Northern Pacific Airways, the United States’ strangest airline startup, just got even stranger. The airline no longer plans to launch with service between Alaska and Asia, but rather plans to initially serve… Mexico?!?
In this post:
The basics of Northern Pacific Airways
For some background, plans for Northern Pacific Airways were first revealed in mid-2021. Here are some key details about the company:
- The people behind this airline are the same people behind Ravn, a regional airline in Alaska
- Northern Pacific plans to use Anchorage as a hub to connect various points in the United States with various points in Asia; think of it like the Pacific equivalent of Icelandair
- Northern Pacific plans to use Boeing 757s for this service, and several have already been acquired
- Northern Pacific has been planning to launch operations in 2022, though the timeline keeps slipping
Personally I find the business model to be very odd. I’m sure the fixed cost structure is great (these 757s were probably acquired for next to nothing), but these planes have high operating costs, and economy airfare between the United States and Asia is already extremely low, so I’m not sure where the margins are for Northern Pacific, or where the demand is supposed to come from.
Unfortunately the way the company’s management has acted in recent months doesn’t give me much faith either. For example, the airline is looking for the public to invest, with a completely absurd valuation. Executives claim the airline has a $350 million valuation, though for the first $1 million invested, a 20% discount would be applied to the valuation, bringing it to “only” $280 million.
The airline also claims to have massive growth plans, with the intent being for Northern Pacific Airways to have 50 jets by 2026.
Northern Pacific Airways now plans Mexico launch
Josh Jones, “Chairman of the Board” of Northern Pacific Airways, and “early Bitcoin investor,” has written on Wefunder about the company’s latest plans. I’m just going to copy and paste the whole thing, because I’m confused:
Hey there! As this Business Insider article from a few days ago announced, NP is launching soon… to Mexico! This is not “Sayonara!” to Japan (nor “Annyeonghi Gyeseyo” to Korea!), but issues related to the Russian invasion of Ukraine have stretched out our timeline for launching flights to Asia (as the article explains).
We’re still on track for full FAA approval for flights by the end of the year, and we already have DOT approval to sell tickets domestically, however it’s looking like the Japanese (and Korean) authorities likely won’t approve us to even begin selling tickets for another 3-4 months. Since you want to begin selling international tickets at least 3-4 months prior to beginning flights, that unfortuantely pushes our launch for flights to Japan and Korea into the early Q2 timeline.
Never ones to sit on our hands, we realized that doesn’t stop us from starting NP service domestically (where we’re already approved to sell tickets), if there were any routes that made financial sense. We had our route guys go to work. They crunched the numbers, and post-crunching, the numbers revealed… Mexico!
Now, we’re working feverishly to get all the (much easier) ducks in a row to begin selling tickets to Mexico, with the goal of sales starting around labor day (exact schedule/pricing/routes will be revealed then!) and flights beginning December 15th.
And then selling tickets to Asia beginning around the end of the year and flights beginning 3-4 months after!
Here we go… to Mexico!
Who’s gonna tell Josh that Mexico isn’t “domestic?” 😉
In all honesty, what routes is Northern Pacific Airways going to operate to Mexico? Presumably the airline isn’t even looking at Anchorage here, but rather is intending to operate from other points in the lower 48 to Mexico?
Bottom line
This is all just very strange to me. I can totally understand why this isn’t a great time to launch transpacific flights (between Japan still being closed to most tourists, and challenges with Russian airspace), but I don’t get the business model to begin with, and I also think Mexico is an unusual pivot.
What do you make of Northern Pacific’s newest business plan?
Interesting Pivot, not sure if they're just trying to use (pay down) the already agreed upon wet lease aircraft or training pilots / keeping employment. They're not going to go anywhere AS flies as they already mentioned they don't want direct competition as RAVN has a partnership with AS and part of their business model is being in parallel even if NPA is not a partner with AS. They did slip on their timeline but...
