Launching a new regional airline in the UK is a complex, capital-intensive undertaking. The AOC application process, fleet acquisition, recruitment, training, regulatory approval and route launching all require capital before revenue flows. Finance for regional airline start-ups requires lenders who understand the regulatory timeline, the pre-revenue phase risks, and the characteristics that make a new regional airline commercially viable.
The UK's regional aviation market has seen renewed interest from new entrant carriers seeking to replace withdrawn services, serve underserved airports and compete in niche markets. Government support for regional connectivity - including funding for PSO routes - has reduced some of the revenue uncertainty for new regional operators.
New regional airlines typically pursue one of two fleet strategies: acquiring second-hand turboprops (ATR 42/72, Dash 8) or regional jets (ERJ-145, CRJ-200) at relatively low acquisition cost, or wet-leasing aircraft for initial operations before transitioning to owned fleet. Both approaches have finance implications that need to be planned from the outset.
DBF works with regional airline start-ups - from initial AOC planning through to fleet financing - providing advice on finance strategy, lender appetite and how to present the business case most effectively. We are experienced in presenting pre-revenue commercial propositions and know which lenders will engage with new entrant regional airlines.
Key Lenders for This Segment
| Lender | Rate from | Strengths |
|---|---|---|
| Investec | 5.8% p.a. | Specialist aviation, large tickets, strong covenants |
| HSBC | 6.0% p.a. | Global capability, complex structures |
| Close Brothers | 6.1% p.a. | Proven commercial desk, accessible |
| Paragon | 6.9% p.a. | Flexible on complex or unusual structures |
| Shawbrook | 7.2% p.a. | Accessible for newer operators |