Opportunities for new airline investment

The pandemic presents reduced aircraft prices for the airline industry.

Across the world, perfectly good aircraft are now sitting grounded in the sun or inside of a hangar awaiting a new owner. The Boeing 737, for example, is the most popular aircraft in the world. Ryanair alone, operates over 300 such aircraft across their Ryanair and Ryanair Sun operations . Two years into the pandemic, Simple Flying reports that investors can obtain a two-year-old 737-800 for a 91% discount to 2019 list prices. A discount of this size for one of the most sought-after aircraft in the world makes an appealing proposition for investors.

Let’s say a new start-up considered lesser utilized four-engine aircraft like the 747, A380 or A340, then these discounts could be even more significant. Of course, any savings would need to be offset against the increased fuel burn and maintenance costs of these quad-jet aircraft, particularly as oil prices continue to increase and maintenance costs rise with inflation.

Ambitious new investors could start airlines with record-low aircraft acquisition costs and less legacy debt than established airlines. Couple this with the improved terms airports would be prepared to offer new entrants to help fill vacant gates legacy competitors left behind. And there you have the perfect storm.

Each year, new countries open to tourism, anywhere from Azerbaijan, Uzbekistan to Paraguay. As the world becomes more globalised, there are more destinations that airlines, new and old, can serve.

The global pandemic drove a 40% reduction in seats offered by airlines in 2021 and an overall reduction of 2.2 billion in passengers flown versus 2019 . In Asia-Pacific, 2021 passenger numbers were almost 60% below levels before the pandemic. Worldpay’s airline industry expertise in building global payment strategies and enhancing the customer experience – including better airport payments and APM acceptance – is just what new airlines with a new mission require. Worldpay has continued to lend a hand to the airline industry. Where many have exited the market, we have been a strong ally. A payment partner willing to take a risk on new and untested start-up airlines with the most advanced acquirer risk management tools in the business. We’re committed to doing our part to contribute to a strong industry rebound and ensure people can continue discovering new vistas and shores for generations.

[References]

¹ Salesforce (2021) The Shopping Index: Global online shopping statistics and ecommerce growth trends [Accessed 10/12/21]https://www.salesforce.com/resources/research-reports/shopping-index/

² Worldpay (2021) Power Your Payments – Travel [Accessed 02/12/21] https://offers.worldpayglobal.com/payments-travel.html