YOLO Airlines

Yolo Airlines Concept Paper
YOLO Airlines will be presenting to its target market what some of its bigger competitors are not likely to offer. In addition to offering an accommodating environment for fun-loving young urban professionals, our airline will also seek to ensure that its pricing is competitive enough for its target clientele. The marketing as well as business strategy is adapted to ensure that the airline is able to absorb unmet global demand which has been sufficiently described in the previous presentations.
Budget and Funding Requirements
Operating Expenses
Year Pre-op 2019 2020
Salaries and Benefits 450,000 2,430,000 4,331,000
Fuel - 3,321,000 7,900,000
Landing Fees - 150,000 310,000
Maintenance - 2,107,000 4,212,000
Navigation Fees - 760,000 1,200,000
Ground Handling - 960,000 1,550,000
Insurance - 225,000 390,000
Other Expenses 507,000 2,098,000 3,200,000
Total Operating Expenses 957,000 12,051,000 23,093,000
Indirect Costs
Year Pre-ops 2019 2020
Advertising Expense 420,000 1,100,000 1,700,000
Technology and Internet 30,000 92,000 112,000
Legal 97,000 58,000 58,000
Rent (lounge and offices) 179,000 113,000 150,000
Other 112,000 500,000 600,000
Total Indirect Costs 838,000 1,863,000 2,620,000
To enhance its chances of long-term success, the airline has come up with a well-defined and deliberate operational plan. In general terms, the airline will offer a one service class and make use of a single type of aircraft. The Bombardier CRJ 700 will be the airplane of choice for the airline. It is important to note that the existing carriers operate the B747 aircraft which has significantly higher operating costs for each trip made. With the suggested aircraft, we estimate our cost per trip (one-way) to be approximately $19,000 which is 47% lower than our competitors’ costs per trip. In selecting this particular aircraft, therefore, we shall be having greater price flexibility and an opportunity to make more trips than other carriers making use of larger aircraft. The airline targets young fun-loving urban professionals. The one class of service we intend to roll out will enable us to be 100% customer oriented. This is more so the case given that the training, purchasing, as well as service and marketing processes can be tailored to meet the needs of this particular clientele.
Within the next three years, the YOLO Airlines intends to have made significant strides in terms of profitability and market share. This, the airline intends to achieve by ensuring that the persons it hires to implement its mission are not only qualified but also identify with both the short-term and longer-term vision of the firm. For this reason, the airline intends to be a model airline company committed to not only meeting but also exceeding the expectations of its clientele. Towards this end, the airline will offer inflight experiences that are enjoyable and innovative. Cabin crew will sport trendy and fashionable uniform (such as sneakers and ankle pants) and in addition to hiring persons in the same age group as our target clientele, training will be implemented to ensure that our staff have a dynamic attitude that clicks well with fun-loving young urban professionals. Inflight entertainment will be tailored to the tastes of this kind of traveller with the color schemes adopted to represent the airline being designed to be playful.
YOLO Airlines, as per its vision, intends to be a model airline. For this reason, it would be important to take into consideration the airline’s place in a global setting. In essence, the airline does not have a direct competitor in its home market. However, further afield, Air France and International Airlines Group (IAG) have adopted a focus such as ours. It is, however, important to note that while most firms have largely adopted a differentiation strategy while applying a similar pricing strategy as that of other carriers, ours will offer both a unique experience to its target clientele while at the same time adopting a low cost strategy so that its pricing can be competitive enough to grant it a lasting position in the global marketplace. Our customers will be young short-term vacationers and business persons i.e. persons aged between 23 and 40 seeking a weekend or midweek getaway or traveling to do business. The ratio of those traveling for vacation vis-à-vis those traveling for business purposes is expected to be 4:3. To reach out to the target clientele, the company will make exclusive use of social media. It is for this reason that the advertising expense happens to be much lower than that of traditional airline companies using conventional and long-standing advertising and media channels to reach out to customers. Towards that end, the airline will make use of various social media platforms, such as Facebook, Twitter, Instagram, etc., to hype its brand. It is important to note that the airline’s operational strategy, whereby one class of service is being offered via a single aircraft type, does not call for the determination of ticket prices using a complex yield management system.
To survive in a highly competitive global marketplace, the company will ensure that its strategy and the implementation of the same are driven by a qualified team with the long-term view in mind. Towards this end, three top positions have been highlighted below.
Chief Executive Officer
Name: Lee Lik Hsin
Hsin has served in various capacities in the airline industry, with his most recent posting having been Budget Aviation Holdings, where he served as CEO. Previously, he served as the CEO of Scoot Airways – an airline whose features are tailored to appeal to the younger traveler.
Mr. Hsin will be responsible for the execution of both the short-term and long-term strategy of the airline. He will be expected to establish and maintain the right partnerships to mold the airline’s flight development path while at the same time enhancing its revenue performance. The candidate has more than 10 years of experience in the airline industry and possesses an MBA. Further, he is a proven business operator and has demonstrated ability to manage people and airline processes. He is also a fun-loving person and has been involved in the management of a company with similar systems and structures as ours.
Chief Operating Officer
Name: Rob Maruster
Like Hsin, Maruster has extensive knowledge of the airline industry, having served in various capacities in the industry over time. His two most recent postings were Republic Services where he was COO and Executive VP, and Delta Airlines Inc. where he was VP of the airline’s Atlanta Worldport. He has also served as JetBlue’s COO. It is important to note that JetBlue continues to be a cost leader in the country – effectively meaning that Maruster has the prerequisite experience to operationalize our pricing strategy.
In addition to ensuring the reliable and safe operation of the airline, Mr. Maruster will be responsible for both the maintenance as well as oversight of the company’s flight operations department. He has the prerequisite 10 years experience in a similar position and possesses the relevant qualifications in Aeronautical Engineering. He also has demonstrated leadership and management skills and is a strategic thinker.



Chief Financial Officer
Name: James Dempsey
James has extensive experience in financial management with his career spanning decades in various industries. He is the immediate former Frontier Airlines CFO. In addition to being a Chartered Accountant, James has served in the aviation finance docket for more than ten years and has at some point been the treasurer of Ryanair which has been one of Europe’s airline industry cost leaders. In this role, James will be expected to run all the fiscal and financial management aspects of the airline. In addition to possessing a CPA, James is also an MBA and has the relevant strategic planning skills. He is also knowledgeable in issues to do with cost control, budgeting, and accounting reporting. James is also an able communicator.
The company intends to attract the seed capital via the issuance of convertible debenture whose offer will be made by way of private placement.
Abridged Income Statement
Year 2019 2020
Number of Aircraft 2 4
Total Passenger Revenue 45,105,000 95,000,000
EBITDA 16,100,000 28,000,000
Net Income 29,005,000 67,000,000



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