How to start an airline

Okay, it may sound like a step too far and too big – but launching an airline isn’t out of the question for budding entrepreneurs with the right background. Adel Ali, founder of Air Arabia, tells us how he did it

Adel Ali: The CEO has no plans to spin off Air Arabia Maroc

Adel Ali: The CEO has no plans to spin off Air Arabia Maroc

You were previously at British Airways, do you need a background in aviation to start an airline or can you just have an MBA from business school?

In any business you do, if you don’t know the business, the golden rule is don’t do it. Therefore if you don’t have the background, it will just cost you more, and you may get it wrong. Starting a business with corrupting mistakes is not the best way to progressing your business.

There have been lots of examples where people thought ‘we have money, we travel a lot with airlines, let’s set up an airline’. A lot of people’s impressions about running an airline are about having aircraft, having seats and how much they’re going to charge for the tickets. That’s only about 5 percent of starting an airline. The other 95 percent of it is all to do with technical and operational areas.

What are the key steps?

There are several hundred things that you need to do. It’s a complex industry and being a complex industry you get involved in the aero political side between countries and governments. You need to ask yourself: can I set up an airline? If I do, can I travel to anywhere and can people travel and will people accept me? And then it leads you to ‘how can I make this commercially affordable, do I have the right infrastructure on the ground and in the air and the capability of bringing in the right people to do this for me?’ Then of course it comes to what’s different about which aircraft you want to use and why? And then it moves to how do you insure it, at what level and what is acceptable and what’s not.

It has a lot to do with the technical side and hence you need an aviation person. When you start operations, a lot of things will hit you that you don’t know. A lot of airlines tend to say we will start operating in three months or six months and then in six months time, they say they will delay it for another six months.

How long did it take you from inception of idea to actually starting?

June 1 to 28 of October. Exactly five months and 28 days. The norm is about eighteen months. We did it in record time. A lot of people thought this was an impossible target to achieve. We went for it and it happened.

How much money do you need to start an airline (low cost)?

It’s a finger in the air, really. It depends on your business plan. You have got to really set up a business plan and you have to make sure you don’t run out of cash in the first couple of years. It depends on the size, where you’re operating, and which airport. It can be anything between $50m to $200m.

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