Business Plan Outline YOLO Airlines

Business Plan Outline

Customer Analysis

Yolo Airlines was set up with an aim to offer a service that had not been adequately exploited by the competition. The company sought to offer an environment that is not only welcoming but also accommodating to fun-loving young urban professionals made up of upwardly mobile business professionals travelling to attend business meetings or unwind after a weeklong of work. The Airline has since added another demographic group with similar characteristics as the one targeted at the launch of the Airline. This group is made up of up-and-coming and fun-loving young persons (not necessarily those with professional credentials) traveling for business or pleasure. This demographic group comprises of young entrepreneurs running their own businesses and young pre-entrepreneurs experimenting with various business ideas before launching their ideas at maturity. The company has strived to remain 100% customer oriented by sticking to a one-class service. Towards this end, the needs of our unique clientele continue to be met with the Airline presenting a fun-filled package that incorporates inflight entertainment and themes tailored to excite our primary clientele. Two years on, this particular demographic constitutes 80-90% of our clientele. At present, the Airline operates on a single transatlantic route which also happens to be the most active transatlantic route. At present, the Airline’s average load factor stands at 96%.

Competitive Analysis

The competition that YOLO regards as posing the greatest threat is JetBlue and Virgin America. While JetBlue continues to be a well-regarded Airline as far as unique and appealing customer service is concerned, Virgin America has a strong selling point which could also appeal to our clientele as well. The Airline essentially sells an upscale experience to customers and offers premium packages on its high-end business traveller package. The premium packages are, however, offered at a premium price – with the Airline primarily targeting accomplished business travellers and other high-net-worth individuals. It is, however, important to note that unlike the competition, the YOLO Airlines seeks to offer not only a unique experience to the target clientele, but also reasonable prices for the level of services offered. The low-cost strategy coupled with focus on offering a unique and memorable experience effectively ensures that the Airline is one step ahead of the competition. It should, however, be noted that the company does not essentially seek to compete on the low-cost general end of the market. To be clear, the Airline seeks to be a low-cost carrier in a specialized category that would otherwise attract premium prices.

Marketing and Management Plan

A significant portion of the Airline’s budget had been allocated to advertising and marketing within the first two years of operation. The relevance of reaching out to our target market cannot be overstated. This is more so the case given the need to let the target clientele know that the Airline has something unique and different to offer. As a matter of fact, the Airline’s survival within the first five years of operation is largely hinged upon how well word that the company has something unique to offer gets out there.

To begin with, as far as the product is concerned, the Airline has a unique service on offer, i.e. a unique experience coupled with topnotch entertainment and technological features, at a cheap price. The products taps unto the tendency of most of the Airline travel options being dull and uninspiring. In contrast, our target clientele is fun-loving and is often used to a formal setting. Having in-flight attendants clad in designer wear and offering music and movie categories that suit the tastes of this demographic group would be reasonable business move to nurture and sell. The Airline’s name is also indicative of our target market, focus, and drive. YOLO is a popular acronym meaning ‘You Only Live Once!’ This particular acronym has become a rallying call amongst those who believe in working hard and playing hard as well. Therefore, our target demographic will most definitely identify with the same.

Next, we have price. Price has got to do with the approach which YOLO Airlines adopts in seeking to price its tickets. It is important to note that some of our major costs are informed by terminal leases, fuel costs, aircraft maintenance costs, and, payment to staff and other personnel. To remain competitive, while at the same time seeking to enhance the bottom-line, YOLO Airlines has tickets priced at $650. While the price is higher than that offered by dedicated low cost airlines, it is significantly lower than that charged by premium service airlines (or packages).

When it comes to place, only two categories of vendors have been utilized over time, with all ticket sales being done online. Customers can either get their tickets from the YOLO website or from third party vendors who also offer the tickets for sale online.

With regard to promotion, it is important to note that the clientele we are targeting is essentially tech-savvy. In that regard, therefore, effort has been made to make active use of social media to market the company’s services. The social media platforms that YOLO Airlines has been active on include, but they are not limited to, Twitter, Facebook, Instagram, Youtube, and SoFly. The need to ensure that the company’s website is not only user friendly but also optimized for search engines has also been identified. This approach to promotion is likely to be high impact, despite its low cost.

