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Airline Business Plan

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Executive Summary executive summary is a brief introduction to your business plan. It describes your business, the problem that it solves, your target market, and financial highlights.">

Opportunity.

Economic growth and the requirements of redevelopment, not to mention the impending entry of several countries in the region to the European Union, are creating increased demand for air services between Western Europe and the countries of Southeast Europe and Turkey.

The market combines a variety of elements all of which demand a higher quality of air service than often currently available:

Business travelers requiring convenience, reliability, speed, and schedules built around business needs.
Government and international organization travelers, requiring the same elements.
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.
The “Diaspora,” Personal and leisure travelers originally from the Southeast Europe/Turkey region, but now living and working in sizable numbers in the countries of Western Europe, with the same demands.
Western European personal and leisure travelers, primarily traveling on the airline’s routes between Western European points.
Seasonal (primarily summer, with some limited niche markets in the winter period) holiday travelers, primarily destined for Greece, Turkey, and the islands of the Mediterranean. Cost, reliability, convenience, and destination are their concerns.

The proposed new airline will appeal to all these distinct groups by offering better quality service (and in some cases, offering service where none now exists), at a higher level of safety, comfort, and convenience, and at reasonable fares, than currently available. The new airline also will focus on the niche markets identified in the Service Description section of this plan, enabling it to better serve and to become identified as the carrier of choice for those markets.

Competition

The overall airline industry operating between Western Europe and Southeastern Europe and Turkey consists of four primary segments:

Established mainline European carriers (primarily Swiss International, Austrian, Lufthansa, Alitalia, Malev, Turkish) utilizing their Southeast European routes as spokes connecting to main hubs in Western Europe (or Budapest and Istanbul in the case of Malev and Turkish, respectively) and serving to feed traffic to their prime intra-European and trans-Atlantic routes (or domestic Turkish routes in the case of Turkish).
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.
Home-based Southeastern European carriers (such as ADA Air, Albanian Airlines, Avioimpex, Balkan Air, Hemus Air, JAT, and Tarom Airways) that often operate older, Soviet-built aircraft or turboprops, offer a generally lower level of service (though not always lower fares), and are often less highly regarded, including 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.
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 flights between Pristina and destinations in Switzerland and Germany, as well as primarily summer charters from Southeast Europe to New York and other destinations in North America. These charters are often operated by individual travel agencies or airlines, and often are categorized by a low level of service and utilization of older, often Soviet-built, aircraft. There also are the vacation charters that operate from Western Europe to Greece, Turkey, Cyprus, and the other holiday spots of Southeastern Europe and the Mediterranean.

It is anticipated that the proposed new airline would most closely fit into the second grouping above, but would compete effectively with all four main segments through a combination of a high level of safety and service, carefully selected routes, niche-market service, convenient schedules, reasonable and competitive fares, and modern, safe, comfortable aircraft. It also will offer service on under-served and unserved routes where little or no competition currently exists.

Air Leo will fill a niche in the growing air-travel and cargo markets linking Western Europe, and points beyond, to Southeastern Europe and Turkey; to achieve high, and profitable, load factors by identifying and serving key routes and city pairs currently unserved, under-served, or poorly served, and where significant unmet demand exists; and to set a new standard for air service and professionalism both within the target market region and beyond.

Expectations

Financial highlights by year, current alternatives.

The new airline’s main competitors will vary depending on market and route served, and the category of passenger. For the most part, competition can be expected as follows:

Business and Government/IO segments to and from Southeastern Europe

Austrian/Tyrolean

Swiss International

For SE European Regional and Diaspora Personal and Leisure Travelers

Balkan/Hemus

For Western European Personal and Leisure Travelers, as well as Business and Government/IO Travelers between Western European destinations

Air France/Air Inter

British Airways/CityFlyer

Deutsche Air BA

TurkishJATKLM/KLM Cityhopper/KLM UK

For seasonal Holiday Travelers to Southeastern Europe and Turkey

British Airways

British Midlands

Hapag Lloyd

The larger, more established carriers often suffer from a lack of flexibility, and a focus on feeding their main intra-European and trans-Atlantic routes. The smaller regional carriers often are focused almost exclusively on their own core regional service. The Southeastern European airlines often suffer from poor service and poor reputations. And the larger, more established charter operators are focused on the holiday charter and package market.

Again, the extent of competition (and what is listed here is not comprehensive) dictates the importance of the new airline’s three-prong strategy to seek out unserved and under-served routes and city pairs, key niche markets where it can effectively compete or create its own market, and meeting peak travel demands on key regional, seasonal, and intermittent routes. It also points out the importance of standing out from the crowd through offering a higher level of service and convenience, and utilizing technology and a service-oriented staff to achieve recognition and passenger preference right from the outset.

Our advantages

In comparing the proposed new airline to its competitors, there are at least two levels of comparison that must be considered; the usually lower-standard airlines, both scheduled and charter, flying out of the Southeastern European region, and the higher-standard, more highly regarded airlines operating out of Western Europe.

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In comparing the proposed new carrier to both its Southeastern European and its Western European competition, it is important to look at those factors that determine how most travelers choose an airline. They include the following (and the order of importance is different for each traveler and each situation, but the most important factors are listed):

Safety, actual and perceived;
Cost, and range of fares offered;
Destinations served;
Availability of seats;
Availability of fares;
Convenience of flight schedules, times of arrivals and departures;
Frequency of flights;
Connections, including reliability and convenience of connections;
Nature of flights: non-stop, direct, number of stops, aircraft changes;
Availability of different classes of service;
Onboard comfort, service, meals, and amenities;
Type of aircraft, including jet or non-jet, size, and speed;
Age and condition of aircraft;
Ease and efficiency of reservations and ticketing;
Reliability and on-time departures and arrivals;
Ground service;
Reliability and quality of baggage handling;
Friendly, competent service in reservations, check-in, and in the air;
Overall reputation of airline;
Nationality of carrier;
Factors of personal preference.

While no airline probably can excel in every one of these areas, the closer an airline comes to "excellent," or at least "good," ratings in each of these key areas, the better it will fare in its competitive standing.

Both in the overall design of the airline and its basic operational features, as well as in its management, quality control, and day-to-day operations, the proposed airline is expected to stand out positively in almost every regard.

It is not uncommon for carriers in the region to operate older Soviet-built equipment (perceived to be less comfortable, less safe, and less reliable than its Western competition – perceptions that often are accurate).

While often it is relatively inexpensive to lease such aircraft, their operating costs tend to be significantly higher than newer, more fuel-efficient Western-built aircraft, and their safety, reliability, and noise factors are often poor, in some cases limiting their ability to operate in some markets.

By utilizing modern, safe, reliable, and cost-effective Western-built regional jet aircraft, the proposed new airline will offer a far more attractive alternative to the traveler both from within and outside Southeast Europe, and will be able to operate with far lower fuel and maintenance costs than the competition.

The comfort, reliability, speed, and safety of the new airline’s aircraft all will enable it to be the airline of preference for virtually all business, government, and organizational travelers from both within and outside the target region when traveling to or within the region, and it also will be preferred by most leisure and personal travelers, including those from with the target region, as well.

On the basis of fares, the new airline will offer highly competitive fares which, in many cases, should be below those offered by its Southeastern European competition. Higher load factors, combined with greater efficiency both in operational costs as well as in reservations, ticketing, and check-in, will enable the new airline to be highly competitive from both a cost and a quality perspective, and will also enable it to retain a higher percentage of its revenues.

Finally, the new carrier will be seeking out, as part of its business and marketing strategies, routes and city pairs that offer unserved or under-served demand. That strategy also will help reduce the threat from competition, and will enable the carrier to further establish itself as the carrier of choice in Southeast Europe.

Competition with Western European carriers The competitive picture is somewhat different when Western European carriers represent the competition. Many of the new airline’s competitive advantages relative to Southeastern European carriers are erased or at least minimized.

The competition in this region will include such well-established carriers as Swiss International, Austrian, Tyrolean, Lufthansa, KLM, British Airways, Air France, Alitalia, Sabena, and others of that nature. More recent, lower-cost, and "hipper" start-ups such as EasyJet, Go Fly, Bluebird, Virgin Express, and others like them will represent even more challenging competition in some cases.

Consequently, the proposed new airline will be the real equivalent of a whole new generation of airline (regional or beyond), and will represent the kind of revolution in the aviation world that Pan Am, Icelandic, Laker Air, PEOPLExpress, Virgin Air Atlantic, EasyJet, and Air Blue represented in their day (and in some cases, their "day" is still today).

In that regard, the new airline might well be known as "TechnoAir" given its extensive deployment of state-of-the-art marketing, reservations, ticketing, check-in, baggage- and cargo-tracking, and operational and safety technologies.

In other key areas – routes, schedules, and fares – the new airline also will be carefully designed to either compete highly effectively or, alternatively, to go where the competition is limited or non-existent.

Requirements for interline arrangements In order for the new airline to be able to obtain the interline arrangements such as code-shares, interline fare agreements, frequent-flyer mileage sharing, and so forth, that will be so important to its competitive posture and overall success, it must:

Fly Western-built aircraft, preferably pure jet.
Meet the standards to have a two-letter airline code.
Meet the highest standards for safety, reliability, and service.
Be accessible through normal reservations and ticketing systems.

Meeting these requirements, and negotiating the desired agreements, will be priorities from the outset in setting up the new airline. Additionally, partnering and interline arrangements will be carefully identified and sought that will offer the new airline strategic partnerships that will help give it the "cover" of larger, more established carriers, and also the status and service and growth potentials it will need to grow beyond its initial stage and to become a true presence in the aviation world.

Keys to Success

In descending order of importance, the five critical keys to success for the proposed new regional airline are:

Employing an experienced, highly professional management team that combines vision; realism; financial ability; solid knowledge of the aviation business; familiarity with, and belief in, the utilization and benefits of the latest aviation, electronic, and informational technologies; on-the-ground knowledge of the region and markets to be served; realization of the crucial importance of an organization’s personnel to its success; and a total familiarity with, and commitment to, the overall mission and goals of the proposed new airline.
Intelligent, progressive, and aggressive marketing that identifies the airline as a different kind of player , one that is sharper and smarter, and with a higher level of professionalism and operational standard than is the norm in the target region. Concentration on safety, with highly trained, dedicated, and professional personnel, caring for the passenger and the passenger’s needs and wants, the advantages offered by advanced technology, and straightforward, understandable, highly competitive tariffs and fare pricing, all will form key pillars of the marketing strategy.
Identification, through careful market research, of unserved or under-served routes and city pairs in the target market area with sufficient passenger demand to enable high load factors and profitable operations utilizing the category of aircraft envisaged.
Use of an all-jet fleet of newer, modern, Western-built regional aircraft that offer a high level of comfort, safety, and fuel and operational efficiency and flexibility, which meet all normal aviation standards, and which offer sufficient, but not excessive, passenger and cargo capacity on the envisaged routes.
Use of advanced electronic and information technology to reduce staffing and other operational costs; expand the potential market base; readily capture sales opportunities; simplify and speed passenger, baggage, and cargo handling; and enhance customer convenience and satisfaction.

Additional important, though less critical, keys to assuring the airline’s success include the following:

Identifying, negotiating, and entering into, in the pre-operational stage and early on, beneficial associations, cooperations, and partnerships with larger, more established, highly regarded carriers both within and beyond the target market region to offer interline arrangements, through fares, frequent-flyer mileage sharing, and convenient hubbing and long-distance onward connections to passengers. Successful execution of this element of the business plan is crucial to the overall success and growth of the airline, and must be kept in mind in the organizational plan and structuring of the airline.
Establishing a high level of operational oversight and quality control that will ensure that the airline always lives up to its marketing commitments and fulfills the promise of a high level of service, customer satisfaction, convenience, and safety, at a reasonable, highly competitive fare.
Avoiding the temptation to go head-to-head with established carriers on routes that already are well-served, unless solid evidence exists of additional, significant pent-up demand, or widespread customer dissatisfaction with existing services.
Maintaining flexibility that enables the airline to always respond and adapt to changing market conditions and opportunities, without being erratic, and employing equipment, scheduling, and staffing on a basis that is sufficient to get the job done properly, efficiently, and at a high rate of return, without "overkill" or fielding costly excess capacity or, conversely, unduly cancelling scheduled flight operations.
Identifying, developing, and quickly and cost-effectively exploiting opportunities for new markets, new market concepts, and expanded sales potential.
Supplementing regularly scheduled passenger service with both regularly scheduled and also special cargo services when and where sufficient demand exists, and also with seasonal, peak-period, and other intermittent passenger services 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. Larger, longer-range, or specialized aircraft may be employed on a charter or wet-lease basis to provide these supplemental, but potentially highly profitable, passenger and cargo services.
Looking to combine the core aviation business with ancillary marketing concepts and activities and ground-based operations that support, supplement, and complement the aviation elements of the business, including such activities as package-, group-, and charter-travel program offerings; value-added sales and customer services, both land- and Internet-based; construction and operation of enhanced passenger-, baggage-, and cargo-handling facilities and services; and other logical business pursuits both within and outside the immediate aviation business.
Avoiding growth for growth’s sake , and instead looking for solid niche-enlargement opportunities that will allow incremental, but always profitable, expansion.

Marketing & Sales

Marketing plan.

The proposed new airline intends to cut out new territory as it goes about marketing itself. While it will clearly serve the target markets of Southeastern Europe and Turkey, it will just as clearly be a different kind of player on the field, and will seek to be known not only as a Western airline, but at the cutting edge of the aviation business in Europe.

The airline’s emphasis on the latest information and electronic technology, and its stress on comfort, convenience, safety and customer service, will be cornerstones on which the marketing strategy will be built.

The airline will utilize a combination of methods to achieve the recognition that it both desires and needs. A fairly large advertising budget is planned to buy the space and time to get its name and message in front of the largest possible group of potential customers that it can. Given the crowded field of European regional airlines, it is better to come on like a lion than a lamb, or you may be lost in the herd.

The airline will also utilize public relations to good advantage to extend and supplement its advertising budget.

Everything about this airline, from its name to its colors, from the look of its planes to its airport kiosks, from its smart but informal crew uniforms to its advertisements and literature should set it apart. And it costs little more to do things freshly and smartly than the more ordinary way of doing things. An organization is new only once in its life, so the airline should grab that opportunity and get all the attention it can at the outset. And it needs to have both an adequate budget, as well as an outwardly directed management, to achieve that end.

The new airline will become known as one where all the staff practice the motto, "We have a job to do, and we do it every day – for you!""

The airline’s sales strategy will flow from its overall concept and marketing approach. Mass marketing, but with a personal touch utilizing airline employees as spokesmen and women to explain that "I have a job to do, and I do it everyday – for you!", will aim to steer as many people as possible either to the airline’s website, or to its telephone-based customer-service representatives. While clients are free to utilize their own travel agents, and the airline may also want to be accessible through general travel sites such as Travelocity, the more customers that can be encouraged to use the airline’s own reservations and ticketing services, the less revenue will have to be shared in the form of expensive commissions.

E-reservations and e-ticketing, combined with e-check-in, make the most sense for any customers who have online access, and also for the airline itself. But nonetheless, the airline must not lose sight of the fact that many people do not have access to the Internet, or do not care to use it to arrange their travel, or perhaps just prefer a more personal touch, and so other means of access must always be readily available.

The regional and specialized sales and marketing managers, as explained in the section on Personnel, will concentrate their effort on targeting specific clients that have the potential to offer corporate or group travel (including contract arrangements), or who are potential air-cargo customers. The airline will not have the resources to field a large sales team, and so these regional managers must target their efforts, and the airline must effectively utilize its mass marketing methods as well as the Internet to attract individual travelers who, once they experience the new airline, hopefully will feel a close affinity toward it and will become loyal and happy customers.

Locations & Facilities

Financial, traffic, and other studies currently are underway to determine the optimal prime basing location for the proposed new airline. Among the locations under study are the following eight:

Luxembourg, Luxembourg;
Berlin, Germany;
London City Airport, London, United Kingdom;
Stanstead Airport, London, United Kingdom;
EuroAirport, Basel/Mulhouse, Switzerland/France;
Amsterdam, The Netherlands;
Cologne/Bonn, Germany;
Munich, Germany.

In selecting a location to base the new airline, the following 11 major considerations are being evaluated, in roughly descending order of relative weight:

The tax and business regime in place in the selected locale. A low profit tax rate and a regulatory and political climate supportive of business, and particularly foreign investment, are key considerations.
The availability of relatively low-cost facilities suitable for basing both the business and aircraft-support operations, as well as the aircraft, is another key consideration.
The availability of sufficient landing and parking slots and gate facilities to permit the desired level of service at the base airport.
The ability to interconnect with one or more major carriers for onward interline arrangements both within Europe as well as to trans-Atlantic and global destinations.
A location that, given the maximum range of the selected aircraft, will enable non-stop flights to the most important destinations within the new airline’s service area in Southeastern Europe and Turkey and, at most, one-stop service to more distant or secondary destinations.
The existence of relatively high-traffic volume between the base location and one or more key interchange points to provide sufficiently high load factors between the base location and onward destinations and points of origin.
The existence of a reasonably high level of cargo traffic, including opportunities for interline trans-shipment of both inbound and outbound cargo.
The support of a larger airline with which the proposed new airline can establish a particularly close working relationship.
The support of local airport and aviation authorities to facilitate establishment, certification, and ongoing operation of the airline and its aircraft.
A location outside of the U.K. to facilitate British trade finance on acquisition of the new aircraft, should decisions be made to acquire British-built Avro aircraft as previously noted, as well as to purchase, rather than lease, the aircraft.
A range of other factors, including the availability and cost of local skilled workers, the growth potential of the market selected, year-round climatic and weather conditions as they may affect flight operations, the "cache" of the locale for marketing purposes, the cost and convenience or difficulty involved in command and control of the airline involving key personnel, some of whom may be based at various other locations, and so forth.

The airline will, however, perform its own normal line maintenance at home base and will utilize locally available services away from home. Aircraft also may be based at key airline hub locations away from the home business base as well.

With acquisition of British-built aircraft, major overhauls and heavy maintenance may be performed at British Aerospace’s Woodford facility in the U.K. on a selective basis. In addition, it is anticipated that separate fixed-cost maintenance agreements will be entered into for both the airframes and the engines, or these elements will be included in any dry-leasing arrangements entered into.

Estimates for total labor and spare parts costs have been calculated as a fixed per-hour cost and included in the portion of this business plan dealing with anticipated operating costs.

Sufficient apron and hangar space for staging, parking, and storing, as needed on a short-term basis, up to the entire initial five-aircraft fleet will be required at the base location and any other hub locations selected.

As the fleet expands over time, additional parking and storage space will be needed either at the main base location or at regional hubs in the airline route network. Additionally, sufficient office space, preferably in one central location at or near the base airport, will be required to house the airline’s main administrative offices and its central reservations system.

While the airline may consider establishing its own sales offices in key market locations, in general sales will be handled through a combination of Internet marketing utilizing the airline’s own website as well as other Internet travel websites, designated general sales agents in given locales, and regular travel agencies everywhere.

Flight may be based on aerodynamics, but the proposed airline will be based on technology, and lots of it. Efficiency and convenience through use of the most up-to-date informational and electronic technologies, in addition to modern aviation and navigational technologies, are guiding principals of the proposed new airline. Technology will also be a cornerstone of the new airline’s marketing strategy.

Among the technological features the new airline will offer are:

Internet marketing and online reservations (e-reservations) and sales (e-sales) that will provide quick and easy access to airline schedules, flight availability, reservations, and ticketing to a wide range of customers worldwide. This eliminates payment of agency commissions and keeps costs low – savings that can be passed on to the customer.
Electronic ticketing (e-ticketing) which will enable passengers to obtain their tickets online and avoid the need to obtain paper tickets from airline offices, travel agencies, or at the airport. It also frees the airline from having to stock, track, and issue tickets and maintain paper trails of them. Again, more savings for both the airline and the customer.
Electronic check-in (e-check-in) that will virtually eliminate waiting in line to check-in for e-ticketed passengers, enabling them to confirm their identities, obtain their boarding passes, and check-in their baggage (and even purchase tickets upon check-in) utilizing a user-friendly kiosk that eliminates those last-minute frustrating waits to get to the counter. And it also greatly reduces the airline’s needs to staff check-in desks, control long lines, employ local contract ground staff, and expend money and resources on an antiquated system that only adds to the traveler’s inconvenience and frustration. Another win-win situation for both airline and passenger.
Electronic baggage tracking (e-baggage tracking) which will enable the airline to track any piece of baggage from check-in to final pick-up and claim. If courier services can track parcels as they move around the world, and enable customers to track their parcels using tracking numbers and online tracking systems, then why can’t the same system be used to assure that no passenger will ever again have to wonder where his or her baggage might be? There may still be contingencies (such as late check-in, lack of space, security restrictions, late connections, and so forth) that cause baggage not to be placed on a given aircraft, but at least both the airline and the customer can be assured that they both know exactly where the given item of baggage is at any moment, and when it might be expected to arrive at the destination. This could well be an exclusive feature of the proposed new airline since no other airline appears to be utilizing it at present.
Electronic cargo tracking (e-cargo tracking) is the same basic idea as e-baggage tracking, and will use the same basic system, only for tracking cargo and parcels.

It also will track all elements of a given passenger’s or customer’s transactions and interactions with the airline, from initial flight inquiry through reservations, ticketing, check-in, flight, connections, and final baggage pick-up, claim, and check-out, as well as any standing preferences, follow-up comments, inquiries, or problems. It also will monitor things like weather conditions, flight delays or projected delays, gate jam-ups, and other contingencies, and will automatically notify both appropriate airline personnel as well as passengers and customers of any advisories, warnings, or changes.

Electronic financial control (e-finance) will enable complete electronic financial control and monitoring of the airline’s finances, clear advantages.
Additional technological features will be incorporated on-board the aircraft to provide flight crews with the latest navigational and communication technologies to assure the highest level of passenger safety and also airline reliability and punctuality. Included in this technology, in the case of the Avro aircraft, is all-digital ARINC 700 avionics with advanced Cat IIIb low weather-minimal landing capability to permit landings under the poorest permissible approach and visibility conditions

Equipment & Tools

Another issue still being evaluated and which will be decided is the question of how to acquire the aircraft. For a variety of reasons, including the ease with which the leases can be cancelled by the lessor and the lack of "ownership" of the aircraft, wet leasing has been ruled out except for short-term acquisition of aircraft that would be employed in meeting peak demand-type services as outlined elsewhere in this business plan.

The two remaining options both need to be examined from cost, flexibility, and finance points of view: Dry leasing the aircraft (generally on a five-year lease), or outright purchase. Both provide long-term control over the aircraft, and while both options tend to restrict changes in the fleet that might be preferred after the initial years of operation, market conditions and high demand for aircraft indicate that it would be relatively easy to be released from the leases, or to sell or lease the aircraft to new owners or operators, or to return them to their sources.

Cost factors employed assume dry leasing of new Avro RJ100 aircraft in 99-seat configurations, with a comparison for purchasing. It is anticipated that finance guarantees up to 85 percent of the acquisition cost of the aircraft could be obtained from the Export Credit Guarantee Department of the United Kingdom (ECGD) for purchasing British-built aircraft exported from the UK.

Ownership & Structure

Reflecting the overall nature of the organization envisaged, there is very little hierarchy in the organizational plan for the airline. In an operation where safety and accountability are so much at issue, obviously someone has to be in charge, and there also have to be clear lines of authority (and expertise) in the operational aspects of the airline. But beyond that, the organization is designed around flexibility, a high level of personal accountability and responsibility, and common cross-training and sharing of responsibilities as need arises and circumstances permit.

The levels of organization (reflected in the personnel and salary chart in the Personnel section of this plan) are as follows:

President and chief executive officer (who reports to the Board of Directors of the airline company).
Vice president and general manager.
Functional vice presidents for the core areas of commercial activities, finance, and operations.
Directors covering sales and marketing, communications, human resources, flight safety, flight operations, ground operations, maintenance, and information systems.
Managers in sales and marketing, as well as in station management functions.
Professional, engineering, ground handling, service, and other support personnel.

On the flight side, which reports to the director of flight operations and also responds to the director of flight safety, there are only three levels of personnel:

First officer;
Flight attendant.

Salary scales and levels of authority have been simplified and based on a rational scale allowing for similar levels, though of different natures, of functional work to be compensated at the same pay levels. The overall objective is to foster an atmosphere of cooperation and shared responsibility to the overall mission, which is to provide the customer and client with the best possible, safest, and most satisfying experience with the airline. Cross-training and cross-functioning are important parts of the organization plan, as explained in more detail elsewhere in this document.

Management team

A complete management team, covering the elements of administration, aviation, and finance, is being assembled. This team brings together a wide range of skills and backgrounds covering the key areas needed to form, launch, and operate the airline, and from a range of national origins.

6.3 Management Team Gaps

It is premature to speak of management team gaps until a core management team is named. The individuals who will play leading roles with the new airline will need to possess the widest possible range of the requisite skills. The current project team believes investors in the airline will want to play a key role in helping formulate core management. Once primary investment is established, that step can be undertaken, and it is anticipated that the core team will be finalized quickly.

