1. Team : Gray Matter Mayank Agrawal - 9930840608 Ashwin Jain -
9971063087 Tejas Shah - 9833232218 Entry Strategy for Bon Avion The
Consigliere 2.0
2. SLIDE NO. SLIDE DETAILS REMARKS FILES 1 Demand & Cost
Drivers Demand & Cost Drivers References - DGCA, IATA reports 2
Competitive Landscape Analysis of existing market players CAPA
Aviation reports 3 Entry Strategy Details of aviation strategies to
be adopted NA 4 Pricing Analysis of Yield Pricing model NA 5 Route
Planning Factors affecting Route Planning 6 Scheduled Routes
Details of Routes selected for operation NA 7 Income Statement 5
year Income statement with analysis 8 Breakeven Analysis
Calculations regarding Breakeven point 9 Airline Launch Plan Five
month launch plan NA INDEX
3. Demand and Cost Drivers Competitive Strategy Route Planning
Financials Cost drivers - demand for Air Seats Trade Real GDP GDP
per capita Labor Force Network Structure Infrastructure Business
Model Type of Service Regulatory Environment Tourism Disposable
Income Component Costs as % of Total variable costs Driving Factor
ATF (Airline turbine fuel) 40-60% Fuel Efficiency, Engine Option
Maintenance 20-30% Age of Aircraft Lease Rentals 15-20% Tenure of
lease Marketing 2-3% Online/Print Reservation, Online Sales 3-8%
Commissions, Systems, ITES Network Upkeep Costs 3-5% Planning
Navigation, Flight and routing charges 1-3% Planning HR 2-10%
Training, Expat pilots, Outsourcing US Aircrafts 7,000 India
Aircrafts 400 Passengers Airlines 84 Million a year Passengers
Railways 8.4 Billion a year Market Potential Time taken in train
Delhi Mumbai 16 hours Time taken in Flight Delhi Mumbai 02 hours
Time taken in train Kolkatta Agartala 60 hours Time taken in Flight
Kolkatta Agartala 45 mins. Costs Incurred by airlines
4. Largest International network to support its domestic
operations Advantage of being the national airline Highest
penetration Large fleet & 108 employees per aircraft Air India
Lowest Aircraft Maintenance cost Standard and uniform base fares
Point to point model & Single fleet Same day returns Lowest
turnaround time Best on time performance Sale & lease back
model - procurement Indigo High fuel efficiency Experience and
International tie ups Strong and Growing loyalty program Strong
corporate tie ups Excellent customer experience Highest leg room
and comfortable seat Jet Airways Predatory pricing Highest load
factor Spicejet Premium Economy World class experience Full Service
Multi cuisine food, other services Vistara Low fares Focus on Tier
2 connectivity Extra charges for Check In Baggage Air Asia Low
fares Focus on Tier 2 connectivity Single fleet - 19 Go Air Demand
and Cost Drivers Competitive Strategy Route Planning Financials
Competitive Rivalry Supplier Power Threat of substitutes Buyer
power Entry/Exit Barriers High ATF Fluctuations in international
prices Aircraft 2 major players(oligopoly) Labor - Unions Low/Mid
Train Bullet Train High Capital Initial Expendi ture Operati on
costs Porters Five Forces 1 1 Low/Mid Fewer options Low supply of
train tickets
5. Low Operational Costs Leveraging Seasonal Traffic Multi
sector flights covering seasonal high traffic destinations Example:
Feb to November Delhi Bengaluru Dec to Jan Delhi-Goa-Bengaluru
Single Cabin Class Maximum seat capacity 180-189 Minimum time in
boarding Low turnaround time. Target 25-30 minutes High Load
Factor: >75% Customer Relationship Initially offering free
return flights instead of discounting Loyalty Program Strategic
industry Tie Ups Standard and uniform fares thereafter Lower base
fares on 2/3/4 month advance bookings Recruitment Recruiting staff
from point of origin/destination to reduce hotel costs Minimum
dependence on Expat pilots Fewer employees per aircraft. Target 95
per aircraft Red Eyed Flights Blue ocean strategy High aircraft
utilization rates > 11 hours Covering longer distance routes, 3
hours and above Hub & Spoke - Point to Point Hybrid Model
Taking advantage of low airport fee at Tier II/III airports
Operating only on profitable routes Ensuring On time performance.
Target 90% Single Fleet Low training costs for Pilot/Crew Learning
by doing Bulk purchase/Lease discounts Leasing(Dry/Wet) 5 Aircrafts
initially to ensure risk minimization. Purchasing aircrafts after 2
years of operations through Sale and Lease Back Model Low
Maintenance Costs Young Aircraft Fleet A320 Neo Maintaining average
age of aircrafts within 5 years Demand and Cost Drivers Competitive
Strategy Route Planning Financials High operational efficiency of
Cabin Crew and Ground staff through digitization of manual
operations, both in flight and on ground
6. Demand and Cost Drivers Competitive Strategy Route Planning
Financials Choice of Aircraft 2/3/4 Month Low fares Last 2 week
high prices Based on Number of days before flight 2 weeks 2 months
prices BaseFare Number of tickets Tuesday Monday Morning Friday
Evening Based on Day and time of the week Friday/Sa turday/S unday
Day BaseFare Number of tickets Rest of the week Airbus A320 Neo
with CFM LEAP Engine option 20% per seat fuel burn saving (approx.
