Airline Business Plan


Airline Business Plan


Opportunity

Market

Air services between Western Europe, Turkey, and Southeast Europe are increasing in demand due to economic growth and the need for redevelopment.

The market has many components that require higher quality services than are often offered.

    1. Business travelers requiring convenience, reliability, speed, and schedules built around business needs.
    1. Travelers from government and international organizations require the same elements.
    1. Personal and leisure travelers from the Southeast Europe/Turkey region who have the money to travel by air and who increasingly demand a higher level of service and convenience, but at an economical cost.
    1. The ‘#8220’Diaspora, a personal and leisure traveler originally from Southeast Europe/Turkey but now living in and working in Western Europe.
    1. Western European personal and leisure travellers, mostly traveling on the airline’s routes between Western European countries.
  1. Seasonal (primarily during summer, with a few niche markets in the winter) holiday traveler, primarily to Greece, Turkey, the Mediterranean islands and Turkey. Their concerns include cost, reliability, convenience, destination, and cost.

These groups will be attracted to the proposed new airline because it offers better service and in some cases, service where none is currently offered. It also offers a higher level safety, comfort and convenience and lower fares than current options. The new airline will be able to serve the niche markets identified under the Service Description section. It will then be able to identify itself as the preferred carrier in these markets.

Competiton

The four primary segments that make up the global airline industry, which operates between Western Europe, Southeastern Europe and Turkey, are:

    1. Mainline European airlines (primarily Swiss International and Lufthansa), Alitalia and Malev, Turkish) use their Southeast European routes to connect to major hubs in Western Europe (or Budapest or Istanbul in the case Malev and Turkish respectively) and feed traffic to their top intra-European, trans-Atlantic routes, or domestic Turkish routes in case of Turkish.
    1. Smaller, but generally well-established regional airlines primarily from Western Europe or the upper level of Eastern European states (primarily Swiss International, Tyrolean, and Adria) that perform essentially the same function as the mainline carriers or, in the case of carriers like Adria, link destinations in Southeast Europe to their own national capitals.
    1. Southeastern European home-based carriers, such as ADA Air and Albanian Airlines, Avioimpex and Balkan Air, Hemus Air and Tarom Airways, often use older, Soviet-built aircraft and turboprops. They are less well-respected, even by travelers from Southeastern Europe. These airlines connect points within Southeast Europe, or they may connect Southeastern European destinations to major destinations in Western Europe.
  1. There also is a fourth segment worth noting, and that is the fairly significant charter market that exists within certain niche or seasonal markets. This market includes charter flight between Pristina, destinations in Germany and Switzerland as well as summer charters between New York and Southeast Europe. These charters are typically operated by either individual travel agencies, or airlines. They are often characterised by a low level service and use of older, often Soviet-built aircraft. The vacation charters also operate between Western Europe and Greece, Turkey, Cyprus, or other destinations in Southeastern Europe or the Mediterranean.

The proposed airline would be most compatible with the second grouping. However, it would still compete effectively against all four main segments by offering a combination safety and service, carefully chosen routes, niche-market service and convenient schedules. It would also offer reasonable and competitive fares and modern, safe and comfortable aircraft. It also will offer service on under-served and unserved routes where little or no competition currently exists.

Why Us?

Air Leo will be a leader in the expanding air-travel and cargo markets connecting Western Europe and Turkey. It will identify and serve key routes and city pairs that are currently unserved, under-served or not served and set new standards for professionalism and air service within and outside the target market.

Expectations

Financial Highlights per Year

Regional Airline Business Plan


Regional Airline Business Plan


Puddle Jumpers Airlines, Inc., a brand new consumer airline, is in its early stages. It’s being formed to capitalize on a particular gap in domestic short-haul travel. The gap exists in low cost service out of Anytown, U.S.A. Due to the limited availability of low-cost services in and out the Anytown hub, along with the high demand for passenger travel on select routes from Anytown it could be expected that a new entrant airline would take over significant air travel business at this hub.

Puddle jumpers’ management team has experience in start-ups of airlines. Private Jet Airlines was previously managed by the same management. The company grew from one Boeing 727 to 16 MD80 series airplanes. Four years back, revenues increased to $130million over a 2-year period.

According to our research, projections and calculations, air travel between Anytown and other cities is sufficient to bring in a significant amount of revenue in the first year. Six aircraft are used and some short-haul routes are included. These figures are based on load factors of 55% in year 1. Expect to double second-year revenues with more aircraft and extended routes. Year two load factors are 62%. Puddle Jumpers plans have the potential to see a faster ramp up than Private Jet. This is due to the nature, demand and routes of the Puddle Jumpers plan. Puddle Jumpers’#8217 target market is more demanding than Private Jet’s growth, so the frequency of Puddle Jumpers’#8217 needs to fly exceeds Private Jet’s demand.

These sales levels will produce respectable net profit in the first operational year and exponential growth in flight-year two. The first year’s profits will only be a small percentage of sales, but they will increase steadily as a result of the improved economies in year two. As net profit for years four through five, 16% will be the over-all operating long-term profit target. The company’s long term plan is part of the due diligence package. This plan actually shows fiscal year two as the first operational year.

Before revenue can begin, cash will be burned in the first year of operations. This is because of the regulatory and organizational requirements for a new carrier. To cover these expenses, it is necessary to invest.

The following chart shows the overall highlights of our business plan during the first three-years. The Gross Margin is very high here, as there are no travel agent commissions or credit card discounts. Although 30% of sales is the standard, travel agent commissions are calculated even though management believes it will be less than 10%.

NOTE: This sample plan displays numerical values in tables, charts, and other data in thousands (000&#8217);

1.1 Objectives

These are the objectives of the Company:

  1. To obtain the D.O.T. F.A.A. Certifications made before or during month eight
  2. To start revenue service at or before year end.
  3. To raise sufficient capital to finance these goals in a timely manner.
  4. In month one, two McDonnell-Douglas MD-80s series aircraft are to be in operation, with four more by the end-of-month four and six by the end-of-month six.
  5. For a total of 18, add one aircraft per year.

1.2 Mission

Puddle Jumpers International Airlines, Inc. strives to be a safe, efficient, and affordable airline service provider for consumers. Safety will be our highest priority. We will operate the newest and best maintained aircraft available. We will never compromise on maintenance. We will strive to operate our flights on time. We will provide friendly, courteous and “no frills” service.

1.3 Keys for Success

Here are the keys to success

  • Obtaining the required governmental approvals.
  • Securing financing.
  • Experienced management. (Already in operation).
  • Marketing: Managing channel problems, barriers to entry, and/or addressing problems with large promotional and advertising budgets. Targeted market share must be achieved even amidst expected competition.
  • Product quality. Safety must always be our top priority
  • Services provided on-time, within budget, and delivered as promised. It is easy to focus on growth and neglect profits. Rapid growth will be restricted to ensure that maintenance standards are both precise and measurable.
  • Control of your budget.

In 1996 dollars, the total cost per ASM (available-seat mile) is 7.0 cents or lower. Puddle Jumpers’ ASM factor puts them in the lowest four of the airline industry in the short haul market. US Air, which is the dominant carrier in the Anytown market at 12.0 cents per ASM, is a comparison. Only three airlines have lower operating costs, but they also use older and less reliable aircraft. Southwest currently has the lowest short-haul price in the industry at 6.43 cents an ASM.