The new airline will need people with skill, experience, energy, and vision to head up and serve in such areas as information management, flight safety, aviation operations, aviation maintenance, ground operations, sales and marketing, communications, and human resources management. Also good pilots, co-pilots, cabin crew members, and ground staff, and administrative staff.

BalkConsort anticipates putting together the best possible airline management team in the business, one that also shares the common vision of what this new airline truly can be and what it can become.

Financial Plan investor-ready personnel plan .">

Key assumptions.

In addition to the general financial and business assumptions presented in the following table, the key parameters presented on the next page also were included as Operating Assumptions in formulating the financial portions of this business plan.

Every effort was made to be realistic in these Assumptions, and if anything they were formulated conservatively, particularly in calculating initial load factors and revenue yields which, in practice, should be considerably higher than offered here. Additionally, passenger and cargo fares were considered to be flat over the entire period covered by this plan to compensate for the possibility that additional competition could force fares to remain relatively constant over the period. However, the objective of this exercise was to show that the proposed operation will be profitable even with much lower revenues than would normally be expected, and the numbers do in fact confirm a profitable outcome.

Additionally, expected net revenues from offering peak-demand special flights also are calculated. They are set apart separately from the scheduled-service revenues to show that both types of service – and particularly the more important scheduled service – are viable and the airline will be profitable even without these additional revenues.

The assumptions utilized here are based on dry leasing new Avro RJ100s at a high level of outfitting and with necessary spares included. A separate set of figures is provided following the Operating Assumptions section which gives a cost comparison should the decision be made to purchase the aircraft new, utilizing ECGD export financing for 85 percent of the purchase price of the aircraft.

Revenue by Month

Expenses by month, net profit (or loss) by year, use of funds.

Start-up Expenses

Legal and consulting $200,000

Route and market study $100,000

Office supplies, stationery etc. $10,000

Brochures and marketing materials $30,000

Design consultants $60,000

Corporate insurance $20,000

Office rent $50,000

Software and systems development $100,000

Expensed equipment and off. furniture $150,000

Expensed vehicles (8) $100,000

Public relations and advertising $80,000

Crew, staff training and manuals $60,000

Other $30,000

TOTAL START-UP EXPENSES $990,000

Projected Profit and Loss

Projected balance sheet, projected cash flow statement.

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Airline Business Plan

Launching an airline is challenging. Even harder is running it successfully. Starting with a new airline business and progressing to established market players requires ongoing learning and adaptability.

Anyone can start a new business, but you need a detailed business plan when it comes to raising funding, applying for loans, and scaling it like a pro!

Need help writing a business plan for your airline business? You’re at the right place. Our airline business plan template will help you get started.

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Download our free business plan template now and pave the way to success. Let’s turn your vision into an actionable strategy!

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How to Write An Airline Business Plan?

Writing an airline business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the entire business plan is ready and summarizes each section of your plan.

Here are a few key components to include in your executive summary:

Introduce your Business:

Start your executive summary by briefly introducing your business to your readers.

Market Opportunity:

Airline services:.

Highlight the airline services you offer your clients. The USPs and differentiators you offer are always a plus.

Marketing & Sales Strategies:

Financial highlights:, call to action:.

Ensure your executive summary is clear, concise, easy to understand, and jargon-free.

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2. Business Overview

The business overview section of your business plan offers detailed information about your company. The details you add will depend on how important they are to your business. Yet, business name, location, business history, and future goals are some of the foundational elements you must consider adding to this section:

Business Description:

Describe your business in this section by providing all the basic information:

Describe what kind of airline company you run and the name of it. You may specialize in one of the following airline businesses:

Full-service carriers
Low-cost carriers
Regional airlines
Charter airlines
Cargo airlines
Describe the legal structure of your airline company, whether it is a sole proprietorship, LLC, partnership, or others.
Explain where your business is located and why you selected the place.

Mission Statement:

Business history:.

If you’re an established airline service provider, briefly describe your business history, like—when it was founded, how it evolved over time, etc.

Future Goals

This section should provide a thorough understanding of your business, its history, and its future plans. Keep this section engaging, precise, and to the point.

3. Market Analysis

The market analysis section of your business plan should offer a thorough understanding of the industry with the target market, competitors, and growth opportunities. You should include the following components in this section.

Target market:

Start this section by describing your target market. Define your ideal customer and explain what types of services they prefer. Creating a buyer persona will help you easily define your target market to your readers.

Market size and growth potential:

Describe your market size and growth potential and whether you will target a niche or a much broader market.

Competitive Analysis:

Market trends:.

Analyze emerging trends in the industry, such as technology disruptions, changes in customer behavior or preferences, etc. Explain how your business will cope with all the trends.

Regulatory Environment:

Here are a few tips for writing the market analysis section of your airline business plan:

Conduct market research, industry reports, and surveys to gather data.
Provide specific and detailed information whenever possible.
Illustrate your points with charts and graphs.
Write your business plan keeping your target audience in mind.

4. Airline Services

The product and services section should describe the specific services and products that will be offered to customers. To write this section should include the following:

Describe your services:

Mention the airline services your business will offer. This list may include services like,

Passenger flight
Baggage handling
In-flight services
Seating options
Loyalty programs
Special assistance

Quality measures

: This section should explain how you maintain quality standards and consistently provide the highest quality service.

Additional Services

In short, this section of your airline plan must be informative, precise, and client-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

Unique Selling Proposition (USP):

Define your business’s USPs depending on the market you serve, the equipment you use, and your unique services. Identifying USPs will help you plan your marketing strategies.

Pricing Strategy:

Marketing strategies:, sales strategies:, customer retention:.

Overall, this section of your airline company business plan should focus on customer acquisition and retention.

Have a specific, realistic, and data-driven approach while planning sales and marketing strategies for your airline business, and be prepared to adapt or make strategic changes in your strategies based on feedback and results.

6. Operations Plan

The operations plan section of your business plan should outline the processes and procedures involved in your business operations, such as staffing requirements and operational processes. Here are a few components to add to your operations plan:

Staffing & Training:

Operational process:, equipment & software:.

Include the list of equipment and software required for the airline, such as aircraft, baggage handling systems, flight operations systems, revenue management systems, etc.

Adding these components to your operations plan will help you lay out your business operations, which will eventually help you manage your business effectively.

7. Management Team

The management team section provides an overview of your airline business’s management team. This section should provide a detailed description of each manager’s experience and qualifications, as well as their responsibilities and roles.

Founders/CEO:

Key managers:.

Introduce your management and key members of your team, and explain their roles and responsibilities.

Organizational structure:

Compensation plan:, advisors/consultants:.

Mentioning advisors or consultants in your business plans adds credibility to your business idea.

This section should describe the key personnel for your airline business, highlighting how you have the perfect team to succeed.

8. Financial Plan

Your financial plan section should summarize your business’s financial projections for the first few years. Here are some key elements to include in your financial plan:

Profit & loss statement:

Cash flow statement:, balance sheet:, break-even point:.

Determine and mention your business’s break-even point—the point at which your business costs and revenue will be equal.

Financing Needs:

Be realistic with your financial projections, and make sure you offer relevant information and evidence to support your estimates.

9. Appendix

The appendix section of your plan should include any additional information supporting your business plan’s main content, such as market research, legal documentation, financial statements, and other relevant information.

Add a table of contents for the appendix section to help readers easily find specific information or sections.
In addition to your financial statements, provide additional financial documents like tax returns, a list of assets within the business, credit history, and more. These statements must be the latest and offer financial projections for at least the first three or five years of business operations.
Provide data derived from market research, including stats about the industry, user demographics, and industry trends.
Include any legal documents such as permits, licenses, and contracts.
Include any additional documentation related to your business plan, such as product brochures, marketing materials, operational procedures, etc.

Use clear headings and labels for each section of the appendix so that readers can easily find the necessary information.

Remember, the appendix section of your airline business plan should only include relevant and important information supporting your plan’s main content.

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks and automatic financials make it easy.

This sample airline business plan will provide an idea for writing a successful airline plan, including all the essential components of your business.

After this, if you still need clarification about writing an investment-ready business plan to impress your audience, download our airline business plan pdf .

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Frequently asked questions, why do you need an airline business plan.

A business plan is an essential tool for anyone looking to start or run a successful airline business. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your airline company.

How to get funding for your airline business?

There are several ways to get funding for your airline business, but self-funding is one of the most efficient and speedy funding options. Other options for funding are:

Bank loan – You may apply for a loan in government or private banks.
Small Business Administration (SBA) loan – SBA loans and schemes are available at affordable interest rates, so check the eligibility criteria before applying for it.
Crowdfunding – The process of supporting a project or business by getting a lot of people to invest in your business, usually online.
Angel investors – Getting funds from angel investors is one of the most sought startup options.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your airline business?

There are many business plan writers available, but no one knows your business and ideas better than you, so we recommend you write your airline business plan and outline your vision as you have in your mind.

What is the easiest way to write your airline business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any airline business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software .

How do I write a good market analysis in an airline business plan?

Market analysis is one of the key components of your business plan that requires deep research and a thorough understanding of your industry. We can categorize the process of writing a good market analysis section into the following steps:

Stating the objective of your market analysis—e.g., investor funding.
Industry study—market size, growth potential, market trends, etc.
Identifying target market—based on user behavior and demographics.
Analyzing direct and indirect competitors.
Calculating market share—understanding TAM, SAM, and SOM.
Knowing regulations and restrictions
Organizing data and writing the first draft.

Writing a marketing analysis section can be overwhelming, but using ChatGPT for market research can make things easier.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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How to Create an Airline Business Plan

Blog > how to create an airline business plan, table of content, introduction, executive summary, market analysis, business description, business structure and organization, marketing and sales strategy, fleet and operations, financial projections, funding and investment, risk analysis and mitigation, regulatory and legal compliance, sustainability and environmental, our other categories.

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Business plan 101.

The airline industry has experienced exponential growth and transformative changes over the years, making it an attractive sector for entrepreneurs seeking to launch their own airlines. However, navigating this competitive landscape requires a well-crafted and comprehensive airline business plan. In this guide, we will walk you through the essential steps and key components of creating an effective airline business plan that will lay the foundation for your success in the aviation industry. As a trusted startup consultant service provider, Stellar Business Plans is here to support you in turning your aviation dreams into reality.

An executive summary serves as the snapshot of your entire airline business plan . It succinctly outlines your airline’s vision, goals, financial projections, and growth strategies. This section sets the tone for the rest of the plan, capturing the attention of potential investors and stakeholders.

Example: “Skyline Airways is a visionary airline committed to redefining air travel by providing unparalleled luxury and convenience to business and leisure travelers. Our strategic expansion plans and commitment to customer satisfaction make us a strong contender in the aviation industry. This executive summary outlines the key components of our business plan, showcasing the promising potential of Skyline Airways.”

Stellar Business Tip: Keep your executive summary concise yet impactful. Highlight the unique selling points of your airline and emphasize how it addresses the pain points of customers.

Understanding the dynamics of the airline industry is crucial for making informed decisions. Conduct an in-depth market analysis, including market trends, target customer segments, and competitor landscape. Utilize relevant statistics and data to present a comprehensive overview.

Example: “The global airline industry is projected to witness substantial growth in the coming years, driven by increasing disposable incomes, growing tourism, and expanding business travel. According to the International Air Transport Association (IATA), global air passenger numbers are expected to double in the next two decades, reaching 8.2 billion by 2037.”

Stellar Business Tip: Leverage market research and industry reports to substantiate your claims. Show that your airline’s strategies are well-aligned with market opportunities.

This section delves into the core aspects of your airline, including your mission, unique selling proposition (USP), and the services you will offer. Introduce your airline’s history and highlight significant milestones that demonstrate your readiness for success.

Example: “FlyRight Airlines was founded with a vision to revolutionize the travel experience for passengers through exceptional customer service and innovative technology. Our commitment to punctuality, safety, and personalized service sets us apart from competitors. As an industry-disruptor, FlyRight Airlines has been recognized with the prestigious ‘Best Customer Service’ award for three consecutive years.”

Stellar Business Tip: Showcase your airline’s achievements and accolades to build credibility and confidence among potential investors and partners.

Outline the legal structure of your airline and discuss the management team’s roles and expertise. Provide an organizational chart to showcase the hierarchy and responsibilities of key personnel.

Example: “SkyJet Airways is registered as a private corporation in accordance with aviation regulations. Our management team comprises seasoned professionals with extensive experience in the aviation and hospitality industries. John Smith, our CEO, brings over 20 years of leadership experience in major airlines, ensuring efficient operations and strategic decision-making.”

Stellar Business Tip: Highlight the expertise of key team members and their significant contributions to the success of your airline.

Develop a robust marketing and sales strategy to attract and retain customers. Utilize data-driven insights and statistics to demonstrate the effectiveness of your marketing initiatives.

Example: “SkyGlide Airlines’ marketing strategy focuses on digital channels, social media, and influencer partnerships to reach our target audience effectively. Our market research indicates that millennial travelers heavily influence travel decisions, and thus, we invest significantly in social media marketing and user-generated content to create brand loyalty.”

Stellar Business Tip: Showcase your understanding of your target market’s preferences and how your marketing efforts align with their expectations.

Detail your fleet composition and specifications, including aircraft types and capacities. Discuss aircraft maintenance and safety procedures, emphasizing your commitment to ensuring a reliable and secure airline.

Example: “AirWings Fleet consists of modern and fuel-efficient aircraft, including Airbus A320neo and Boeing 787 Dreamliner, ensuring a comfortable and eco-friendly flying experience. Our partnership with leading maintenance providers guarantees the highest standards of safety and reliability, with regular maintenance checks and adherence to regulatory guidelines.”

Stellar Business Tip: Focus on the safety and comfort features of your fleet to instill confidence in your airline’s operations.

Create comprehensive financial projections based on market research and sound assumptions. Utilize charts and tables to present revenue forecasts, cost structures, and projected profitability.

Example: “Our financial projections anticipate steady growth, with projected revenue of $100 million in the first year, reaching $500 million by the fifth year. This growth will be supported by a robust marketing strategy, optimized operational costs, and an expanding customer base.”

Stellar Business Tip: Provide a clear breakdown of revenue streams and cost drivers to demonstrate your financial stability and growth potential.

Explain the initial investment required to launch and operate your airline. Showcase your budget for start-up costs and capital expenditures, providing clarity to potential investors about the financial requirements.

Example: “AirSprint Airways requires an initial investment of $50 million, which will cover aircraft acquisition, staff training, marketing campaigns, and administrative expenses. We are seeking strategic investors who share our vision of transforming air travel and are committed to long-term partnerships.”

Stellar Business Tip: Clearly articulate your funding needs and explain how the investment will be utilized to drive the growth of your airline.

Identify potential risks in the airline industry and outline your risk mitigation strategies. Present contingency plans to assure stakeholders of your preparedness for challenges.

Example: “SkyWings Airlines has conducted a comprehensive risk analysis, identifying potential risks such as fuel price volatility, geopolitical tensions, and regulatory changes. Our risk mitigation strategies include hedging fuel costs, diversifying routes, and maintaining strong relationships with aviation authorities to navigate regulatory changes smoothly.”

Stellar Business Tip: Address potential risks proactively and demonstrate your airline’s ability to adapt to unforeseen circumstances.

Discuss the licensing and certification requirements necessary for operating an airline. Show how your airline will comply with aviation authorities and regulations.

Example: “AviaJet is committed to maintaining the highest standards of safety and compliance with all aviation regulations. We are currently in the process of obtaining an Air Operator’s Certificate (AOC) and expect to launch operations after receiving all necessary approvals from the Civil Aviation Authority.”

Stellar Business Tip: Emphasize your commitment to adhering to all legal and regulatory requirements to gain trust from investors and passengers.

Impact Promote sustainability initiatives and demonstrate your commitment to reducing the airline industry’s environmental impact. Showcase your airline’s dedication to adopting eco-friendly practices.

Example: “EcoFlight Airlines is dedicated to minimizing our carbon footprint and preserving the environment. We are investing in modern, fuel-efficient aircraft, adopting sustainable inflight practices, and exploring alternative fuels to achieve carbon neutrality by 2030.”

Stellar Business Tip: Highlight your airline’s commitment to sustainability, as it aligns with the growing eco-consciousness of travelers.

Creating an airline business plan requires careful planning, extensive research, and a clear vision of your airline’s future. By following this comprehensive guide, you are equipped to build a solid foundation for your airline’s success. Stellar Business Plans is here to provide you with expert guidance and support in crafting an impressive business plan that will impress investors and stakeholders. Together, we can embark on a journey to make your airline a soaring success. Get ready to take flight with Stellar Business Plans!

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Updated On : September 2, 2023

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Simple Flying

How to start an airline: part 2 - developing a business plan.

It's time to plan your new airline - the operations, destinations, and fleet.

Welcome Aboard

So you have decided to start an airline. This is a big decision to take on a project that could quickly take over your life. But how do you actually go about it, and where do you begin? The process involved in starting an airline can be rewarding, enjoyable, and hopefully profitable too. But it can also be frustrating, fraught with challenges, and the next setback will always remain just around the next corner. But if you are determined to do this, let’s take a closer look at how you might go about achieving your goal.

The four key stages of planning

The first thing to do is develop a robust business plan for your airline . You should consider the four critical stages of planning, better known as what , where , how , and why . Your business plan could make all the difference between your airline becoming the next big deal or simply another casualty of the ruthless airline industry, itself littered with failures throughout its history.

Getting these first critical decisions right will improve your chances of succeeding and perhaps ensure your airline's survival chances in the future. Once you have rigorous and comprehensive answers to all four key stages, it will be time to draft your business plan.

Your airline business plan will act as the shop window for your airline that you will present to potential investors ; a document that can be peered throughout to see whether your offering is attractive enough to entice others inside and, hopefully, to part with their hard-earned dollars.

After all, unless you have bottomless pockets, you will be reliant on others to provide additional funding and investment to get your airline off the ground. We shall explore the whole issue of budget and finance in greater depth in the next part of this series.

The first stage of planning - What?

The first of the critical issues to address when you consider starting an airline is ' what '? What do you want to achieve exactly, bearing in mind that this may not be possible, cost-effective, safe, or even legal?

Focussing on developing your initial idea is all very well, but being flexible to change and ready for setbacks will be useful characteristics in your planning toolkit as you progress. You should develop an exact, detailed concept of what you want to do with your airline. What are your goals, and what do you need to achieve them.

What are your aims and ambitions? Do you want to start small and get bigger, or do you simply want to remain small and niche? Remember, many airlines survive because they stay small. Or are your aspirations to become a feeder carrier possibly, or a regional operator . Do you want to scale things up to become a short, medium, or even long-haul operator, flying the big jets to faraway destinations?

Is your airline going to be a scheduled carrier, a charter operator, or a combination of both? You might want to avoid the complications of fare-paying passengers altogether (often referred to in the airline world as ‘self-loading freight’) and specialize in the carriage of cargo only.

In principle, these are all feasible ventures, and the industry has successful examples in each sector. Honing on just one market segment initially and doing that well will be crucial before you even consider growing your business.

Once you have an established, well-developed concept of what you want your airline to be, you can progress to the next stage of the process.

The second stage of planning - Where?

Where you want to fly sits snugly alongside the ‘ what ’ question addressed above. You should be considering your proposed route structure , selecting your hub airports and your home base from the outset. You need to decide whether you wish to focus on being a point-to-point carrier or whether a hub-and-spoke operation might suit your airline better.

Remember that some airports you may wish to serve will be slot constrained, so a quick initiation into that airport's slot allocation process will be necessary. You may not be allocated a workable set of slots for your airline, so be prepared for some tough negotiating.

Recent startup airlines which appear to be making early progress with network planning are Breeze and Avelo in the US, selecting point-to-point routes to develop their business. PLAY in Iceland is aiming to build a viable hub-and-spoke network using Keflavik Airport (its home base) as its hub facility, offering decent levels of connectivity for passengers traveling over Iceland between the United States and Europe

Are you considering entering an existing market where you will compete with others, or will you target new, emerging markets, opening up regions and routes that would otherwise remain unserved by other carriers, such as Bonza , the excitable new startup in Australia?

Bearing in mind that you will require aircraft, crew, ground handling, maintenance provisions, and other services at each base you open dictates that you simply should not consider opening up a plethora of routes that are entirely unlinked to each other in any way.

Startup airlines regularly focus early operations on a single or minimal number of bases to start before they even consider expansion. An excellent current example of this is the new Flybe operation starting operations shortly. This new carrier (revived from the ashes of another carrier of the same name, which failed at the start of the pandemic) has limited its initial operation to just two small UK bases - Birmingham and Belfast City .

No doubt routes will be picked up and dropped from these bases in the early stages as Flybe refines its model. Yet, by staying small initially, the airline hopes to avoid having a dispersed network and fleet, which stretches resources and ultimately leads to operating a wide range of loss-making routes, just as its predecessor did.

While the 'what' question may have been based on intangibles, such as desire or ambition, the 'where' decisions will be primarily based on data and information.

Detailed route analysis using modeling and forecasting will be a prerequisite here. It will be imperative to have all your facts in numeric form so that forecasting and projections can be produced to act as your road map as you develop.

Route and network development consultancies can assist you in this process, as can the planning departments of airport authorities , as well as the leading commercial aircraft manufacturers.

Even a decision to fly a new 200-seat jet from point A to point B will find you with offers from all of these sources, each undoubtedly willing to provide planning assistance, particularly if there is something potentially in it for them. So don't be afraid to ask for help from those who know their industry best.

James Pearson , Simple Flying's very own in-house route and network planning expert, provides the following helpful advice for anyone considering a potential new airline's route structure -

Network planning requires solid research using multiple data sources, thinking creatively, and forecasting as accurately as possible. It also requires a strong gut instinct about what will work and why.

For low-cost and ultra-low-cost carriers especially, predicting market growth through stimulating demand is often essential. For many thin routes, this is crucial to make them viable, without which they would be too small.

Network planning isn't just a one-off process. It also requires continual market awareness to check what is happening to avail of more opportunities as they arise. No matter the work, not all routes will work or are expected to work. If they did, an airline wouldn't be experimenting enough.

The third stage of planning - How?

When considering the question of ' how' , there are various points to consider. Will you select just a single aircraft type for your operation, or does your plan call for several types? Without delving too deeply into economic theory relating to the principle of economies of scale, startup airlines have often seen success when focussing on a single type of aircraft - Southwest , Ryanair, or Wizz, all being good examples.

Selecting the correct aircraft type for your operation will be of utmost importance. Too small an aircraft, and you could be passing up the opportunity to fill more revenue-producing seats. Too large an airplane, you could risk flying around half-empty planes, burning fuel, and losing money, and lots of it.

Getting this balancing act is imperative to ensure your business plan's economics are correct. Your airline is financially viable so that your airline’s survival is assured, at least in the initial startup phase. Again, aircraft manufacturers' marketing departments will be all too eager to assist you in this process if there might be an aircraft sale or two for them!

The fourth stage of planning - Why?

Starting an airline is not easy; otherwise, everyone would be doing it, right? Going into the startup process thinking your airline will be flying before you know it would be foolhardy and misguided. You should give a great deal of consideration to why you wish to do this.

Why do you want to put yourself through months, if not years, of stress just to get to your airline's inaugural flight, let alone what may come afterward? Starting an airline simply as a vanity project has been repeatedly shown to be not enough reason to build a sustainable business.

You will need a good degree of passion, enthusiasm, resilience, and ambition to make this all come together. Starting an airline for fun is not a ‘thing’ in itself. You may have good intentions, grand designs, and enormous ambitions for your airline. Still, without established motives and deeply embedded aspirations, you may as well stop planning before you even get started.

And to address the 'elephant in the room' when it comes to airline startups, don’t expect to run a profitable business for several years at the very least . The startup costs involved in getting a new startup airline flying are far more considerable than even your forecasts will tell you. You need to make provision for this, given the multitude of setbacks that will undoubtedly come your way throughout the startup process.

As mentioned earlier in this article, If you are starting an airline simply to get rich quickly, you seriously need to rethink your whole ethos.

Failing to plan is planning to fail

Without comprehensive and credible plans in place, you are setting yourself up for a rapid fall. Any cracks in your business plan will quickly widen, be stretched to critical levels, and may simply just bring your whole project crumbling down before you even get going.

Yet, knowing what you want to do, where you intend to do it, how you intend to achieve it, and perhaps most importantly, why you are setting off on this arduous process and profoundly personal and life-changing journey will either attract investors to you or conversely confine your airline plans firmly to the drawing board.

Head in the air but feet on the ground

So, in summing up, be very clear about what you are aiming to achieve. Have big ideas and even bigger goals, but wherever your airline planning takes you, keeping your feet firmly on the ground will serve you well. Because remaining grounded throughout the planning process at all times, will hopefully ensure that your airline startup does not!

Next time, we shall look at airline funding and financing. Join us for 'How to Start An Airline: Part 3 - Finances', coming soon.

StartupBoeing

Prepare for takeoff.

