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.
The dynamics of the airline industry are becoming increasingly pronounced as deregulation and competition increase. Technology or government involvement are no longer guarantees of success. However, the business model is becoming the leading factor of survival in this industry. This blog comments on the development of airline business models throughout the world, and will hopefully give some insight into airline operations, the industry, and business models in general
Showing posts with label Co-op routes. Show all posts
Showing posts with label Co-op routes. Show all posts
Monday, September 24, 2007
Route established on a co-op basis
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