$250,000 a year) Low maintenance costs Capacity of 189 seats with
single class configuration Faster deliveries within 2-3 years
Pricing - Yield Pricing Limiting to seats to 180 enhance leg room
Food and beverages in flight on demand @price 7Kg + 15 Kg Free
Baggage Extra Baggage @250 per Kg Competitive pricing for cargo
targeting e-tailing cargo companies Demand and Cost Drivers
Competitive Strategy Route Planning Financials
7. 0 1000000 2000000 3000000 4000000 5000000 6000000 7000000
8000000 9000000 10000000 HYDERABAD KOLKATA CHENNAI BANGLORE MUMBAI
DELHI POTENTIALITY MATRIX The strategic importance is gauged by the
business activity, tourist destination and potential smart city.
This matrix lists tier-2 & 3 cities according to their
potential air traffic. The growth is measured in terms of year on
year increase in the domestic passengers handled by the airport.
These cities can play a role in our hub and scope model. HIGHLY
STRATEGIC HIGH GROWTH LOW GROWTH LESS STRATEGIC GOA AHEMDABAD PUNE
BHOPAL NAGPUR LUCKNOW AGARTALA VIJAYWADA TIRUPATI VISHAKAPATNAM
COCHIN BHUBANESWAR JAMMU AGARTALA INDORE Demand and Cost Drivers
Competitive Strategy Route Planning Financials *Data from DGCA
Reports Monthly domestic passenger traffic at 6 busiest airports in
India Delhi and Mumbai handle the highest number of domestic
passengers. Bangalore, Chennai, Kolkata and Hyderabad follow them
interchangeably These cities have an ever increasing demand and
require a good frequency of cross flights.
8. AIRC RAFT NO. ROUTE TOTAL MONTHLY PASSENGERS JOURNEY S PER
DAY AIRCRAFT UTILISATI ON RATE MONTHS OF OPERATION ALTERNATE ROUTE
TOTAL MONTHLY PASSENGE RS JOUR NEYS PER DAY AIRCRAFT UTILISATION
RATE MONTHS OF OPERATI ON HUB 1 DELHI-MUMBAI- DELHI 472005 2 9.5
hrs Jan,Feb,Mar,A pr,Jul,Sep,Oct, Nov,Dec (9 months)
(a)Delhi-Ahmedabad-Mumbai- Delhi (b)Delhi-Nagpur-Mumbai-Delhi
(c)Delhi-Bhopal-Mumbai-Delhi 366177 272891 260653 2 2 2 11 hrs 12
hrs 12 hrs May June August Delhi 2 MUMBAI- BANGLORE- MUMBAI 270434
2 8.5 hrs Feb,Mar,Apr,M ay,Jun,Jul,Aug, Sep,Oct,Nov (10 months)
Mumbai-Goa-Banglore- Mumbai 248404 3 10 hrs Dec,Jan Mumb ai 3
DELHI-BANGLORE- DELHI 278022 2 12.5 hrs Feb,Mar,Apr,M
ay,Jun,Jul,Aug, Sep,Oct,Nov (9 months) (a)Delhi-Goa-Banglore-Delhi
(b)Delhi-Pune-Banglore-Delhi 212021 261911 2 2 13.5 hrs 14.5 hrs
Dec,Jan May Delhi 4 DELHI-HYDERABAD- DELHI 171440 2 11 hrs
Jan,Feb,Mar,A pr,May,Jun,Jul, Aug,Sep,Oct,D ec(11 months)
(a)Delhi-Hyderabad-Cochin- Delhi 108640 2 14 hrs Nov Delhi 5
DELHI-KOLKATA- DELHI 147849 2 9.33 hrs Jan,Feb,Mar,A pr,May,,Jul,Au
g,Sep,Oct,Nov, Dec (10 months) (a)Delhi-Lucknow-Kolkata-Delhi
(b)Delhi-Agartala-Kolkata-Delhi 137466 99717 2 2 10.5 hrs 15 hrs
June May Delhi The routes have been selected by analysing the
monthwise peaks in passenger traffic according to the DGCA reports
for 2014-15 Demand and Cost Drivers Competitive Strategy Route
Planning Financials
10. Demand and Cost Drivers Competitive Strategy Route Planning
Financials Breakeven Analysis Bon Avion India 2017F 2018F 2019F
2020F Operating Profit 17.59 42.11 73.57 111.95 Net Profit -30.67
-27.34 1.41 16.79 Calculations for the cost analysis are attached
in the Excel
11. December 2015 January 2016 February 2016 March 2016 April
2016 March 2019 8 15 22 29 5 12 19 26 3 10 17 24 29 7 14 21 28 5 12
19 2 9 1 23 Stage 1: Apply for FIPB approval for commencing its
operations in India Activity 1: Application Activity 2: Expected
Approval grant (recent Vistara, Air Asia) Stage 2: Permission to
Schedule Aircraft and transport passengers Activity 1 : Application
Activity 2 : Approval & Leasing Stage 3: Incorporate Joint
Venture Activity 1: (51% Indian Conglom- erat. 49% Bon Avion)
Activity 2: Recruitment Stage 4: Air Operator permit, Test run,
Scheduling flights Stage 5: Flights on Offer Stage 6: Breakeven
Milestone Bon Avion India Launch Plan