Starting an airline is tough. Running a profitable airline is even tougher. From startup airlines to established industry leaders, the process involves constant learning and adaptation.

Few businesses have as many variables and challenges as airlines. They are capital-intensive. Competition is fierce. Airlines are fossil fuel dependent and often at the mercy of fuel price volatility. Operations are labor intensive and subject to government control and political influence. And a lot depends on the weather.

But the intrepid entrepreneur is not alone. The StartupBoeing team assists entrepreneurs in launching new airlines. From concept through launch, StartupBoeing offers guidance, review, analysis, data, resources, contacts, and referrals to qualified startup airlines.

For further questions or dialogue, please e-mail us at [email protected] .

Market Analysis

Entrepreneurs who are considering a startup airline launch are wise to study the commercial aviation market. Three comprehensive publications are very useful in providing a detailed analysis of traffic growth, regional trends, and airplane requirements. They are produced by Boeing and highly regarded throughout the industry.

Commercial Market Outlook World Air Cargo Forecast Current Aircraft Finance Market Outlook

Operating Environment

Startup airlines must be aware of and operate within a framework of regulations, standards and guidelines. Included here is basic information on some of the primary international agreements and programs that shape the operating environment for commercial aviation.

Learn about the " Freedoms of the Air ," a set of international rights that allow a country's airlines to enter the airspace of another country or land there.

Find out more about ETOPS , or Extended Operations, a collaborative industry/government program allowing airplanes to fly routes with longer diversion times.

Business Planning

Successful startup airlines begin with a sound business plan. This detailed planning document typically includes:

Analysis of the market and competition
Brand positioning
Description of the business and opportunity
Details about the operation
Management team biographies
Discussion of risks and obstacles
Pro forma financial statements/projections
Capitalization plan
Brand development
Implementation strategy.

The business plan is the fundamental starting point for working effectively with theStartupBoeing consulting team. StartupBoeing provides free review services of the business plan and corresponding financials. We offer constructive suggestions, question assumptions, and challenge the entrepreneur to prove the concept just as prospective investors might. For entrepreneurs requiring assistance in preparing the plan itself, StartupBoeing can suggest advisors worldwide who specialize in such services.

The Structural Plan

The Airline Planning Roadmap (PDF) offers a conceptual sense of the necessary steps in launching an airline from idea through launch.

Business Plan Questions (PDF) provides a list of important questions to consider when writing the business plan.

Brand Foundation Overview (PDF) provides a list of steps to take to position your emerging brand based on your market analysis and a need to differentiate from existing competitors.

Structuring the Plan

The Airline Business Plan Outline (PDF) is a tool for capturing many of the important elements for successfully starting and operating an airline. While it is not a comprehensive structure for all airline concepts, it can serve as a starting framework for a business plan.

Airplane Selection

Target markets and frequencies are determined through traffic analysis and route/schedule planning. The startup airline is now positioned to select the appropriate airplane. Included here is basic airplane data a startup-airline can use to make a preliminary aircraft selection and complete a compelling business plan.

Interactive Aircraft Comparator

In-Production Airplanes

Out of production airplanes, passenger airplanes.

727 (727-100/-100C/-200)
737 (737-200/-200C)
737 (737-300/-400/-500)
737 (737-600/-700/-800/-900ER)
747 (747-100/-200/-300/SP)
747 (747-400/-400ER)
757 (757-200/-300)
767 (767-200/-200ER/-300/-300ER/-400ER)
777 (777-200/-200ER/-200LR/-300/-300ER)

Freighter Airplanes

707-320C Freighter
727-100/-200 Freighter
737-200/-300 Freighter
747-200F/-200SF/-100SF
747 Freighter (747-400/-400ER)
757-200 Freighter
DC-8 Freighter
DC-9 Freighter
DC-10 Freighter
MD-11 Freighter

Boeing Converted Freighters

747-400 BCF

Airplane Support

Visit Boeing Support and Services to learn more about Boeing global customer support, including spares & logistics support, maintenance and engineering services, fleet enhancements and modifications, and flight operations support.

The Boeing Airport Compatibility Group assists the aviation community to address their airport-related issues regarding our airplanes, providing Boeing and McDonnell Douglas commercial airplane product information needed to promote the continued and timely development of the world's airports.

Boeing provides a variety of documents that provide Airplane Characteristics data for General Airport Planning . Sections within each document include airplane description, airplane performance, ground maneuvering, terminal servicing, operating conditions, and pavement data.

Learn more about the pallets and containers used to carry cargo on-board large Boeing aircraft, including specific designations, dimensions, descriptions and visuals.

View a glossary of airplane terms .

Airplane Sourcing

Selecting the optimal airplane based on market, network plan, traffic estimates, interior layout, economics, and performance requirements is a good start. But now the airline entrepreneur must source the airplane. Decisions must be made about lease-versus-buy and new-versus-used. Airplane availability may be a challenge. Such factors may drive the airplane selection or even change the business model.

An important first step in sourcing the airplane is to consider financing options . The two most common methods of financing airplanes are direct purchase and operating lease.

New Airplanes

Depending on current production line availability, financing, business plan, and desired launch date, a startup airline may consider purchasing a new production airplane.

Leasing New or Used Airplanes

Boeing works with major airplane leasing companies worldwide. StartupBoeing is able to match qualified startup airlines with Boeing's leasing partners.

Lease Rates

Boeing does not regularly track airplane market lease rates. However, a range of lease rates can be provided to qualified startup airlines.

Through Boeing Commercial Aircraft Customer Finance, qualified startup airlines can be matched with third party sellers/lessors of used airplanes.

Third Party Used Airplanes

Through Boeing's internal Trading Floor, qualified startup airlines can be matched with third party sellers/lessors of used airplanes. Other sources of used airplane availability include:

Operating Your Airline

Boeing offers startup airlines the industry’s largest portfolio of commercial aviation support and services essential for running a successful airline. Through Boeing Global Services startup operators have access to everything from training and interior modifications to aircraft maintenance and high-tech enhancements.

The following solutions are available to suit your specific startup plans and requirements.

Maintenance & Parts Solutions

Boeing’s Maintenance and Part solutions help you to manage maintenance, modification, repair, overhaul and upgrades of your fleet while simplifying your supply chain. One of the services most applicable to a new airline is Global Fleet Care.

Boeing’s Global Fleet Care gives you the most comprehensive maintenance program available.

Global Fleet Care can:

Help a new entrant operator conserve startup maintenance program capital
Provide a competitive hourly maintenance rate that reduces airline staffing requirements.
Include initial parts provisioning
Supply engineering services
Provide 24/7 Customer Support and Airplane Health Monitoring

Flight Operations Solutions

Boeing’s Flight Operations Solutions provide full flight operations support that is scalable to grow as your airline expands and your operational complexity increases. From pilot training to start of operations and beyond, our suite of products will provide the highest quality tools for your crews to deliver an efficient flight operation.

Services most applicable to a new airline:

Flight Planning
Charts and Navigation
Electronic Flight Bag (EFB)
Pilot training and Simulator
Performance Planning

Boeing Aviation Consultants

Boeing’s staff of experienced airline and consulting professionals can advise and assist with all activities associated with a new entrant airline.

Boeing’s Consultants can:

Assist with securing an Air Operator Certificate (AOC) as well as other regulatory requirement filings
Design and structure an efficient operations organization
Advise in the development and regulatory approval of a maintenance program
Design a parts optimization program
Assist with route analysis and payload improvements
Develop a fuel efficiency program
Select Information Technology elements that are appropriate for the size of operation
Prepare an airline for eventual transition to ‘smart’ airplanes

Once an airline is up and running, Boeing’s Aviation Consultants can also provide periodic, detailed operations analysis that can assist with optimizing your maintenance and fuel efficiency programs, as well as provide crew management solutions for best scheduling and utilization of crewmembers.

When you are ready to start your airline, Boeing is ready to help you every step of the way.

Boeing offers startup airlines a comprehensive array of tools and services for running a successful airline. Everything from training to interior design to financing to maintenance to high-tech enhancements and more. Available resources include:

Aviation Partners Boeing : Fuel saving and performance enhancing Blended Winglets for a number of current production Boeing airplanes and out-of-production models
Boeing Business Jets : Private, Business, and Government VIP configured Boeing production airplanes
Boeing Support and Services : Customer Support, Material Management, Maintenance Services, Fleet Enhancement, Flight Operations
Fuel Conservation Services : Optimizing your operations to maximize airplane fuel efficiency
Jeppesen : Aviation Training, Charts & Navigation Services, Flight Planning and Custom Services
Training & Flight Services : Maintenance and Flight Crew Training

Becoming a Customer

Whether you are starting a new airline with Boeing aircraft, adding your first Boeing aircraft to your existing fleet, or you are new to maintaining Boeing aircraft, we have the products, services, and information resources needed to get you off the ground and keep you flying.

Relationship

Creating a business relationship with Boeing can provide access to:

Boeing expertise
Support services needed for the introduction, operation and maintenance of your aircraft

What do you need?

If you are a Maintenance Repair and Overhaul (MRO) or repair station, please see the Intellectual Property Management - Licensing Questionnaire .

In order to obtain Boeing goods and services, it will be necessary to enter into an agreement with Boeing and set-up an account. To begin the account set-up process, complete and submit a Boeing Customer Questionnaire . This questionnaire must be completed and submitted electronically.

Upon receipt of the completed questionnaire and based upon the information you submit, Boeing will:

Start the process of establishing an account so your company can do business with Boeing.
Assign your company a Boeing customer code which will identify your company within Boeing for future business transactions.
Identify you as the owner, operator, or lessee of the aircraft.
Supplemental Agreement for Electronic Access (SA-EA)
Supplemental Agreement for Electronic Enabling (SA-eE)
Provide you with certain documents at no charge when the CSGTA and its supplements are signed and appropriate insurance is obtained.

Access to Boeing Part Page

Boeing Material Services offers the advantage of buying from the original equipment manufacturer (OEM).

Boeing also provides customers with access to the aftermarket for a wider breadth of resources to locate hard-to-find parts. From single transactions to supply chain management, Boeing provides you with the right part, at the right place, at the right time. For more access information, please contact [email protected] .

Intellectual Property Management - Licensing Questionnaire

Aircraft owner/operators and third-party service providers have particular needs for OEM products and services as they support the industry. These products and services may require the use of information that is created during the development and certification of Boeing products. Comments from the industry have helped us to establish a set of Intellectual Property licensing standards that address specific requirements and establish a fair and consistent fee structure for the use of the information developed.

Take the Intellectual Property Management - Licensing Questionnaire .

Customer Services General Terms Agreement (CSGTA)

The Customer Services General Terms Agreement (CSGTA) incorporates articles applicable to various Boeing products and services into a blanket-type agreement so that, once in place, only unique terms and conditions need to be negotiated when a customer requires a specific product or service. The benefits of this approach are:

Faster responses to requests from customers for products and services.
A reduction in resources and effort needed to implement and manage all Customer Support related agreements for both customer and Boeing.

Some examples of the products and services covered by the CSGTA are lease of parts and tools, purchase of spare parts and standards, retrofit kit changes, repair, modification, technical assistance/consulting, training services and technical data.

Two Supplemental Agreements are associated with the CSGTA. The Supplemental Agreement to the CSGTA for Electronic Access (SA-EA) incorporates articles specific to granting you electronic access to Boeing goods and services, specifically technical data available on MyBoeingFleet.com. The Supplemental Agreement to the CSGTA for Electronic Enabling (SA-eE) incorporates articles specific to software licensing.

Part 125 Airplane Operating Certificate (AOC)

To apply for a part 125 AOC you will need to provide certain documents to your regulatory agency such as the Maintenance Planning Document (MPD), Quick Reference Handbook (QRH), and Aircraft Flight Manual (AFM). Our business operations group will help you get access to these documents on a temporary basis to help you with your AOC application.

MyBoeingFleet (MBF)

MyBoeingFleet is Boeing's secure internet portal, providing authorized customers with access to the industry's most comprehensive range of support products and services for Boeing commercial aircraft.

Aircraft owners and operators - as well as maintenance providers, leasing companies, regulatory agencies and other third party service providers - use MyBoeingFleet to order parts, collaborate with Boeing experts, and obtain essential information such as drawings, documentation, manuals, and operational data and procedures.

Owner/operators and licensed maintenance providers can also access productivity solutions such as Maintenance Performance Toolbox and Airplane Health Management.

Frequently Asked Questions

I want to start an airline. how can the startupboeing site help.

The StartupBoeing site is filled with information that will be useful in starting an airline. In starting an airline, there are specific steps that should be followed, and they are laid out in order to help you along your journey.

Step 1: Market Analysis
Step 2: Operating Environment
Step 3: Business Planning
Step 4: Airplane Selection
Step 5: Airplane Sourcing

How can we obtain Boeing aircraft performance data for our planned operations?

The StartupBoeing team has found that this usually is not the first question to ask when starting an airline. The market opportunity and business plan will help shape what aircraft to fly. Once an understanding of the market opportunity and competitive environment are established, the StartupBoeing team can assist in providing suggestions for aircraft and ultimately performance data to fit the market opportunity.

Can Boeing lease me an aircraft?

Boeing generally does not lease aircraft. Aircraft leasing is usually done by third parties not associated with Boeing. To help you find these leased aircraft, Boeing has provided links to these parties found in the Airplane Sourcing section.

I want to buy a used aircraft from Boeing. How much does it cost?

Boeing generally does not sell used aircraft. Used aircraft are usually sold by third parties not associated with Boeing. To help you find these used aircraft, Boeing has provided links to these parties found in the Airplane Sourcing section.

Where can I find information on Boeing airplanes?

Information on passenger and freighter airplanes, along with information on cargo hold sizes can be found in the Airplane Selection section.

Where can I find a definition of aircraft terms?

A glossary of aircraft terms can be found here .

Where can I find airplane market data?

The Boeing Current Market Outlook (CMO) and World Air Cargo Forecast can be found in the Market Analysis section.

Where can I find information on business planning?

Information on business plans can be found in the Business Planning section.

Where can I find information about regulatory requirements?

Information about regulatory requirements can be found in the Operating Environment section.

Airline Business Planning

Experienced in the specialist field of airline business planning, having created expert and detailed plans for many different business models, outlining the strategy to execute

Your airline needs clear visibility of where it wants to be in the next 3, 5 and 10 years and a plan of how to get there. Airlines that operate to a clearly defined strategy are proven to be significantly more successful than those that do not.

Business planning is not a one-off activity, but rather a ‘live’ process, so an airline’s planning horizon should always be current and continuously updated based on real world results, events, trends and market forces.

Our team is experienced in the specialist field of airline business planning, having created expert and detailed plans for many different operator business models. An AviaSolutions business plan provides leadership teams with reliable and robust advice to adequately plan for the airline’s future and success.

These plans outline to airline leadership teams the strategy to execute, the critical business decisions to be made, the timelines, and the business plan implementation stages along the way. They include elements such as:

Market positioning strategy
Investment requirement
Project Implementation schedule
Route network and schedule
Fleet plan and aircraft introduction
Budget and financial planning
Manpower requirements and planning
Aircraft acquisition strategy (lease or buy)
Aircraft financing solutions

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Travel Agency Business Plan Template

Written by Dave Lavinsky

Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their travel agencies. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a travel agency business plan template step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Travel Agency Business Plan?

A business plan provides a snapshot of your travel agency as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Travel Agency

If you’re looking to start a travel agency or grow your existing travel agency you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your travel agency in order to improve your chances of success. Your travel agency business plan is a living document that should be updated annually as your company grows and changes.

Source of Funding for Travel Agencies

With regards to funding, the main sources of funding for a travel agency are personal savings, credit cards, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

The second most common form of funding for a travel agency is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan.

Finish Your Business Plan Today!

Your travel agency business plan should include 10 sections as follows:

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of travel agency business you are operating and the status; for example, are you a startup, do you have a travel agency that you would like to grow, or are you operating a chain of travel agencies.

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the travel agency industry. Discuss the type of travel agency you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.

Company Analysis

In your company analysis, you will detail the type of travel agency you are operating.

For example, you might operate one of the following types:

Commercial Travel Agencies : this type of travel agency caters to business travelers. These agencies specialize in tracking down deals for business travelers to help companies manage travel costs.
Online Travel Agencies : this type of travel agency exists only in cyberspace. They provide clients with the convenience of online booking and discounts that are available only to professional travel agencies.
Niche Travel Agencies : this type of travel agency provides clients with specialized knowledge of a region.
Membership Associations : Memberships associations give travelers access to the organization’s travel planning services for the cost of an annual membership rather than charging per transaction. This type of agency offers the most benefit to frequent travelers.

In addition to explaining the type of travel agency you operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

When and why did you start the business?
What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new location openings, etc.
Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the travel agency business.

While this may seem unnecessary, it serves multiple purposes.

First, researching the travel agency industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards glamping, it would be helpful to ensure your plan calls for plenty of luxury camping packages.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your travel agency business plan:

How big is the travel agency business (in dollars)?
Is the market declining or increasing?
Who are the key competitors in the market?
Who are the key suppliers in the market?
What trends are affecting the industry?
What is the industry’s growth forecast over the next 5 – 10 years?
What is the relevant market size? That is, how big is the potential market for your travel agency. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your travel agency business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: sports enthusiasts, soccer moms, baby boomers, businesses, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of travel agency you operate. Clearly baby boomers would want a different atmosphere, pricing and product options, and would respond to different marketing promotions than businesses.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most travel agencies primarily serve customers living in their same city or town, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other travel agencies.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes customers making travel arrangements themselves at home. You need to mention such competition to show you understand that not everyone who travels uses travel agency services.

With regards to direct competition, you want to detail the other travel agencies with which you compete. Most likely, your direct competitors will be travel agencies located very close to your location.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

What types of customers do they serve?
What products do they offer?
What is their pricing (premium, low, etc.)?
What are they good at?
What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

Will you provide better travel packages?
Will you provide products or services that your competitors don’t offer?
Will you make it easier or faster for customers to book your offerings?
Will you provide better customer service?
Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a travel agency business plan, your marketing plan should include the following:

Product : in the product section you should reiterate the type of travel agency that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to regular accommodation and transportation booking, will you offer items such as tour packages and excursions?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the packages you offer and their prices.

Place : Place refers to the location of your travel agency. Document your location and mention how the location will impact your success. For example, is your travel agency located next to a heavily populated office building, or highly trafficked retail area, etc. Discuss how your location might provide a steady stream of customers.

Promotions : the final part of your travel agency marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

Making your travel agency’s storefront extra appealing to attract passing customers
Distributing travel brochures outside the travel agency
Advertising in local papers and magazines
Reaching out to local bloggers and websites
Social media advertising
Local radio advertising
Banner ads at local venues

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your travel agency such as serving customers, procuring supplies, keeping the office clean, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 1,000th customer, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch a new location.

Management Team

To demonstrate your travel agency’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in the travel agency business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in travel agencies and/or successfully running retail and small businesses.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you serve 50 customers per week or 100? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets : While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your travel agency, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a travel agency:

Location build-out including design fees, construction, etc.
Cost of equipment like computers, website/platform, and software
Cost of marketing materials and maintaining an adequate amount of supplies
Payroll or salaries paid to staff
Business insurance
Taxes and permits
Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your store design blueprint or location lease.

Travel Agency Business Plan Summary

Putting together a business plan for your travel agency is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the travel agency business, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful travel agency.

Travel Agency Business Plan FAQs

What is the easiest way to complete my travel agency business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Travel Agency Business Plan.

Where Can I Download a Travel Agent Business Plan PDF?

You can download our travel agent business plan PDF template here. This is a business plan template you can use in PDF format.

What is the Goal of a Business Plan's Executive Summary?

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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.

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Common Airline Business Models

As with any business, the main thing to consider when looking at airline business and airline management are the most commonly used airline business models. the business model, in general, determines the way one intends to make money with the airline. there are various possibilities and the ones outlined below only show a generic and most common set of business models available..

There are really 5 main airline business models which are being used by the majority of airlines around the world. Of course, those airlines tend to add their own tweaks to each model in hope to get ahead of competition, but still – the framework remains within one of those 5. I have also added a sixth airline business model, which I called a hybrid model, as some airlines lean towards combining two or more of the available models to their benefit.

I’ll present the list of typical airline business models here, and later on I’ll try to explain a bit on how they work and where they see possibilities of obtaining the revenue they need to make money and continue profitable operations. So those are the five models (+ the hybrid):

Legacy airlines (also known as Full Service Network Carriers)
Low cost airlines (Low Cost Carriers)
Charter Airlines (Holiday Carriers)

Regional Airlines

Cargo airlines.

Hybrid Airline

Legacy Airlines

A Legacy Airline is, at least in Europe, most often a former national airline which has been privatized to some extent over the years. Those airlines have generally a fairly large fleet, which is quite diversified as they are operating all sorts of routes, starting with long haul through medium range (short haul) and regional flights. Those airline business models have been around probably ever since airlines existed.

Legacy airlines have also the benefit of owning (at least a share) of relevant other aviation services such as handling companies at their hub airports, maintenance facilities, catering companies and the like. This may seem a benefit at first glance, but doesn’t always turned out to be one. I will write a bit more on why that is later.

Here are the main income drivers for legacy airlines:

Good reputation, which provides for good business with corporate and governmental clients
A broad set of connecting flights, allowing for long haul journeys from small airports on one ticket, with one airline
Increased comfort through on board meals, baggage charges which are included in the main fare and airport lounges for business and first class passengers
Very diversified fares, starting with almost low cost “last minute” or “first minute” tariffs and ending with really expensive business class and first class seats
Convenient loyalty programs which offer reasonable rewards for travelling with a given airline (or, more frequently, with a given airline alliance)
Reliable and slowly changing timetable, leaving passengers with a decent level of security with respect to flight connections they require

In general, legacy airlines and similar airline business models can be thought of as reliable, having good customer service, predictable and fairly decent on board service and on board entertainment and leaving some benefits in the form of loyalty programs for frequent flyers.

Low Cost Carriers

The idea of Low Cost Carriers started in the United States, but it’s certainly experiencing a rapid development in Europe at present. I can’t think of a single European who does not remember the advertisements of flights offered per 1 Euro before the legislation on advertising really kicked in on the LLCs. As the name suggests, Low Cost Carriers are huge on reducing costs to the bare minimum and making people believe (rightfully, in most cases) that they are being offered the lowest fare possible on a given route.

The low cost business models assume that price sells itself while, of course, being quite generous on advertising campaigns as the passenger needs to know that the given low fare is actually available on the market.

As all Low Cost Carriers need to comply with the airline regulations which apply to all airlines, regardless of airline business models used, they do not save money on things like maintenance (although they do to a certain extent in a legal way, which I will write about in a different post). Therefore, they need to save on other things. The savings are generally based on passengers not getting expected benefits from their ticket, but having to pay for them instead. This fact changes the way we perceive flight ravel quite dramatically, but again, this will become the subject of a different post.

Here’s what will generally not be included in a standard airfare and charged extra from passengers who actually need the service:

In-flight meals. There will be none served “for free” (meaning included in the airfare). Rather, many meals and drinks, including alcohol, are available for purchase during flight at prices significantly exceeding typical market value.
Reserved seating. Low cost airline business models generally assume what is called “free seating”, which means that the first passenger in gets the best seat. This means savings on the reservation and boarding system as well as additional income, because many Low Cost Carriers offer paid “priority boarding” which means that passengers who pay additional fees are allowed to board the aircraft before the other ones.
No baggage (or very limited baggage) included in the airfare. This means that passenegers generally need to pay additional fees to have their luggage transported with them.
Additional charges for things such as payment by credit card online. These things often seem obvious to airline passengers, but they are charged additional fees in low cost airline business models.

As you can see, as the result of the actions mentioned above, the overall cost of a transfer may not be too much different to that presented by legacy airlines. However, quite often this is still beneficial to most passengers as people are likely to resign of additional service for the purpose of a lower fare.

Most low cost airline business models also take advantage of other savings possibilities, which are not entirely associated with charging passengers for services, which for quite a long time have been considered as naturally included in the fare. Those savings come from:

A very unified monotype fleet, which allows for saving coming from maintenance, employer costs associated with type diversification and major discounts from aircraft manufacturers on new aircraft (which can be sold used for a price similar to the price of purchase)
Very extreme contracts with maintenance providers forcing them to pay penalties for many delayed or cancelled flights, regardless of what actually caused the technical issue
No connecting flights. The low cost airline business models assume that the only connection that is being offered is point to point. Passengers wanting to take advantage of connecting flights must re-check-in at their transit airport. This saves much on reservation software and check-in fees as well as reduces costs associated with delays and passengers who missed their connecting flight.
Special arrangements with regional or low cost airports, which gives the Low Cost Carriers a dramatic advantage in landing fees and other associated costs. This is possible due to the volume of passengers they are forwarding to and from those airports.

The low cost airline business models have caused a dramatic shift in the way air transport is being perceived today. They are a very important factor of local economics, assuming that by local we mean an area the size of the European Union.

