Airline Project Plan Market Factors

Airline Project Plan

Market factors in Dubai favor the airline meeting the demand for higher-quality passenger and cargo service linking Dubai with the rest of the World especially European destinations via Western European hubs to trans-Atlanta and global destinations. T/he new airline will base business and marketing strategies on high achievement and profitable load factors through absorption of demands that are unmet in the following three primary air-traffic categories:

(1) Unserved and underserved routes on which high unmet demand currently exists or can be developed readily;

(2) Serving key niche markets where demand is either unmet or poorly served and (3) Meeting peak traffic demands on certain key regional, seasonal, and variable routes where very high load factors can be predicted despite existing but lower-quality competition, or where competition cannot meet the demand.

The airline in Dubai will be designed around the most up-to-date electronic, informational and aviation technology for ensuring that operating and marketing costs are kept low and to maximization efficiency in the deployment of resources and a high level of customer service and convenience. The airline staff and organization will be dedicated to the provision of a high level of service to customers and convenience and in meeting the passenger's needs, wants, comfort and safety toward ensuring the airline acceptance in the marketplace and to ensure the long-term success and growth of the airline.

According to the work of Air Leo Business Plan and to be incorporated in this business plan are the following six key principles:

(1) Provision of high-quality service on routes and in markets that currently are either unserved, poorly served, or under-subscribed by existing carriers, thereby setting both a new trend and a new pace in air service to and within the Southeastern European region.

(2) Employment of cost-effective, up-to-date regional aircraft that will be sized right for the market and the route, leading to higher load factors, reduced costs, improved efficiency and flexibility, greater passenger comfort and satisfaction, and higher net profits. Outfitting these aircraft with the latest aviation technologies and navigational equipment will help ensure the highest level of reliability, punctuality, safety, and customer satisfaction.

(3) Utilization of the latest electronic and informational technologies in sales and marketing; reservations, ticketing and check-in; scheduling and resource planning; cargo tracking; and operational oversight. Such techniques as internet marketing, reservations, and sales; electronic ticketing and check-in; online quality control, resource planning, operational oversight, cargo and baggage tracking, and customer service, all will reduce staffing requirements while offering ease-of-use and greatly enhanced access by, and convenience to, the customer.

(4) Recognition that not everyone is geared for the electronic world, leading the proposed airline to provide a high level of non-electronic service as well, particularly to the many newer, less-experienced travelers - but future loyal customers - found in the region.

(5) Ensuring a friendly, cooperative, enjoyable, yet highly professional face to the customer.

(6) Development and implementation of cooperations, associations, and partnerships with other larger, more established, and highly regarded airlines both within and beyond the region to provide an extensive range of connections, through fares, frequent-flyer mileage sharing, and other passenger and client advantages through interline arrangements, code shares, common hubbing, and so forth. (Air Leo Business Plan, nd)

II. Primary Business Objectives

The airline proposed herein has the following as its primary objectives:

(1) to operate and establish a new regional airline in Dubai for the purpose of flying low-cost Middle Eastern routes.

(2) Implementation of an organizational and marketing strategy that will achieve the passenger load factors in the 65-85% range and increase to the 75-90% range resulting in the maximization of revenues and return on investment.

(3) to achieve revenues in excess of $22 million USD per quarter and exceeding $30 million USD per quarter by 2013.

Aircraft for the airline will be obtained on either on dry-lease or purchase basis and to supplement those aircraft with passenger aircraft and cargo liners that are longer in range on a charter or wet-lease basis to serve peak demand and intermittent routes and period including cargo demands and expanding the fleet size incrementally for the purpose of doubling its initial capacity by the ending of the second year of operations for the purpose of accommodating the projected passenger growth and cargo growth.

III. Requirements for Achieving Key Objectives

It is critical that the airline, toward achieving its key objectives, make identification and develop key alliances including cooperations, partnerships and associations with airlines that are larger and well-established both within the target region and beyond the target region for the purpose of enabling the airline to make provision of an extensive range of connections through the following;

(1) fares;

(2) frequent-flyer mileage sharing; and (3) Other passenger and client advantages through interline arrangements, code shares, common hubbing and etc.

