A Business Plan for Setting Up an Airline Company

A Business Plan

for

Setting up an Airline Company

Business Plan:

Setting up an Airline Company

Apollo Airways

Executive Summary:

Apollo Airways is a new consumer airline in its formative stages. It is being organized to take advantage of a specific gap in the travel market. The gap in the availability of low cost service with the demand for passenger travel on selected routes from Dhaka indicates that a new airline could be expected to capture a significant portion of current air travel business at that hub.

Our research and projections indicate that air travel to and from Dhaka is sufficient to provide a new carrier with revenues of $110 million dollars in its first full year of operations, utilizing 6 aircraft and selected routes. These sales figures are based upon load factors of only 55% in year one. Second year revenues are expected to exceed $216 million dollars with additional aircraft and expanded routes. Load factors for year two are 62%. The Apollo Airways’s 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 Apollo Airways's target market exceeds the demand that dictated Private Jet's growth.

These sales levels will produce net profit of just over $1 million in the first operational year and $21.4 million dollars in flight year two. Profits in year one will be 1% of sales and will improve to 10% of sales 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 three, four, and five.

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....