Premiums
- Marketing and Advertising
- Administrative and Overhead Costs (office rentals, utilities, office supplies, accounting, legal services, and other administrative expenses).
- Costs related to providing in-flight services, such as catering, in-flight entertainment, and amenities
- Ongoing training programs for pilots, cabin crew, and other personnel
- Navigation and Air Traffic Control Fees
- Ongoing expenses for IT infrastructure, reservation systems, and digital platforms
- Cleaning and Ground Handling
- Regulatory and Certification Fees
Average Salary of your Staff
- Chief Executive Officer (President) – $180,000 per year
- Logistics and Operations Manager: around $85,000 per year
- Human Resources and Admin Manager – $70,000 per year
- Pilot – $120,000 per year
- Maintenance Engineer – $70,000 per year
- Cabin Crew – $50,000 per year
- Sales and Marketing Manager – $45,000 per year
- Accountants (Cashiers) – $45,000 per year
- Customer Service Representative: $33,000 per year.
Factors That Influence the Cost of Starting an Airline
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This is without doubt one of the significant expenses that come with starting an airline. Note that the choice you make here will need to align with your budget. You need to know the exact model that will work best for your airline. When procuring a new aircraft, don’t forget that there are numerous options.
The choice you make at this point may be what makes your airline successful or could consign your airline to the long list of airline failures.
Commercial aviation is one of the world’s most heavily regulated industries in the world and that is for a good reason. Note that the associated risks of collectively flying millions of passengers every single day are massive and safety will have to be given utmost consideration.
Regulation especially when it had to do with starting an airline is more about safety. Although there will be variations in the regulatory and certification frameworks between locations, they will most definitely cost a fortune.
Have it in mind that any new airline will require a headquarters and a home operating base, and this might or might not be in the same location.
Airlines need their administrative offices to be situated close to the airport, as it is meant to serve as their primary hub, but this is not always the case. When choosing the ideal location for your headquarters, ensure to consider your cost and whether there is room for growth.
Starting and running an airline in the United States will most definitely require strong leadership from the very beginning. According to experts, early recruitment of your lead management is very important to the survival and sustenance of your airline.
Some precise roles within an airline are mandated by regulatory and oversight reasons. Filling these roles with persons with industry experience will not only satisfy the authorities under whose jurisdiction your airline will operate, but it will in many ways bolster your airline’s chances of operating its first revenue flight.
You have to understand it takes more than just good planning, a good level of business insights, or even the right choice of aircraft for your Airline to be up and running. Have it in mind that without certain support services, your aircraft will remain static on the ground.
Aviation insurance, which would encompass liability coverage for potential accidents, is a very necessary expense for an airline. Also, note that the amount you put in here will be quite massive and this is due to the nature of the industry.
Marketing and Branding
Marketing and promotion, often referred to as advertising, is very important for any startup business, including airlines. Regardless of the size of your airline, moving passengers or cargo without a well-detailed marketing plan will make your new airline remain unknown to people. As such, it is imperative you develop a detailed brand strategy.
IT Systems and Software
Making use of reservation systems, and crew scheduling software, coupled with many other technology infrastructures is very important to ensure that you can put up efficient operations and customer service. Ensure to leverage a careful and considered approach when purchasing these essential support services as they will impact your Airline, your investment, and your revenue.
Note that with the right understanding coupled with a reasonable degree of negotiation skills, you will be able to obtain the right services your airline will need at a deal that is appropriate for you and your passengers.