AMG Logistics Update: UK-India Carrier Claims To Crack ‘Impossible’ Airline Model
What’s the inspiration behind Flypop?
The idea came from my dad, who always wanted to travel non-stop back to Punjab from the United Kingdom, but there were never any low-cost alternatives. I was completely amazed that there had never been a low-cost airline selling fares from the United Kingdom or the United States to South Asia. Basically, he came up with the notion that he wanted to fly as easily and comfortably as possible. If you grow older, you need that, and if you’re a young family of children, you need that, too.
We’ve already seen that there’s a growing opportunity for direct low-cost flights between the UK and India. You only have to look at SpiceJet and what they sampled recently. But obviously, it’s a tricky time for the aviation industry. How do you think the launch will go, if it indeed goes ahead as scheduled?
As far as I’m concerned, there’s never been a better time to start an airline with operating costs so tiny, even if there’s no rush to get the airline started. I only need to make sure that it’s primed to capture some kind of pent-up demand. This is a positive concern since there are incoming phone calls from retailers promising 50% savings for everything. But I’m going to choose and chose if I start and where I start. I just need to be alert for this. Our launch plan eliminates confusion since we’re going to proceed with a wet-lease model. Flypop will be a finance, communications and administration unit, [operations] will be outsourced to a wet-lease provider in the UK or Europe.
Are you confident that demand will pick up enough for you to launch? Or will it be a case of seeing what happens and delaying the launch if needed?
This is certainly a pause choice since the low-cost model is focused on loading the aircraft and receiving ancillary revenue. We have very low pre-launch operating overheads that enable us to maintain a long wait before the aviation industry returns to some kind of normality. We’re going to close our supply deals at the lowest pace of history and the ability to ship anytime we want to launch. But there’s practically no cash burn once we’re ready, unlike our bad peers who have those big cash burns that are millions of pounds a month. This is a huge benefit. The only thing I have to do is get my timing correct, not start too early, and start incurring the fire.
When do you plan on launching?
We were going to be available by April. April is the Easter holiday plus the Sikh Holy Month of Vaisakhi, where we’d have a number of travellers. However, we’re not going to push the button until we feel that we can get the amounts and keep higher fares.
Do you think airfares will remain relatively steady for the foreseeable future?
It’s just going to be a matter of supply and demand. The availability is going to be available to tend to the market, but I hope the fares are going to fall down. The fares are going to get back to where they were before, and we’re going to be much cheaper than that. We hope to be at least 30% cheaper than everyone else.
What are you doing up until the launch itself to prepare the airline? Will you be busy negotiating airport slots, for example?
Yes absolutely. And we have a brilliant negotiation team headed by Charlie Clifton, who is Ryanair’s former director of operations. He’s salivating to get to know the vendors and get the best offers, as he’s been doing with Ryanair for 20 years. Six months earlier, we weren’t even able to get a phone call to London Heathrow, and now they’re approaching us, but it’s a whole different world. Six months earlier, our marketing strategy featured the obsolete Airbus A330–300s, 5 to 7 years old. Now we can have the latest [Aribus] neos, [Boeing] Dreamliners, A350s, everything we want. Back in the day, there was a shortage of pilots, and now there is a glut of pilots. They’re both going to be leveraged and it’s going to be mirrored in our low fares.
That’s quite an interesting point. The long-haul low-cost model has been debated for a long time. Norwegian is just one example of an airline that has failed to make it sustainable. Why do you think flypop’s model is going to be successful?
VFR (visiting friends and relatives). It’s actually coming down to that. Long-haul low-cost flights rely on your low-cost flights. If you can’t fill them up, you’re going to make a mistake. Norwegian had the correct concept, but sadly, they weren’t catering for a market that could fill their planes all year long. This is what we have with the South Asian diaspora, which goes back and forth to the second Indian cities of New York, Toronto, the United Kingdom and areas of Europe. They’re going back and forth to the second cities all year long, giving them low fares and they’re going to fly some further. Someone got some aspect of low-cost long-haul right, many got 80 per cent right, but with industry, once you get 100 per cent right you’re going to battle. For a long-haul low-cost flypop model, the winning ingredient is the goal section.
So I imagine choosing your destinations and marketing strategy will be absolutely key.
All of our destinations are diaspora-led. And if we do some tourism attractions, it’s just going to be during certain tourist months. We’re a diaspora airline, really. We’re beginning in South Asia, but the same reasoning applies in the United Kingdom for the West Indies, the Caribbean and Africa. Let’s assume we’re the only low-cost option.
How profitable do you think that routes between the UK and India can be?
It’s a big business. 3.4 million Indians are now travelling between the United Kingdom and India. I truly feel that if we start travelling to the second cities, it doesn’t take market share away from anybody. It would stimulate at least 50% further interest from new consumers. So I think this is a big market. About 25% of our passengers would go via the Middle East hubs. Approximately 25% of our passengers would go via the Delhi and Mumbai hubs. But 50 per cent of the market would be fresh.
Which specific destinations do you have in mind?