Charter (Holiday) Airlines

Charter airline business models dwell on holiday excursions offered by several companies offering holiday trips all over the world. In most cases, they do not sell individual tickets. Rather, they sign appropriate contracts with travel agencies for the transport of a given number of passengers to a given location throughout a year. It becomes the travel agency’s responsibility to fill the aircraft with passengers.

In some cases, one aircraft may be chartered by more than one travel agency if the destination is rare enough to cause one tour operator not being able to fill the aircraft. However, also in that case, the charter airline is secured as the entire aircraft is being sold.

There are several advantages to such airline business models, such as:

No direct sales, which makes making investments into marketing and reservation systems unnecessary.
Secured cash-flow provided appropriate agreements with tour operators are signed before each fiscal year
Low cost customer service issues, as the charter operators often use the techniques applied by low cost airline business models such as no included meals on board or payment for additional luggage.

The main problem of charter carriers is to obtain proper contracts with tour operators. Supply quite often exceeds demand in this market, although this varies from country to country and is highly dependent on the travel characteristics of the given nation.

Regional airline business models, as the name suggests, aim at transporting people from smaller, regional airports to larger hubs or between those airports and thereby improving the given countries overall social movability.

The regional airlines tens to find their income streams from:

Tickets sold on minor routes with frequent travelers, especially in areas where alternative means of transport are difficult, costly, inconvenient or a mix of all of those attributes
Agreements with large companies which need to provide their employees with a viable means of transport from home to work
Government subsidies for local areas which need to be connected with the rest of the world despite of it being economically unviable
Flying in a franchise for other carriers (mainly legacy airlines) and “feeding” passengers to their hubs for further travel, especially on long haul flights.

It also needs to be said that those airlines generally encounter slightly smaller operating costs due to the usage of smaller aircraft, cheaper regional airports and a significantly smaller number of passengers which translates into much lower booking and ticketing costs.

Cargo airline business models are pretty self-explanatory. Those are airlines which make their living out of transporting good for forwarders or big shipping companies. Those airlines generally operate at night and do not have any costs associated with the transport of people. However, they are highly dependent on proper contracts with forwarding and shipping companies, which generally require a very high level of service. This in turn means for the cargo airlines additional costs associated with ensuring absolutely perfect reliability.

Hybrid Airlines

There are about as many hybrid airline business models as one could possibly imagine. Those include legacy airlines transporting cargo to their destinations, offering their own low cost carriers or franchising out their regional routes to other airlines in order to achieve proper feeder traffic.

There are still many options for new and unexplored airline business models. Let me know of any ideas you might have or other models which you have experienced and which do not fit to any of the ones described above.

13 comments on “ Common Airline Business Models ”

Thank you, well-written and useful article. Would be appreciated to have examples for each category.

Thank you, I’m glad that you enjoyed the article 🙂 Regarding examples, those could be:

Legacy airline: Lufthansa, Low cost carrier: Ryanair, Charter airline: Thomas Cook, Regional Airline: Etihad Regional, Cargo Airline: BlueBird Cargo, Hybrid Airline: Monarch

Many of the large players tend to invest in all other areas of aviation For example for Lufthansa we have also Lufthansa Regional, Lufthansa Cargo and Germanwings.

Hello Mike. I really enjoined reading this article. hope to see more from you. wondered if you can write a bit about Business model of air cargo players. kind regards

I’m not really an expert in cargo operations. I know that in many cases the operator is working for a large shipping company, like FedEx or TNT. This means that in some cases an aircraft with the shipping company’s livery is not actually operated by the shipping company, but by a third party who, basically, charters their aircraft on a regular basis. Such contracts can be quite strict, as of course delays and cancellations are out of the question 🙂

HI mike, crystal air cruises are lunching a new luxury world tour service in August, what category will that fall under?

Good way to promote an interesting product 🙂 Although probably not for my pocket at the moment 🙂 I would say that’s a charter holiday flight, although with a very specific customer range.

Great idea, by the way! Would love to try it!

Hello Mike, I am really interested and I have a question for you. Is it possible to get in touch by email?

Of course, just drop me a line at contact(at)airlinebasics.com

Looking forward to hear from you!

Hello Mike ,

Interesting arrival .

What about an airline servicing the nation as a domestic and performing for tourists for domestic travel targeted for leisure, while also serving International flight ( regional flights). And as well proving both cargo services .

Would it, still be hybrid or whah ??

Sorry “interesting article “ Typo error

Hi Mike, interesting. And if i may ask you, where would you put Etihad,Qatar and Emirates on those business models and would u be able to briefly explain why?

Thank you Ozman

Hey, I want to know more about the alternative models: (1) high fare full service network carriers. (2) low fare high service network carriers. (3) High fare high service carriers. (4) low fare low service carriers ( point-to-point)

Can I get the citation for your text? pls urgent

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Airline Business Plan

Executive Summary

Market factors favor inauguration of a new airline to meet the demand for additional, higher-quality passenger and cargo service linking Western Europe with the rapidly expanding markets of Southeastern Europe and Turkey, and linking Southeastern European destinations, via Western European hubs, to trans-Atlantic and global destinations.

This new airline will base its business and marketing strategies on achieving high, and profitable, load factors through absorption of unmet demand in three key air-traffic categories: unserved and under-served routes on which high unmet demand currently exists or can be readily developed; serving key niche markets where demand is either unmet or poorly served; and 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.

In addition, the proposed new airline will be designed around, and operated utilizing, the most up-to-date electronic, informational, and aviation technologies to ensure low operating and marketing costs, maximum efficiency in deployment of its resources, and a high level of customer service and convenience. And it is this final element – dedicating the airline, its staff, and its organization to providing a high level of customer service and convenience, and efficiently meeting the needs, wants, comfort, and safety of the passenger – that will assure the proposed airline’s rapid acceptance in the marketplace and its long-term growth and success.

Particularly in the post-09/11/01 environment, experience in Europe has shown that those carriers which can maintain a “mean-and-lean” operation while still meeting the needs and desires of the traveling public, with the right fares, will not only survive, but can prosper.

The six key characteristics leading to the success and profitability of this new carrier will be:

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

In short, the goal of this new airline is to be known to the passenger and the cargo customer by its proposed motto: “We’ve got a job to do, and we do it every day – for you!” A key element contributing to the success of this new carrier will be its organizational and management team. Leading this team is Balkan Consortium Holdings USA, Inc. (BalkConsort), a U.S. corporation that is regionally based in Southeast Europe and which knows the region and its business needs. BalkConsort, together with its partner companies and associations throughout the countries of Southeast Europe and beyond, identifies business and profit opportunities and develops projects and strategic partnerships to implement and benefit from them.

As explained in the Company Summary that follows later in this business plan, BalkConsort USA’s interest and ownership in the proposed airline will transfer first to a new off-shore holding company, BC Holdings International Ltd, and then to a daughter company registered in a member state of the European Union (“BalkConsort EU”), both of which will be established prior to the airline’s start-up. Due to current European Union requirements that E.U. nationals hold the majority interest in an E.U.-flagged carrier, and the importance of an E.U. air operators certificate (AOC) to the new airline’s overall business plan, a majority ownership stake in the new airline, either directly or through “BC Holdings EU,” must be by E.U. nationals.

Joining the BalkConsort USA/BC Holdings International team are aviation, finance, and marketing experts with long and successful track records, including extensive experience organizing and managing other start-up airlines of both a regional and global scope. This organizational and management team, which is described in greater detail in the section of the business plan dealing with the Management Team, will help reduce the risk and ensure the success of the proposed new carrier.

1.1 Objectives

The proposed airline will have as its primary objectives the following elements:

To establish and operate a new regional airline aiming specifically at linking Western Europe with the rapidly expanding markets of Southeastern Europe and Turkey, and linking Southeastern European destinations, via Western European hubs, to trans-Atlantic and global destinations.
To provide service and absorb unmet demand in three key traffic categories: unserved and under-served routes on which high demand currently exists or can be developed; serving key niche markets where demand is either unmet or poorly served; and 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.
To implement an organizational and marketing strategy that will, beginning in the first year of flight operations, achieve average passenger load factors in the 65-85 percent range, depending on route and season, and increasing thereafter to the 75-90 percent range, thereby maximizing revenues and return on investment while minimizing risk.
To achieve revenues in excess of [XYZ] million USD per quarter within the first six months of flight operations, and exceeding [XYZ] million USD per quarter, by the end of the first year.
To achieve net operating profits in the [XYZ] percent range within the first 12 months of flight operations, an annualized return-on-investment of approximately [XYZ] percent by the end of the second year of operations, and steady growth enabling rational expansion of the airline thereafter.
To achieve the projected results starting with three mid-to-large-size regional aircraft, growing to five by the end of the first year of operations, similar to the 99-passenger British Aerospace Avro RJ100 or 85 – 99-seat Avro RJ85 regional jet aircraft, obtained on either a dry-lease or purchase basis; supplementing those aircraft with larger, longer-range passenger aircraft and cargo liners on a charter or wet-lease basis to serve peak-demand and intermittent routes and periods, as well as cargo demands, as called for by the business plan; and incrementally expanding the fleet size and scope on a dry-lease or purchase basis to at least double its initial capacity by the beginning of the third year of operations to accommodate projected passenger and cargo growth in the business plan’s out-years.
To gear operations, and present a professional, serious, growth-oriented image from the outset, that will set the stage for reasoned, planned expansion, mirroring growth rates projected for the first year of operations, and that will enable the airline to extend its regional scope and, in future years, to transition from its initial regional status into a larger continental and intercontinental carrier.
As an element critical to achieving the airline’s other key objectives, to identify and develop key interline alliances, cooperations, associations, and partnerships with other larger, more established, and highly regarded airlines both within and beyond the target region that will enable the proposed airline 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.

1.2 Mission

The proposed new airline’s mission, simply stated, is to fill a niche in the growing air-travel and cargo markets linking Western Europe, and points beyond, to Southeastern Europe and Turkey; to achieve high, and profitable, load factors by identifying and serving key routes and city pairs currently unserved, under-served, or poorly served, and where significant unmet demand exists; and to set a new standard for air service and professionalism both within the target market region and beyond.

By utilizing the latest aviation, electronic, and informational technologies, and by designing effective and efficient systems and building in quality control from the outset, we aim to ensure the highest level of service, operations, and safety, all based around the needs, wants, comfort, and convenience of the passenger and the cargo client. This combination of technology, service orientation, and quality oversight will help keep costs at a minimum and maximize profits to the airline and its investors. It also will help build the strong customer satisfaction and excellent reputation that will enable the airline to build solid, and crucially important, interline arrangements necessary to expand its scope and customer attraction in the early stages, and which will lead to continued long-term growth both within the target market area and, looking toward the future, beyond.

In short, this airline wants to be known by its proposed guiding motto: “We’ve got a job to do, and we do it every day – for you!”

1.3 Keys to Success

In descending order of importance, the five critical keys to success for the proposed new regional airline are:

Employing an experienced, highly professional management team that combines vision; realism; financial ability; solid knowledge of the aviation business; familiarity with, and belief in, the utilization and benefits of the latest aviation, electronic, and informational technologies; on-the-ground knowledge of the region and markets to be served; realization of the crucial importance of an organization’s personnel to its success; and a total familiarity with, and commitment to, the overall mission and goals of the proposed new airline.
Intelligent, progressive, and aggressive marketing that identifies the airline as a different kind of player, one that is sharper and smarter, and with a higher level of professionalism and operational standard than is the norm in the target region. Concentration on safety, with highly trained, dedicated, and professional personnel, caring for the passenger and the passenger’s needs and wants, the advantages offered by advanced technology, and straightforward, understandable, highly competitive tariffs and fare pricing, all will form key pillars of the marketing strategy.
Identification, through careful market research, of unserved or under-served routes and city pairs in the target market area with sufficient passenger demand to enable high load factors and profitable operations utilizing the category of aircraft envisaged.
Use of an all-jet fleet of newer, modern, Western-built regional aircraft that offer a high level of comfort, safety, and fuel and operational efficiency and flexibility, which meet all normal aviation standards, and which offer sufficient, but not excessive, passenger and cargo capacity on the envisaged routes.
Use of advanced electronic and information technology to reduce staffing and other operational costs; expand the potential market base; readily capture sales opportunities; simplify and speed passenger, baggage, and cargo handling; and enhance customer convenience and satisfaction.

Additional important, though less critical, keys to assuring the airline’s success include the following:

Identifying, negotiating, and entering into, in the pre-operational stage and early on, beneficial associations, cooperations, and partnerships with larger, more established, highly regarded carriers both within and beyond the target market region to offer interline arrangements, through fares, frequent-flyer mileage sharing, and convenient hubbing and long-distance onward connections to passengers. Successful execution of this element of the business plan is crucial to the overall success and growth of the airline, and must be kept in mind in the organizational plan and structuring of the airline.
Establishing a high level of operational oversight and quality control that will ensure that the airline always lives up to its marketing commitments and fulfills the promise of a high level of service, customer satisfaction, convenience, and safety, at a reasonable, highly competitive fare.
Avoiding the temptation to go head-to-head with established carriers on routes that already are well-served, unless solid evidence exists of additional, significant pent-up demand, or widespread customer dissatisfaction with existing services.
Maintaining flexibility that enables the airline to always respond and adapt to changing market conditions and opportunities, without being erratic, and employing equipment, scheduling, and staffing on a basis that is sufficient to get the job done properly, efficiently, and at a high rate of return, without “overkill” or fielding costly excess capacity or, conversely, unduly cancelling scheduled flight operations.
Identifying, developing, and quickly and cost-effectively exploiting opportunities for new markets, new market concepts, and expanded sales potential.
Supplementing regularly scheduled passenger service with both regularly scheduled and also special cargo services when and where sufficient demand exists, and also with seasonal, peak-period, and other intermittent passenger services 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. Larger, longer-range, or specialized aircraft may be employed on a charter or wet-lease basis to provide these supplemental, but potentially highly profitable, passenger and cargo services.
Looking to combine the core aviation business with ancillary marketing concepts and activities and ground-based operations that support, supplement, and complement the aviation elements of the business, including such activities as package-, group-, and charter-travel program offerings; value-added sales and customer services, both land- and Internet-based; construction and operation of enhanced passenger-, baggage-, and cargo-handling facilities and services; and other logical business pursuits both within and outside the immediate aviation business.
Avoiding growth for growth’s sake, and instead looking for solid niche-enlargement opportunities that will allow incremental, but always profitable, expansion.

Company Summary

The plan for the envisaged new regional airline is an outgrowth of the market research and regional experience of Balkan Consortium Holdings USA, Inc. (BalkConsort), garnered over a nearly three-year period, beginning in mid-1999. BalkConsort, which is proposing to found the new airline, is a U.S. corporation registered in the State of Delaware and headquartered in Chicago, Illinois, with a Southeastern European regional headquarters located in Panorama, just outside Thessaloniki, Greece. BalkConsort, together with its partner companies and associations throughout the countries of Southeast Europe and beyond, identifies key business and profit opportunities and develops projects and strategic partnerships to implement and benefit from them.

Early on following its establishment in the region in mid-1999, BalkConsort identified a growth opportunity in the aviation and travel sector in Southeast Europe. This opportunity is occasioned by growing economic, political, and social stability, and consequent significant business expansion, within and between most of the countries of the region; vastly expanded outside contact and support with and for the region, occasioned by the aftermath of the Bosnia and Kosovo conflicts; extensive UN, NATO, and other international-organization operations in the region; and such multilateral initiatives as the Stability Pact for Southeast Europe, the Southeast Europe Cooperative Initiative, and the Southern Balkan Initiative.

Additionally, the company has determined that maximum potential from this growth opportunity can be obtained not only by linking certain key destinations within the Southeast European region, but by linking the region with carefully selected destinations in Western Europe and beyond. It further has identified significant unmet demand, and significant short-, medium-, and long-term growth potential, represented by Turkey and the rapid growth of the Turkish economy and its domestic and international air-travel market, particularly in light of Turkey’s growing economic and political integration with the European Community and Europe as a whole.

Ancillary Travel Services In response to the growing travel-market potential of the region, represented in particular by the large expatriate community living and working in parts of the region, including Bosnia-Herzegovina, Kosovo, the Former Yugoslav Republic of Macedonia, and Albania, BalkConsort established Hassle-Free Holidays, a package-travel wholesaler and retailer, in mid-2000.

Both Hassle-Free Holidays and its partner organizations are expected to feed customers and traffic to the regional airline and utilize the airline’s services when possible, and will act as additional low-cost outlets for marketing the airline through their planned electronic-commerce websites. Locally established retail travel agencies can serve as a base for the airline’s sales and operations in the key niche market of Kosovo, and Hassle-Free Holidays already has established other close links with retail agencies in Skopje, Thessaloniki, and Athens, and is working on developing similar relationships with agencies in Istanbul, Ankara, Tirana, and elsewhere both within and outside the Southeast European region.

Other related company activities of BalkConsort BalkConsort currently maintains strategic partnerships or associations with companies in the following functional and geographic areas, all of which can serve to support, augment, or supplement the proposed new airline’s core aviation business:

Construction, construction management, and construction technology (U.S., Greece, Turkey, Albania).
Environmental engineering, including water and waste water treatment and solid-waste management (U.S., Italy).
High-level security, demining, and explosive-ordnance removal (U.K.).
Aviation services and airport development (Albania).
Travel services and package travel development and marketing (Greece, FYRO Macedonia, Kosovo, global).
Free trade zone development (U.S.).

The company owns 50 percent of a private U.S.-Albania joint venture limited-liability company, Rruget e Mira sh.p.k., founded in early 2001 and based in Tirana, Albania. The joint-venture company is set up to undertake primarily public road and street construction and reconstruction projects, as well as general construction and development projects, in Albania.

It also is considering tendering, either on its own or more likely in conjunction with a major international engineering and construction firm, for the build-operate-transfer (BOT) concession the Government of Albania will let for the planned new passenger terminal for Rinas (Tirana) International Airport. In addition, BalkConsort also holds exclusive license rights to two advanced U.S.-developed construction technologies in the 10 countries of Southeast Europe, including Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Greece, Macedonia, Slovenia, Romania, Turkey, and Yugoslavia (including Kosovo).

These technologies, combined with other building technologies, products, and methodologies the company and associated companies represent, can offer significant advantages to the new airline should it pursue, either on its own or in conjunction with BalkConsort, development and construction of new passenger-, baggage-, and cargo-handling facilities and other related installations.

Legal relationship and company status of the new airline BalkConsort intends to spin-off the proposed new airline operating company into a separate legal entity under the continued partial ownership and general oversight of BalkConsort, acting as a holding company. Investments in the new airline may be made either through BalkConsort, as a share of its total capital holdings, through an E.U.-based daughter company described later in this section that will be BalkConsort’s proxy for its interests in the new airline company, or directly into the new airline operating company.

To obtain maximum flexibility in terms of certification and flight and landing rights, it is important that the primary carrier operate under an air operator’s certificate (AOC) granted by an European Union country. Since current E.U. requirements stipulate that European Union nationals (companies and individuals) hold the majority ownership interest in any E.U.-flagged carrier, it is critical that overall ownership in the new airline be structured in such a way that the majority interest is held by E.U. nationals.

According to its overall organizational plan, BalkConsort anticipates reorganizing itself into an off-shore holding company (BC Holdings International Ltd), most likely registered in Anguilla, and transferring the current share ownership of Balkan Consortium Holdings USA, Inc. to the new off-shore holding company. BalkConsort USA will then become a daughter marketing company of BC Holdings International, with a majority of its shares owned by U.S. stockholders (necessary for it to fulfill its role as a U.S. marketing company capable of winning U.S. government contracts reserved for U.S.-owned companies), and a minority share owned by BC Holdings International as a holding company. The corporate organizational plan then calls for the establishment of a daughter marketing company in the E.U., similar to BalkConsort USA, to be held partly by BC Holdings International as minority shareholder and with a majority of ownership held by E.U. nationals. This daughter company (BalkConsort EU) may own all or part of the new airline operating company, provided that majority ownership in the airline meets E.U. requirements for an E.U.-flag carrier.

BalkConsort (in its new identity as BC Holdings International and as “BalkConsort EU”) anticipates maintaining or appointing positions on the new airline operating company’s board of directors proportional to its direct or indirect ownership interest in the airline, with other board positions held or named by other investors in the airline proportional to their ownership interests. Additionally, some board positions will be held by non-equity members, nominated by BalkConsort and the other investors and strategically selected by the board, whose presence and guidance can serve to advance the new airline’s operations, business interests, financial positioning, and expansion. It is anticipated that the new airline operating company will be established as a limited-liability company in one or more E.U. countries, the country or countries to be determined based on tax requirements and relative tax and business operating advantages, and other substantive considerations. For instance, registering and basing the company in Luxembourg may offer significant tax, as well as logistic, advantages to the new airline.

Meanwhile, it may be necessary to register a subsidiary company in another country, such as Switzerland for example, to obtain necessary landing rights or slots in that country. Furthermore, if – as is being considered and is detailed elsewhere in this business plan – the airline acquires British-built aircraft, it may be advantageous from the perspective of obtaining British export financing to base the company outside the U.K. Additional AOCs may be obtained by subsidiary carrier companies established outside the E.U. for substantive reasons such as outlined above. The final company structure, including ownership arrangements, national company registrations and AOCs, and basing, will be determined based on consultation and negotiation between BalkConsort and prospective investors, and with the expert guidance of its project team of tax, business, and aviation advisors and consultants, and others as may be needed.

2.1 Company Ownership

It is anticipated that a portion of the ownership in the new airline operating company will be held by BC Holdings International Ltd, most likely through an E.U.-registered daughter company, along with one or more strategic private investors. Investment in the new airline operating company may be made directly in the airline operating company or through investment in BC Holdings International or its E.U. daughter company as the holding company for the airline, with shares apportioned according to the equity investment involved. However, as previously stated, the majority ownership stake in the new airline must be held by E.U. nationals for the airline to qualify for an E.U. AOC, considered an essential element of the overall organizational plan. BalkConsort is prepared to discuss and negotiate specific ownership arrangements in detail with prospective investors. Equity requirements are discussed in the Start-up Summary that follows.

For planning purposes, any subsidiary airline companies established by the parent airline operating company, as described in the previous section, shall be considered to be wholly owned subsidiaries of the parent airline operating company, although individual sub-ownership arrangements may be made in individual cases of such subsidiary companies, particularly in cases where local ownership interests might be required by prevailing law in the countries in question. Balkan Consortium Holdings USA, Inc., the current entity formulating this proposal, is a privately held Delaware (U.S.A.) corporation. As noted in the previous section, a new off-shore holding company, BC Holdings International, Ltd., will be set up, with stock ownership in BalkConsort USA transferring to the new entity. It is anticipated that subsequently BC Holdings Ltd. will set up an E.U. daughter company which would then hold a share of the new airline, based on its relative stake in the airline.

2.3 Company Locations and Facilities

Financial, traffic, and other studies currently are underway to determine the optimal prime basing location for the proposed new airline. Among the locations under study are the following eight:

Luxembourg, Luxembourg;
Berlin, Germany;
London City Airport, London, United Kingdom;
Stanstead Airport, London, United Kingdom;
EuroAirport, Basel/Mulhouse, Switzerland/France;
Amsterdam, The Netherlands;
Cologne/Bonn, Germany;
Munich, Germany.

In selecting a location to base the new airline, the following 11 major considerations are being evaluated, in roughly descending order of relative weight:

The tax and business regime in place in the selected locale. A low profit tax rate and a regulatory and political climate supportive of business, and particularly foreign investment, are key considerations.
The availability of relatively low-cost facilities suitable for basing both the business and aircraft-support operations, as well as the aircraft, is another key consideration.
The availability of sufficient landing and parking slots and gate facilities to permit the desired level of service at the base airport.The ability to interconnect with one or more major carriers for onward interline arrangements both within Europe as well as to trans-Atlantic and global destinations.
A location that, given the maximum range of the selected aircraft, will enable non-stop flights to the most important destinations within the new airline’s service area in Southeastern Europe and Turkey and, at most, one-stop service to more distant or secondary destinations.
The existence of relatively high-traffic volume between the base location and one or more key interchange points to provide sufficiently high load factors between the base location and onward destinations and points of origin.
The existence of a reasonably high level of cargo traffic, including opportunities for interline trans-shipment of both inbound and outbound cargo.
The support of a larger airline with which the proposed new airline can establish a particularly close working relationship.
The support of local airport and aviation authorities to facilitate establishment, certification, and ongoing operation of the airline and its aircraft.
A location outside of the U.K. to facilitate British trade finance on acquisition of the new aircraft, should decisions be made to acquire British-built Avro aircraft as previously noted, as well as to purchase, rather than lease, the aircraft.

A range of other factors, including the availability and cost of local skilled workers, the growth potential of the market selected, year-round climatic and weather conditions as they may affect flight operations, the “cache” of the locale for marketing purposes, the cost and convenience or difficulty involved in command and control of the airline involving key personnel, some of whom may be based at various other locations, and so forth.

