Northern Pacific Launches Crowdfunding Campaign Seeking Public Investment
Some members of the public received an email this weekend from Northern Pacific Airways alerting them to a newly-launched crowdfunding campaign. The startup airline is seeking $5 million as part of this “Community Round,” but is soliciting investments of “as little as $100” a worrying sign of money problems? Or is it merely a way to build excitement, enthusiasm, and personal attachment to a budding airline?
On May 27th, certain individuals received an email from Northern Pacific notifying them of a crowdfunding campaign. The email begins by saying the following:
As a valued supporter of Northern Pacific, we wanted you to be among the first to know that we are now raising a Community Round on Wefunder in support of the launch of our international airline! This means we’re letting our biggest supporters – you, our soon to be customers – become investors in the company.
The email then says that the reader can “invest as little as $100” by visiting wefunder.com/northernpacificairways.
Explaining its Community Round, the airline says this initiative is a way to build a network of people who share in its mission and values. “The great thing about Wefunder is that it allows anyone – whether or not they’re an accredited investor – to become an angel investor in our company,” the email adds.
Finally, the airline notes that US federal law limits a Community Round to only $5M, “which is why we’re telling our loyal customers about it first before going out more broadly to the rest of Alaska.” The airline then posted about its investment opportunity on its social media channels about an hour later.
The airline has already taken possession of one aircraft. Photo: Northern Pacific
What do investors get in return?
Since crowdfunding isn’t a traditional investment in the sense that a share of the company is being purchased, rewards are promised based on the level of investment. Here is what the airline is promising its community investors at various levels of spending:
- Spend over $250, and you’ll get free drinks at Northern Pacific through 2023
- $500-999 provides Northern Pacific and Ravn elite “1K” status through 2023
- $1,000-4,999 gets $1,000 in North Pacific Flight Vouchers
- $5,000-9,999 gets an invitation to the Anchorage North Terminal Launch Party for the North Pacific
- $10,000-49,999 earns $10,000 in North Pacific flight coupons
- $50,000-99,999 gets Northern Pacific and Ravn “#1” elite status through 2025
- $100,000-499,999 gets tickets to the inaugural Northern Pacific flight
- $500,000-999,999 allows you to name a Ravn DHC 8
- $1,000,000+ and you can name a North Pacific Boeing 757
- Invest $5,000,000+, and you can paint a North Pacific Boeing 757 with your custom design
We would presume that higher-level investments also attain all of the lower-level rewards as well, although this isn’t explicitly stated on the airline’s crowdfunding website.
Full disclosure: The author of this article is NOT participating in the airline’s campaign.
The airline is set to launch this Fall. Photo: Northern Pacific
Crowdfunding pros and cons
When it comes to investing money into anything, there are inherent risks present. Anyone who’s taken part in a Kickstarter or Indiegogo campaign will know this and might have also been burned when an exciting new project never fully materializes and delivers on claims.
Indeed, while we would hope the majority of crowdfunding campaigns have the best of intentions, sometimes the headwinds are just too great to follow through on a project. This leaves investors high and dry, having given money to a project without receiving anything in return.
At the same time, the airline is right about building a network of people who share in the airline’s mission and values. The most direct way a member of the public can support an airline is to buy tickets and fly on that carrier. Considering Northern Pacific isn’t quite at that stage just yet, this would seem to be the next best thing.
The carrier’s fleet plan. Photo: Northern Pacific
It has helped in the past…
We’ve covered a few stories of airline crowdfunding in the past. Three examples that come to mind are the revival of WOW Air, the launch of FlyBair, and the rescue of Thai AirAsia. So how did these public appeals pan out?
FlyBair launched its crowdfunding campaign in 2019. It has yet to operate flights using its own aircraft. Photo: FlyBair
There have been other “investment opportunities” that went bust or have yet to materialize. As the website 6Park notes, an “airline” known as Baltia had been around for more than 30 years, even having a 747-200 for more than 20 of those years. However, the carrier never operated a single commercial flight. An SEC suspension in 2018 was its final nail in the coffin.
Avatar Airlines has been struggling to get off the ground for years as well, seeking capital from accredited investors. The firm has been seeking investments to bring its ultra-low fare, 747-400-based airline to reality – a project that has been in the works for many years now.
Northern Pacific appears to be on-track
While crowdfunding is certainly a more unconventional method of getting an airline off the ground, all signs indicate that Northern Pacific is the real deal. The carrier appears to be on track to actually transport passengers as it has already acquired four Boeing 757-200s and has submitted the paperwork to secure routes to East Asia. Additionally, the carrier has revealed its cabin seating while also breaking ground on a terminal-revitalization project at its Anchorage airport hub.
With all of this in mind, it looks as though the carrier is well on its way to becoming a reality. Future Northern Pacific passengers who might want to take part in the campaign, but are wary of crowdfunding initiatives, should be able to invest with some measure of confidence. That being said, launching an airline is a massive undertaking, and there is a long list of failures and successes that demonstrate that a startup can go either way at any point in the process.
What do you think of Northern Pacific’s crowdfunding campaign? And what do you think of their investor benefits? Let us know by leaving a comment!
Sources: 6Park News
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