Airline Feasibility Study – Commercial start-up Airline or Airline Review
Our Airline Feasibility Studies include but are not limited to the following areas. We agree a full list of criteria with our clients and whether it is a new airline or an airline currently operating, this fundamental study will provide you the customer with a range of costed options for the board and investors to approve and the long-term success and viability of the proposed airline – or not as the case may be.
EXECUTIVE SUMMARY
- Description of airline concept (scope, revenue/cost structure, service offering, aircraft types, major markets served, regulation etc.)
- Target customer and perceived opportunity
- Competitive advantage over incumbent carriers
- Market share expectations and competitive strategy
- Financial highlights: operating margin, profitability, etc.
- Management team’s airline operations experience level
- Capitalization plan and ROI expectations
INDUSTRY & TARGET MARKET
Industry overview
Target market analysis
- Economic state (GDP)
- Demographics / population
- Income statistics
- Growth rates
- Air travel market size and trends
- Forecasts for air travel
- O&D pax/cargo traffic demand by market
COMPETITIVE ANALYSIS
Incumbent airlines operating in the marketplace
Current competitors’ market share by route
Competitor service offerings (including aircraft type/age)
Incumbent airline frequencies/schedules
Fare comparison by service class and route
Barriers to market-entry (gates, slots, bilateral agreements, etc.)
SERVICE OFFERING
Overall Concept
Mission/Vision Statement
Scope (domestic, regional, international, network)
Markets to serve
Airport options
Headquarters / Airport base(s)
Target customer segment
Route structure (local, hub/spoke, point-to-point)
Frequency, Schedules
Product / service offering (drives cost structure)
- Seat pitch, Seat assignments
- Boarding process
- Service-class offering (economy, business, first, pods, beds)
- Catering (hot meals, limited, purchase, beverage-only, etc.)
- Aircraft interior (leather, bins, window size, lighting, age, etc.)
- Duty-free / in-flight shopping
- In-flight entertainment (IFE) – live TV, internet, video
- Power / IFE at seat
- Kiosk/online check in
- Airport lounges
- Customer loyalty program (FF program)
- Amenities (towels, pillows, blankets, socks, eye masks, etc)
Aircraft Selection
- Capacity (pax/cargo) to meet demand
- Range to fly missions
- Economics for profitability
- Maintenance costs
- Fuel efficiency
- Reliability
- Engines (fuel/range/performance)
- Winglets (fuel/range/performance)
- Fleet commonality
- Avionics
- Buy/lease
- New/Used/Age
- Insurance (airframe, engine, pax/cargo liability)
- Noise/emissions
Alliances / code-sharing / partnering
Service entry and growth strategy
Sustainable competitive advantage
OPPORTUNITY
Estimated market share by market / route
Fare pricing by class / route
Load factor by class / route
Expected operating revenue, costs, and margins
Profit potential and sustainability
Sensitivity analysis of profitability under various scenarios
MARKETING & DISTRIBUTION PLAN
Marketing Strategy
Marketing Mix (the 4 Ps):
Product (service offering)
Price (fares)
Fare structure
Revenue management
Pricing / yield
Place (sales and distribution)
Internet (direct)
Internet (wholesale/3rd party)
Call Centre, City Ticket Offices
Airport ticket counters (walk ups)
Global Distribution Systems (GDS)
Travel Agents
OPERATIONS PLAN
Labour
- Pay rates / scales, Benefits
- In/out-sourcing
- Unions (contracts)
Administration, Distribution
Airport Operations, Customer Service
EASA Maintenance (line, light, heavy, equipment)
Ground Operations (ramp)
Dispatch, Flight Operations
Training
Fuel purchasing / hedging / policies
Technology (IT)
ETOPS (if applicable)
Cargo / Freight / Mail
Facilities / Equipment
MANAGEMENT TEAMS
Organizational Chart
Executive Biographies / Resumes (CVs) for the 5 key functions:
- Airport Operations
- Flight Operations
- Maintenance Operations
- Finance
- Marketing & Distribution
Cross Border Management (CEO, VPs, etc.)
Board of Directors
Professional Advisors/Consultants
RISKS AND MITIGATION PLAN
Business model risk
Gates/slots availability
Market share penetration
Fuel costs
Default on aircraft liabilities
Safety
Weather, Geo-political, Economic
Regulatory, Terrorism
Infrastructure
FINANCIALS (5-year pro forma)
Income Statement (P&L) and Balance Sheet
Statement of Cash Flows
Airline operating statistics & financial ratios
IMPLEMENTATION SCHEDULE
Iterative Development Phase
Business plan development
Financial model development
Management team assembly
Aircraft selection
Investor “roadshow” if required
Launch Phase – six months
Funded, Certification
Aircraft sourcing, Certification, Staffing
Facilities / Equipment
Begin Flight Operations – 0 to 12 months
Initial Growth Phase – 3 to 5 years
CAPITALIZATION / FUNDING PLAN
We usually working on the assumption that the airline and other projects require external funding.