Lastly, we have people in reference to the experts in SEO and social media marketing helping the company advance its agenda on this front. There are also virtual assistants who are in essence the frontline customer service persons who interact with customers from time to time and who handle customer queries and other concerns and refer them accordingly. The Airline remains fully committed to ensuring that whatever is advertised is exactly what the customer experiences.

At present, the company is being led by a stellar cast of officers fully dedicated to the success of the enterprise. The positions highlighted below have been substantively filled. The qualifications and competencies of each occupant have been highlighted in appendix 1. Only key positions have been highlighted.

1. Chief Executive Officer - CEO

2. Chief Finance Officer

3. Sales and Marketing Director

4. Human Resources Director

5. Director of Strategy

6. General Counsel

The company continues to scan its own internal systems as well as external trends so as to identify top level staffing needs and create matching positions sin an attempt to advance its agenda in the coming weeks and months.

Operational Plan

Essentially, the Airline’s current values match its initial vision. From the onset, the Airline was focused on offering a service that the ‘big boys’ in the airline industry shunned. Traditionally, airlines have competed on the basis of cost and in some instances, level of luxury. YOLO Airlines elected to operate on a ‘lifestyle experience’ platform while at the same time ensuring that costs are kept at minimum so as to offer reasonable prices. This has worked well so far, and the Airline continues to deliberately implement strategies to maintain its course.

The Airline has acquired all the necessary certifications needed to undertake commercial flights. This it has attained via compliance with all the financial and safety measures as highlighted by the relevant authorities. The Airline also has takeoff as well as landing slots at the two airports it has been operating from. The Airline has a breakeven load factor of 50%. The business model the Airline contemplates would satisfy the said load factor – which in essence translates to 60 passengers per flight.

Initially, YOLO was keen on outsourcing all aspects of ground handling. This, however, changed with the establishment of critical mass. The company at present engages its own staff except in aspects and circumstances where agents have to be roped in.

To further assure the success of its operational plan, the Airline also actively identifies risks and seeks ways to mitigate them.

1. Terrorism: The September 11 attacks were a critical event in this particular industry, in that they effectively forced the industry to reevaluate a wide range of issues relating to how to prevent the occurrence of such occurrences. YOLO abides by industry standards as far as the prevention of terror is concerned.

2. Weather/Flight Liabilities/Safety: An entity is as good as its employees. The Airline only hires competent and trained staff. Further through an in-house training program, the Airline’s staff are trained to handle a myriad of situations, from emergency situations to irate customers and more.

3. Fuel costs: It is important to note that fuel costs are a significant cost item as far as an Airline’s operating costs are concerned. In an attempt to control and minimize fuel use, the Airline seeks to properly manage its payload distribution and aircraft weight. The Airline also seeks to minimize fuel burn by, amongst other things, using a proprietary flight planning tool to assess route, wind, and turbulence and identify the optimum altitude.

Financial Plan

Figure 1.0. Quarterly Income Statement (2nd Quarter of 2019)

Revenue

Passenger Revenue (total)

Revenue from Charter

Other Revenue

Total Revenue

Operating Expenses

Fuel

Salaries and Benefits

Navigation Fees

Landing Fees

Ground Handling

Maintenance

Insurance

Pax Services

Other Expenses

Total Operating Expenses

EBITDAR

Depreciation

EBIT

Tax (rate = 32%)

Net Income

From figure 1.0 above, the Airline was able to beat its projections on the passenger revenue front by 7%. The total revenue figure was also aided by charter revenue – an important revenue stream that had been discounted in earlier estimates. Revenue from charter constitutes 8.28% of total revenue. It is, however, important to note that some other items such as salaries and benefits exceeded projections. Together with fuel, these constituted 51% of total expenses. Measures will be undertaken to bring these two operating costs down. Some of the measures being explored towards this end include downsizing the current workforce as some duplication of roles is one issue that has already been highlighted in strategy meetings. Full implementation of the proprietary flight planning tool is expected to help in the minimization of fuel costs. The tool has an inbuilt load optimizer that helps in the management of payload and weight distribution. It is, therefore, likely that going forward; we are likely to make significant cost savings so as to further enhance the Airline’s bottom line.