Airline lift off
George Weinmann moved to China to launch the country's first low-cost airline; but regulations kept him from lift off. Undaunted, the entrepreneur found his opportunity on a honeymoon to the island nation of the Maldives. Now, he runs an upstart carrier linking the world's fastest-growing travel market of China with the popular island destination, and is eyeing new routes beyond.
By Ron Gluckman /in the Maldives, Bangkok and Beijing
AT A TIME WHEN MANY AIRLINES ARE FILING FOR BANKRUPTCY, curtailing service or consolidating routes, George Weinmann is jumping into the industry with a start-up.
Mr. Weinmann, the chief executive of Mega Maldives Airlines, is going after a growing niche, linking increasingly affluent China with the Maldives, a tiny island nation. The American entrepreneur says he has the right ingredients to make it a success: lucrative landing rights in an expanding market, an international network of contacts and crucial government approvals.
“Over the next 10 years, the Maldives can become the playground in the backyard of India and China, similar to the way the Caribbean is to the U.S.A. and Canada,” Mr. Weinmann said.
Still in its second year, the start-up recently added Chongqing to its network of flights between the Maldivian capital of Malé and Beijing, Shanghai and Hong Kong. Selling mainly to group tours organized by travel agents, Mega Maldives has grown to about 180 employees, twice the number when flights started in January 2011.
His start-up is all the more ambitious given that the airline industry is hammered by rising fuel prices and cutthroat competition.
“This is an industry where, even if you make $1 billion one year, you can lose $1 billion another year,” noted Martin Craigs, who spent most of his career in aviation, but now is chief executive of the Pacific Asia Travel Association.
Mega Maldives has faced its own challenges, particularly after street protests in February, when President Mohamed Nasheed of the Maldives stepped down — or was forced out in a coup, as he says. China reacted nervously; many carriers canceled flights.
“We’ll keep flying,” Mr. Weinmann said in February, soon after the unrest hit the islands. “But for how long, it’s hard to say. Right now the planes are still full, but people just aren’t booking” in advance.
In the aftermath, the airline has suspended only one route, to Hong Kong. Mr. Weinmann said that the full schedule would resume on April 4. He projects that by June, Mega Maldives will expand service to 34 monthly flights from China to the islands.
His initial plan was to start China’s first low-cost carrier, focusing on the fast-growing corridor of Chongqing, Wuhan and Changsha. But after he moved to China, its government decided to curtail private investment in its booming aviation industry. He began investigating alternatives like charter operations, but found few viable options.
When he finally took a long-postponed honeymoon to the Maldives with his Chinese wife, Wang Beibei, he found his niche. On the last day of his vacation, he met Maldives officials to discuss charter operations from China. But the officials instead proposed that he consider setting up an international airline in the Maldives.
“It was a total fluke,” acknowledged Mr. Weinmann, 37. “At first we demurred. We know how difficult the airline business is and this time, I did not have the financial backing or the scale of the low-cost business plan I had done before.” But he and his investors “kept seeing the demand and the opportunity and finally, we plunged in.”
The roots of the airline can be traced to a business plan competition he participated in while he was at the University of Michigan. Mr. Weinmann, who spent five years at Boeing as an aerospace engineer, sketched out a plan for a low-cost airline for China.
After completing his M.B.A., he visited China for the first time in 2004. An adviser on his business plan, who had worked for an American airline in China, helped arrange a meeting with a top official at the Civil Aviation Administration of China, which oversees mainland aviation. Mr. Weinmann, a native of New Orleans, said he received positive feedback on his plan and promptly packed up for China.
Raising seed capital from family and friends, he pitched investors and says he secured $60 million in financing. But he had to abandon the plan when it became clear China would not approve it.
Years later, he operates in Asia’s smallest nation. The Maldives has about 330,000 people on 1,200 islands spread over 35,000 square miles. About 900,000 people visit each year, and Chinese tourists are the largest share of the market. The number of visitors to the Maldives from China doubled in 2010, and soared 67 percent in 2011.
Mega Maldives began last year with one Boeing 767 flying from Hong Kong to the Maldives. Service expanded later in the year to Shanghai, Beijing and Chongqing. In January of this year, a second 767 was added.
Mr. Weinmann is optimistic about the airline’s prospects. The International Air Transport Association, an industry trade group, projects that international travel from mainland China will rise by around 10 percent annually through 2014, making it the world’s fastest-growing market for international flights.
“We expect to be profitable in 2012, our second full year” of operation, Mr. Weinmann said.
Mr. Weinmann has his sights on other markets. He holds stopover rights in China, allowing his airline to continue to other destinations like Japan. Carriers from America and Europe can spend years negotiating routes to China, but Beijing fears no competition from tiny countries like the Maldives. Mr. Weinmann said that the airline had been approved to extend flights to the China-to-Japan corridor and that he planned to add routes to other countries.
“Mega Maldives has found a nice niche, but there are a lot of challenges,” said Brendan Sobie, an analyst at the Center for Asia Pacific Aviation’s Singapore office. About two dozen airlines serve the Maldives, with Sri Lankan and Emirates in the lead. As the market grows, established competitors with deeper pockets are better positioned to increase flights, Mr. Sobie says.
Mr. Weinmann, however, said that he believed that start-ups had an advantage because they could typically respond faster to changing conditions. His airline’s schedule is part of that advantage, he said. The islands are an expensive destination, and most Chinese visitors come on short breaks. Mega Maldives maximizes their days in the sun by timing the flights to arrive early.
“Business 101: find a niche and serve it well,” he said. “That’s what we have done.”
Ron Gluckman is an American reporter who is based in Asia since 1991, roaming around the region for numerous publications, including the New York Times, which ran this story in March 2012.
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