The Value Before the Venture

Most people assume product development is about launching. It’s right there in the name, the development of a product. But often, the real value lies in what’s discovered before anything is released. In product development consulting, the outcome isn’t always a product. Sometimes, it’s a decision, or a series of decisions. A decision not to proceed. Or to wait. Or to reshape the offering, the model, the infrastructure, or even the business. And that insight can deliver a list of features, a go to market strategy, financial modelling, team structures, and of course the product ranges. In effect the product development process produces a set of documents which say: “This is one of the ways in which the product range can be made viable and competitive”.

In 2021, I was commissioned by a private investor, let’s call him Vincent, to explore a bold opportunity: launching Georgia’s first real domestic airline. At the time, no structured, scheduled air service connected the country’s major cities. Only one charter operator and a few lightly trafficked routes existed. Today, that remains largely unchanged. The gap was clear. The opportunity looked compelling.

My role wasn’t to raise capital or pitch investors, that was Vincent’s ambit. It was to build the business case, define the product lines, design the systems, and map the regulatory and contractual landscape. Vincent referred to it as “calculating the algorithm that the system will use.” I delivered cost and pricing models for both passengers and cargo, along with detailed plans for supporting services, baggage handling, kiosk check-in, catering, duty-free, and infrastructure for compliance, leasing, and operational reporting. In essence, I built the framework of an airline, detailed enough to be scrutinized, costed, presented and potentially made real.

What Vincent got wasn’t a plane full of passengers. He got clarity. He, and any potential investors, could now make an informed decision about whether to proceed, delay, or walk away, based on facts rather than guesswork. In the end, he chose not to proceed. And while I can’t speak to every factor in that decision, the work we did gave him visibility where there would otherwise have been risk.

That’s the role of product consulting. It isn’t always about building. It’s about revealing or preparing. And sometimes, it’s the unlaunched product that offers the greatest return.

 

 

 

 

The Opportunity: A Country Without a Real Domestic Airline

At the time of the project, Georgia had no structured domestic airline service, and in most functional senses, it still doesn’t. There were airports in key cities, a national carrier operating internationally, and modern infrastructure. But there was no system for reliably connecting Georgia’s major urban centres by air.

That gap aligned with Vincent’s strategy. The country’s geography and conditions made overland travel slow and inconsistent. The routes between inland Tbilisi, central Kutaisi, and coastal Batumi, the three largest cities, were long, winding, and frequently congested. Trains exist, but they weren’t especially fast or reliable and operated on legacy infrastructure lacking in investment with limited or no digital accessibility. For a businessperson needing to attend a 10:00 AM meeting in Batumi and return to Tbilisi the same day, there was no credible option.

A small charter operator flew light aircraft from a satellite airfield near Tbilisi, but their model resembled private aviation, limited capacity, round-trip routes, and pricing that served tourism and occasional regional needs, not commercial transport. There was no real network, no frequency, and no structure around scale.

That was where the opportunity lay: a lean, scalable domestic airline offering predictable routes between Georgia’s major cities, priced for professionals and small businesses, and operated on a digital-first platform. The infrastructure existed. The customer use cases were clear. And while the regulatory environment carried complexity, the legal frameworks to lease aircraft, operate flights, and sell tickets online did exist.

The question wasn’t whether Georgia needed a domestic airline. The question was whether someone could launch one, and how. That’s what we set out to find out.

 

 

Product and Pricing Design: High Complexity, Thin Margins

Airlines are not high-margin businesses. They rely on volume, timing, and yield control, getting the right people or goods onto the right aircraft at the right price, consistently. And in Georgia’s case, with relatively short flights and market limited pricing headroom, the challenge wasn’t finding demand. It was designing a model that could survive the constraints.

From the outset, the product structure was built to reflect how airlines work in reality. There wasn’t one product, there were dozens. For passengers alone, the offerings included:

• One-way and return flights
• Additional baggage
• Preferred seat selection
• Business upgrades
• Rebooking options

Then came consumer cargo services, priced per item, weight, or volume, and a separate corporate cargo tier with SLAs, bulk pricing, and recurring pickup/delivery logic for businesses. Same-day and next-day delivery options were part of the differentiator from those package and cargo services already available in the market.