III. Background

Amfly Airline PLC (a.A. Plc), a major airline operator in Western Europe, has just purchased 60% of the shares in Eastern Pride Airways Ltd. (EPA Ltd.) from the thirty-year-old widow of the founder who died one month ago. The widow's two stepsons own the remaining 40% of the shares. The elder son, the Managing Director, holds 25% and the younger son, the technical director, holds 15%. EPA Ltd. is a low budget airline that operates on Europe Middle East lucrative routes. The Europe-Middle East lucrative route is a major route for a.A. Plc but overhead costs is making the route a burden. Their purchases of EPA Ltd. might mean that they can operate on the Middle East route at a cheaper cost and continue providing a very rapid reliable service to their customers. Because of the local difficulties (especially the recent 'Ash cloud' saga in Europe last year) and increased landing cost in Western Europe airports, a.A. Plc proposes to close its entire Western Europe operations and relocate its headquarter to Dubai, United Arab Emirates. The transfer will require a new hub centre in Dubai. The remaining a.A. Plc old office building in Western Europe would be sold off, possibly for housing development. All current pilots and fifty-percent of the cabin crews would be offered jobs at the new Dubai Headquarter but most of the general administrative staff and the remaining fifty-percent of the cabin crews would be surplus to requirements and would be made redundant. The whole move must be made soon without affecting customers' summer travels. The project is only at the concept stage and no work has yet been done or decisions taken. Less than a third of the admin staff are in a union but the cabin crews are fairly militant; so far there has been lack of support from members for industrial action. Included in the plan will be the following: (1) purchase price per share; (2) number and type of airplanes used; (3) price of real estate sold and purchased; (4) number of pilots and cabin crew; and (4) number of administrative staff.

IV. Summary

Market factors in Dubai favor the airline meeting the demand for higher-quality passenger and cargo service linking Dubai with the rest of the World especially European destinations via Western European hubs to trans-Atlanta and global destinations. T/he new airline will base business and marketing strategies on high achievement and profitable load factors through absorption of demands that are unmet in the following three primary air-traffic categories:

(1) Unserved and underserved routes on which high unmet demand currently exists or can be developed readily;

(2) Serving key niche markets where demand is either unmet or poorly served and (3) Meeting peak traffic demands on certain key regional, seasonal, and variable routes where very high load factors can be predicted despite existing but lower-quality competition, or where competition cannot meet the demand.

The airline in Dubai will be designed around the most up-to-date electronic, informational and aviation technology for ensuring that operating and marketing costs are kept low and to maximization efficiency in the deployment of resources and a high level of customer service and convenience. The airline staff and organization will be dedicated to the provision of a high level of service to customers and convenience and in meeting the passenger's needs, wants, comfort and safety toward ensuring the airline acceptance in the marketplace and to ensure the long-term success and growth of the airline.

According to the work of Air Leo Business Plan and to be incorporated in this business plan are the following six key principles:

(7) Provision of high-quality service on routes and in markets that currently are either unserved, poorly served, or under-subscribed by existing carriers, thereby setting both a new trend and a new pace in air service to and within the Southeastern European region.

(8) Employment of cost-effective, up-to-date regional aircraft that will be sized right for the market and the route, leading to higher load factors, reduced costs, improved efficiency and flexibility, greater passenger comfort and satisfaction, and higher net profits. Outfitting these aircraft with the latest aviation technologies and navigational equipment will help ensure the highest level of reliability, punctuality, safety, and customer satisfaction.

(9) Utilization of the latest electronic and informational technologies in sales and marketing; reservations, ticketing and check-in; scheduling and resource planning; cargo tracking; and operational oversight. Such techniques as internet marketing, reservations, and sales; electronic ticketing and check-in; online quality control, resource planning, operational oversight, cargo and baggage tracking, and customer service, all will reduce staffing requirements while offering ease-of-use and greatly enhanced access by, and convenience to, the customer.

(10) Recognition that not everyone is geared for the electronic world, leading the proposed airline to provide a high level of non-electronic service as well, particularly to the many newer, less-experienced travelers - but future loyal customers - found in the region.

(11) Ensuring a friendly, cooperative, enjoyable, yet highly professional face to the customer.

(12) Development and implementation of cooperations, associations, and partnerships with other larger, more established, and highly regarded airlines both within and beyond the region to provide an extensive range of connections, through fares, frequent-flyer mileage sharing, and other passenger and client advantages through interline arrangements, code shares, common hubbing, and so forth. (Air Leo Business Plan, nd)

One of the very first and most important steps in airport master plan preparation is the forecasting of future aviation activity in an unconstrained environment which means that the forecast is not constrained "by any assumptions about the availability of existing or future Airport facilities including aircraft gates or runways. These forecasts are that representing the "natural" activity that would occur at the Airport in this study without any constraints placed upon the availability of facilities. (Air Leo Business Plan, nd, paraphrased) the following table contains a summary of the unconstrained Master Plan forecasts.