It is anticipated that most routine maintenance will be performed at the base location, with some more minor maintenance and repairs relegated to other locations in the route network. In both cases, most of this routine maintenance and repair work will be contracted out to established and experienced service providers, reducing the need for the new airline to maintain its own extensive maintenance and repair teams and facilities. The airline will, however, perform its own normal line maintenance at home base and will utilize locally available services away from home. Aircraft also may be based at key airline hub locations away from the home business base as well. With acquisition of British-built aircraft, major overhauls and heavy maintenance may be performed at British Aerospace’s Woodford facility in the U.K. on a selective basis. In addition, it is anticipated that separate fixed-cost maintenance agreements will be entered into for both the airframes and the engines, or these elements will be included in any dry-leasing arrangements entered into.

Estimates for total labor and spare parts costs have been calculated as a fixed per-hour cost and included in the portion of this business plan dealing with anticipated operating costs. Sufficient apron and hangar space for staging, parking, and storing, as needed on a short-term basis, up to the entire initial five-aircraft fleet will be required at the base location and any other hub locations selected. As the fleet expands over time, additional parking and storage space will be needed either at the main base location or at regional hubs in the airline route network. Additionally, sufficient office space, preferably in one central location at or near the base airport, will be required to house the airline’s main administrative offices and its central reservations system. While the airline may consider establishing its own sales offices in key market locations, in general sales will be handled through a combination of Internet marketing utilizing the airline’s own website as well as other Internet travel websites, designated general sales agents in given locales, and regular travel agencies everywhere.

As demonstrated throughout this business plan, it is clear that a strong growth potential exists for the future, and the airline will gear itself toward sensible, well-based growth and solid financial and business planning. The proposed new airline has the potential to become a strong, well-established, and – as the numbers indicate – extremely profitable carrier, starting from now.

3.1 Service Description

In reviewing the planned services to be offered by the proposed new airline, this plan will divide services into two main categories: passenger services and cargo services. Within each category, the service strategy, as well as general services to be offered, are presented and reviewed.

3.2 Competitive Comparison

Beating the former source of competition is both a reasonable and an essential goal. But comparing favorably, and even standing notably above, the latter also is an important objective since these airlines will represent direct competition to the new airline on many of its projected key routes, despite efforts to avoid such competition to the extent feasible. Fortunately, several of the key distinguishing characteristics planned for the new carrier not only will enable it to fare extremely well in both levels of competitive comparison, but will actually be achievable at a savings in cost and resources. In other words, by being smart, the new airline can be significantly better than its competition while at the same time accruing lower overall costs, a remarkably good combination.

Safety, actual and perceived;
Cost, and range of fares offered;
Destinations served;
Availability of seats;
Availability of fares;
Convenience of flight schedules, times of arrivals and departures;
Frequency of flights;
Connections, including reliability and convenience of connections;
Nature of flights: non-stop, direct, number of stops, aircraft changes;
Availability of different classes of service;
Onboard comfort, service, meals, and amenities;
Type of aircraft, including jet or non-jet, size, and speed;
Age and condition of aircraft;
Ease and efficiency of reservations and ticketing;
Reliability and on-time departures and arrivals;
Ground service;
Reliability and quality of baggage handling;
Friendly, competent service in reservations, check-in, and in the air;
Overall reputation of airline;
Nationality of carrier;
Factors of personal preference.

While no airline probably can excel in every one of these areas, the closer an airline comes to “excellent,” or at least “good,” ratings in each of these key areas, the better it will fare in its competitive standing. Both in the overall design of the airline and its basic operational features, as well as in its management, quality control, and day-to-day operations, the proposed airline is expected to stand out positively in almost every regard.

Competition with Southeastern European carriers While not all Southeastern European carriers fit the stereotype presented here, and several are in the process of privatization and ostensible upgrading, most do operate at a lower level of service than is customary in Western Europe. It is not uncommon for carriers in the region to operate older Soviet-built equipment (perceived to be less comfortable, less safe, and less reliable than its Western competition – perceptions that often are accurate).

For instance, such competing airlines as Avioimpex of the Former Yugoslav Republic of Macedonia, Albanian Airlines (Albania’s Kuwaiti-owned private carrier), ADA Air (a smaller private carrier in Albania with which BalkConsort has been partnered for certain purposes), Hemus Air and Bulgarian Airlines, both of Bulgaria, Tarom, Romania’s state carrier, and even Malev, the Hungarian airline, still operate Soviet-era aircraft in their fleets. In some cases, these aircraft are turbo-prop powered, and not pure jet. While often it is relatively inexpensive to lease such aircraft, their operating costs tend to be significantly higher than newer, more fuel-efficient Western-built aircraft, and their safety, reliability, and noise factors are often poor, in some cases limiting their ability to operate in some markets.

Service levels are poor in general, among both scheduled and charter carriers, which represent a significant part of the market, particularly in service to Kosovo and Turkey, the two niche markets identified for the new carrier. By utilizing modern, safe, reliable, and cost-effective Western-built regional jet aircraft, the proposed new airline will offer a far more attractive alternative to the traveler both from within and outside Southeast Europe, and will be able to operate with far lower fuel and maintenance costs than the competition. The comfort, reliability, speed, and safety of the new airline’s aircraft all will enable it to be the airline of preference for virtually all business, government, and organizational travelers from both within and outside the target region when traveling to or within the region, and it also will be preferred by most leisure and personal travelers, including those from with the target region, as well.

Greater reliability and punctuality of the aircraft, augmented by state-of-the-art navigational devices that permit operation under a wider range of weather and visibility conditions, will enable the airline to compete most favorably on those bases also, and will ensure the least likelihood of flight cancellations, postponements, and missed or late connections. On the basis of fares, the new airline will offer highly competitive fares which, in many cases, should be below those offered by its Southeastern European competition. Higher load factors, combined with greater efficiency both in operational costs as well as in reservations, ticketing, and check-in, will enable the new airline to be highly competitive from both a cost and a quality perspective, and will also enable it to retain a higher percentage of its revenues.

In short, the local competition, except in a few cases (such as Aegean/Cronus Airlines, and to a lesser extent Olympic Airways, from Greece; Adria from Slovenia; in some cases Malev, from Hungary; and the Turkish carriers) will not represent very strong competition to the new airline, and particularly in attracting the primary market groups at which the new carrier will be aimed. Finally, the new carrier will be seeking out, as part of its business and marketing strategies, routes and city pairs that offer unserved or under-served demand. That strategy also will help reduce the threat from competition, and will enable the carrier to further establish itself as the carrier of choice in Southeast Europe.

In most cases, the new airline will be competing with other carriers operating aircraft of a similar nature. Safety, comfort, convenience, and reliability, as well as in many cases cost, all are on a similar footing. To stand out from the crowd, the airline must do things either differently or better, or both, than its competitors, and it is here that both the design and the management of the new airline must be at their sharpest. The competition in this region will include such well-established carriers as Swiss International, Austrian, Tyrolean, Lufthansa, KLM, British Airways, Air France, Alitalia, Sabena, and others of that nature. More recent, lower-cost, and “hipper” start-ups such as EasyJet, Go Fly, Bluebird, Virgin Express, and others like them will represent even more challenging competition in some cases.

But unlike any of its competitors, which may employ one or two or several elements of the proposed new airline’s marketing strategies, informational and electronic technologies, and management techniques, none of them – none – employ the full range of those elements that the proposed new airline will employ. Consequently, the proposed new airline will be the real equivalent of a whole new generation of airline (regional or beyond), and will represent the kind of revolution in the aviation world that Pan Am, Icelandic, Laker Air, PEOPLExpress, Virgin Air Atlantic, EasyJet, and Air Blue represented in their day (and in some cases, their “day” is still today).

In that regard, the new airline might well be known as “TechnoAir” given its extensive deployment of state-of-the-art marketing, reservations, ticketing, check-in, baggage- and cargo-tracking, and operational and safety technologies. The advantages of these technologies include a net cost saving to the airline, greater convenience and ease for the passenger, and an image and reputation that will cause the new airline to stand out from the pack. Combined with a staff and management that will be carefully recruited, selected, trained, and motivated to be the best of the best, and to be the most customer-oriented in the business, the new airline also will soon become known by its motto: “I’ve got a job to do, and I do it every day – for you!” In other key areas – routes, schedules, and fares – the new airline also will be carefully designed to either compete highly effectively or, alternatively, to go where the competition is limited or non-existent.

Fly Western-built aircraft, preferably pure jet.
Meet the standards to have a two-letter airline code.
Meet the highest standards for safety, reliability, and service.
Be accessible through normal reservations and ticketing systems.

Meeting these requirements, and negotiating the desired agreements, will be priorities from the outset in setting up the new airline. Additionally, partnering and interline arrangements will be carefully identified and sought that will offer the new airline strategic partnerships that will help give it the “cover” of larger, more established carriers, and also the status and service and growth potentials it will need to grow beyond its initial stage and to become a true presence in the aviation world.

3.3 Fulfillment

The primary issue regarding sourcing is the question of the type and source of aircraft to be employed in the new airline’s fleet.

Aircraft selection Several potential fleet aircraft and manufacturing sources are being considered and evaluated, including the following:

Airbus Industrie ATR72, A-300, A-310, A-320
Boeing 717, 737-500, 737-700
Bombardier Canadair Regional Jet CRJ
British Aerospace BAe 146-300, BAe 146-200QC*, Avro RJ85, RJ100, RJX85, RJX100
Embraer ERJ-145
Also, in an all-freighter configuration, the BAe 146-200QT** and BAe 146-300QT**

* QC = “Quiet Convertible” version allowing quick-conversion from passenger to full-freighter configuration; only five of these – the complete production run – currently are in service worldwide. ** QT = “Quiet Trader” all freight version, of which in service there are 13 in the 200 version and 10 in the 300 version.

With the exception of the turboprops ATR72 and the Saab 2000, all aircraft under consideration are pure jets. Given the strong “jet preference” among the flying public (for instance, Continental Express in the U.S. estimated that its load factors increased 33 – 50 percent when it switched from turboprops to jet aircraft, and similar results have been documented elsewhere, including in Europe), the overall greater speed and reliability, reasonably close operating costs (especially given the additional flights that can be operated daily), and the longer range offered by jets, the preferred aircraft type is a pure jet. It remains only to decide which is the “right” pure jet for the fleet.

A number of key factors have mitigated toward the BAe Avro RJ family of regional jets rising toward the top of the list as the probable aircraft of choice for the new airline. Among those factors are the following:

Relatively low per-seat acquisition cost.
Relatively low per-passenger-mile costs, given their added capacity over smaller regional jets, and high reliability factors in the newer versions (for instance, Aegean/Cronus Airlines of Greece, which operates six RJ100s on a very active daily schedule, has averaged above 99.6 percent departure reliability with its RJ fleet).
Complete pilot and maintenance intercompatibility between the various members of the family (RJ70, RJ85, RJ100, and now the new RJX family as well), giving added flexibility in flight and maintenance operations and reducing training and simulator costs.
Four-engine configuration which gives it an added safety factor (while also increasing operating costs, however).
Spacious, comfortable cabin interiors that offer the only seat, aisle, and overhead bin dimensions available in a regional jet that are equivalent to those on standard-size jets.
The option of flexible cabin and seating configurations that allow for varying the number of seats provided for various classes depending on demand, the number of seats abreast, types of seat coverings, the number of seats provided on a given flight, and so forth.
Availability of the aircraft from various sources on both lease and purchase bases.
The possible option of obtaining advantageous British export financing.\
Ability to service the aircraft in many locations on the projected service network and the availability of major overhaul capabilities at the manufacturer’s own facilities in the U.K.
Widespread passenger and industry acceptance of the Avro regional jets both within and outside Europe.

Seating capacity is an important consideration both from the point-of-view of capacity, load factors, and per-passenger-mile costs, but also from the point-of-view of “scope clauses” in pilot union contracts. In Europe, any airliner with 100 or more seats falls under the far more highly compensated “mainline” airliner contracts in place in the industry. Planes with 99 and fewer seats are considered “regional airliners” for contract and union purposes, carrying more economical compensation packages. One approach worth considering is to commence operations with one generation of aircraft with an option to return those aircraft to the lessor or manufacturer without penalty in an “upward trade” to acquire the newer generation aircraft when they become available.

Such options are commonly supported by manufacturers in their effort to market newer generation aircraft, and would enable the new airline to avoid any delays that might ensue from backups in the RJX build pipeline. Given the new airline’s stress on technology and the comfort of the passenger, combined with the very real considerations of lower operating and maintenance costs and greater flexibility, consideration of the latest generation of aircraft should be evaluated carefully, along with limiting seating to five abreast, including in Value Class as described elsewhere in this plan. However, factors such as initial acquisition cost, refurbishing costs, operating and maintenance expenses, reliability, operating parameters, customer preference, and financing packages available for purchase or lease all must be considered.

For purposes of the costing factors utilized in this business plan, acquisition and operating costs for dry-leasing new Avro RJ100 aircraft with a high-level of technical features and passenger amenities have been employed, with a cost comparison also made for purchasing the same aircraft. Adjustments would need to be made for other aircraft types or ages and acquisition methods.

Aircraft acquisition Another issue still being evaluated and which will be decided is the question of how to acquire the aircraft. For a variety of reasons, including the ease with which the leases can be cancelled by the lessor and the lack of “ownership” of the aircraft, wet leasing has been ruled out except for short-term acquisition of aircraft that would be employed in meeting peak demand-type services as outlined elsewhere in this business plan.

A number of leasing sources are available for the BAe Avro aircraft being considered, and some used aircraft also are available from time-to-time on the market from various sources. In addition, new aircraft can be acquired directly from the manufacturer on a variety of different plans and options, as well as used aircraft on occasion. Cost factors employed assume dry leasing of new Avro RJ100 aircraft in 99-seat configurations, with a comparison for purchasing. It is anticipated that finance guarantees up to 85 percent of the acquisition cost of the aircraft could be obtained from the Export Credit Guarantee Department of the United Kingdom (ECGD) for purchasing British-built aircraft exported from the UK.

3.4 Technology

Among the technological features the new airline will offer are:

Internet marketing and online reservations (e-reservations) and sales (e-sales) that will provide quick and easy access to airline schedules, flight availability, reservations, and ticketing to a wide range of customers worldwide. This eliminates payment of agency commissions and keeps costs low – savings that can be passed on to the customer.
Electronic ticketing (e-ticketing) which will enable passengers to obtain their tickets online and avoid the need to obtain paper tickets from airline offices, travel agencies, or at the airport. It also frees the airline from having to stock, track, and issue tickets and maintain paper trails of them. Again, more savings for both the airline and the customer.
Electronic check-in (e-check-in) that will virtually eliminate waiting in line to check-in for e-ticketed passengers, enabling them to confirm their identities, obtain their boarding passes, and check-in their baggage (and even purchase tickets upon check-in) utilizing a user-friendly kiosk that eliminates those last-minute frustrating waits to get to the counter. And it also greatly reduces the airline’s needs to staff check-in desks, control long lines, employ local contract ground staff, and expend money and resources on an antiquated system that only adds to the traveler’s inconvenience and frustration. Another win-win situation for both airline and passenger.
Electronic baggage tracking (e-baggage tracking) which will enable the airline to track any piece of baggage from check-in to final pick-up and claim. If courier services can track parcels as they move around the world, and enable customers to track their parcels using tracking numbers and online tracking systems, then why can’t the same system be used to assure that no passenger will ever again have to wonder where his or her baggage might be? There may still be contingencies (such as late check-in, lack of space, security restrictions, late connections, and so forth) that cause baggage not to be placed on a given aircraft, but at least both the airline and the customer can be assured that they both know exactly where the given item of baggage is at any moment, and when it might be expected to arrive at the destination. This could well be an exclusive feature of the proposed new airline since no other airline appears to be utilizing it at present.
Electronic cargo tracking (e-cargo tracking) is the same basic idea as e-baggage tracking, and will use the same basic system, only for tracking cargo and parcels.
Electronic quality control (e-QC) is another innovation that will enable technology to create a far better flying experience for the customer, give airline management and staff greater control over airline operations and performance, and save time, effort, money, and staff resources in the process. What is envisaged is a central electronic matrix that controls and monitors scheduling of aircraft, equipment, personnel, supplies, and support materiel, and responds to problems, excesses, and deficiencies.

Electronic financial control (e-finance) will enable complete electronic financial control and monitoring of the airline’s finances, clear advantages.
Additional technological features will be incorporated on-board the aircraft to provide flight crews with the latest navigational and communication technologies to assure the highest level of passenger safety and also airline reliability and punctuality. Included in this technology, in the case of the Avro aircraft, is all-digital ARINC 700 avionics with advanced Cat IIIb low weather-minimal landing capability to permit landings under the poorest permissible approach and visibility conditions.

Market Analysis Summary

The market combines a variety of elements all of which demand a higher quality of air service than often currently available:

Business travelers requiring convenience, reliability, speed, and schedules built around business needs.
Government and international organization travelers, requiring the same elements.
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.
The “Diaspora,” Personal and leisure travelers originally from the Southeast Europe/Turkey region, but now living and working in sizable numbers in the countries of Western Europe, with the same demands.
Western European personal and leisure travelers, primarily traveling on the airline’s routes between Western European points.
Seasonal (primarily summer, with some limited niche markets in the winter period) holiday travelers, primarily destined for Greece, Turkey, and the islands of the Mediterranean. Cost, reliability, convenience, and destination are their concerns.

4.1 Market Segmentation

A complete market analysis and segmentation will require a specific passenger and destination survey, the cost of which is included in the Start-up Costs for the airline.

Preliminary analysis (based on a variety of methods, including observation, interviews with travel- and airline-industry professionals, economic segmentation, future projections based on marketing plans, and experience with the region and market) for planning purposes, however, indicates the following approximate market segmentation overall (considerable variations, of course, would be anticipated depending on route, season, and other factors):

Business – 15%
Government and International Organizations – 10%
Regional Resident Personal and Leisure Travelers – 20%
Diaspora Personal and Leisure Travelers – 10%
Western European Personal and Leisure Travelers – 5%
Seasonal Holiday Travelers – 10%*

* The seasonal/holiday travel segment of the market to some degree distorts the overall market percentages, but might initially be anticipated for two reasons: first, it compensates for the drop in business and government travel that can be expected during the peak summer holiday travel season; second, a significant portion of this traffic is likely to be carried on flights employing specially chartered or wet-leased supplemental aircraft.

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Business Plans Handbook
Business Plans - Volume 09
Airline Company Business Plan

Airline Company

BUSINESS PLAN SKYTRAILS AIRLINE, LTD.

London Stansted Airport London, United Kingdom

SkyTrails Airline plans to establish itself as a niche player in the long-haul market of business travel. By continuously focusing on the needs of the premium-class business traveller, SkyTrails will provide the best value proposition in the markets it serves. It will offer customers a compelling value proposition: a high level of service and comfort at 50 percent of the current published business-class fare.

EXECUTIVE SUMMARY

The company, regulatory environment, market analysis.

Having successfully raised £1.3 million from angel investors, SkyTrails is now looking to raise £25 million from investors who are interested in the opportunity presented by SkyTrails and believe in its growth potential. This is a unique opportunity to invest in a new concept in the aviation industry which offers attractive returns and a clear exit strategy in the public markets within 3 to 5 years.

SkyTrails' aim is to establish itself as a niche player in the long-haul market of business travel.

By continuously focusing on the needs of the premium-class business traveller, SkyTrails will provide the best value proposition in the markets it serves.

SkyTrails is the project name for a new airline company that will focus on single class long-haul scheduled flights. SkyTrails will capitalise on the widening gap in long-haul travel between business and economy class. Based at London Stansted Airport (STN), SkyTrails will initially focus on the busiest transatlantic route, London to New York, by offering a STN-JFK service. SkyTrails will operate Boeing 757-200 aircraft configured with 80 seats which will provide a very spacious and pleasant environment. The aircraft will be equipped with the latest technology in order to enable the business traveller to use his time efficiently while travelling. The company will start by leasing two aircraft and expand its fleet to 6 aircraft by the second year of operation.

SkyTrails will be a "business to business" airline and will focus exclusively on the premium/business segment of the market. It will offer customers a compelling value proposition: a high level of service and comfort at 50 percent of the current published business-class fare. SkyTrails will charge £1,800 for a roundtrip ticket as opposed to £3,580 (for companies with high volume demand, SkyTrails will offer further discounts down to £1,400 for bulk purchase). In addition to an attractive price, SkyTrails will offer passengers considerable time savings, convenience, and will focus on creating a lifestyle appeal.

The business model contemplated enables the company to reach a break-even point with 40 passengers per flight (50 percent load factor) which significantly reduces the risks associated with typical airlines that need a greater number of passengers to break-even. In many ways, the SkyTrails model replicates the benefits of the very successful regional jet model on a long-haul basis.

By the end of the fourth year SkyTrails will achieve sales of £218 million, EBITDAR of £72 million and net income after taxes of £32 million.

Market Potential

The London-New York route is the busiest transatlantic route with over 3.8 million passengers carried in 1999. The Civil Aviation Authority (CAA) estimates that approximately 30 percent of passengers were business travellers (1.14 million passengers).
In 1999, over 2.65 million passengers in Stansted's catchment area travelled to the USA. Given that no airline currently serves the North Atlantic route from Stansted, SkyTrails will be uniquely positioned to take advantage of the unserved demand that exists.
Stansted is the fastest growing airport in Europe with 9.9 million passengers for 1999.It is the hub of low cost airlines Go Fly, Ryanair, and Buzz, all of which are experiencing tremendous growth and an increase in business travellers. They claim that as many as 40 percent of their passengers are travelling on business.
Stansted benefits from an Open Skies Agreement with the USA. This enables SkyTrails to operate flights to any city in the USA without having to obtain special rights under the Bermuda II Bilateral Agreement which apply to Heathrow and Gatwick.
SkyTrails has already obtained landing and takeoff slots at Stansted and JFK airports for its initial flights.
Total traffic from U.K. airports to the USA amounted to 16.2 million passengers in 1999. After launching the JFK route, SkyTrails will then be able to expand by targeting other attractive markets in the USA (Boston, Chicago, Washington, D.C., etc.) as well as other continents depending on the regulatory environment. With a break-even point of 40 passengers per flight, SkyTrails will also be able to target medium and low density routes offering an enormous potential for growth and an important competitive advantage.

It is important to note that during the first 12 months the operations will be handled by TravelAir which has ETOPS certification, thus taking away much of the operational burden from SkyTrails' management and ensuring a timely launch.

Markus Friedman, Chairman CEO of EBEL Watches (1991-1999) CEO of CWS (1964-1991)

William Scott, Founder and Managing Director Assistant to CEO, Southern Winds (airline in Argentina) (1999) Associate, Global Transportation, Chase Manhattan Bank (1995-1998) M.B.A., Columbia Business School (2000)/B.Sc. Economics, London School of Economics (1995)

Frederick Rodmann, Finance Director Assistant General Manager, Pegasus Airline (1992-2000) Audit Senior, Price Waterhouse (1986-1992)

Joseph Orr, Corporate Sales Manager Airline Manager, Lastminute.com (2000) National Account Manager, Virgin Atlantic Airways (1994-2000)

Oleg Schweitz, Marketing Director Director of Marketing, Paramount Comedy Chanel (1997-2000) Brand Manager, AT&T Communications (1996-1997) Marketing Manager, Warner Bros. (1993-1996)

Ken Loman, Technical Director Technical General Manager, Accountable Manager, Qatar Airways (1997-98) Technical General Manager, Accountable Manager, CityFlyer Express (1991-97) Project/Development Engineer, Air Europe (1988-91)

Non-Executive Directors

John MacDonald (Founder/Chairman CityFlyer Express 1992-1998)

Ryan Roland (Professor, Columbia Business School)

Competition

The London-New York route is currently served by British Airways (11x/day), American Airlines (7x/day), Virgin Atlantic Airways (5x/day), United Airlines (4x/day), and Continental Airlines (2x/day). These airlines operate out of Heathrow and Gatwick with wide-body aircraft (B747s, B777s, B767s, A340s, A300s, DC-10s) in a two- or three-class configuration. British Airways has introduced a fourth class of service, World Traveller Plus, which is equivalent to Virgin's Premium Economy.

By targeting such a dense route, SkyTrails initial market share will not be significant enough to be considered as a threat by the major transatlantic carriers. Existing players will only be able to react with price which is only one aspect of the SkyTrails concept and by no means the most important.

