ESTABLISHING AIR MANO TO PROVIDE REGIONAL AIR TRAVELS AMONGST THE MANO

RIVER UNION COUNTRIES –WEST AFRICA

-BY PRINCE YEAKEHSON( LL.M,MBA)

The Mano River Union (MRU) is an international association establishedin 1973 between Liberia and Sierra Leone. In 1980, Guinea joined theunion. The goal of the Union was to foster economic cooperation amongthe countries. It is named after the Mano River which begins in theGuinea highlands and forms a border between Liberia and Sierra Leone.Due to conflicts involving these countries, the objectives of the Unionhas not be achieved. However, on May 20, 2004, the Union wasreactivated at a summit of the three leaders of the Mano River UnionStates. On April 1, 2008, Cote d'Ivoire agreed to join the union. Coted’Ivoire’s agreement to join the MRU brings the Union membership tofour. Despite the civil wars and civil insurrections in these fourcountries, the population growth is progressive and economic activitiesare again picking up. There is no history of an existing or establishedregional air transport to the four countries. Although there areinternational flights like Delta, Brussels and France Airlines that fly tothese countries, thousands of businessmen spent days, weeks or monthson commercial vehicles to travel from one of these countries to the nextsimply because they cannot afford high fares demanded by theseinternational airlines. I think the establishment of a regional airline (AirMano) to be named after the exiting union that ties the fourcountries, economic activities will be stimulated and this will bring agreat investment return to my business.

This paper will endeavor to analyze thecurrent situation in the Mano River Unionregion especially regarding the stability of theregion for airline investmentpurpose, Strategic Direction (missionstatement) of Air Mano ,ExternalEnvironment, Opportunities for Growth, Industry Rivals positioned value chain andcompetitive strategy ( marketing strategies)and pro forma income statement. Conclusionand references will follow next.

Although Liberia, Guinea and Sierra Leone havecommon aeronautical authority known as theRobert Flight Information Region (RFIR) which isresponsible to monitor the airspace of the threecountries and to collect over flight fees foraircrafts plying their collective airspace, the threecountries have failed to establish and fundregional flights in the MRU. There was plan toestablish one in the past but failed. They failedbecause of political interferences from the MRUcountries leaders. There is no exiting regionalairline industry in the Mano Rive Union to takeadvantage of this economic zone.

The airlines that operate in these countries areconcerned with international operations ratherthan regional. Although some of them sometimeshave schedule flight like from Brussels- Liberia -Cote d’Ivoire-Brussels on Brussels Airline;Atlanta-Ghana-Liberia –Atlanta on Delta Airlineand France-Guinea-Liberia –France or France –Senegal-Freetown- France on FranceAirways, there is no regional fight to go the routeof Liberia-Freetown-Guinea- Cote d’Ivoire-Liberia like the proposed Air Mano will be engagein.

With the establishment of Air Mano as a full fleshregional flight, the question of competition willbe very slim as many people will not want to gothrough the hurdles of connecting with twopoints as posed by these international airlines.Although I recognize the fact that Air Mano willbe faced with enormous challenges ranging fromacquisition of a demand seated aircraft toconfidence building in the region to provereliability with schedule flights (even if it meansto fly with empty seats), in the long run, therewill be huge investment returns. In short, theconcept of this business is regional airtransportation.

3.1. The mission of Air Mano is to serve theMano River Union Member Countries byproviding alternative and feasible airtransport services.

3.2. The objective/vision of Air Mano isfundamental to the purpose of any businessgear towards minimizing cost at a relativegain through investment returns thusactualized by delivering timely andmeaningful air transport services in theregion.

To actualized this objective/vision, I will have to seek regional shareholders ( Common Stock holders) from Guinea, Liberia, Sierra Leone, and Cote d’Ivoire to increase ( say my $1.6 Million venture capital) to enable us buy at least two 30 seated aircrafts whereby we will use one for standby.

3.3. The philosophy of Air Mano is enshrinedin its mission statement: to serve the publichappily and timely at reasonable cost forbetter service. This philosophy will bereflected by the management control systemswe will employ to gain the public attentionand to pull them over from the commercialvehicles they have travelled by long distancesin the past for days, weeks and months andto create an air service environment for themto travel by air safely.

