Sample Airline Business Plan - Market Analysis - 2021 - Business Planning
Attention! The free business plan offered for download below is an example. The business plan that best suits your business conditions needs to be created with the help of specialists.
Airline business processes through business plan
When planning to create an airline with a payback period of two years, the future project should provide high profitability, generate profit and provide transportation for the population.
The implementation of the project is possible in case of obtaining a loan in the amount of 525,000,000 rubles, while it is planned to ensure the organization and implementation of high-quality civil transportation.
If the project is successfully implemented, the investor's estimated income will be 35,770,000 rubles. From the first month of the project implementation, it is planned to pay interest on the loan in the amount of 17.5% and after two years the total amount of the interest rate will be 35,770,000 rubles.
In the future, banks plan to reduce interest rates on loans. The payback period is 21 months, including discounting - 2 years. The estimated economic effect is 285182240 rubles.
Airline business model in business plan
For the implementation of the business plan for the opening of the airline, the amount of necessary cash costs will be 566251800 rubles / year.
These investments will mainly go to:
- Construction of premises - 1,500,000 rubles;
- Purchase of equipment - 467,865,200 rubles;
- Purchase of computer equipment - 120,000 rubles;
- Website development, payment for hosting, purchase of scripts, development of an electronic scoreboard and online ticket purchase - 120,000 rubles;
- Fixed costs for the purchase of aviation fuel and other consumables (from 100 liters) - 15,309,000 rubles. / year;
- Advertising - 600,000 rubles / year;
- Salary of project participants - 333,547,800 rubles / year;
- Taxation - 10,087,800 rubles / year;
- Unforeseen expenses - 47,189,800 rubles.
How to open your own airline: risk assessment when opening an airline + stages of business organization + subtleties of drawing up a business plan + analysis of the complexity of the registration process + a detailed review of the preparation of the material and technical base + marketing plan + calculation of the amount of capital investment.
The trend of recent years shows that air travel has become very popular among the population, and their volumes are constantly increasing.
These statistics suggest that starting your own airline can be a very lucrative business idea. But is it so easy to open such a business if it requires fabulous costs and can pay off for many years?
How to open your own airline, and whether it is possible due to many risks, we will discuss in this article.
How to start your own airline: risk assessment and step-by-step instructions
Own airline is a promising and profitable business, which, moreover, is among the most in demand. But to open your own airline, you will need to spend over 500 million rubles, and no one guarantees that you will be able to recoup such an activity.
Unfortunately, many airlines have gone bankrupt without even returning the invested amount. The reasons for this are very different: someone was not in demand on the market and was "suppressed" by competitors, and someone became a victim of force majeure.
Such sad statistics does not mean that starting this type of business is in any case inappropriate. You just need to understand that several years will pass from the moment of investing until the first profit is received + you should really be well versed in the topic of air travel, develop a competent business plan, and invest a lot of money in advertising.
The main disadvantages of business in this area are as follows:
- A large number of competitors - major airlines that will hinder your activities.
- Business travelers looking for convenience, reliability, speed and schedules built around business needs.
- Travelers from government and international organizations requiring the same items.
- Personal and tourist travelers from Southeast Europe / Turkey who have the money to travel by air and who increasingly demand higher levels of service and convenience, but with economic costs.
- Diaspora, personal and tourists originally from the South East Europe / Turkey region, but now they live and work in significant numbers in Western European countries with the same requirements.
- Western European personal and tourist travelers, mainly traveling on airline routes between Western European destinations.
- Seasonal (mainly in summer, with limited niche markets in winter) holidaymakers mainly destined for Greece, Turkey and the Mediterranean islands. Cost, reliability, convenience and purpose are their problems.
- Business - 15%
- Government and International Organizations - 10%
- Regional Resident Personal and Tourist Travelers - 20% li >
- Diaspora Personal and leisure travelers - 10%
- Travelers from Western Europe and rest - 5%
- Seasonal travelers - 10% *
Reviews of the airline business plan ()
The main thing about the airline's business plan for the year
A grand scam: opening an airline
If you have an idea to open your own airline, it means that you have no special financial problems and will not be foreseen. Otherwise, it makes no sense to undertake such a grandiose project. This serious business requires no less serious attitude to the process of its creation. Moreover, the slightest miscalculation is fraught with such material losses that after them not every businessman will be able to get back on his feet.
But, despite the apparent difficulties, the airline as a business has very good prospects, which are due to the loss of passengers' confidence in state-owned companies. People expect a high level of service and adequate ticket prices from private airlines. But the main requirement is a good technical condition of air transport.
Before investing a lot of money in the creation and development of a business, it is necessary to carefully analyze both the positive and negative experience of other companies. It's much better than learning from your own mistakes. In addition, you should take into account all the factors that can affect the result of your work, including the regular increase in fuel prices.
Modern Russian airlines perform many different functions today. In addition to ordinary passenger traffic, they are engaged in the carriage of goods, carry out charter flights. Significant initial capital isn't the only ingredient in success. It is important to spend money wisely, calculating each step, clearly understanding what result this or that action can lead to.