Key Success Factors

SkyTrails believes that the following factors will be key to the company's success:

Management and Culture SkyTrails has hired experienced airline professionals in order to ensure the operations are well managed. Blending experienced airline professionals with a young creative management team will be a successful combination which will continuously look for innovation while maintaining a high level of professionalism. Getting the right combination will be key in executing this venture successfully. The company will also focus on building a strong corporate culture that will help to differentiate itself from the competition and sustain a high level of motivation while maintaining cost control. More than just an airline, a lifestyle SkyTrails will differentiate itself as much as possible from the traditional airlines. SkyTrails will be to the airline industry what the boutique hotels (Royalton, W Hotel, Mercer Hotel, etc.) are to the hotel industry. Passengers flying on SkyTrails will identify to a lifestyle. SkyTrails has hired industrial designer Ric Sloan to work on the interior of the aircraft. Ric Sloan is one of the leading contemporary industrial designers and is viewed by many as one of the world's most fashionable. Superior Product and Service With an 80-passenger configuration, the cabin of the Boeing 757 will look more like a private jet than like a large mass transportation aircraft. Boarding and disembarking will be much faster given the low number of passengers. SkyTrails will reduce the overall travelling time by at least 1 hour and 30 minutes for passengers flying to and from the city of London, Canary Wharf, and the fast growing Cambridge area. Providing a personalized and comfortable experience is key in retaining customers and getting repeat business. A strong emphasis will be placed on this aspect of the business: particular attention will be paid to the design of the cabin, the technology available, efficiency of processes, and quality of service offered by the cabin crew. SkyTrails will continuously innovate and have the ability to introduce new products to market in a shorter timeframe than its competitors. Strong Sales team SkyTrails will market its services to companies directly. Its ability to acquire corporate clients will be extremely important to the success of the venture. SkyTrails will offer discounts for volume travel and will also partner with select hotels in order to offer all-in packages. Low Cost Operation As a new airline, SkyTrails will have a significant cost advantage over the existing airlines that have large overhead expenses. By focusing on a single type of aircraft, a single class of travel, and initially a single route, systems will be simple and costs will be kept to a minimum. SkyTrails will continuously focus on maintaining a low cost base in order to keep this advantage. Low Break-Even Point By operating the B757, SkyTrails will have lower operating costs and a low break-even point (40 passengers/50 percent load factor) significantly reducing the risks associated with traditional airlines. With such a low break-even point, SkyTrails will be able to make it through economic downturns with less pain than its competitors. It will also enable SkyTrails to consider medium and low density routes on a long-haul basis offering more point to point services. The Internet Maximizing the potential of the Internet will be key in keeping low distribution and administrative costs. SkyTrails will have a strong Internet presence and will use the Internet for customer interaction as well as internal functions.

Operating Strategy: One type of aircraft, one class of service SkyTrails will operate a single type of aircraft: The Boeing 757-200. By operating this aircraft type on the transatlantic route, SkyTrails will have significantly lower operating costs per trip. The trip cost for the B757-200 will be approximately £25,000 one way as opposed to £75,000 for a B747 operated by existing carriers. This demonstrates the lower risk associated with this operation. It will also enable the company to offer direct services where others offer indirect services. Moreover, it will be able to offer greater frequency than competitors operating larger aircraft. Focusing on a single aircraft type enables the company to minimize the costs of training and maintenance. SkyTrails will offer only one class of travel which facilitates processes (marketing, purchasing, training, systems, etc.). In order to provide a high quality service to its customers, SkyTrails will implement productivity and profit-based incentives for personnel. Pricing Strategy: Simple, £900 One Way SkyTrails will not need sophisticated yield management systems to determine the price of each ticket. However, SkyTrails will hire an experienced yield analyst in order to maximize revenues. SkyTrails will offer a simple fare structure which will be comprised of a maximum of four different fare types. This pricing structure will be very attractive for the small and medium enterprises (SME) who do not have access to large volume corporate discounts with the major carriers. Sales, Marketing, and Distribution Strategy 1. Corporates: SkyTrails is a business to business airline. It will focus its efforts on targeting corporate travel managers directly through a strong sales force, partnerships with credit card companies, or other entities that have access to corporate clients. SkyTrails will offer flexible pricing to suit companies' travel requirements. 2. End-users: In order to attract the traveller directly, SkyTrails' marketing strategy will focus on the lifestyle and convenience rather than price because in many cases price is not the primary issue for the business traveller. SkyTrails will only use electronic tickets which will be distributed through agents, the Internet, and our call center. SkyTrails will also distribute through travel agents as they still have a significant position in the corporate market. Growth Strategy SkyTrails will initially target the high volume routes in which it will only be a small player and not be perceived a real threat to the larger airlines. The following U.S. cities are obvious targets: New York, Boston, Washington, D.C., and Chicago. However, the medium term objective is not to increase capacity on these large routes but rather to focus on medium to low density routes where competitors flying wide-body equipment will not be able to operate profitably. London to Bradley Airport (Hartford, Connecticut) is a perfect example of such a route.

Financial Summary and Funding Requirement

Management currently estimates the total funding requirements at £25 million. This takes into account the start-up costs, the on-going operating costs, the costs of incorporating additional aircraft, and the minimum cash requirements to satisfy the CAA.

The table above outlines the value of the company in 2005. This assumes conservative cash flow multiples and we therefore believe that these valuations are on the low side of the spectrum.

By continuously focusing on the needs of the premium class business traveller, SkyTrails will provide the best value proposition in the markets it serves.

We exist to provide a valuable service to our customers, a rewarding opportunity for our employees, and profitability to our shareholders. We believe that success in this endeavor depends on our employees. Satisfied employees lead to satisfied customers, which lead to satisfied shareholders. To achieve this, we enable our employees to act with an entrepreneurial spirit, and we value those willing to take responsibility for their actions and the consequences of those actions. We treat employees as family, which fosters intimacy, informality, strong relationships, caring attitudes, and it makes work more fun. We give employees the opportunity to become shareholders and to participate in the financial benefits of ownership. People take better care of things they own. We treat employees with respect, which encourages them to treat each other and every customer with respect. We want our customers to experience legendary service that makes a lasting impression. Providing exceptional value to customers requires hard work and concentration. Hard work is most effective when processes are simple. Simplicity reduces costs and speeds processes. We do not cut corners. We believe in doing things right the first time. We take pride in our efforts as well as the rewards. Throughout this endeavor, safety will be the overriding force behind any decision.

During the start-up phase, the operations side of the business will be outsourced to TravelAir reducing management needs and ensuring a timely launch.

Our aim is to achieve a good balance between senior airline professionals and creative young managers.

Markus Friedman, Chairman (59)

After graduating from the University of Geneva in Law and Political sciences in 1964, Mr. Friedman joined CWS, a Swiss-based company producing industrial hygienic products and soon became CEO. In 1991, after 27 years at CWS, Mr. Friedman left the company and joined EBEL, the Swiss watch manufacturer, as CEO. He brought in Investcorp as a shareholder and restructured the company. In October 1999, Mr. Friedman orchestrated the sale of EBEL to LVMH, the French luxury goods group and left EBEL. Mr. Friedman is a shareholder in Avcon, a Swiss-based company that manages a fleet of private jets.

William Scott, Founder and Managing Director (27)

Mr. Scott has been actively involved in the airline industry since he joined Chase Manhattan Bank's Aerospace Group in 1995. He was involved in aircraft financing, airline privatisation and restructuring, and M&A transactions. More recently, Mr. Scott worked for Southern Winds, a regional airline in Argentina founded in 1996. He worked closely with the CEO in raising equity and on strategic issues. Mr. Scott holds a B.Sc. Economics from the London School of Economics and an M.B.A. from the Columbia Business School.

Frederick Rodmann, Finance Director (35)

Mr. Rodmann has been Assistant General Manager of Pegasus Airlines, a Turkish charter airline, since 1992. As Assistant General Manager he was actively involved in many aspects of Pegasus business and has wide aviation experience. Mr. Rodmann assisted Aer Lingus, the Irish flag carrier, to sell Pegasus Airlines to its current owners, the Cukurova Group in 1994. Under his stewardship Pegasus has made profits in each of the last six years and has grown its fleet from two to sixteen aircraft. Prior to joining Pegasus, Mr. Rodmann worked for Price Waterhouse in Dublin from 1986 to 1992. Mr. Rodmann is a member of the Institute of Chartered Accountants in Ireland. He also holds a Bachelor of Commerce degree from University College Galway, Ireland.

Joseph Orr, Corporate Sales Manager (32)

Mr. Orr has gained over 7 years of sales experience within the airline industry. The majority of this was at Virgin Atlantic where he worked within the Corporate Sales Department. His last role of National Account Manager gave him sole responsibility for a number of Virgin's largest volume clients—a portfolio that was valued at £35m. Prior to this, Mr. Orr was Area Sales Manager covering the city of London. Though the smallest geographical territory within this team, it was the highest revenue generating area and had the highest proportion of clients contracted to Virgin. Mr. Orr left Virgin Atlantic earlier in 2000 and was appointed head of Airline Supply at lastminute.com prior to joining SkyTrails. He holds a Bachelor of Arts in Business Studies with travel modules.

Oleg Schweitz, Marketing Director (31)

Mr. Schweitz brings over 10 years of marketing and branding experience to SkyTrails. Having spent 3 years in International media planning at the CIA Group, he then moved to Warner Bros as Marketing Manager, overseeing all Interactive Entertainment products published across Europe. Mr. Schweitz joined AT&T as Brand Manager in 1996 with responsibility for brand marketing and advertising strategy during its key consolidation period in the U.K. Most recently Mr. Schweitz has been the Marketing Director with Paramount Television responsible for marketing and airtime sales revenue for the Digital, Cable, and Satellite broadcaster and a marketing department of eight. Mr. Schweitz is a qualified Chartered Marketer with the Chartered Institute of Marketing.

Ken Loman, Technical Director (39)

Mr. Loman has accumulated over 20 years of experience in the industry. On leaving the Royal Air Force in 1985, Mr. Loman worked with Jersey European in the Maintenance Control Department. In 1988 he moved to work with Air Europe as a Project/Development Engineer within the Technical Services Department. In 1991, he became involved in the start-up of CityFlyer Express as Technical General Manager. The airline achieved the First JAR 145 Approval for which he was the Accountable Manager. Late 1997 Mr. Loman worked on a short-term contract involved in the re-launch of Qatar Airways until late 1998. Since this time Mr. Loman has been working on a consultancy basis for a number of aviation related entities.

John MacDonald, Director (subject to clearance from non-compete with British Airways)

Mr. MacDonald is an active entrepreneur and general manager with skills in the identification and analysis of business opportunities, and their subsequent implementation and management. John MacDonald has a proven track record in founding, developing, and selling airline companies. In 1982, he founded and was the Managing Director of Connectair Limited, a commuter airline for British Caledonian. Connectair was successfully sold to ILG, Air Europe in 1988. From 1991 to 1999, John MacDonald was the Executive Chairman of CityFlyer Express, the premier British Airways Express Franchise. CityFlyer Express was sold to British Airways in 1999.

John MacDonald is a Non-Executive Director of Cannons Group plc and Positek Limited. Mr. MacDonald holds a B.A. from Southampton University and an M.B.A. from Cranfield University.

Ryan Roland, Director

Educated primarily in the Great Britain, Professor Roland earned B.Sc. and Ph.D. degrees in Chemistry from University College, London University. He also received degrees in Business Administration from Manchester (Dip. B.A.), Harvard (M.B.A.) and Columbia Business Schools (Ph.D.).

Professor Roland served on the faculties of the UCLA Graduate School of Management and Harvard Business School before joining the Columbia Business School faculty in 1979. He has also served as a Visiting Professor at INSEAD, Fontainebleau, France, Hong Kong University of Science and Technology, and the China Europe International Business School.

He has undertaken both educational and consulting activities for major corporations in the United States and overseas. Included are: AT&T; Aetna; American Cyanamid; Bankers Trust; Bell Canada, Bell Laboratories; Bell Communications Research; BOC; Ceverceria Cuahtemoc (Mexico); Chase Manhattan Bank; Chemical Bank; CIGNA; Ciba-Geigy; Cluett Peabody; Corning; Digital Equipment; Equifax; The Equitable Life Assurance Society of the United States; Essilor of America; FMC; General Foods; General Electric; Goodyear; GTE.; Hoescht-Celanese; IBM; Johnson & Johnson; L'Air Liquide; MacDonalds; McGraw-Hill; Merck; PaineWebber; Pfizer; Singer; Sony; Stone Container; Thompson; and Unilever. Professor Roland is widely published. His articles have appeared in numerous journals and reviews. Professor Roland has also published five books.

Opportunity

In order to remain competitive, corporations have become more cost conscious and have taken steps to tighten their travel and entertainment budgets, often by requiring their employees to travel on a specific airline or in economy class. SkyTrails believes there is a fantastic opportunity to create a single class long-haul airline that will bridge the growing gap between business and economy class travel. London Stansted Airport offers attractive opportunities for long-haul travel and JFK is the most popular airport in the New York area. We believe that targeting the London-New York route makes sense because it is the busiest transatlantic route with 3.8 million passengers in 1999.

Tighter Travel and Entertainment Budgets

Travel and entertainment budgets of large and small companies represent on average 7 percent of operating costs and are the third largest category of controllable corporate expense behind salaries and data processing. These costs are coming under increasing scrutiny as companies try to maintain their profitability levels. As a result of this trend, more and more companies are implementing strict travel policies and are forcing employees to travel economy class. While this is still predominantly a phenomenon occurring for short-haul flights, some companies have already implemented these rules on long-haul flights as well. Only large companies with enough bargaining power obtain discounts from airlines for business class travel. These discounts range from 15 percent to 50 percent, depending on the size of the company travel budget. Large corporations therefore continue to allow their passengers to fly business class on long-haul travel because they benefit from these discounts. For smaller companies, the choice is more difficult: either pay full fare business class and travel in comfort or pay full fare economy class and travel in a cramped environment resulting in employee fatigue and inefficiency. Many companies do not have any other choice but to force employees to travel economy as business class is too expensive.

Bridging the Business-Economy Gap

The opportunity has been created by a widening gap in long-haul travel between economy class and business class, both in terms of price and service offered. Prompted by the introduction in the early 1990s of Virgin's Upper-Class, a business-first product, competitors have had to either improve the quality of their business class (British Airways) or follow suit by eliminating first class services and offering a business-first product (Continental Airlines). As a result of these changes, business class on long-haul flights has improved significantly but prices have also increased accordingly. Conversely economy class has seen very little improvement and overall economy class prices have decreased as a result of over capacity.

The following table gives us an overview of this trend:

There is a segment of the business travel market that cannot or will not continue to pay business class fares for long-haul travel. These business travellers are getting the worst deal since they are paying full-fare economy as they need the flexibility to change their ticket but are getting the same service as a leisure traveller paying a deeply discounted economy fare.

SkyTrails will provide an attractive alternative: A "Business Class type" service for £1,800

LONDON-NEW YORK /STANSTED-JFK

While the overall transatlantic market is very competitive and many airlines have recently complained of over capacity in the market, fares have only been reduced in the economy class cabin where we tend to see a larger portion of deeply discounted fares. SkyTrails believes that it is the best strategy to start competing on the busiest transatlantic route where we only need a small share of the market to achieve profitability. In 1999, over 3.8 million passengers flew between London and New York (source: CAA). SkyTrails' initial share of the market will be approximately 2 percent. It will be difficult for established airlines to react in such a dense market. With higher fixed costs and larger market shares, established players will be reluctant to do so. The cost of competing on price would by far outweigh the cost of accepting a small erosion in their market share.

STANSTED AIRPORT

Stansted is London's third international gateway and one of the fastest growing airports in Europe. Growing at over 30 percent per annum, it served 9.9 million passengers in 1999. Stansted has a catchment area of 11.5 million people representing 20 percent of the U.K. population. Stansted is operated by the British Airport Authority (BAA), a publicly traded company. The BAA has a keen interest to see Stansted grow and has invested over $750 million since 1986.

Existing Unserved Market for Transatlantic Services

Currently, no airline is offering a service to New York from Stansted Airport which means that SkyTrails will have no direct competition within the Stansted catchment area. In 1999, 2.65 million passengers in Stansted's catchment area travelled to the USA (source: CAA). These passengers will naturally prefer flights from Stansted. The low cost airlines operating out of Stansted—Ryanair, Go Fly, and Buzz—are all recording an increase in business travellers. These cost conscious business travellers are natural customers for SkyTrails.

Stansted's Catchment Area

Excluding Central London, total population of Stansted's catchment area is 11.5 million. The catchment area includes Essex, Suffolk, Norfolk, Cambridgeshire, Northamptonshire, Leicestershire, Lincolnshire, Bedfordshire, and Hertfordshire.

The most interesting region of Stansted's catchment area is Cambridge. Over the past three years, Cambridge has transformed itself into the home of fast-growing high technology companies. Over 1,200 companies employing over 35,000 people are based in the Cambridge area. Also, 12 major global corporations have established research centres in the area including Microsoft, Nokia, and Xerox.

Easy Access

The Stansted Express rail link runs every 15 minutes to/from Liverpool Street Station (heart of the city of London) right into the terminal building at Stansted airport. Travelling time is 41 minutes. Passengers working in London will be able to leave their offices 70 minutes before takeoff time, a convenience no other airline can offer.

Stansted is located just 30 miles from the North East of London and only 15 miles away from London's orbital motorway (M25). Stansted is adjacent to Junction 8 on the M11 which makes access easy for people working in Canary Wharf.

London Stansted Airport also offers easy onward travel facilities to Cambridge, Ipswich, and Norwich either by road, train, bus, or coach.

Market Acceptance

More and more business travellers use Stansted as an alternative to Heathrow and Gatwick, both of which have become very hectic. In 1998, 32 percent of passengers travelling through Stansted were business travellers. A survey conducted by the Financial Times in November 1999 on 800 business travellers working in the city of London revealed that business travellers rated Stansted higher than both Heathrow and Gatwick.

Friendly Regulatory Environment

Slots are available at Stansted and new airlines have the priority when applying for these. Slots are distributed for each season and airlines need to apply approximately three months in advance (June deadline for winter schedule). SkyTrails has already secured slots at Stansted for its desired schedule.

Airlines flying out of Stansted are not governed by the Bermuda II Bilateral Agreement between the U.K. and USA. Stansted falls under the regional airports category which enjoy open skies with the USA. This means that airlines will automatically be granted traffic rights for flights from Stansted to the USA.

For further information on the regulatory environment please see the Appendix.

Lower Costs

Charges at Stansted are at least 20 percent below those of Heathrow and Gatwick. In addition, SkyTrails has negotiated attractive deals with suppliers who are eager to see transatlantic services from Stansted.

JFK AIRPORT

JFK is the largest and best known airport in the New York area. The new start-up JetBlue is based at JFK and will potentially be beneficial for SkyTrails in terms of connecting traffic.

Regulatory Environment

JFK has a slot restriction from 2 P.M. to 8 P.M. but under the new entrant rule, SkyTrails has been able to obtain the slots required for the initial two daily flights.

Service/Product

SkyTrails will introduce a single class concept to long-haul air travel. The newly designed class will provide a "high tech," spacious, and comfortable environment. In many ways, SkyTrails aims to create a "boutique" airline which replicates the concept of boutique hotels and targets the same type of customers.

In order to achieve this goal, SkyTrails will hire and partner with well known designers and suppliers for various aspects of the business. The seats and aircraft cabin will be designed by Ric Sloan, one of the most fashionable industrial designers of the moment. He was featured in Forbes magazine (12 May 2001) as "one designer to watch." SkyTrails will partner with a fashion designer for the uniforms and with well known restaurants for the catering.

SkyTrails' primary target will be young executives (25-45) that are lifestyle driven.

In addition to a standard airline four abreast seating configuration, SkyTrails will also offer a unique meeting room environment enabling passengers to conduct business in an office setting while travelling.

Seats will have a 52-inch pitch and will recline at least 150 degrees, very similar to the current business class of traditional carriers. SkyTrails will make a special effort to offer good lighting for passengers, something which is lacking in today's airlines. Given the number of proposed seats, each passenger will enjoy considerable improvement in air quality over the established operators, an issue that is attracting increasing attention in the media.

SkyTrails will ensure that the aircraft is equipped with the amenities business travellers need in order to continue working while travelling. Again, SkyTrails will aim to provide these services at a fair price in order to stimulate their use rather than high prices which are prohibitive. SkyTrails aims to create a business centre in the aircraft where passengers will be able to use telephone, fax, and printer. Each seat will be equipped with a laptop power supply. SkyTrails will also provide e-mail access and use of a personal mobile phone for each passenger.

Convenience

SkyTrails will focus on offering a high quality service from the time of booking right to the time at which the passenger arrives at hotel/home in the destination city. Passengers will have the choice of booking a seat through the Internet, a call centre, or a travel agency.

e-tickets: Tickets will be 100 percent electronic and the passenger will only need their passport and confirmation number in order to access the aircraft. They will be able to print a copy of their itinerary from the website or will get confirmation numbers from the call centre. Free transfers to/from airports: A free shared limousine service will be offered between JFK and Manhattan on arrival and departure. On the Stansted side, free rail ticket to/from Liverpool Street station will be offered or a free car service to/from Cambridge. Valet Parking Service: SkyTrails will offer a complimentary valet parking service at Stansted which will save time for passengers wishing to drive to the airport. Larger carry-on luggage: The increased space on board will also accommodate larger carry-on luggage which is a sensitive issue for business travellers who do not wish to check in their luggage. No more check-in: Allowing larger carry-on luggage enables us to abolish the concept of check-in and simply close the gate 15 minutes prior to takeoff. For those passengers with lots of luggage, SkyTrails will offer a door-to-door service for an extra fee. By abolishing check-in, SkyTrails will not only avoid many delays but it will also save money that other airlines spend on lost and damaged luggage. Reduced overall transfer time: Passengers working in the city of London and Canary Wharf will save at least 1 hour from the moment they leave their office to the time of takeoff. On arriving in New York, they will save at least 30 minutes as they will not have to wait for their luggage and for a taxi. Boarding and disembarking the aircraft will be much faster due to the smaller number of passengers on each flight. Passengers travelling in the opposite direction can expect similar advantages over the competition. Personalized service: SkyTrails will have individual DVD players for passengers to view the movie of their choice. On the catering side, SkyTrails intends to offer a choice of cuisine by partnering with well known brands. On the night flight from New York, passengers will have the option to order their breakfast on the train into Liverpool Street station, therefore giving them more time to sleep on the aircraft. SkyTrails will accommodate passengers in departure and arrival lounge. The arrival lounge in Stansted will have shower facilities to accommodate business travellers going straight to work. Finally, SkyTrails will offer enhanced shopping on-board through extensive product offerings. SkyTrails will sell exclusive products not widely available in traditional stores.

SkyTrails will take special care in hiring and training the cabin crew as the level of on-board service is highly dependent on the quality of these people.

Frequent Flyer Program

Major airlines have been successful at retaining customers by giving them frequent flyer miles each time they travel. As customers get more miles, they gain privileges which include access to airport lounges, upgrades, free flights, and other benefits. In addition, major airlines, through global partnerships are able to offer these programs on many different airlines.

SkyTrails will introduce a frequent flyer program of its own which will be very simple and easy to understand. Most airlines have very complicated programs which often make it difficult for customers to redeem their miles. SkyTrails will offer frequent flyer Internet cash/points that customers will be able to spend on specific websites. SkyTrails will partner with selected ecommerce sites in order to provide this service. SkyTrails believes that its value proposition combined with good service and a simple and innovative frequent flyer program will be sufficient to retain customers.

Operating Strategy

SkyTrails' primary objective is to establish itself as a niche player in the long-haul market of business travel by providing a high level of service and comfort at an attractive price. The use of a simplified organizational structure, a common aircraft type, and a policy of system wide commonality will significantly reduce operating costs over the more traditional airlines. This, coupled with our focus on premium long-haul passengers, will enable us to achieve much higher margins than our competitors.

Focus on a single type of aircraft and a single class of travel

SkyTrails opted for the B757-200 based upon its capacity, range, operating costs, reliability, and availability. By operating a narrow body aircraft on long-haul flights, SkyTrails is able to reduce significantly the operating costs and offer more frequencies. By operating a single aircraft type, SkyTrails will minimize costs associated with training and maintenance programs. Pilot commonality, aircraft interchangeability, technician interchangeability, great economies of scale in spares holdings are some of the benefits associated with single aircraft type operation. Also by offering a single class of service, SkyTrails reduces significantly the complexity of serving three different classes (i.e., catering, marketing, purchasing, systems, etc.).

Ensure service-oriented personnel through productivity and profit-based incentives

SkyTrails wishes to maintain labour cost flexibility by providing a portion of total compensation in the form of profit sharing. Maintaining high productivity of the work force is also an important aspect that management will focus on. SkyTrails believes that employee ownership is fundamental to its success and will provide schemes to promote this.

Focus on long-haul, point-to-point, nonstop services

SkyTrails will initially focus on the London-New York route where it can operate profitably with a small share of the market. SkyTrails will maintain this focus in the future by choosing routes where a large market already exists. Following New York, SkyTrails will start services to Boston, Chicago, and Washington, D.C.

Outsource non-passenger related activities

SkyTrails will outsource many services to quality companies in areas where there is no direct contact with the passengers. SkyTrails aims to offer a quality service to its passengers and will therefore ensure that only its staff interact directly with the customers.

Pricing Strategy

Simple and transparent fare structure.

SkyTrails will use a simple yield management system to determine the best price for each single seat in the aircraft. SkyTrails will have a simple fare structure with three different fares. SkyTrails will monitor the purchasing patterns and will be able to restrict the amount of discounted fares on certain flights.

In order to attract large corporations, SkyTrails will offer one way fully flexible tickets between £1,400 and £1,700 depending on the volumes involved. While large corporations already get deals at around £1,000 one way, small and medium enterprises (SME) have no means to achieve any significant discount from the full fare business class (£3,580 rtn) SkyTrails will offer very attractive alternatives for the SME market.