The following table summarizes the unconstrained Master Plan forecasts:

2011

Purchase Price Per Share

Number and Types of Airplanes Used

Price of Real Estate Sold and Purchased

Number of pilots and cabin crew

Number of Administrative Staff

General Aviation

Daily Operations

Helicopter

Jet

Piston

Turboprop

The Master Plan is a concept-level planning and feasibility study that makes identification of potential near-term projects within a two-year timeframe and makes provision of long-term 20-year on-Airport general land-use guidance. This master plan is adherent to FAA Advisory Circular No. 150/5070-6A and makes identification of near-term projects and makes provision of long-term Airport general land-use guidance as well as making provision for a vehicle for participation of the community in airport planning through a stakeholder advisory committee.

The stakeholder advisory committee is to be comprised of community member and staff representatives which includes fixed-base operators, passenger and cargo lines, as well as flight training and light general aviation aircraft operators.

IV. Company Summary

Amfly Airline PLC (a.A. Plc), a major airline operator in Western Europe, has just purchased 60% of the shares in Eastern Pride Airways Ltd. (EPA Ltd.) from the thirty-year-old widow of the founder who died one month ago. The widow's two stepsons own the remaining 40% of the shares. The elder son, the Managing Director, holds 25% and the younger son, the technical director, holds 15%. EPA Ltd. is a low budget airline that operates on Europe Middle East lucrative routes.

Routes

The Europe-Middle East lucrative route is a major route for a.A. Plc but overhead costs is making the route a burden. Their purchases of EPA Ltd. might mean that they can operate on the Middle East route at a cheaper cost and continue providing a very rapid reliable service to their customers.

Because of the local difficulties (especially the recent 'Ash cloud' saga in Europe last year) and increased landing cost in Western Europe airports, a.A. Plc proposes to close its entire Western Europe operations and relocate its headquarter to Dubai, United Arab Emirates. The transfer will require a new hub centre in Dubai. The remaining a.A. Plc old office building in Western Europe would be sold off, possibly for housing development.

Pilots, Cabin Crew Employment

All current pilots and fifty-percent of the cabin crews would be offered jobs at the new Dubai Headquarter but most of the general administrative staff and the remaining fifty-percent of the cabin crews would be surplus to requirements and would be made redundant. The whole move must be made soon without affecting customers' summer travels. The project is only at the concept stage and no work has yet been done or decisions taken.

Less than a third of the admin staff are in a union but the cabin crews are fairly militant; so far there has been lack of support from members for industrial action. Included in the plan will be the following: (1) purchase price per share; (2) number and type of airplanes used; (3) price of real estate sold and purchased; (4) number of pilots and cabin crew; and (4) number of administrative staff.

V. Merger Summary

Merger costs will include:

(1) sufficient cash reserve provision for ensuring timely payment of leasing and finance payments as well as operating costs of the aircraft through at least the first six months of operation.

(2) Costs related to marketing, advertising and public relations including the costs of setting up a website that is capable of offering flight and fare information as well as online sales and marketing via the Internet including convention print advertising and broadcast advertising and public relations.

(3) Costs associated with training, recruiting and certification of light and ground operational crews.

(4) Reserve for covering overall operating costs and this is other than the costs associated with operations for the first six months of airline operations.

(5) Administrative costs and legal costs incurred in business setup and the setup of the airline operations.

VI. Risk Assessment

The United Arab Emirates is a nation with a population of 5 million and is located on the border of Saudi Arabia. This area has undergone rapid modernization since it was founded in 1971. The UAE is strategically located and demand in the UAE for commercial airplanes is stated to be high. (Sell, 2009) the GDP for the UAE in 2008 was $184.3 billion and ranked 56th in the world. The GDP growth rate is stated at 7.4%. The UAE is inclusive of the city of Dubai stated to be the "most populated city" and "home to the region's largest banks and financial institutions." (Sell, 2009) There are reported to be "a number of UAE banks…active in the aircraft-financing sector. The banks have tended to focus on Gulf airlines with which they are most familiar." (Sell, 2009) the UAE is also home to several large aircraft leasing companies including DAE Capital and Abu Dhabi-based Waha Leasing. It is hoped that sovereign funds will result in an increase in investment of aircraft financing. Presently the Emirates group which is based in Dubai and a government backed company is the primary holder of Emirates Airline providing service to more than 92 destinations in 59 countries worldwide with a fleet comprised of 105 aircraft. Emirates Airline is the primary competition of the newly formed airline presented in this project. (Plunkett Research, 2008)