Air Manor will be incorporated under the lawsof the Republic of Liberia and headquarteredin Monrovia. It will have branch offices inGuinea, Sierra Leone, and Cote d’Ivoire to beheaded by a branch manager who shall reportto the General Manager. The General Mangershall be based in Monrovia, Republic ofLiberia. He/she shall implement the corporateresponsibility of Air Mano in the region.

Research and development shall be headed by adirector who shall be responsible forresearch, planning and development of Air Mano. Inshort, the director for R&D shall control the economicaffairs of the company.

Corporate Finance shall be headed by a a comptrollerwho shall be responsible for the corporate finance infor all locations in Liberia, Guinea, Sierra Leone andCote d'ivoire.

Sales force/Sales Department shall be responsible forsales strategies in the region regardingpromotion, pricing/airfare structuring to meet marketdemand.

BOARD OF DIRECTORS

HEADQUARTER(MONROVIA)

RESEARCH & DEVELOPMENT

CORPRATE FINANCE

SALES FORCE/marketingBRANCH OFFICE

(FREETOWN)

BRANCH OFFICE

(CONAKRY)

BRANCH OFFICE (ABIDJAN)

The management principles/practices that are being implemented at Air Mano will be done through: Planning, Organizing, Leading, and Controlling.

Planning-The planning and research department will be under one supervising manager. Planning will entails forecasting/ projecting the traffic for the year, ticket sales expected for the year, maintenance schedule and fuel cost estimates, and outline or suggest how to achieve these in 5 or 10 years. Implementations to achieve the 5 or 10 years goal will be divided into objectives/ phases: Phase 1, 2, 3 , etc. or Year 1, 2, 3 and so on.

For example, Year 1 goal would be toincorporate Air Mano, rent an office space inMonrovia and have it staffed, launch thecompany in Liberia and engage in maximumpublicities in all the Mano River UnionCountries to create awareness of our regionalflight operations, purchase the company’sfirst aircraft, and launch the company’swebsite where the public can transactbusiness with our company anywhere theyare in the world.

Year 2 would focus more on establishingbranch offices in each Mano River UnionCountries and year 2 would focus onpurchasing additional aircrafts to increase ourfleet in the region depending on thedemand, etc.

Regarding the organization ofimplementation of these plans outlinedsupra, the Sales Force Department which willbe headed by another supervisingmanager, will shoulder most of theresponsibilities of implementation of thePlanning Department’s research and plans forthe company. For example, the Sales ForceDepartment job would be publicity/marketing, and sales.

Leading and control will be the sole responsibilityof management and management will be headedby a General Manager who shall run the daytoday activities of Air Mano. He shall coordinateoperational activities of Air Mano in the regionwhich shall include establishing branch officersin the Mano River Union membercountries, hiring and firingemployees, purchasing aircrafts and maintenanceequipment for the company and making sureshareholders values are paramount and notentrenching himself/herself. He shall also ensurethat the corporate finances are well managed bythe Department of Finance.

4.1. Opportunities for Growth According to Thomas et al (2012), the macro-economic

environment encompasses the broad environmentalcontext in which a company’s industry is situated. Itincludes several components: population demographics,;societal values and life styles, political, legal andregulatory factor, the natural environment and ecologicalfactors, global forces, etc.

As mentioned in the introduction to this paper, the fourmember countries of the MRU were struck by civil warsand civil unrest which destroyed meaningful economicactivities in this region and it could not meet its objectivesto foster trade and economic cooperation for two decades(Conference Report- ECOWAS, (2010).

Today, the guns are silent in this region and people are trying to rebuild their lives again. Although there are international flights like Delta, Brussels and France Airlines that fly to these Mano River Union countries, thousands of businessmen spent days, weeks or months on commercial vehicles and by foot to travel from one of these countries to the next; simply because they cannot afford high fares demanded by these international air carriers .

I think the establishment of a regional airline (AirMano) to be named after the exiting union thatties the four countries, economic activities will bestimulated and this will bring great investmentreturn to my business in the long run. In fact, thecurrent population statistics of these fourcountries are as follow: Liberia: 4.1Million, Coted’Ivoire: 22 Million, Guinea: 10.8 Million andSierra Leone 5.8 Million

SOURCE: World population 2011 by country (http://www.prb.org/Publications/Datasheets/2011/world-

population-data-sheet.aspx ).

