Monday, September 24, 2007

Route established on a co-op basis

What do you do if your local airline does not offer the non-stop route that you desire? You get support from local businesses and start a co-op to offer the route. This is exactly what a property management firm did in Denmark to start a route from Billund, Denmark to Lviv, Ukraine. The local business market near Billund desired a direct route to an area where many do business but there was a lack on direct connections. UPG, a Danish property management firm, established UPG Airservice, a co-op with local businesses, to provide service to Ukraine using two aircraft from Sun-Air, a Danish regional based in Billund. Any profit from the route will be divided among the co-op owners according to the share of tickets bought.
This is a very innovative way for local businesses to establish the desired routes and for an airline to secure a revenue source for their assets. Depending on the details of the contract there may be limited risk for Sun-Air as the airline may provide capacity on a fee-for-departure contract, similar to US regionals. The 32-seat Dornier jets that Sun-Air use may be the right capacity, although something smaller may allow more of such arrangements.

1 comment:

Anonymous said...

Kristian - this is Andrea from Airline Business ( We'd like to send you your copy of 'Ryanair - the full story of the controversial low-cost airline'. Could you please email me?