The pricing model followed airline logic, not train logic. No season tickets. No bulk-ride discounts. Instead, dynamic pricing encouraged forward planning: the earlier you booked, the better the fare. Last-minute bookings came with steep premiums. Not to punish customers, but to manage yield. Every seat was perishable inventory.

One particularly strategic product was the “baggage mass charge.” It wasn’t just about excess luggage. It was a flexible, volume-based charge that helped offset variable costs like fuel, insurance, and handling, costs which didn’t scale cleanly with ticket price. Tying part of the revenue model to mass made it possible to recover operational costs proportionally, especially on under-filled flights.

Cargo pricing was more stable but more complex. Mass mattered, but so did shape, density, packaging, and risk class. Flammable liquids, batteries, or temperature-sensitive goods triggered entirely different workflows, often requiring special inspection and insurance. You don’t get to load what you want, only what the aircraft and regulations permit.

Perhaps the most overlooked constraint was geometry. Profitability depended not just on hitting weight limits, but on using physical space efficiently. A poorly packed hold might leave mass unused, or space wasted. It was three-dimensional Tetris, and the model had to account for both what could fit and what could fly.

Even with a fuel-efficient aircraft like the ATR 72-600, the business case showed that without cargo, passenger flights alone would rarely be profitable. The fixed costs, apron services, de-icing, landing fees, didn’t drop just because the cargo hold was empty. The per-kilogram cost could only come down if everything was full: mass, volume, and schedule.

 

Trains, Timing, and Traveller Behaviour

Designing an airline in Georgia wasn’t just a matter of aircraft and airspace. It meant competing with what people were already doing, and that meant trains, cars, and occasionally, taxis.

Rail is entrenched. It’s cheap, understood, and good enough. Not especially fast or luxurious, and often unreliable, but for many travellers, especially price-sensitive ones, it works. A flight from Tbilisi to Batumi might only take 45 minutes in the air, but airport transfers, check-in, and security quickly eroded that advantage. A train might be slower, but it was simpler.

Still, for a certain class of traveller, senior businesspeople, executives, consultants, air travel wasn’t just about speed. It was about reliability, convenience, and status. Flying into Batumi for a day of meetings and back by evening didn’t just save time, it sent a signal. It implied seriousness, punctuality, and seniority. That mattered. Especially in business cultures where perception plays a role in professional standing.

Of course, cost still played a role. Many companies and independent professionals were already structured around the quirks of rail: catching 3:00 AM or 4:00 AM trains and sleeping enroute or travelling the night before and booking a low-cost inn. Even with those extras, rail was often cheaper than a plane ticket, and habits are hard to break.

That meant the airline couldn’t just sell speed. It had to deliver value, in reliability, in comfort, and in perceived professionalism. And it had to justify a higher price. Strategic pricing helped. Customers who booked early got better fares. Last-minute travellers, often those most time-constrained, paid more. Season tickets were avoided entirely, to preserve yield control. Occasional discounts filled off-peak capacity, but the pricing model always aimed to reward planning without undermining margin.

And while flight times were under the airline’s control, demand was not. A 6:00 AM flight was popular; a 10:00 AM flight less so. Scheduling could adapt. But behavioural inertia couldn’t be redesigned, only nudged. The job of the product was to understand those patterns and slot into them, not fight them.

In the end, the product wasn’t just a seat in the air. It was a tool for reshaping habits, and that meant balancing economics, experience, and identity, all at once.

Cargo: Complexity, Risk, and Non-Negotiable Rules

 

People often imagine cargo as a kind of leftover, a way to fill empty space once the passengers are sorted. In reality, cargo is its own business line, with its own logic, risks, and regulatory burden. For a domestic carrier, it’s not just an add-on. It’s essential.

One of the most misunderstood aspects is inspection. Not every package is opened, but every shipment is documented. The cargo manifest is more than a formality, it’s the foundation of accountability. Certain goods must be physically inspected: volatile substances, flammable liquids, lithium batteries, compressed gases, biological samples. At altitude, a minor leak or chemical reaction becomes a major threat. You can’t pull over at 30,000 feet.