4.2. Industry Rival Positions

The rivals in this industry are the BrusselsAirlines, Delta Airlines, and Air France;however, these are international airlines.Although, they fly to these MRU countries, theyare not interested in regional operation as AirMano is proposed to be. For example, BrusselsAirlines flies from Brussels- Liberia - Coted’Ivoire-Brussels; Delta Airlines flies formAtlanta-Ghana-Liberia –Atlanta e and Air Franceflies from France-Guinea-Liberia –France orFrance –Senegal-Freetown- France.

It is interesting for my proposed business, tonote that none of these international flights isinterested in regional operations for myproposed route: Liberia-Freetown-Guinea-Cote d’Ivoire-Liberia. With the establishmentof Air Mano as a full flesh regional flight, thequestion of competition will be very slim asmany people will not want to go through thehurdles of connecting with two points asposed by these international airlines.

Although I recognize the fact that Air Manowill be faced with enormous challengesranging from acquisition of a demand seatedaircraft to confidence building in the regionto prove reliability with schedule flights (evenif it means to fly with empty seats like SouthWest Airlines sometime does in the UnitedStates), in the long run, there will be hugeinvestment returns

SOURCE: Peter-Donnelly, 2007 and Southwest fact sheet).

According to Thomas et al, (2012), ―resourceand capability analysis provides managerswith a powerful tool for sizing up thecompany’s competitive assets anddetermining whether they can provide thefoundation necessary for competitiveadvantage over market rivals‖. They furtherassert that it is the fundamental buildingblocks of its competitive strategy.

And regarding value chain, they put emphasis on cost efficient management and lower costs through economic of scale, experienced and learning curve effects, operating at full capacity, improving supply chain efficiency, minimizing cost at higher output, motivating employees for high customer service and productivity, breaking the line of intermediaries to direct sale to customers at lower cost, etc.

And regarding value chain, they put emphasison cost efficient management and lower coststhrough economic of scale, experienced andlearning curve effects, operating at fullcapacity, improving supply chainefficiency, minimizing cost at higheroutput, motivating employees for highcustomer service and productivity, breakingthe line of intermediaries to direct sale tocustomers at lower cost, etc.

For Air Manor, the following value chainenhancements will be employed:

6.1. Value Chain Enhancement Idea #1:Operation-Air Manor will operate only three 30seated aircrafts in the Manor River Unioncountries. Two will be operated at a time and onebe used for standby to avoid any disappointmentfor our passengers just in case of any technicalfailure depriving us from take-off at any airport.We hope to run at a full capacity of 24/7 ( 24 hrsa day and 7 days a week).

6.2. Value Chain Enhancement Idea #2 Sales- Air Mano will endeavor to maintain a low price

that we think our market survey data hasindicated. We will however ensure not to operateat a lost. Our low price will really be apromotional price but will continue to chargebase on affordable economic indicators in theregion of our operation and customers. Weourselves will sell Air Mano tickets to ourcustomers to avoid hike in price byintermediaries (travel agencies). Infact, customers will be allowed to purchase AirMano tickets and book seats online from ourwebsite without any hassle.

Although our focus is to offer airline servicesto the travelling public as our mainbusiness, we will however offer duty freeservices through a mini sale on our aircraftwhile in flight. Every duty free item sold onour aircraft will have Air Manor printed on thepack or label. Our advertisement budget willbe about 40% of our total operation budgetfor the first year.

We will sell at discount price for familiestraveling one direction and a 10 % reductionin price for round trip tickets lasting not morethan one month. And In our attempt tomaintain low airfare, infants (below age 1) aslong they don’t occupy a seat in ouraircraft, will not be charged a fare. Age 1-12, will be charged the same rate but lowerthan the fare for age 13 up- ward.

6.3. Value Chain Enhancement Idea #3:Customer Service

Customer service is one key factor in theairline business (Southwest Airlines FactSheet).At Air Mano, we will serve ourcustomer honorably and address theirconcerns /complaints (if any) promptly. Bythat, we will ensure to have customercomplaint hot lines open 24/7 to give themthe opportunity to reach our HotlineCustomer Complaint Team across the region.

We will also provide a menu on our website forcustomer complaints and concerns. Asmentioned, we will open one branch office ineach of the MRU member countries to handlebranch matters regarding the sale of tickets andcustomer’s complaints. We will serve one meal oneach of our aircrafts (say from Monrovia-Freetown or from Freetown –Conakry) since thedistances between these countries are less thanone hour. We will sell mini items on our aircraftat a duty-free price during a flight.