Interesting Pivot, not sure if they're just trying to use (pay down) the already agreed upon wet lease aircraft or training pilots / keeping employment. They're not going to go anywhere AS flies as they already mentioned they don't want direct competition as RAVN has a partnership with AS and part of their business model is being in parallel even if NPA is not a partner with AS. They did slip on their timeline but have been good about communicating changes and I'm hopeful, if hesitant, they can make flights to Asia by 2023.
Kudos to their design of painting 757 windows like A350's
All very good and fine arguments. Except you don't need Russian airspace to fly from Anchorage, that was why all Europe to Japan routes went via ANC in the days before the Soviet Union opened the Siberian shortcut. And except there is an open skies agreement between Japan and the US. So getting permissions are not really a hurdle, unless they insist on flying to Haneda which is excluded from the open skies agreement.
...All very good and fine arguments. Except you don't need Russian airspace to fly from Anchorage, that was why all Europe to Japan routes went via ANC in the days before the Soviet Union opened the Siberian shortcut. And except there is an open skies agreement between Japan and the US. So getting permissions are not really a hurdle, unless they insist on flying to Haneda which is excluded from the open skies agreement.
I guess as mentioned by others the rather sealed borders of Japan. And I guess with the range of a 757 they would struggle to reach Vietnam, Thailand, Cambodia, Singapore that are already open to visitors. Though Korea is pretty straight forward to enter as well.
The "fine" management team at NP (most aviation people in AK know them by their style of yelling rages at employees and when that doesn't improve things just yell louder) thought it would be a brilliant cost-cutting plan to skip worrying about ETOPS certification (a process of being able to fly way out in the ocean and essentially take short-cuts on over-water routes). However, without ETOPS, you need to be a lot closer to airports...
The "fine" management team at NP (most aviation people in AK know them by their style of yelling rages at employees and when that doesn't improve things just yell louder) thought it would be a brilliant cost-cutting plan to skip worrying about ETOPS certification (a process of being able to fly way out in the ocean and essentially take short-cuts on over-water routes). However, without ETOPS, you need to be a lot closer to airports at all times, and for US/Asia routes that means close to Russian airports. So now this hare-brained Mexico idea. Yeah, absolutely no competition on that from just about every other US airline in existence....
Maybe they can codeshare with Global Ghana Airways?
If AS can't make nonstops from it's namesake to Mexico work how the heck does NPA think they can based on pure O&D? I admire these people for trying. Their initial business plan was questionable but viable in theory. Thanks for circumstances in bad luck they're between the rock and another rock, yet I'm not sure plan B is tenable. At this point maybe establishing an Allegiant Travel style package air/hotel/car + possible cruise and...
If AS can't make nonstops from it's namesake to Mexico work how the heck does NPA think they can based on pure O&D? I admire these people for trying. Their initial business plan was questionable but viable in theory. Thanks for circumstances in bad luck they're between the rock and another rock, yet I'm not sure plan B is tenable. At this point maybe establishing an Allegiant Travel style package air/hotel/car + possible cruise and rail Alaska focused operation makes more sense.
NPA picked up some deeply discounted 757s - I'll bet deeply discounted. They scooped them up during the darkest depths of the pandemic, when airlines were having trouble just finding places to park their unneeded jets, so I assume they got a heckuva a deal on these older planes. I'm guessing that would help make the Mexico numbers a bit more viable than AS's store-bought 737s.
Alaska Airlines has plenty of flights to Mexico...just no...
NPA picked up some deeply discounted 757s - I'll bet deeply discounted. They scooped them up during the darkest depths of the pandemic, when airlines were having trouble just finding places to park their unneeded jets, so I assume they got a heckuva a deal on these older planes. I'm guessing that would help make the Mexico numbers a bit more viable than AS's store-bought 737s.
Alaska Airlines has plenty of flights to Mexico...just no nonstops from ANC.