Risk management isn’t a layer added after the fact, it’s part of how cargo is accepted and processed. The system we designed had to:

·         Identify restricted items at entry

·         Trigger correct inspection workflows

·         Classify cargo by risk type

·         Match loads to flight profiles (e.g. no hazardous materials on passenger routes)

·         Ensure documentation was traceable by the airline, airport, and regulators

Insurance added another layer. Many goods required proof of coverage before boarding. Premiums could spike based on what was being transported, even small amounts of dangerous goods carried financial and legal consequences. Five hundred litres of methanol or a crate of lithium-ion batteries weren’t just insurance line items. They were operational constraints, and it follows, some items couldn’t be sent on passenger flights at all, warehousing is an additional cost for a package and cargo airline.

And then there was geometry, again. A cargo hold could hit its weight limit and still have space left. Or the opposite: an awkward package could block space but leave weight unused. Even with low fuel costs, the fixed costs of flight, handling, landing, inspections, insurance, meant every square metre and kilogram mattered.

We designed cargo not as an afterthought, but as a core product, with its own pricing, processes, and risk profiles. Profitability depended on volume, predictability, and precision. Without that, margins were thin, and exposure was high.

Running an Airline: Systems, Leasing, and Accountability

An airline is a system of systems, most of which passengers never see. People think of booking sites, check-in desks, and boarding gates. But the real complexity is behind the scenes: leasing contracts, regulatory compliance, maintenance tracking, certification management, and legal accountability.

This airline was never going to buy aircraft outright. Like most modern carriers, especially startups, the original plan was to lease, starting with the ATR 72-600, a 72-seat turboprop that offered strong fuel economy and short-haul performance, ideal for Georgia’s domestic network. Vincent favoured the ATR, but the business case also explored and preferred larger aircraft, including Airbus models, for future cargo scalability.

Aircraft leasing is not casual. It comes with hard obligations:

• Strict payment schedules
• Maintenance tied to both hours and calendar time
• Certification tracking, not just for pilots, but for baggage handlers, engineers, and loaders
• Operational restrictions depending on aircraft specifications and lease terms

Many of these processes weren’t handled directly by the airline. In Georgia, services like certification checks or maintenance events were often performed by airport contractors or semi-state entities. But the responsibility still sat with the airline. If anything slipped, even a lapsed technician certification, the consequences could be serious: fines, delays, or even lease termination.

That’s why the software platform was designed not just as an operational tool, but as a compliance shield. It tracked:

• Certification expiry dates
• Maintenance cycles
• Audit trails
• Document uploads for regulatory and lessor access

Any lapse could be costly. The system had to ensure that everything was provable, up to date, and defensible.

This lean model depended heavily on third parties, but that didn’t reduce the need for control. The platform became the glue holding the whole operation together. It didn’t perform the maintenance, but it proved that it was done. It didn’t issue the certifications, but it tracked them. The software wasn’t just part of the airline; it was the heart of the airline.

 

Minimal Staff, Maximum System: The Digital Airline Model

From the beginning, the airline was designed to be digital-first and staff-light. This wasn’t just a philosophical stance, it was a financial imperative. Labour, leases, and service duplication erode margin faster than fuel. The core idea was simple: the system is the heart and face of the airline.

All ticket sales were to be handled digitally, but that didn’t just mean “online” in the usual sense. The same system would power:

• Direct bookings via phone or laptop, about 85% of the Georgian people are online.
• Self-service airport kiosks
• Sales by agents or airport staff with controlled access

There were no airline-branded sales counters or check-in desks. Over-the-counter transactions were permitted, but handled by airport staff, not airline employees, using the same system, just with different permissions. This reduced fixed costs and delivered a consistent customer experience across all channels.

The approach extended to check-in, baggage handling, boarding, and even support. Where human interaction was needed, it came from existing airport roles. The airline’s own staff footprint was deliberately minimal.

That required a robust system, one that could manage:

• ID and ticket validation
• Baggage allowances and excess payments
• Real-time passenger manifests
• Role-based permissions for airport agents
• Cargo documentation and regulatory classification
• Insurance validation and exception handling
• API Integration into existing airport systems

Everything flowed through the same platform. The system didn’t just process transactions, it governed operations, enforced compliance, and tracked movement.

This model also enabled scalability. Every airport connected to the system could support the airline’s routes without adding new personnel. Growth didn’t mean growing the team, it meant extending the network.

This wasn’t an airline that used software. It was effectively a software-defined airline, one where people interacted with the system, not the other way around. That gave it reach, consistency, and a fully auditable operational footprint from day one.