7.1. Marketing Emphasis/Focused Low CostProvider

Under this theory, Thomas et al, (2012)elaborated that it is better to communicateattractive features of budget priced productoffering that fits the niche memberexpectations. In this regard our competitive/market strategies will begin from our salepromotion.

SOURCE: Thomas, Arthur, A., Peteraf, Margaret, A., Gamble, John E, Strickland

III, A.J., (2012), Crafting and Executing Strategy, p.96-97; 50; 138-141

Sales promotions directly influence corporateperformance by attracting and serving afirm's customers in both economic andpsychological ways; Promotions also servesas a point of differentiation that can help abrand stand out in a category -- regardlessof product attributes or prices.

SOURCE: PR Newswire [New York] 11 June 2002: Four-Year Research Study Concludes: Sales

Promotion Benefit to Consumers and Businesses (http://search.proquest.com.ezp-

00rrw.lirn.net/docview /443992089/13BE53BC3D07BBE0D56/2?accountid=35996)

As part of its sale promotion, Air Mano willcommence its flight operations between two citypoints: Monrovia-Freetown-Monrovia. There willbe a one month advertisement in the twomentioned cities regarding the commencementof a regional flight that will fly from Monrovia(Liberia) to Freetown (Sierra Leone), Conakry(Guinea) and Abidjan (Cote d'ivoire). The publicitywill be in the print and electronic media as wellas several giant billboards will be planted acrossthe two initial cities with photos of the type ofaircrafts Air Mano will operate.

The public will be informed about our promotionprice. Air Mano flight will be made to fly overeach of the two cities for 30 minutes during ourlaunching program. This same approach will becarried out to the other two cities (Conakry andAbidjan). After operating for three months, wewill include Guinea by establishing a branchoffice in Conakry and our route will be Monrovia-Freetown-Conakry-Monrovia. In six monthstimes, we will include the forth city (Abidjan) byalso establishing a branch office there.

Finally, our route will be Monrovia-Freetown-Conakry-Monrovia forMondays, Wednesdays, and Fridays and theother route will be Monrovia- Abidjan-Conakry-Monrovia on Tuesdays andThursdays. On Saturday our route will beMonrovia-Freetown-Conakry- Abidjan-Monrovia and on Sunday our route will beMonrovia- Abidjan-Conakry-Freetown-Monrovia.

7.2. Basis for Competitive Strategies/FocusedDifferentiation

Under this theory, Thomas et al, (2012) alsoadvanced that there has to be attribute thatappeal specifically to niche members. In thisregards we will ensure the following two Ps:price, and place and the five Cs: Consumer,Cost, Communication, and Convenience toappeal to the travelling public:

7.2.1. Price-The price/ airfare is one main factor in the airline industry that will encourage the public to travel by air. In this regard, we will ensure to maintain a perpetual low fare/price per passenger. Infants (below age 1) as long they don’t occupy a seat in our aircraft, will not be charged a fare. Age 1-12, will be charged the same rate but lower than the fare for age 13 up- ward.

7.2.2. Place-Regarding place of ouroperation, as mentioned early, Air Mano flightoperation will be regional ( West Africa) andthe countries involved are Liberia, SierraLeone, Guinea and Ivory Cost. Thesecountries are the only members of the ManoRiver Union (MRU). We don’t intend to gobeyond.

7.2.3. Consumer-the purpose of our businessis to serve the travelling public by air in theMano River Union countries. We will doeverything in our reach to encourage thepeoples in these countries to see our serviceuseful to them as not just an alternative fortravelling but a save transport.

7.2.4. Cost-The cost for the production ofrevenue for a targeted profit is a great concernfor any investment. Air Mano cannot be anexception to this truism. However, our objectiveis not to make profit in the short run but in thelong run. We intend to establish an air travel hubin this region as a better alternative to landtravel. Therefore, we will enjoin on the four MRUCountries’ governments to reduce the taxes onair tickets for this region so that our ticketswould be affordable.

7.2.5. Communication-We will conveymessages of Air Mano through print andelectronic media and by way of giganticbillboards, and community dramas.

7.2.6. Convenience- We will ensure to be ontime with our scheduled flights and we willmake the travelling public aware and to trustus for this. In the near future, we willpurchase a bigger seated aircraft for ourpassengers’ convenience.

