Regional Airline Business Plan
Puddle Jumpers Airlines, Inc. is a new consumer airline in its formative stages. It is being organized to take advantage of a specific gap in the short-haul domestic travel market. The gap exists in low cost service out of Anytown, U.S.A. The gap in the availability of low cost service in and out of the Anytown hub coupled with the demand for passenger travel on selected routes from Anytown indicates that a new entrant airline could be expected to capture a significant portion of current air travel business at that hub.
The management of Puddle Jumpers is experienced in airline start-ups. Previously management grew Private Jet Airlines from a single Boeing 727 to a fleet of 16 MD80 series aircraft. Revenues grew to $130 million in a two year period four years ago. Our research and projections indicate that air travel to and from Anytown is sufficient to provide a new carrier with excellent revenues in its first full year of operations, utilizing six aircraft and selected short-haul routes. These sales figures are based upon load factors of only 55% in year one. Second year revenues are expected to more than doublewith additional aircraft and expanded routes. Load factors for year two are 62%. The Puddle Jumpers plan has the potential for a more rapid ramp-up than was the case with Private Jet due to the nature of the routes and the demand for travel currently in the targeted markets served. In short, the frequency of flights needed to serve Puddle Jumpers’s target market exceeds the demand that dictated Private Jet’s growth.
These sales levels will produce respectable net profit in the first operational year and exponential growth in flight-year two. Profits in year one will be a modest percent of sales and will improve steadily with the economies gained in year two. The over-all operational long term profit target will be 16% of sales as net profit in years four and five. The company’s long term plan is part of the due diligence package. The first operational year is actually fiscal year two in this plan. The first year of formative operations will burn cash until revenue can commence. This is due to the organizational and regulatory obligations of a new air carrier. Investment activity is needed to handle the expenses of this phase of the business.
The following chart illustrates the over-all highlights of our business plan over the first three years. Gross Margin here is quite high since the only costs included in this calculation are travel agent commissions, credit card discounts, and federal excise taxes. Travel agent commissions are calculated on 30% of sales even though management feels the actual number will not exceed 10% of sales.
The Company has the following objectives:
- To obtain required D.O.T. and F.A.A. certifications on or before month eight.
- To commence revenue service on or before the end of year one.
- To raise sufficient “seed” and “bridge” capital in a timely fashion to financially enable these objectives.
- To commence operations with two McDonnell-Douglas MD-80 series aircraft in month one, four by end of month four, and six by end of month six of flight operations.
- To add one aircraft per month during year two for a total of 18 at year two end.
Puddle Jumpers International Airlines, Inc. has a mission to provide safe, efficient, low-cost consumer air travel service. Our service will emphasize safety as its highest priority. We will operate the newest and best maintained aircraft available. We will never skimp on maintenance in any fashion whatsoever. We will strive to operate our flights on time. We will provide friendly and courteous “no frill” service.
1.3 Keys to Success
The keys to success are:
- Obtaining the required governmental approvals.
- Securing financing.
- Experienced management. (Already in place).
- Marketing; either dealing with channel problems and barriers to entry; or solving problems with major advertising and promotion budgets. Targeted market share must be achieved even amidst expected competition.
- Product quality. Always with safety foremost.
- Services delivered on time, costs controlled, marketing budgets managed. There is a temptation to fix on growth at the expense of profits. Also, rapid growth will be curtailed in order to keep maintenance standards both strict and measurable.
- Cost control. The over-all cost per ASM (available seat mile) is pegged at 7.0 cents or less in 1996 dollars. This ASM factor places Puddle Jumpers in a grouping of the lowest four in the airline industry within the short-haul market. (US Air, the dominate carrier in the Anytown market, averages 12.0 cents per ASM by comparison). The only three airlines with lower operating costs also operate older and less reliable equipment, and even then the lowest short-haul cost in the airline industry is currently Southwest at 6.43 cents per ASM.
Puddle Jumpers International Airlines is being formed in July, 1996 as a South State Corporation. Its offices will be in Anytown. The founder of Puddle Jumpers is Kenneth D. Smith. Mr. Smith has extensive experience in consumer aviation. His bio as well as the backgrounds of all the members of Puddle Jumpers’s management team are enclosed herein.*
*Confidential and Proprietary information has been removed from this sample plan.