The goal wasn’t just lower cost. It was scalable control; the kind legacy carriers often spend decades chasing.

Cost Modelling: When Small Means Expensive

In aviation, smaller isn’t always cheaper. In fact, it’s often the opposite. While aircraft like the ATR 72-600 offer excellent fuel efficiency, many of the costs associated with operating a flight, ground handling, apron services, maintenance events, airport fees, don’t scale down with size. That became starkly clear in the modelling.

The ATR looked efficient on paper. It required less runway, burned less fuel, and simplified pilot licensing. But ground operations told a different story. Pushback, de-icing, GPU usage, tow fees, apron cleaning, and services like lavatory trucks, crew transport, and ramp handling had flat or weight-tiered fees. Whether flying 70 or 170 passengers, many charges were the same.

Some examples from the model:

• Pushback: $170 per flight
• Ramp handling: $665–950 depending on aircraft weight
• De-icing: $500 per spray, plus $6–12 per litre of fluid
• Lavatory truck: $105 per flight
• Ground power unit: $60 per 30 minutes

Those costs don’t flex much, and that’s before landing fees, parking charges, or any delays.

Baggage mass charges played a strategic role here. More than just a passenger upsell, they acted as a proportional charge to recover variable costs, like fuel and handling, in a way that tied pricing to what the aircraft actually carried. These charges helped balance margins on flights that couldn’t run completely full.

Even so, the economics were tight. The ATR freighter variant, for example, had a limited hold that needed to be packed both efficiently and fully, in volume and in weight, to break even. Real-world cargo doesn’t always oblige. A single bulky shipment could block space without delivering the necessary revenue, and flights with low backhaul demand were hard to justify.

The Airbus models explored in the business case, including the A319 and A320, told a different story. Though they had higher fuel and gate costs, they offered better cost-per-seat and cost-per-kilogram performance when full. Demand on key routes like Tbilisi–Batumi was concentrated, not diffuse. There wasn’t enough demand to fill two ATRs at 6:00 AM, but there was enough to fill one Airbus.

That mattered. The airline could control scheduling, but not demand. It could choose whether to run a 6:00 AM or 10:00 AM flight. But it couldn’t create more business travelers or justify more cargo volume. In that environment, scaling up, with discipline, was smarter than starting small and staying small.

The takeaway wasn’t just about fuel or fees. It was structural: in aviation, efficiency isn’t the absence of waste, it’s the concentration of value. Bigger planes made more sense when the market clustered tightly around a few peak moments. And that was exactly what the model showed.

 

Feasibility vs. Fragility: The Limits of Strategy

From a systems and commercial standpoint, the airline was viable. The pricing worked. The aircraft leasing options were mapped. The passenger and cargo products were detailed, priced, and operationally sound. The platform architecture was lean, scalable, and built for compliance. On paper, this was a real business, one that could work.

But it wasn’t turnkey.

Its success depended not just on what had been designed, but on who would run it, and under what conditions. Georgia’s aviation sector, while functional, is highly regulated, politically visible, and, by many accounts, not immune to informal processes. Licenses may be granted through official channels, but relationships, alignment, and unofficial costs can influence what gets issued and when. These factors could influence costs too.

The business model assumed disciplined execution. But in practice, that execution required more than systems and spreadsheets. It required someone with aviation experience, strong local connections, and the operational stamina to navigate a landscape where delays, informal expectations, and opaque approvals were routine.

And this wasn’t just an administrative concern. It shaped everything from insurance costs to lease risk. A delayed certification renewal could ground a plane. A misalignment with airport authorities could affect gate access or pricing. A misunderstanding about route approval windows could stall expansion for a year.

This wasn’t just a startup problem. It was a structural truth: the market was real, but it wasn’t frictionless. And launching the airline successfully would mean not just managing the business but managing the environment around it.

That insight was part of the value. The business case didn’t just prove what was possible. It showed what it would take, and who it would take. For the right operator, with the right risk appetite and relationships, the opportunity was strong. For anyone else, the margins were too thin, and the politics too complex.

That’s why Vincent ultimately chose not to proceed. Not because the strategy failed, but because it worked. It gave him the insight to make a decision grounded in reality. It wasn’t about launching a plane. It was about not launching into overriding risk.