Amritsar, Ahmedabad, Kolkat, Trivandrum, Goa, Pune, Chennai, Hyderabad, Bangalore. They’re all the second towns. We’re just going to keep away from Mumbai and Delhi. We’re going to make the big boys battle for those. This is all India. And then we have somewhat close destinations in Pakistan. And then there’s a massive community of Gurkha in Britain, so that’s Kathmandu. My ideal would be to travel to Jaffna, but that doesn’t suit the wide-body aircraft at the moment. And also, in years three and four, we’re considering the West Indies and Africa.
You’re only wet-leasing in your initial stages but is the plan to eventually operate your own fleet?
Oh, indeed, totally. Right now, we’re desperate to lock up on inexpensive offers. But it’s only one move at a time. I don’t believe the big bodies are going to be bought up really soon either. We’ll start with a wet-lease, get to our second aeroplane, make sure all our procedures and processes are in order, and then we’ll tie up a big 10 to 20-plane contract with a significant discount so that we can hold our CASK down and move it down to consumers for the next 10 years. Right now, we are in talks with Boeing and Airbus to do so.
And why the Airbus A330? Is that just because of the previous plan that was set up? Could you be looking at Dreamliners or A350s in the future, for example?
Oh, not at all. The A330–300 was the best pre-COVID-19 value for capital. Operators like AirAsia X, who had them, had them almost precisely tailored to what we want, an all-economy set-up. These were the aircraft that was readily usable. But now we’re referring to the lessors and OEMs about the latest 787–9s, A330neos and A350neos. So we’re going to sell our consumers as fine a deal as any legacy carrier, just 30 per cent less. The one thing we can’t do is travel for 10 hours to every place. This ensures that at the end of every 24 hours, our aircraft will be back at the base for check-ups.
Can you ever see yourself using long-range narrow bodies, for example A321XLRs?
No, no. I really don’t think single-aisle aircraft would soon catch up on long-haul routes, but I’m able to prove it wrong. I truly feel that it’s a totally different atmosphere and dynamic for a long-haul traveller. You’ve got to get twin-aisles to get to the bathroom and serve the trolleys. I’m sure that the big bodies are always the potential as long as you have them on the roads where you can fill up.
In the Gulf region, some carriers make up a part of their business by connecting the UK and India. Do you think that you will be able to take a degree of market share from these operators?
I assume there are certain individuals who would still continue to fly across the Middle East, such as the middle classes and single travellers. So there’s a market that only likes to run non-stop. And it’s the really tiny portion that I hope we’re going to pick up from the Middle East airlines. There’s ample pie for luxury carriers in the Middle East, the United Kingdom and India. The pie is so big that it is destined to rise evermore.
You said that the product will be as good as the legacy carriers that are already serving that market. What will the feel of the airline be like from a passenger-experience perspective?
It’s going to be really close to Norwegian and AirAsia X. There will be no windows on the rear of the chairs. There will be USB ports to charge your computer. We’re going to have our own platform where you can book passes, purchase ancillaries, watch stuff on board. Everything’s going to be off our app. And then it’s a lot like the product of AirAsia X. We’re going to sell anything. The only item you’re able to carry onboard is a 10kg bag and everything else you pay for. We’re going to get around 400 31-inch chairs, nine-inch seats, whether it’s Dreamliner, A330 or A350. At the front, we’re going to provide some additional legroom so you can customize a premium ride. We’re going to have free Wi-Fi so you can order your drinks from your mobile. And if you don’t have a computer, we’re even going to lend you one at a discount. It’s going to be eight hours of promotion everything we’ve got.
You’ve already touched on the point about surplus pilots and cabin crew, not only in the UK but everywhere in the world. It’s true that there is no shortage of potential staff and recruitment is traditionally one of the hardest parts of any business. So the current state of the industry must present a unique opportunity to you.
I don’t want to gloat, because it’s the employer industry. I can’t think of a great situation for a foreign start-up where you’re allowed to reach your rivals on a fair playing field, if not at an advantage.
There has been little to celebrate in the aviation industry recently but you certainly seem to have lots of confidence in your concept. What is your message to the market?
The economy is coming back, and it’s coming back faster. I’m hoping [airlines] can take this chance by going back and be even more emission-free, because that’s something we’ve got to face up to. And the experience of the consumer must be utterly second to none when it comes to protection. It’s a real chance for both of us to do it right, something I don’t believe the aviation sector has achieved because it clearly adds costs. We aim to be a really low-cost, friendly airline. Asian hospitality is second to none, however, we should balance it with the rigour of British financial governance. At the end of the day, low cost doesn’t suggest that travellers are being treated poorly. You have to serve the passengers well, with respect. Get some fun onboard, some background music, and just offer them the service they deserve. I am very thankful to the UK Government, who has given us two or three months of due diligence to ensure that we are a post-pandemic, post-Brexit model start-up that can contribute to British jobs. And it’s linking us to the whole Commonwealth. I think providing trade ties and job links with India might be a very major differentiator for Britain, whether or not you agree with Rapkay.
What are your other differentiators?
We’re obviously trying to be carbon-free. We’re trying to make up for any passenger on our dollar. Initially, we’re going to purchase carbon credits, so we want to get to a point where we plant a tree with every passenger. This is number five. Plus, for every 400 meals sold on board, we’re going to offer 200 meals to homeless people in the UK or 1,000 equivalent in South Asia. It’s named the Buy One, the Give One Initiative. This is the very concept of disruption. You will earn a lot of money without creating a harmful impact on society. There’s no reason to do so.