2.1 Company Ownership
Puddle Jumpers International Airlines, Inc. will authorize 20,000,000 shares of common stock. 1,000,000 shares are to be set aside as founder’s stock to be divided among key management personnel. It is also expected that management stock options will be made available to key management personnel after operations commence. It is expected that founders stock plus option stock will not total more than 15% of authorized shares.
Initial “seed” capital is to be attracted via a convertible debenture sold by Private Placement. This round of funding will have premium conversion privileges vs. later rounds and “bridge” capital. The company has plans to proceed to a public offering prior to initiating revenue service. The expected proceeds from the Private Placement are expected to be $300,000 at “seed” stage, $3.5 million in “bridge” funding and $10 million in I.P.O. proceeds (projected at $6 per share). Management cannot assure that an I.P.O. will be available at the time desired and at the price sought.
2.2 Start-up Summary
In the second year of operations, Puddle Jumpers will expand revenue by adding flights to the most demanded and popular routes in current operation. This will serve to make our schedule the most convenient to these destinations, improving further our competitive advantage. The routes expected to be expanded first include Chicago, New York, and Anytown. Second level expansions would included Philadelphia, Dallas, Washington DC, Orlando and Detroit.
2.3 Company Locations and Facilities
Management plans to lease a small office in suburban Anytown immediately upon closing “seed” funding.
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With Hyundai’s New EX8 Mighty Truck You Can Move Mightier Loads
Hyundai Automotive South Africa’s commercial vehicle range has received a healthy injection with the launch of the new EX8 Mighty truck, boasting several new features and an industry-leading factory warranty that makes it a formidable contender in its market segment.
The new EX8 Mighty – a successor of the previous HD truck – stems from a long, proud and successful tradition of building competitive commercial vehicles with notable strengths in Korea, the rest of Asia and the Middle East.
Assembled at Hyundai Automotive SA’s commercial vehicle factory in Apex, Benoni, The EX8 Mighty joins the ever-popular H100 (also referred to as Hyundai’s “Bakkie”) and the H1 panel van in Hyundai Automotive SA’s commercial vehicle range.
Hyundai Automotive SA’s Commercial Vehicle Division has its own truck body builder on site in Benoni that produces several standard and customized options according to the customer’s specifications. This includes van bodies, dropsides, tippers, tautliners, trailers and H100 tipper conversions. The truck body builder also does all kinds of repair work for customers.
More spacious cabin, better comfort and visibility
Compared to its predecessor, the EX8 Mighty’s interior space has been increased from 2,9m2 to 3,5m2. Storage space for driver and passengers has also been increased to 11,8 litres. Visibility from inside the cabin has been greatly improved by increasing the windshield size – an important feature, because better visibility ensures safer driving. The windshield height has increased by 20mm, and width by 70mm.
Also, the dash has been lowered by 80mm, allowing an increased visibility angle of 2,2 degrees. Interior space has been enhanced by increasing the interior cabin height to 1 490mm. The steering column now has forward-backward adjustment of 60mm, as well as height adjustment of 76mm – an altogether new feature that enables the driver to set the most comfortable and safest driving position.
Greater load-carrying capability
The longer wheelbase of the new EX8 Mighty has increased its versatility as a load carrier and resulted in a longer deck (4 850mm) that allows you to carry more freight and do fewer trips.
The Gross Vehicle Mass (GVM) of the new EX8 is 7800kg versus 7500kg of Hyundai’s main competitors, which also means you can carry more with the EX8 Mighty. The dropside version of the EX8 has a load capacity of 4 tons.
Various load carrying options according to customers’ demands are available, including a tipper conversion, closed bodies for secure transport of goods, and the very practical dropside body that ensures easy loading and off-loading of goods.
To summarise, we have a well-priced commercial vehicle that has:
- An industry-leading factory warranty of 4 years, with no limit to
- the mileage
- An extra 300kg GVM in comparison to competitors
- Service intervals that have been increased to 20 000km in order
- to reduce the cost of ownership.
Five EX8 derivatives, with keen pricing
Hyundai is launching the new EX8 in five derivatives at very competitive prices. They are the:
- EX8 LWB CC R379 500 (excl. VAT)
- EX8 LWB CC (with aircon) R394 500 (excl. VAT)
- EX8 Dropside R413 100 (excl. VAT)
- EX8 Dropside (with aircon) R428 100 (excl. VAT)
- EX8 SWB Tipper R451 500 (excl. VAT)
For more please visit.