A pro forma income statement is similar to ahistorical income statement, except itprojects the future rather than tracks thepast. Pro forma income statements are animportant tool for planning future businessoperations. If the projections predict adownturn in profitability, you can makeoperational changes such as increasing pricesor decreasing costs before these projectionsbecome reality.

Pro forma income statements provide animportant benchmark or budget for operating abusiness throughout the year. They candetermine whether expenses can be expected torun higher in the first quarter of the year than inthe second. They can determine whether or notsales can be expected to be run above average inJune. The can determine whether or not yourmarketing campaigns need an extra boost duringthe fall months. All in all, they provide you withinvaluable information—the sort of informationyou need in order to make the right choices foryour business.

Creating a pro forma income statement forAir Mano

We will begin with the income statement fromthe current year. For example, it is obviousthat each item on that statement will bechanged during the coming year and this willenable us to estimate final sales andexpenses for the current year to prepare apro forma income statement for the comingyear.

Pro forma gross profit If we assume that we’re going to expect sales to

increase by 10 percent next year, we can safelymultiply this year’s sales of ( Say $4,000,000 by110 percent to get $440,000,000.

Then, in this case, you assume there will be noincrease in the cost of each our flight operationor sales of air tickets, and if we need 10 percentmore sales in order to achieve your salesgoals, we also safely multiply this year’s cost ofgoods sold (let’s assume a figure of$2,000,000), by 110 percent to get$220, 000,000.

To figure your pro forma gross profit for nextyear, we can subtract the pro forma cost ofgoods sold from the pro forma sales.$440,000,000 minus $220,000,000 equalsour gross profit, or $220,000,000.

Pro forma total expenses Let’s assume salaries and other expenses will

increase by 5 percent. In that case we willmultiply our historical salaries of$20,000,000 and our historical expenses of$1, 000,000 by 105 percent each. Our proforma salaries for next year will be$21, 000,000 and our pro forma expenseswill be $205,000. You then figure your proforma total expenses by adding pro formasalaries and pro forma other expensestogether.

Liberia, Sierra Leone, Guinea and Cote d’Ivoirehave individually experienced civil wars(instability) since 1990. There is seriouseconomic meltdown in the region and the forcethat bond them together (the Mano River Union)has done less to bring any economic cooperationamongst the four countries. The instabilitycaused huge deplorable road conditions in theneighboring countries to Liberia. Businesspeople spent weeks or months commuting fromone of the MRU Countries to the next to tradegoods and services.

I have intended to establish an airline to beheadquartered in Monrovia; establishoperational sub offices in the other threecountries and to seek shareholders from thefour countries to enable us to buy fewaircrafts for our air operations in the region.

Finally, we will carry on promotional activitiesfor one month by engaging both the printand electronic media, placing big billboardsto advertise our presence and our lowprince, and dramatizing on the radio aboutthe importance of air travel as a fast and timesaving medium of transport. Air Mano willensure to maintain a scheduled flightaccording to the plan advertised and asstipulated in this plan.

ECOWAS International Conference –Two Decades of Peace process in West Africa, Achievements – Failures-Lesson, Monrovia, Liberia 22-26 March 2010) http://www.comm.ecowas.int/dept/h/h1/en/rapport/Final_Report_Two_Decades_English.pdf

http://www.nationsonline.org/oneworld/africa.htm http://businesscasestudies.co.uk/business-

theory/marketing/marketing-mix-price-place-promotion-product.html

International Crisis Group http://www.crisisgroup.org/en/regions/africa/west-africa.aspx and http://www.acp.int/content/speech-secretary-generals-statement-26th-session-acp-parliamentary-assembly-18-november-2011

Peter-Donnelly,(2007), Marketing Management, P.283

PR Newswire [New York] 11 June 2002: 1. (Four-Year Research Study Concludes: Sales Promotion Benefit to Consumers and Businesses)http://search.proquest.com.ezp-00rrw.lirn.net/docview/443992089/13BE53BC3D07BBE0D56/2?accountid=35996

Southwest Airlines Fact Sheet(http://www.southwest.com/html/about-southwest/history/fact-sheet.html)

Thomas, Arthur, A., Peteraf, Margaret, A., Gamble, John E, Strickland III, A.J., (2012), Crafting and Executing Strategy, p.96-97; 50; 138-141

World pPopulation in 2011 by country(http://www.prb.org/Publications/Datasheets/2011/world-population-data-sheet.aspx

THANK YOU!