Much in this type of business depends on the professionalism of the specialists who will work for you. But the state of technology has an even greater influence on the success of the business. If your fleet will consist solely of old, outdated aircraft, you should not hope that you will be able to earn a positive reputation. Success accompanies those businessmen who are able to offer their passengers flight safety combined with a high level of service.
It is very important to define specific numbers that you cannot do without at the initial stage of starting a business. First of all, this is the optimal number of aircraft, which will allow you to satisfy customer requests, but at the same time, the winged transport will not be idle for a long time without work. If the fleet is too small, then the client will have virtually no choice. Excessive air transport can result in significant loss of funds in the event of downtime.
Marketing strategy development is an integral part of your business. In advance, come up with a catchy name of the company, order the specialists to make a logo, develop a slogan. In the future, this will have a significant positive impact on the active promotion of the business and the return on investment of the airline. If you need additional investment, contact your bank for help. A professional, well-designed airline business plan will help increase your chances of getting a loan.
Ready-made airline business plan from scratch with examples of calculations for opening
A good business plan of the airline is pleased to offer the attention of all those interested on our website. Let's make a reservation right away - this is a project for serious investors who create a business not for a year or two, but for the long term. A private airline today is an alternative to government departments, which, having outdated equipment, are in no hurry to “leave the game”. That is why an increasing number of people flying on airplanes are waiting for private companies to enter this market.
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Economic growth and redevelopment requirements, not to mention the upcoming entry of several countries into the region to the European Union, are creating an increased demand for air travel between Western Europe and the countries of Southeast Europe and Turkey.
The market is a mix of various elements, all of which require a higher quality of aircraft service than currently available:
The proposed new airline will appeal to all of these separate groups by offering better service (and in some cases offering a service that no longer exists), with higher levels of safety, comfort and convenience, and reasonable fares than at present. The new airline will also focus on the niche markets identified in the Service Description section of this plan, allowing it to better serve and become identified as the carrier of choice for these markets.
A complete market analysis and segmentation will require a dedicated survey of passengers and recipients, the cost of which is included in the start-up costs for the airline.
Preliminary analysis (based on various methods including observation, interviews with airlines on travel and airline industry specialists, economic segmentation, future projections based on marketing plans and experience with the region and the market), however, indicates the following approximate segmentation of the market as a whole (significant deviations, of course, will be expected depending on the route, season, and other factors):
* The seasonal / holiday segment of the market distorts the overall market interest to some extent, but could initially be expected for two reasons: First, it compensates for the drop in business and government travel that can be expected during the peak summer season vacation; second, a significant portion of this traffic is likely to be carried on flights using specially chartered or wet leased additional aircraft.
The accompanying market analysis table and the table below show the overall potential markets based on the estimated population in each segment, as well as the potential air traffic growth rate in the new airline's target market region in those segments, but not reflect the expected passenger demand from these markets. A general view of the airline's expected passenger traffic by market segment is presented above.
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Puddle Jumpers Airlines, Inc. is a new consumer airline in its early stages, It is organized to take advantage of the special gap in the short-haul short-haul market. The gap exists in an inexpensive service from Anytown, USA. The gap in low-cost service availability to and from Anytown, coupled with passenger demand on selected routes from Anytown, indicates that the new entrant airline is expected to capture a significant chunk of the hub's current air travel business.
Puddle Jumpers management has experience working with airlines. Previously, Private Jet Airlines' management grew from one Boeing 727 to a fleet of 16 MD80 series aircraft. Revenues rose to $ 130 million in two years four years ago.
Our research and projections show that air travel to and from Anytown is sufficient to provide the new carrier with excellent first-year earnings on six aircraft and selected short-haul routes. These sales figures are based on load factors of only 55% per year. Revenue for the second year is expected to more than double compared to additional aircraft and extended routes. The load factors for the second year are 62%. The Puddle Jumpers plan has the potential to accelerate faster than the Private Jet due to the nature of the routes and travel demand currently in target markets. In short, the frequency of flights required to serve Puddle Jumpers' target market exceeds the demand that Private Jet's growth dictates.
These sales levels will result in respectable net income in the first operating year and exponential growth in the summer year. Profits in the first year will be a modest percentage of sales and will improve steadily with economies generated in two years. The total long-term operating profit target will be 16% of sales in the form of net income in four and five years. The company's long-term plan is part of the due diligence package. The first operating year is actually the second financial year in this regard.
The first year of formation operations will burn cash until income starts. This is due to the organizational and regulatory obligations of the new air carrier. Investment activity is necessary to cover the costs of this stage of the business.
The following diagram illustrates the highlights of our business plan for the first three years. The gross margin is quite high here, as the only costs included in this calculation are travel agent commissions, credit card discounts, and federal excise taxes. Travel agent commission is calculated on 30% of sales, even if management believes the actual number will not exceed 10% of sales.
NOTE. For indicative purposes in this example plan, the numbers in tables and charts are shown in thousands (000)
We recommend using LivePlan as the easiest way to create graphs for your own business plan.