Canadian Adam Scott surprised the aviation world at the Paris air show in June 2013 with his plan to launch Odyssey Airlines, an upscale carrier flying between London City Airport and the eastern U.S. and Canada. For that ambitious project, Scott placed a conditional order for 10 Bombardier Inc. CSeries. The proposed airliner from the Montreal aircraft maker is back in flight testing after being grounded for more than three months following a May 29 engine blowout.
The 110-seat CS100 CSeries Scott intends to buy will be reconfigured to seat about 40 passengers in luxury. British Airways already flies an Airbus 319 from London City to New York, but must refuel in Ireland. The CSeries has the capacity for non-stop flying between London and the east coast.
The 35-year-old longtime U.K. resident spoke to The Gazette’s François Shalom from London in September.
Q. Where is the project at these days?
A. We’ve been continuing on our funding missions. We want to look to elevate our profile. Last year we raised some substantial cash from peer-to-peer lending.
This year, we chose to look to the equity crowdfunding platform. and really, the idea there again is to elevate our profile, let people know we’re coming and that we’re serious, and give people the opportunity to really participate.
High-profile aviation people have joined the program, including David Tait, a co-founder of Virgin Atlantic, Steve Miller (CEO of Hong Kong-based Dragonair) and focusing critically on looking at how we are going to differentiate ourselves from the others … (and) on the bigger story of how we’re going to be something that’s fundamentally better for our target audience.
Q. What, exactly, is peer-to-peer funding?
A. It’s a form of crowdfunding, where you effectively raise debt rather than equity. It’s raised from a group of individuals in an electronic platform and it allows investors to lend money to the company to fund its continued development and potentially other upside opportunities later on — for example, to convert debt into (airline) tickets in future. It gives people the opportunity to participate in the ongoing evolution of Odyssey.
Q. How did the crowdfunding effort go?
A. It was not the most traditional form of crowdfunding (which is) where you put money into something and get maybe an awards-based incentive. So if you apply that to an airline, you might get a ticket to travel somewhere, or a model of an airplane, something like that. That’s traditional crowdfunding. Equity crowdfunding is investing in a company and getting a share or an equity subscription in exchange for your cash … We raised in excess of 2.1 million sterling (British pounds, or about $3.75 million) in the lead-up to Christmas last year, we want to bring that into a wide audience and to afford people the opportunity to participate with an investment of as little as 10 U.K. pounds and up to a maximum of 5 million pounds. (The drive collected just over 1 million pounds in the U.K., or about $1.8 million, and about US$425,000 in the U.S.)
Q. Is it fair to say that you’re raising money this way because you’re having difficulty raising money through more traditional sources?
A. No, I wouldn’t say that at all. Anyway, what are traditional sources for starting an airline? (Banks and traditional investors are notoriously reticent to fund major aviation projects, even for huge companies like Boeing, Airbus and Bombardier.) We have a very set goal and objective in terms of raising capital and to date we’ve raised over 5 million pounds ($9 million). We have tapped the traditional markets as well — wealthy individuals, etc. We are now on course to look at our institutional fundraising in the first half of 2015, which will be more of a traditional fund-raise. To compare ourselves with other airlines … is difficult.
Ours is a different beast because of course we’re not only a start-up airline but a start-up working with a brand new aircraft. So we have that double whammy. If you try to put that on a timeline, any other start-up could just say ‘We’re going to take x y z aircraft and start flying them 12 months from now.’ We obviously have a longer period before we can actually start flying.
Q. Are the problems Bombardier is having with the CSeries having a material impact on the plans to launch Odyssey?
A. We have a regular dialogue with Bombardier, we have a very open channel with (Bombardier vice-president for the CSeries) Rob Dewar direct. We’re very comfortable with the issue and the fix (for the May 29 engine failure) that’s being implemented for a return to flight testing (the CSeries returned to the air on September 7th) … We’ve said for the last 15 months that we’re looking to launch in 2016. We’re confident with what Bombardier is doing.
Q. How much money do you need, all told?
A. Ballpark, the total right now is about US$100 million, in addition to the roughly US$10 million we’ve raised to date. We will get there, we’re confident of that … (mostly) from institutional sources.
Q. Many airlines with a similar business model have failed over the years. Why do you think you will be different?
A. Basically … because we’re going to be using the right aircraft, we’re going to be operating out of the right airports and we’re going to be launching at the right time. If you look at the others that have come and gone in the past, they were operating the wrong aircraft out of the wrong airports, and most of them launched simultaneously just before oil spiked to US$147 a barrel … Remember that there are successes as well … L’Avion, which was sold to British Airways (in 2008), (and) there’s a service operated by Qatar Airways for flights between Doha and London Heathrow.
Q. Which airports in the U. S.? La Guardia, perhaps?
A. (Laughs) We’re not disclosing that just yet. Of course, New York, like London, has several options. But … we’re not going to fly into JFK. We’re not positioning ourselves as a direct competitor to the big boys. That’s not what our market is. We’re not going after market share. We’re focused on providing a special service. And on that side of the pond, specifically in New York, we want to be able to emulate the same kind of experience that a customer has at London City.
Q. Who, precisely, is your targeted clientele? It appears to be several notches above business class on airlines but not as expensive as flying private. That seems a narrow tightrope to navigate and sustain.
A. I would correct that. Our real target is customers, the flying public, for whom time is an issue. They don’t want to get stuck in a car getting to an airport, or a train to the airport and then get to a huge, massive terminal with miles of walking to do, etc. Our target customers’ time is valuable, and the experience on the ground is as important as the experience in the air … So we’re targeting business travellers, but we’re also targeting those who would otherwise fly a private jet … There’s a lot we’re working on, a lot to revolutionize the business travel experience. So we want to keep that as close to our chest as possible for the time being.
Q. How much will a ticket cost?
A. Right now, the idea is that it will be very close to the prevailing prices of business travel. So we’re not going to launch as a discount carrier, nor will we launch as an exorbitantly expensive carrier either — between $5,000 and $10,000.
BY FRANÇOIS SHALOM, MONTREAL GAZETTE