SkyTrails will use special promotions in the first months of operations in order to attract as many customers as possible and get them to experience the service. The initial objective is to focus on load factors rather than yields in order to penetrate the market and stimulate product trial.

Marketing and Sales Strategy

In order to be successful in the market of business travel, SkyTrails needs to convince two decision makers: 1.) the travel manager or person who makes the travel policy for a company and 2.) the traveller himself. The travel manager and the traveller make decisions based on different criteria and it is important to satisfy both decision makers in order to ensure success.

The travel manager is mainly driven by price and his objective is to negotiate the best deal for his company. On the other hand, the traveller is driven by frequent flyer programs, comfort, convenience, and lifestyle. SkyTrails will have a sales team that will focus on travel managers of large and small companies and will have a conceptual and lifestyle driven communication strategy that will appeal to the traveller.

Sales and Distribution

Large volume companies (1000+ sectors per annum).

SkyTrails will target the large financial institutions and other companies with a major presence in both London and New York. In the city of London and in Canary Wharf there is great concentration of London-New York premium class traffic. The Top 20 London-New York spending companies account for close to 100,000 premium sectors per annum (sectors: one-way ticket). These companies are able to negotiate discounts of up to 50 percent off published fares and are often tied in to global deals with the major airlines. While SkyTrails can still offer more attractive deals to these large corporates, it does not anticipate obtaining primary carrier status. SkyTrails will most certainly get secondary or tertiary status therefore capturing up to 20 percent of these companies' volumes. It will sign commercial agreements with these companies.

Medium Volume Companies (50-1000 sectors)

SkyTrails has already identified over 200 companies in this category. These companies are the most attractive for SkyTrails because they have a weaker purchasing power than the large volume companies and therefore do not get discounts in excess of 30 percent off published fares.

Small and Medium Enterprises (up to 50 sectors)

SkyTrails will also target the small and medium enterprises (SMEs) market. The Stansted catchment area of London, North London, Essex, Cambridgeshire, Hertfordshire, Essex, East Anglia, and the Southern Midlands has a proliferation of SMEs, many of which are subsidiaries of U.S. based companies. SkyTrails will offer a compelling value proposition to these SMEs based on corporate discounts from an already competitive pricing structure. British Airways and other major transatlantic airlines do not offer corporate discounts in the SME market.

SkyTrails will hire a strong sales team that will target companies directly. SkyTrails will also team up with a major credit card company and large business travel agencies that will give SkyTrails access to a large number of SMEs. SkyTrails believes that getting companies enrolled will be a critical success factor and will ensure that its value proposition is well communicated to the businesses likely to use the service.

Electronic Ticketing

SkyTrails will offer customers quicker, easier, more convenient ways to arrange travel through the use of e-ticketing or "ticketless travel." An e-ticket entitles a passenger to all the same conditions of a conventional paper ticket, however instead of being printed, the e-ticket is stored in the SkyTrails e-ticket database. The customer simply receives a paper itinerary/receipt for Customs and Immigration.

Distribution and Revenue Management

SkyTrails will use an integrated ticketless software (Open Skies by HP) which offers an online booking engine as an alternative to traditional airline distribution through Computer Reservation System (CRS). Open Skies also offers streamlined revenue accounting, airport functionality, and a customer database function. The Open Skies system is currently used by Go, Easyjet, JetBlue, Buzz, CityBird, and many others.

Travel Agency

SkyTrails will form relationships with the key U.K. business travel agents giving them an opportunity to increase their commission by taking some of the risk. Travel agents will be able to buy in bulk in advance and get higher commissions than if they simply book tickets on an ad hoc basis.

Travel agents' commissions in the U.K. have declined from 9 percent to 7 percent in recent years and are set to reduce further in 2001. SkyTrails will offer attractive returns for agency partners—well above U.K. industry standards.

Call Centres

SkyTrails will operate an efficient, customer oriented call centre open 24 hours a day in order to serve individuals, corporate clients, or travel agents. Fully trained staff will also be able to handle website enquiries.

Direct Sales through the Internet

Harnessing the power of the Internet will be key to the success of SkyTrails. It is the most cost effective distribution method and SkyTrails will heavily promote its website to attract direct passengers. A user friendly website will be set up to sell tickets, select seats, choose meals, check punctuality, etc. In addition, the website will enable passengers to choose connecting flights with European low cost airlines (Ryanair, Go Fly, Virgin Express, Easyjet, Buzz) and also with U.S. low cost airlines. This will enable SkyTrails to expand its target market by capturing connecting passengers as well as point-to-point passengers.

An extranet corporate booking tool will be developed for use by corporate clients.

SkyTrails will form strategic partnerships with leading travel, luxury goods, and financial websites targeting similar audiences with hyperlinks between websites.

Advertising and Communication

SkyTrails'customer base is well defined which will enable SkyTrails to focus its advertising efforts to specific locations and specific newspapers and magazines.

Growth Strategy

Phase i: market penetration in high density routes.

SkyTrails will initially target the most dense transatlantic market starting with New York. We will then expand to Boston, Washington, D.C., Dulles, and Chicago.

By targeting very dense markets, SkyTrails will only need a small portion of the overall market in order to be profitable.

Phase II: Extend service to medium/low density long haul routes

We see much larger potential in medium to low density long haul routes where the traditional airlines are not present today. These destinations include Stewart Airport or Whiteplains Airport which are located in New York state but within easy reach of Greenwich and Stamford (Connecticut) which are key business centres. Passengers will be able to bypass the large hubs for long haul flights in the same way the regional jet is able to bypass hubs on short haul flights.

Other Opportunities

While scheduled long haul flights will clearly be our focus, SkyTrails will take advantage of opportunities in the high-end segment of the leisure market where we are seeing strong growth. Such opportunities could fit in nicely with the business travel which tends to be low at weekends and during the summer season.

SkyTrails will also consider ad hoc charters and corporate charters on a case by case basis.

Air Operator's Certificate and Operating License

In order to conduct commercial flights, SkyTrails will need an Air Operator's Certificate (AOC) and an Operating Licence which are granted by the U.K. Civil Aviation Authority. In order to get an AOC and an Operating Licence, the company has to comply with safety, financial, and other requirements laid down by the CAA/JAA. The application process can take over 12 months to complete. In order to avoid relying on this process to start operations, SkyTrails will use the AOC and operating license of TravelAir in the first year of operations. By using an existing airline, SkyTrails significantly reduces the risk of delays in the start-up phase. SkyTrails will in effect outsource the operations to this existing airline for the first 12 months which will enable SkyTrails to focus on the commercial aspects of the business. From the passenger's perspective, TravelAir will be invisible. The crew will have SkyTrails uniforms and the aircraft will have SkyTrails livery. TravelAir has tremendous experience with B757 ETOPS (Extended Twin Operations) operations and is viewed by many as the best quality charter airline in the U.K.

Through TravelAir, SkyTrails has obtained landing and takeoff slots at both Stansted and JFK for the following times:

TravelAir will transfer all the slots obtained to SkyTrails once it obtains its own AOC.

In order to maintain a high level of customer service, SkyTrails will either employ its own staff or ensure the ground handling agent has dedicated staff for all aspects of airport handling involving contact with customers. For other aspects of ground handling, SkyTrails will initially outsource its needs until critical mass has been established. SkyTrails will lease space in each airport for lounges and offices.

Maintenance and Training

Heavy maintenance and training will be outsourced, initially to TravelAir.

The Boeing 757-200 is one of the most popular commercial aircraft ever built. Over 800 B757s are currently in service. Boeing is starting to deliver a stretched version, the B757-300 and is presently evaluating the possibility of building an extra long range B757. The B757-200 is usually configured to accommodate 180 passengers in a two-class configuration. The B757-200 has a high level of dispatch reliability (in excess of 99 percent).

The other possibilities for SkyTrails could have been the B767 which is a wide body aircraft. SkyTrails believes that the risk involved with operating a B767 are 30 percent higher and also limit the ability to expand in smaller markets. SkyTrails could have considered the BBJ which is equivalent to a B737 long range. Unfortunately, the BBJ is still in its early days and the lack of availability in the market is what has driven our decision towards the B757. The BBJ could be ideally suited for smaller markets.

Bilateral Agreement between U.S. and U.K.

Flights from major international airports in the U.K. to the U.S. are regulated by a Bilateral Agreement between the two countries. The government negotiates routes for its country and then distributes these to the airline of its choice. Usually airlines have to submit an application detailing why its proposed service is in the best national interest. This creates a barrier to entry which is difficult to overcome. In addition, landing and takeoff slots at London Heathrow and London Gatwick are difficult to obtain creating another barrier to entry. These barriers to entry give a strong advantage to existing airlines. However, U.S. and U.K. government have been negotiating possible liberalization of skies. If this happens, we expect to see additional capacity out of Heathrow to the USA which may have an impact on yields.

Open Skies for Regional Airports (Bermuda II Agreement)

International flights from all the regional airports in the U.K. (Stansted, Birmingham, Manchester, etc.) are regulated by this Agreement with the U.S. which enables all national airlines of each country to operate an unlimited number of flights between these airports and any U.S. international airport. SkyTrails will therefore be able to benefit from this Agreement by operating out of Stansted. SkyTrails will still have to apply for the routes but these will be automatically granted. The application was filed on 12 September 2000.

A more detailed overview of the regulatory environment written by Eugene Stokes, Aviation Partner at Smyth Adair Benson, is provided in the Appendix.

Global Airline Industry

Major airlines characteristics:.

Focus on hubs In order to increase load factors, major airlines have adopted a hub and spoke strategy which consists of centralising flights at an airport therefore benefiting from connecting passengers in addition to origination and destination passengers. As a result of this strategy, many passengers are forced to make stopovers, increasing their travelling time. SkyTrails will offer point to point services which offer significant time savings for premium passengers. High fixed costs Major airlines have large overhead costs and many are tied in to labour contracts which prevent them from reducing these costs significantly. SkyTrails will maintain a lower cost base and therefore maintain a competitive advantage. Lack of customer focus Overall, airlines tend to lack customer focus. By focusing on hubs and alliances, airlines gain efficiencies but these strategies are of limited benefit to the customers. SkyTrails will offer an individual service and its success will be built on customer focus. Consolidation with major alliances: Star Alliance, One World While most industries have consolidated in the past few years through mergers and acquisitions, the airline industry's consolidation is based predominantly on alliances and minority equity stakes. Starting with code-share agreements and extending these to full alliances have been the common pattern followed by airlines around the world. These alliances enable airlines to benefit from each others network and distribution capability. While very beneficial to the airlines, it is arguable whether the consumer really benefits from these alliances as they tend to reduce competition. Customer satisfaction usually suffers as a result of this consolidation, creating an opportunity for SkyTrails. The most successful alliance to date is the Star Alliance which is comprised of Lufthansa, United, SAS, Thai, Varig, Air New Zealand, Ansett Australia, All Nippon Airways, and recently Singapore Airlines. Its main competitor, One World, is comprised of British Airways, American Airlines, Cathay Pacific Airways, Qantas, Finnair, and Iberia. Another important combination is Virgin-Singapore Airlines. Singapore now owns 49 percent of Virgin Atlantic and the two airlines will be a strong competitor on the transatlantic market. Following Swissair's acquisition of 85 percent of Sabena, other European airlines have started to talk about possible mergers and acquisition. On the U.S. side, United and U.S. Airways have announced a merger which has prompted other talks within the major airlines. This consolidation will be closely monitored by the regulatory bodies and it is uncertain how many will be approved. SkyTrails will not take part in any alliance and will remain committed to its niche strategy. The larger the alliances become, the more opportunities there are for niche airlines to prosper. Low Cost Airlines are gaining market share Following the continued success of Southwest Airlines, many start-up airlines have emerged in the past ten years, both in Europe and in the U.S. The low cost airlines focus on short-haul traffic and have been key in stimulating demand by offering extremely low fares. These airlines initially targeted the leisure traveller but in recent years they have attracted a growing amount of business travellers who were not satisfied with the high prices charged by the major airlines. The main challenge faced by these young companies is that of safety. After the ValueJet accident in Florida, customers were concerned that low cost airlines did not maintain their aircraft correctly and were more dangerous to fly than the majors. While low cost airlines continue to thrive in the U.S., the more recent European additions such as Easyjet, Virgin Express, Go Fly, Ryanair, and others are experiencing tremendous growth and are presenting a serious challenge to the major airlines short-haul strategies. SkyTrails will benefit from this trend as passengers are now used to flying with newer airlines which do not have the history of State-Owned carriers. Regional Airlines are increasing point-to-point travel The Regional Airlines are by far the most profitable segment of the market with net margins as high as 15 percent. They benefit from very fuel efficient modern aircraft (Regional Jets) and are able to focus on high yield passengers by providing point-to-point services and more frequencies. By using smaller jets, boarding and disembarking times are reduced which enables fast turnaround of the aircraft. Companies such as Comair and Atlantic Coast in the U.S. and Crossair, Air Littoral, and British Regional Airlines in Europe have grown tremendously in the past five years. SkyTrails is in effect an extension of the Regional Airlines by offering point to point services on a long-haul basis.

Breakdown of Passengers on London to New York route April 1999-March 2000

Top 10 U.S. Destinations from Heathrow October 1998-September 1999

Stansted Catchment Area Originating Traffic to New York

SkyTrails Share of New York market from inner and outer catchment area

Inner and Outer Catchment

Focus on Point to Point Traffic

The majority of the business traffic between London and New York is point to point as business travellers from other European capitals tend to fly direct.

Connecting Traffic

While SkyTrails will focus primarily on point to point, it will benefit from connecting traffic originating in secondary cities in the U.K., Europe, and the U.S. Premium travellers in those cities have to connect in a hub in order to travel to the U.S. and they could easily combine a low-cost European flight into Stansted with a SkyTrails flight to the U.S. The following table highlights the various secondary cities that are served by a low-cost airline operating at Stansted and with arrival and departure times within 2 hours of a SkyTrails flight:

Premium Capacity on the London-New York Route (Sept.-Dec. 2000)

Market Shares on Planned Routes for SkyTrails:

Product on the London-New York Route

British Airways (BA)

BA is the market leader with over 40 percent of premium capacity. BA has run into a number of difficulties in the past year and reported disappointing results in 1999. The airline has clearly stated its strategy to focus on the business and premium traveller. BA has introduced a full-sleeper Business Class. We believe that BA is right to focus on the business segment but by offering a full-sleeper Business Class, they are taking the risk that First Class passengers downgrade to Business Class. In addition, by providing this higher quality product, BA is betting that it will be able to continue increasing the price of its business class product. It is simply widening the gap between business class and economy. BA recently introduced World Traveller Plus, which corresponds to Virgin's Premium Economy. The pricing will be similar to SkyTrails but the product is simply an economy class with more legroom. Although BA does offer a good product, it has been harmed by bad press, disappointing results, and unmotivated staff. BA's global strategy with American Airlines has been delayed by the regulatory bodies but BA is still trying to make it work under a weaker form. While BA and AA combined will be a powerful team, the culture and product do not seem to be aligned today.

American Airlines (AA)

AA has 7 daily frequencies with B767 and A300 offering 18.1 percent of the market capacity. AA's service and product standards are below that of the competition. As mentioned earlier, AA's alliance with BA, if it goes through, will be a powerful combination in terms of size and resources.

Virgin Atlantic Airways (Virgin)

Virgin's share of the premium segment is 12.3 percent. Virgin is by far the most innovative player in today's market. Virgin was the first airline to introduce a business-first service in the early 1990s and is the only airline to offer a premium economy section on long-haul flights. Virgin has a code-share agreement with Continental which enables both airlines to sell tickets on each others' flights. The recent sale of 49 percent of Virgin to Singapore Airlines will also provide Virgin with an increase in connecting passengers from Asia. Virgin is also rumoured to be considering a first-class only concept operating BBJs, ACJs, or Bombardier's Global Connector. This does not represent a threat to SkyTrails as Virgin is targeting the First Class passenger.

United Airlines (United)

United has the same share of the premium market as Virgin with 12.3 percent. United is one of the leading airlines in the Star Alliance which provides much connecting traffic. United's product is industry standard and is viewed as a follower rather than a market leader.

Continental Airlines (CO)

CO is more of a niche player in this market with only two flights a day. It operates out of Gatwick to Newark. However, its code-share with Virgin gives it access to Heathrow and JFK. Continental is a strong player at Newark where it controls over 50 percent of the landing and takeoff slots. It is planning to increase its presence at Newark by building a new terminal for additional wide body aircraft. In May 2001, Continental started a service from Stansted to Newark with a B757. This certainly helps to raise the profile of Stansted as a gateway to the U.S. Continental's B757 only has 16 business class seats and its early morning departure from Stansted does not suit the London or Canary Wharf based traveller.

British Midland (BM)

BM has been attempting to obtain traffic rights from Heathrow to the USA, so far unsuccessfully. It is determined to keep trying to get into the market. BM has ordered Airbus A330s which will be delivered in summer 2001 and which it intends to use on routes to the USA. British Midland has obtained rights to fly from Manchester to the USA but not from Heathrow.

Funding Needs

SkyTrails' total funding needs amount to £25 million. The following table summarises the uses of funds to August 2003 which is the point when accumulated net uses of funds reaches its highest point:

SkyTrails has to set aside a Bond which is required by the CAA in order to protect consumers during the period that SkyTrails is operating under TravelAir's AOC. SkyTrails also needs to have sufficient funds to satisfy the CAA that it can survive with no revenues for 3 months at the time it applies for its own AOC.

In order to value airline companies on the same basis, we use the Enterprise Value (EV) to EBITDAR multiple. EBITDAR is cash flow before rentals (operating leases) which, for SkyTrails amounts to £72.6 million at the end of the fourth fiscal year. The following table shows the multiples for European publicly traded airlines:

EBITDAR: Airlines are valued based on EBITDAR multiples (as opposed to EBITDA) because airlines have different mixes of operating leases and on-balance sheet financing for aircraft which therefore would distort valuations based on EBITDA multiples.

If we take a very high discount rate of 50 percent to account for the risk involved and assume that we are four years away from the end of the fourth fiscal year, we get the following present values:

Operating Margins

The financial model produces an operating margin at the end of year 4 of 21.3 percent. Margins well in excess of this are currently being attained by regional carriers, even though the more traditional airlines do not reach these heights. We believe this margin is on the low side because we have made conservative assumptions. We will attain margins similar to the better regional carriers as our strategy is similar to theirs. The table below shows the operating margins obtained by a selection of regional and non-regional airlines and was sourced from Airline Business magazine.

Assumptions

SkyTrails will start operations with two B757-200 with an 80-seat configuration. The following table shows aircraft addition through the period of the plan:

Load Factors

We have assumed that the first two flights reach their break-even load factor after 12 months.

Other Revenue: £1,000 per sector is assumed for Cargo and Duty Free revenue.

The following table breaks down the mix of fares assumed in each year:

N.B. These figures are based on current prices obtained from suppliers

Fixed Costs

Direct costs, flight-deck crew.

11 flight crews are assumed for the first two aircraft. Each flight crew is composed of a captain and a first officer. Captain cost is assumed at £6,850 per month and first officer at £4,760. These figures include social charges, accommodation, and transport.

11 cabin crews are assumed for the first two aircraft. Each cabin crew comprises 1 purser, 2 senior cabin crew, and 3 junior cabin crew at a cost of £2,367, £1,878, and £1,670 respectively.

$25,000 per month per aircraft.

$315,000 per month per aircraft for the first two aircraft which is based on current market conditions.
$335,000 per month per aircraft for the next two aircraft as we assume used aircraft will be leased.
$420,000 per month per aircraft for aircraft 5-9 as we assume new aircraft will be leased.

Security Deposits

The standard 3-month rental is assumed.

Reconfiguration Costs

We assumed £2,000,000 per aircraft for the first two aircraft of which 25 percent is paid 6 months prior to delivery and 75 percent is paid thirty days net. All other reconfiguration costs are assumed thirty days net.

TravelAir Management Fee

$42,000 per month for the first two aircraft and $15,000 per month for additional aircraft. This is consistent with the contract signed with TravelAir. We assume SkyTrails will get its own AOC in the thirteenth month of operation at which point SkyTrails will no longer pay a fee to TravelAir but incurs higher payroll cost as it takes all the operations in-house.

These include salaries and benefits for the Ground Operations/Customer Service, Sales, Marketing, Finance and Administration, and Technical departments. These are projected according to a manpower plan.

Exchange Rate: £1=$1.45

SkyTrails will using hedging techniques for both fuel and currency in order to minimize its exposure.

Interest Income: Interest rate is assumed at 3.5 percent per annum.

Annual Income Statement (£)

Regulatory Environment and Licensing Issues

Eugene Stokes Partner Head of Aviation Regulatory and Commercial Smyth Adair Benson

For the past 15 years Eugene Stokes has been a recognised specialist with an international reputation in regulatory, commercial, EC, and competition law affecting air transport and the travel industry: he advises airlines, airports, banks, governments, and regulatory authorities on a wide range of regulatory, legal, and aeropolitical issues, has been involved in all aspects of the liberalisation of aviation in the European Community and advises on both contentious and noncontentious commercial and competition issues in the aviation sector.

During this period, his airline clients have been numerous but have included United Airlines, Delta Airlines, ANA, Cathay Pacific, Philippine Airlines, Swissair, CityFlyer Express, British Caledonian, Dan-Air, and Avianca, and he has advised the new low cost U.K. scheduled carrier EasyJet since its start-up.

SkyTrails—Licensing Requirements

SkyTrails is an English registered company and its principal place of business will be in England. Under European Community Law, every air transport undertaking with its registered office and principal place of business in a Member State of the European Union must hold an operating licence granted by that Member State in accordance with the EC Licensing Regulation (Council Regulation EEC No: 2407/92). In the United Kingdom the grant of operating licences is delegated to the Civil Aviation Authority. While the EC Market Access Regulation (Council Regulation EEC No: 2408/92) provides that all holders of EC operating licences have the right (virtually unrestricted) to operate any services between any two points in the European Community ("community carriers") it leaves the rights of Community carriers to operate to points outside the FU unaffected. Community carriers require to be separately licensed by their states to perform such services according to the requirements of bilateral air services agreements between the Member States which licences them and the relevant states outside the European Union.

The bilateral air service agreement between the U.K. and the U.S. is quite restrictive, but the proposed route London Stansted/New York JFK is available under it. An application will need to be made to the CAA for a route licence following the grant of which the U.K. government (the Department of the Environment Transport and the Regions or "DETR") will be asked to designate the applicant (i.e. by diplomatic note inform the U.S. government [Department of Transportation or "DOT"] that the applicant has been designated for service under the bilateral by the U.K. government).

The requirements of an EC operating licence are quite onerous and include the issue by the CAA of an Air Operators Certificate (AOC) and demonstration to the CAA's satisfaction of stringent financial fitness requirements (which require it to be demonstrated that the applicant can discharge its financial obligations in its business for the first two years and this without any revenue for the first three months). For a new airline, these requirements (particularly the AOC requirements which relate to safety and technical competence) can take many months to process. Because SkyTrails wishes to commence service early in 2001 it has decided to contract with an existing U.K. operating licence holder to operate the services on its behalf until such time as its own operating licence is granted.

While it is permitted to enter into such an operating agreement, it is a requirement of U.K. law that an undertaking which makes seats available on an aircraft (or holds itself out as being able to make seats on an aircraft available) while not the operator of the aircraft, must (except in certain circumstances which will not apply to SkyTrails) be licensed. The applicable licence is an Air Travel Organiser's Licence (ATOL) the primary purpose of which is to protect the consumer who has advanced moneys to a seat provider in advance of receiving evidence of his contract with the actual operator.

Because of the hybrid nature of the operation, the CAA can apply the financial fitness standards of the EC licensing regulation to SkyTrails even during the period when it holds an ATOL (the financial fitness standards for which are somewhat different).

This "hybrid" arrangement whereby a new airline operation commences through the combination of an ATOL (held by the new airline pending grant of its own operating licence) and an operating agreement between the new airline and an existing U.K. operator is somewhat frowned upon by the European Commission (although it is not technically contrary to relevant EC legislation). While a number of U.K. airlines have commenced service in this way, the U.K. CAA now looks for a commitment to work towards the grant of an operating licence as soon as possible.

The Process

Route licence.

SkyTrails has selected TravelAir as the operator of the initial services. TravelAir will be required to apply for the route licence for the Stansted/JFK route and seek designation by the U.K. government. Once application has been made to the CAA it will be published in the CAA's Official Record after which there will be a 21-day period for objections to be lodged. Only other U.K. operators have the right to object but, given the CAA's pro-competitive licensing policy and the availability of this route under the U.K./U.S. bilateral, it is not anticipated that any such objector would have reasonable grounds. The possibility of an objection cannot, however, be entirely dismissed. An objection does delay the process which to some competitors might be regarded as a reason for objecting in itself even though the objection might need to be withdrawn later when grounds for the objection would need to be filed. Generally, we would not expect any other U.K. carrier to behave in such a manner.