FWIW AS does fly to several Hawaiian islands nonstop from ANC (they currently have no competition on those routes...that could change soon...). Nobody flies nonstop from ANC to Mexico. I would imagine that flights to Cabo and Cancun would make the most sense for Alaskans looking to flee from Anchorage in the winter.
Only question is, do their ETOPs 757s have long enough legs to do it nonstop? I think they could make SJD (Cabo) but would be a little short of reaching CUN. (Adding a stop in SEA would give AS some competition on that route, too.) They could reach MEX, but that's probably not as attractive as the beach destinations. All the Hawaiian islands would be within range...
Actually, this makes perfect sense - assuming you're a "new" airline sitting on planes, and your plans were to connect to northern/eastern Asia.
Japan is closed. Korea is closed. Taiwan is closed. China is China, fuggedaboudit. None of these places are in the mood to open up. Ask again next year.
The cherry on top for them is the Russian airspace closure, which isn't going to go away anytime soon...until the following events all take...
Actually, this makes perfect sense - assuming you're a "new" airline sitting on planes, and your plans were to connect to northern/eastern Asia.
Japan is closed. Korea is closed. Taiwan is closed. China is China, fuggedaboudit. None of these places are in the mood to open up. Ask again next year.
The cherry on top for them is the Russian airspace closure, which isn't going to go away anytime soon...until the following events all take place:
1. Ukraine defeats Russia on the battlefield and Russia just gives up (will happen, but will take a while)
2. Putin is deposed (again, will happen, after Russia completely loses the war and Russians figure out how badly it went)
3. Some rational person rises to power in Russia and decides to bring that country out of the 19th century (again, might take a while)
Consider: Everyone who lives in Alaska wants to get out of Alaska in the winter. They want to go to two places: Hawaii and Mexico.
If you are an airline in Alaska with jets and no place to go, this move makes perfect sense. Flights to Hawaii to follow soon.
Korea isn't closed. Hasn't been for months. Going there in a couple days, and the detour around Russia only adds about 40 min to flight time. Surely this is an added cost, but fares to Korea have been astronomical since they reopened.
"Route guys" lol.... I imagine it will be two people sharing a cube doing all network planning/pricing/revenue management
Just taking a quick look at the value of bitcoin over the last 6 months...I can see why some changes may be in the works. Hopefully, he leveraged the coins before the market started to change.
Northern Pacific seems like a work of fiction. I don't like the 757 idea at all. Too old. Too many possible maintenance issues at high cost. Don't think Anchorage is the best base. Love the idea/livery though. I do wish them the best. It would be nice to see such an unusual airline out of Anchorage, Alaska. The owner must have some big "cojones" to pull this off. Hope for much success in this endeavor.
I don't understand the skepticism on this pivot, actually. Yeah any airline startup deserves skepticism, but this move makes sense in the short term. The reality is that with their location and with Russian airspace closed, it would be uneconomical to fly to Asia. I think the Mexico routes are more likely catering to residents trying to escape the cold than anything else, so I'd anticipate routes to Cabo and such.
It’s a fake airline, doing fake airline things.
There's no market for TPAC flights for an airline like this. The rest of the industry is operating a skeletal network. Another pointless venture in the industry that will probably fail.
In other words, a business in search of a strategy, just chasing after routes and revenue without a clear plan how it all links up together. Airlines are a network business. You build it out from your hubs, connecting as you go, expanding along existing routes where opportunities emerge and where the investment pays for itself and may offer further opportunities. It takes years, even decades. Airlines are not in-and-out businesses, unless you plan to...
In other words, a business in search of a strategy, just chasing after routes and revenue without a clear plan how it all links up together. Airlines are a network business. You build it out from your hubs, connecting as you go, expanding along existing routes where opportunities emerge and where the investment pays for itself and may offer further opportunities. It takes years, even decades. Airlines are not in-and-out businesses, unless you plan to go bust. Going after random routes without planning is bad business and shows a lack of joined-up thinking.
Yeah, Northern Pacific has already lost the plot - and the movie hasn't even finished with the opening credits. This will not end well.