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Note
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Various reasons are given to explain why so many airline start-ups have gone bankrupt whilst still in their infancy. In general terms, many new airlines are strategically ill conceived and inadequately financed. More specifically, legal barriers and high costs pose the main challenges in Europe. A number of airlines launched in the wake of European air transport deregulation failed subsequently to attain regulatory approval from relevant authorities such as the UK Civil Aviation Authority. In addition, European start-ups incur on average 40% higher costs than their US counterparts. These stem from factors such as higher airport charges, greater fuel prices and more inflexible labour conditions. For instance, the handling costs at Paris Charles de Gaulle airport are roughly three times more expensive than at Washington Dulles airport. Rising lease rental costs on aircraft have also adversely affected start-ups globally. The obvious lessons are that although enormous market potential exists across Europe for low fare airline competitors, only a few will manage to sustain a presence and their route expansion will be slower than initially anticipated.
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Ryanair's low break even load factor is attributable to its high passenger-per-mile yield, which is calculated by dividing the cost per passenger per mile by the revenue per passenger per mile.
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