Assuming there is no objection, TravelAir will be able to proceed after a 21-day period to grant of the licence by the CAA (who will wish to ensure that TravelAir is financially fit to operate the route—this depending to a large extent on the financial arrangements between SkyTrails and TravelAir). Following grant of the route licence to TravelAir, the process of designation by the U.K. government can be completed in a matter of days and it is not anticipated that the process of grant of an operating permit by the U.S. DOT would occupy any substantial passage of time.

If there is an objection to the application to the CAA, the CAA will fix a date for a hearing and require written submissions from the applicant and the objectors. The entire hearing process can take between three and six months and there are provisions for appeal to the Secretary of State which is a written process. It is, however, considered extremely unlikely that even if there were objections they would proceed to a hearing because there are no obvious good grounds for an objection to be made out.

On the grant of its own operating licence, SkyTrails would apply for its own route licence, having agreed with TravelAir that TravelAir would apply for its own route licence to be revoked at the appropriate point.

SkyTrails will apply for an ATOL in time to be ready to sell with the appropriate lead time. On grant to it of its operating licence the ATOL will be revoked.

Other Considerations

The U.K./U.S. bilateral requires fare to be filed and approved by the governments. SkyTrails' fares will be substantially below those of their competitors at the outset. While this will obviously be of concern to those competitors, it is not expected that they will succeed in persuading their governments to disallow them. Nevertheless they may try to squeeze a new carrier like SkyTrails out of the market by lowering their own fares. Whether such price pressure is lawful will depend on the application of general principles of anti-trust/competition law, but these principles are well known to the competitors concerned who will be well aware of the consequences of proceeding unlawfully.

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Creating a Winning Air Charter Business Plan For Success in Modern Market

Jul.14, 2023

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Table of Content

1. Potential Of Air Charter Business

Air charter service is a convenient option that allows individuals and businesses to rent private aircraft for specific trips, destinations, or purposes. It provides personalized air transportation tailored to the needs of the passengers or cargo.

The air charter business operates within a complex and highly competitive industry. It encompasses a modern fleet of commercial aircraft present worldwide. According to research from MarketWatch, charter air services’ market size was valued at USD 17260.0 million in 2021 and is expected to expand at a CAGR of 12.0% during the forecast period, reaching USD 34070.0 million by 2027.

2. Executive Summary

Why do you need a business plan for a private air transportation company.

A business plan is vital for a private air transportation company. It serves the purpose of securing financing and effectively communicating the company’s strategy to partners, investors, and employees. The Airmall Business Plan exemplifies this approach, outlining both short-term and long-term objectives while providing a clear roadmap for organizational growth. Additionally, it takes into account future risks, opportunities, and challenges that may arise in the industry.

How to write an executive summary for a private jet business plan

The Executive Summary in a private jet charter business plan should provide a comprehensive introduction to the proposed enterprise. It should be similar to an Airline Business Plan , covering background information on the company, an overview of the services it will offer, and the reasons behind its establishment.

The business plan should encompass several key components. These include clearly defined objectives, an in-depth analysis of the market landscape, a thorough evaluation of competitors, reliable financial projections, and any other areas critical to the success of this endeavor.

3. Company Overview

History of the charter flight company.

Charter Flight was founded in 2017 by two former commercial airline pilots. Their mission aimed to deliver a heightened and individualized air travel experience, surpassing the offerings of large commercial flights. All the while prioritizing safety and unwavering quality at every step along the way. With this in mind, the founders had an idea of how to start a charter airline business and developed an air charter business plan sample that puts safety, customer service, and attention to detail as its highest priorities.

They have grown exponentially over the past seven years. In the Helicopter Business Plan , they now operate a fleet of over twenty aircraft, including both turboprop and jet charter planes.

Charter Flight’s main objective is to provide exceptional, tailored private air charter flights for their esteemed clientele. They are committed to ensuring the utmost reliability, safety, and luxurious experience in private aviation. Every aspect of customer service, attention to detail, and cutting-edge technology adoption is meticulously prioritized to maintain the highest standards of safety and efficiency.

4. Services and pricing

Charter Flight offer a wide variety of aircraft charter services, including:

Private Air Charters: They provide luxurious, comfortable, safe, and private air charter services to any destination worldwide. Like a charter bus company , the private air charter service will typically include a dedicated flight crew, any necessary auxiliary staff, plus a selection of food and beverages onboard.
Group Charters: Groups of up to 10 persons can travel together on the same flight at an affordable charter flight rate.
Aircraft Charters: They provide a full-service charter flight service tailored to individual requests.
Air Cargo Charters: They provide tailored air cargo charter service to meet the needs of businesses and other organizations transporting goods on tight deadlines or to remote areas.
Business Jet Charters: They provide access to comfortable, modern, and well-equipped business jets that provide an optimal environment for work or relaxation, whichever you choose.

The pricing for our services is determined by various factors. These factors include the type of aircraft used, the distance to be covered during the flight, the duration of the flight, and the number of passengers on board.

5. Customer Analysis

Customer segmentation.

The customer base for charter plane services can be segmented as follows:

Business Executives: Business executives who want a reliable and efficient method of traveling to meetings, conferences, or even vacations often choose to charter a plane for their needs.
Vacationers & Adventure Seekers: Those wanting a unique and memorable vacation or a thrilling adventure often rent a private plane to travel to faraway destinations for an unforgettable experience.
Celebrities & High Net-Worth Individuals: Celebrities, music artists, and high net-worth individuals often use air chartering to fly to and from vacation or promotional events. In the private jet business model, clients view private plane services as a luxurious and convenient way to get around.
Sports Teams & Equipment: Teams participating in sports tournaments and large events often rent charter planes to transport their team members, equipment, and staff to the destination.

6. SWOT Analysis

Strengths: Identify internal capabilities that will support the business venture. Examples of strengths might include specialized skills and capabilities possessed by staff, existing customer relationships, access to monetary resources, and competitive advantages in the industry.
Weaknesses: Pinpoint areas of potential vulnerability. Areas of weakness might include lacking needed resources and personnel, outdated business models, inadequate market research, and competition from rivals in the market.
Opportunities: Identify external factors that could benefit the air charter business.
Threats: External factors that have the potential to negatively affect the business should be identified. These threats may encompass abrupt shifts within the industry, emergence of new competitors, disruptions caused by external events, economic downturns, or changes in customer trends within the industry.

Business plan for investors

7. marketing analysis, competitors.

The private aviation business is extremely competitive, with numerous charter companies, fractional ownership companies, and even commercial airlines vying for the same customers.

Companies such as XOJet , JetSuite , NetJets , and FlexJet are some of the most notable competition in the space. These companies have deep pockets and significant market presence and constantly create innovative solutions for their customers..

Market trends

The charter flight industry is currently experiencing a period of growth. Many major competitors have launched new jet programs and services to enhance their existing fleets and offerings.

In addition, the luxury charter market has seen significant growth in private sectors like the Middle East, Asia Pacific, and Latin America. This expansion opens up more promising opportunities for luxury charters. Moreover, with the integration of mobile technology and online booking services, there is enhanced convenience and customization available to passengers when reserving their flights.

Competitive Advantage (USPs)

The charter company maintains a competitive advantage through its unwavering commitment to enhancing customer experience. By prioritizing exceptional service, the company ensures convenience and tailored amenities for each flight. Additionally, the company places utmost importance on procuring reliable and secure aircraft, granting customers peace of mind during their air travel.

8. Marketing Plan

A charter service must act extensively when it comes to marketing. A strategic method of maximizing potential customers must be followed. The following outlines a few key areas in which to focus.

Search Engine Optimization: Keywords should be used on the home page and throughout the website to ensure that the business appears quickly in the search engine results.

Networking: A strong online presence must be created in order to make the public aware of the service. Social media must be utilized to reach potential customers and build a base of followers.

Sponsorships: As a corporate jet charter business, sponsoring events and leveraging the power of branding can be a very successful tool in exposing customers to the services offered.

Promotions Strategy

A comprehensive approach to promotions is needed to ensure maximum exposure to the services offered by the charter service. This includes a variety of methods, such as the following.

Advertising: Traditional and digital advertising outlets should be utilized to capture the attention of target markets.
Public Relations: Coverage by industry-specific publications and news outlets should be sought to build credibility and promote the business.
Discounts: Discounts can be offered on select charters to entice customers and build a recurring revenue stream.
Contests: Online and offline contests can generate interest and spread awareness.
Events: Hosting events such as open houses and customer appreciation days can promote the business and solidify client relationships.

9. Management Team

Organizational structure.

The organizational structure of the private air business plan is composed of the following:

CEO: This role is responsible for managing the business’s operations and ensuring it meets its objectives.

CFO: This role is responsible for the financial management and planning of the business.

VP of Operations: This role is responsible for overseeing the charter business’s operations and ensuring its objectives are achieved.

VP of IT: This role is responsible for managing the IT infrastructure of the business and providing technical support.

VP of Marketing: This role is responsible for developing and executing a marketing strategy and launching promotional campaigns.

VP of Sales: This role is responsible for developing and implementing a sales strategy to maximize revenue.

Chief Pilot: This role is responsible for the flights’ and pilots’ safety and compliance.

10. Financial Plan

Startup costs.

Legal Fees: $1,200
Aircraft Licensing & Regulatory Costs: $15,000
Professional Website Development: $6,000
Radio Frequency Applications & Certifications: $2,500
Airport Construction & Direct Operating Costs: $65,000
Insurance: $30,000
Company Formation & Regulatory Fees: $3,000
Office Equipment & Supplies: $15,000
Fuel & Oil Purchases: $25,000
Pilot Training & Aircraft Maintenance: $25,000
Marketing & Advertising: $10,000

TOTAL STARTUP COSTS: $186,200

Financial Projections

Revenue: $500,000
Fixed Costs: $250,000 (insurance, pilots, maintenance),
Variable Costs: $80,000 (fuel, oil)
Net Profit: $170,000
Revenue: $700,000
Fixed Costs: $250,000
Variable Costs: $90,000
Net Profit: $360,000
Revenue: $1,000,000
Variable Costs: $100,000
Net Profit: $650,000

Funding Ask

Amount Requested: $100,000
Equity Offered: 25%
Use of Funds: $50,000 will be used to purchase necessary equipment and supplies, and the other $50,000 will be used for initial marketing and advertising efforts.
Repayment Terms: The funds will be repaid over a four-year period with 8% interest.
Collateral: All associated equipment and supplies purchased with the loan will serve as collateral for the loan.

11. Unlock Proven Expertise and Strategic Insight for Successful Air Charter Business Planning with OGS Capital!

OGS Capital, with its team of expertise and strategic insight, can develop a comprehensive business plan tailored specifically for your air charter business. We possess in-depth knowledge and understanding of the complexities in this industry, combining it with our financial acumen to create investment-ready plans that address both operational and regulatory aspects.

Drawing on our extensive experience in the aviation industry and our deep understanding of operational, regulatory, and financial aspects, we have the ability to design plans that fulfill the requirements of investors, banks, and policymakers. These marketable plans are tailored to meet industry standards.

Our finance professionals possess the necessary skills and expertise to strategically structure financial models that maximize the competitive advantages within the air charter industry.

Our clients achieve successful results thanks to our personalized business planning and in-depth market analysis. With extensive experience in the aviation industry, no other team of consultants understands its complexities better than ours.

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Travel Agency Business Plan Template

Written by Dave Lavinsky

Travel Agency Business Plan

You’ve come to the right place to create your Travel Agency business plan.

We have helped over 10,000 entrepreneurs and business owners create business plans and many have used them to start or grow their travel agencies.

Below is a template to help you create each section of your Travel Agency business plan.

Executive Summary

Business overview.

My Itinerary Travel Agency is a new travel agency located in Boca Raton, Florida. The company is founded by Sandra Rodriguez, an experienced travel agent who has gained valuable knowledge on how to run a travel agency during the past ten years while working at Fun Destinations Travel Agency. Now that Sandra has experienced managing a travel agency, she is ready to start her own company, My Itinerary Travel Agency. Sandra is confident that her organizational and communication skills, combined with her understanding of business management, will enable her to run a profitable travel agency of her own. Sandra is recruiting a team of highly qualified professionals to help manage the day-to-day complexities of running a travel agency – sales and marketing, vendor relationships, customer relationship management, budgeting, and financial reporting.

My Itinerary Travel Agency will provide a full suite of travel planning services for individuals nationwide through its sophisticated online platform and accompanying customer app. My Itinerary Travel Agency will be the go-to travel agency for personalized service, convenience, and expertise of its travel agents. The company will be the ultimate choice for customer service while offering the best travel accommodations available.

Product Offering

The following are the services that My Itinerary Travel Agency will provide:

Airline travel bookings
Tour and travel package sales
Accommodation reservations and bookings
Cruise bookings
Car rental reservations
Travel ticket sales and reservations
Tour ticket sales and reservations

Customer Focus

My Itinerary Travel Agency will target individuals nationwide who are looking for personalized and convenient travel planning services. The company will target vacationers, tourists, and business travelers who are seeking the best deals on premium accommodations. No matter the customer, My Itinerary Travel Agency will deliver the best communication, service, and the best prices.

Management Team

My Itinerary Travel Agency will be owned and operated by Sandra Rodriguez. Sandra is a graduate of Florida University with a degree in business. She has over ten years of experience working as a travel agent for another local agency. Sandra will be the company’s chief executive officer. She will oversee the travel agency staff, manage customer relationships, and build vendor relationships.

Sandra has recruited sales and marketing expert, Sara Anderson, to be the company’s chief marketing officer and help oversee travel agency’s sales and marketing activities. Sara will handle all branding, marketing, advertising, and outreach for the company. She will also create and maintain the company’s online and social media presence. Sara has a Master’s degree in Marketing and has nearly ten years of experience working as a marketing director for a leading travel industry corporation.

Success Factors

My Itinerary Travel Agency will be able to achieve success by offering the following competitive advantages:

Skilled team of travel agents combined with the latest technology in the industry will allow the company to provide its clients with personalized service and modern convenience to make planning their trip easy and efficient.
The members of the leadership team have long standing relationships with a large pool of vendors, allowing them to provide clients with the best deals possible on premium accommodations.
The company offers a variety of modes of communication to better serve more clients’ preferences. Customers can speak with a travel agent in person, via telephone, video call, email, or chat through the website or app. Support is available 24/7 to ensure all clients’ questions and concerns are promptly attended to.

Financial Highlights

My Itinerary Travel Agency is seeking $290,000 in debt financing to launch its travel agency. The funding will be dedicated towards securing the office space, and purchasing office equipment and supplies. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff and marketing expenses. The breakout of the funding is below:

Office build-out: $110,000
Office equipment, supplies, and materials: $70,000
Three months of overhead expenses (payroll, utilities): $90,000
Marketing costs: $10,000
Working capital: $10,000

The following graph below outlines the pro forma financial projections for My Itinerary Travel Agency.

Company Overview

Who is my itinerary travel agency.

My Itinerary Travel Agency is a newly established travel agency in Boca Raton, Florida. My Itinerary Travel Agency will be the first choice for anyone seeking a personalized approach, 24/7 support, and streamlined technology to make trip planning easy. The company will serve customers nationwide from their headquarters in Florida.

My Itinerary Travel Agency will be able to guarantee the best deals possible thanks to the leadership team members’ long standing relationships with a large network of vendors in the hospitality, transportation, and entertainment markets. The company’s team of highly qualified travel agents will provide personalized service to each client, removing the uncertainty and hassles associated with finding and booking the right accommodations.

My Itinerary Travel Agency History

My Itinerary Travel Agency is owned and operated by Sandra Rodriguez, an experienced travel agent who has gained valuable knowledge on how to run a travel agency during the past ten years while working at Fun Destinations Travel Agency. Now that Sandra has experienced managing a travel agency, she is ready to start her own company, My Itinerary Travel Agency. Sandra is confident that her organizational and communication skills, combined with her understanding of business management, will enable her to run a profitable travel agency of her own. Sandra is recruiting a team of highly qualified professionals to help manage the day-to-day complexities of running a travel agency – sales and marketing, vendor relationships, customer relationship management, budgeting, and financial reporting.

Since incorporation, My Itinerary Travel Agency has achieved the following milestones:

Registered My Itinerary Travel Agency, LLC to transact business in the state of Florida
Has identified the ideal location for the company’s office and is in the process of securing a lease
Reached out to numerous contacts to include transportation, hospitality, and entertainment companies to begin securing vendor contracts
Began recruiting a staff of accountants, travel agents, and other office personnel to work at My Itinerary Travel Agency

My Itinerary Travel Agency Services

Airline travel comparisons and bookings

Industry Analysis

The U.S. travel agency industry is valued at $48.5B with more than 90,600 businesses in operation and over 318,600 employees nationwide. Factors currently driving industry growth include an increase in domestic tourism and travel for overnight trips, vacations, and business purposes. More domestic travel typically results in more consumers using travel agencies to book their trips. The travel agency industry can be segmented by brick-and-mortar establishments or online businesses. The global market size for the online travel agency segment reached $432B last year and is expected to rise as more people use the internet to book their trips. The travel agency industry relies heavily on the use of technology. Industry operators must stay up-to-date on the latest travel technology in order to remain competitive in the market.

One of the most significant hurdles for travel agency operators is attracting customers in the age of do-it-yourself booking. Now that customers are able to book many of their travel accommodations themselves, travel agents must be able to demonstrate why booking with them is a better option. Some ways industry operators can add value are by providing personalized services, promotional discounts, and helpful information about accommodation options.

Customer Analysis

Demographic profile of target market.

My Itinerary Travel Agency will target individuals nationwide who are looking for personalized and convenient travel planning services. The company will target vacationers, tourists, and business travelers who are seeking the best deals on premium accommodations. No matter the customer, My Itinerary Travel Agency will deliver professional communication, service, and the best prices.

The precise demographics for Boca Raton, Florida are:

Customer Segmentation

My Itinerary Travel Agency will primarily target the following customer profiles:

Individuals and families planning a vacation
Business travelers
Individuals and families in need of accommodations for events such as weddings, reunions, or conventions

Competitive Analysis

Direct and indirect competitors.

My Itinerary Travel Agency will face competition from other companies with similar business profiles. A description of each competitor company is below.

Fun Destinations Travel Agency

Fun Destinations Travel Agency is one of the largest and oldest travel agencies in Florida. The company was founded in 1958 in Boca Raton with one small office location. Now, the company has over 50 locations throughout multiple states. Fun Destinations specializes in booking accommodations for family vacationers. The company books accommodations near key family destinations such as theme parks, resorts, and tourist attractions. Fun Destinations is family owned and operated so the founders are familiar with the hassles associated with planning a family vacation. For this reason, Fun Destinations focuses on booking the best family-friendly accommodations so its clients can relax and enjoy the family fun.

Best Fit Vacations Travel Agency

Best Fit Vacations Travel Agency is a small travel agency catering to Boca Raton locals from its central office and nationwide clients via its online booking platform. The company was established in 1995 with the mission of providing vacation accommodations that will be “the best fit” for every client. Best Fit Vacations is owned and operated by industry professionals that have extensive experience working with vendors to negotiate the best deals for clients. The company strives to get the lowest prices for every booking and regularly finds additional savings and discounts other agencies might not know about.

Trustworthy Travel Agency

Trustworthy Travel Agency is a Boca Raton, Florida-based travel agency that provides superior service to its consumers. The company is able to provide a wide variety of travel accommodation bookings for customers in the area. Trustworthy Travel Agency has three locations throughout the state and operates an online booking platform for nationwide travelers. Customers can book online or over the phone at their convenience. The company uses an algorithm that finds the lowest prices on travel, lodging, and other accommodations across the country.

Competitive Advantage

My Itinerary Travel Agency will be able to offer the following advantages over their competition:

Marketing Plan

Brand & value proposition.

My Itinerary Travel Agency will offer the unique value proposition to its clientele:

My Itinerary Travel Agency offers the best deals through its extensive vendor network.
The company offers personalized customer service, a variety of communication modes, and 24/7 support.

Promotions Strategy

The promotions strategy for My Itinerary Travel Agency is as follows:

Social Media Marketing

The company’s chief marketing officer will create accounts on social media platforms such as LinkedIn, Twitter, Instagram, Facebook, TikTok, and YouTube. She will ensure My Itinerary Travel Agency maintains an active social media presence with regular updates and fun content to get customers excited about traveling.

Professional Associations and Networking

My Itinerary Travel Agency will become a member of professional associations such as the Travel Agency Association, American Travel Agents Society, and the Florida Travel Industry Association. The leadership team will focus their networking efforts on expanding the company’s vendor network.

Print Advertising

My Itinerary Travel Agency will invest in professionally designed print ads to display in programs or flyers at industry networking events. The company will also invest in professional ads to place in travel magazines and local publications.

Website/SEO Marketing

My Itinerary Travel Agency’s chief marketing officer will design the company website. The website will be well organized, informative, and list all the services that My Itinerary Travel Agency is able to provide. The website will also list testimonials from happy customers.

The chief marketing officer will also manage My Itinerary Travel Agency’s website presence with SEO marketing tactics so that when someone types in a search engine “best travel agency” or “travel agency near me”, My Itinerary Travel Agency will be listed at the top of the search results.

The pricing of My Itinerary Travel Agency will be on par with (and often lower than) competitors so customers feel they receive value when purchasing the company’s services.

Operations Plan

The following will be the operations plan for My Itinerary Travel Agency.

Operation Functions:

Sandra Rodriguez will be the chief executive officer for the company. She will oversee the travel agents, vendor relationships, and customer relations. Sandra has spent the past year recruiting the following staff:
Sara Anderson – chief marketing officer who will oversee all marketing strategies for the company and manage the website, social media, and outreach
Tom Brown – accountant who will provide all accounting, tax payments, and monthly financial reporting for the company
Christopher Jones – lead customer support manager who will directly oversee all customer support activities

Milestones:

My Itinerary Travel Agency will have the following milestones complete in the next six months.

12/1/2022 – Finalize contract to lease the office

12/15/2022 – Finalize personnel and staff employment contracts for the My Itinerary Travel Agency management team

1/1/2023 – Begin build-out/renovation of the office, and purchase office equipment and supplies

1/15/2023 – Begin networking at industry events and implement the marketing plan

2/15/2023 – Finalize contracts for initial vendors

3/15/2023 – My Itinerary Travel Agency officially opens for business

Financial Plan Business Plan FAQs

Key revenue & costs.

The revenue drivers for My Itinerary Travel Agency are the commissions earned as a percentage of bookings from vendors and fees charged to customers for consultations and services.

The cost drivers will be the overhead costs required in order to staff a travel agency firm. The expenses will be the payroll cost, utilities, greenhouse equipment and supplies, and marketing materials.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

Average accommodations booked per month: 9,000
Average commissions per month: $15,000
Overhead costs per year: $640,000

Financial Projections

Income statement, balance sheet, cash flow statement, what is a travel agency business plan.

A travel agency business plan is a plan to start and/or grow your travel agency business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your travel agency business plan using our travel agency Business Plan Template here .

What are the Main Types of Travel Agencies?

There are a number of different kinds of travel agencies , some examples include: independent agency, host agency or franchise.

How Do You Get Funding for Your Travel Agent Business Plan?

Travel agencies are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding. This is true for a travel agent business plan and a tour and travel business plan.

What are the Steps To Start a Travel Agency Business?

Starting a travel agency business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Travel Agent Business Plan - The first step in starting a business is to create a detailed business plan for your travel agency that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your travel agency business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your travel agency business is in compliance with local laws.

3. Register Your Travel Agency Business - Once you have chosen a legal structure, the next step is to register your travel agency business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your travel agency business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Travel Agency Equipment & Supplies - In order to start your travel agency business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your travel agency business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

Learn more about how to start a successful travel agency business:

How to Start a Travel Agency Business

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Airline Business Plan Example
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Airline Business Plan [2024 Edition]
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Travel Agency Business Plan Template. Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their travel agencies. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a travel agency ...
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Executive Summary executive summary is a brief introduction to your business plan. It describes your business, the problem that it solves, your target market, and financial highlights.">

Competition

Expectations

Our advantages

Create a professional business plan

Keys to Success

Marketing & Sales

Locations & Facilities

Equipment & Tools

Ownership & Structure

Management team

Financial Plan investor-ready personnel plan .">

Revenue by Month

Projected Profit and Loss

The quickest way to turn a business idea into a business plan

Airline Business Plan

How to Write An Airline Business Plan?

1. Executive Summary

Introduce your Business:

Market Opportunity:

Marketing & Sales Strategies:

2. Business Overview

Business Description:

Mission Statement:

Future Goals

3. Market Analysis

Target market:

Market size and growth potential:

Competitive Analysis:

Regulatory Environment:

4. Airline Services

Describe your services:

Quality measures

Additional Services

5. Sales And Marketing Strategies

Unique Selling Proposition (USP):

Pricing Strategy:

6. Operations Plan

Staffing & Training:

7. Management Team

Founders/CEO:

Organizational structure:

8. Financial Plan

Profit & loss statement:

Financing Needs:

9. Appendix

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The four key stages of planning

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