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Aviation start ups – promoting innovation or creating unnecessary competition?

The number of air passengers is expected to grow by 5.1% over the next 20 years. This, according to experts, naturally means that there will be a large number of new airlines being established in the process. These new players, introducing brand new business models and a fresh outlook, will promote a healthy competition among the largest and the newly established airlines, especially within the emerging markets. As a result, customers may expect a more innovative approach and much higher service quality standards.

‘Airlines are often subjected to rapid market fluctuations that increase or decrease profits. However, new companies, unabashed by the existing challenges, introduce new products and services and thus contribute towards the product quality and stimulate innovative ideas through encouraging competition. The maximum surplus value, naturally, falls to the end consumer.’ – explains John Hoyos, Business Development Manager in South America.

Airlines are often subjected to rapid market fluctuations that increase or decrease profits

According to experts, the last year’s growth in African airlines’ profits (USD 100 million, according to ICAO) was mainly determined by the newly established airlines. In the meantime, in China, which is one of the most rapidly developing markets, such newcomers acted as a powerful accelerator for encouraging innovations and progress within the industry. It is worth mentioning that South America has not undergone such a vivid growth in emerging airlines lately, however, the experts can still observe an increase in the number of innovations and improvement in general service quality. A similar situation can be spotted in Russia where a gradually increasing number of new players impels faster business processes among the more experienced ones. A slightly different game is taking place in the United States where the newly established companies are often strongly regulated by licenses and various permissions. As a result, they are faced with the need to pay more attention to well-though-out business strategies and attracting the right investors.

‘Not only does the introduction of new products accelerate business processes but also improves the total domestic economy. Such companies as Virgin Blue, WestJet, Ryanair, Emirates and several others have also once been start-ups. That is why we think it is absolutely necessary to support the newly established companies that may one day join the list of the most influential air carriers across the world.’ – explained Chief Commercial Officer of Vytautas Vorobjovas.

According to Mr. Vorobjovas, all markets, including the aviation sector, require constant regeneration. Otherwise they will fall into the trap of stagnation and gradual deterioration. ‘In order for the process to move forward there must be a strong emphasis on healthy competition and that is where new companies play an enormous role. With that in mind, is introducing a 50% discount for the industry newcomers that will make it a lot easier for them to deal with acquiring new parts and components and solving AOG situations.’ – says V. Vorabjovas.

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