Do you want to start an airline company?
An airline business provides air transport to passengers on a national and international level. The business is undoubtedly much more profitable than other usual businesses. However, it comes at the cost of a difficult startup.
Starting an airline business is an inevitably expensive venture. The costs of jets, the salaries of qualified and experienced pilots, salaries of the crew, charges paid to the airport, payments to government and travel agents combined make a huge cost.
Therefore, if you are exploring how to build an airline business plan, you must first make sure that you will be able to manage a large team and expenses. To start this business, the first step would be creating a business plan. In this blog, we’re providing a business plan for airlines written for the startup, Bruce Airlines.
2.1 The Business
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Bruce Airlines will be a registered and licensed aviation business startup headquartered in Charlotte. The business will be owned by Bruce Greg, former COO of Aer Lingus.
2.2 Management of Airline company
Managing an airline company demands a lot of experience and expertise. Because the slightest mistake of anyone can lead to huge money and even life losses. In this airline business plan executive summary pdf we’ll be providing all details about Bruce Airlines. So you would have complete knowledge of what to include in your starting up airline business plan.
To manage an airline company, you’ll be needed to employ aviation attorneys, schedule coordinators, aviation technicians, flight attendants, pilots, and administrative staff.
To ensure the smooth running of business’ operations, Bruce Airlines will offer just 45 destinations across the globe in the initial phase.
2.3 Customers of Airline company
The customers of our airline will mainly be businesspersons and officers who need to travel internationally. Moreover, the general public and tourists will also be our target customers.
2.4 Business Target
Our target is to cover the startup expenses within two years of the launch. Moreover, we also aim at earning a net profit margin of $27k per month by the end of the second year and $49k per month by the end of the third year.
3.1 Company Owner
Bruce Greg completed his pilot training at American Airlines Cadet Academy at the age of 21. After that, he did an MBA from Harvard University and joined Aer Lingus as a company manager. He served at several managerial posts and eventually became the company’s, Chief Operating Officer. He served as COO for six years and then decided to launch his own airline.
3.2 Why the airline company is being started
Bruce has always been associated with the airline business. He decided to launch his own airline to be an entrepreneur and earn the most by utilizing his skills and experience.
3.3 How the airline company will be started
Step1: Creating A Business Plan
The first step before starting an airline company is to create a business plan for airlines company. Bruce studied several examples of business plans for airlines and developed his start an airline business plan himself. We are providing the business plan he created in this sample business plan airline company.
Step2: Acquiring Required Licenses & Permits
Step3: Establish Headquarter, Values & Services
Bruce Airlines will be headquartered in Charlotte. The company will come into contact with airports and the government to negotiate the fee for hangars and for scheduling flights and routes. Meanwhile, the company will define its services, values, and customer care policies to get recognized.
Step4: Hire The Staff
To run an airline company, you need to hire a large staff. Due to the responsible and delicate nature of work, Bruce decided to recruit staff after rigorous testing and interviewing. The list of staff he’ll hire will be given in the upcoming sections along with their job descriptions and salaries.
Step5: Promote & Market
To attract customers amid huge competition, it is essential to develop an effective marketing strategy. And to come in contact with stakeholders who can indirectly promote your company.
Step6: Establish Online Presence
In this era, it is really important to establish a strong website presence. Bruce decided to launch a website that provides electronic ticketing and flight booking system to facilitate his customers.
|Research and Development||$24,000|
|TOTAL START-UP EXPENSES||$550,000|
|Other Current Assets||$240,000|
|Start-up Expenses to Fund||$550,000|
|Start-up Assets to Fund||$1,595,000|
|TOTAL FUNDING REQUIRED||$2,145,000|
|Non-cash Assets from Start-up||$2,135,000|
|Cash Requirements from Start-up||$510,000|
|Additional Cash Raised||$100,000|
|Cash Balance on Starting Date||$70,000|
|Liabilities and Capital|
|Accounts Payable (Outstanding Bills)||$50,000|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$3,400,000|
|Loss at Start-up (Start-up Expenses)||$663,000|
|TOTAL CAPITAL AND LIABILITIES||$2,815,000|
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Like all other airlines, Bruce Airlines will also be offering four travel classes. The services and luxuries associated with each class are listed here. If you want to build your own airline you can take help from this business plan template airlines.
- Economy Travel Class: This will be our basic class consisting of normal quality seats, foods, and extras for those looking for economical travel. The leg space, seat width, and screen size will be a lot lesser than all other classes. However, it will be adequate for a short flight.
- Premium Economy Travel Class: This economy-plus class includes the following offerings:
- Wider and Comfortable Seats
- Quality foods and refreshments
- 16-inch entertainment screen
- Extra things including hot towels, toothbrushes, headsets, etc.
- Business Travel Class: This class will be lesser luxurious than the first travel class as private space will not be available in it. However, it will also have many facilities to enjoy a comfortable and long flight. The offerings in this class will include:
- Extra Comfortable Seats (More width, inclination)
- High-quality foods and refreshments
- 20-inch entertaining screen
- Extra things including eye masks, headsets, towels, and others.
- First Travel Class: This will be our most luxurious traveling class suitable for long flights. In this class we’ll offer the following luxuries and facilities:
- High priority check-in security
- High priority baggage handling
- Mini-Suites with privacy doors and noise-dampening curtains
- Storage compartments
- 26-inch entertainment screen
- Personal wardrobe
- Comfortable seat that reclines into super-comfy bedding with temperature control
- Finest foods and drinks made by world-renowned chefs
- Amenity kit including toothbrushes, face creams, lip balms, ear-plugs, and other things.
Marketing Analysis of Airline Company
Marketing analysis is a very important part of airlines business plan template. It analyzes the target market and target customers. Moreover, it also explains how much price you should set to meet your financial goals while attracting more customers than your competitors.
In this starting an airline business plan we are providing the marketing analysis done for Bruce Airlines. Here we have analyzed the global market trends for this business and the general groups of people that can be considered as potential customers.
If you are looking for how to write a business plan for an airline you can take help from airline business models pdf.
5.1 Market Trends
According to IBISWorld, more than 22k global airline businesses are running in the United States, employing more than 2.5 million masses. According to the same source, the business holds a huge market size of $686 billion.
Despite that the industry is already quite large, still, It is expected to grow more in the coming years. The growth is forecasted based on the surge in travel activities and expansion in the middle-class population in the coming years.
5.2 Marketing Segmentation
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5.2.1 Business Persons
This group of our customers comprises of businessmen and women who need to travel to several countries as part of their business. This group is expected to avail of our first class and business class travel tickets. As this category usually arrange business trips and meetings, therefore, we expect this group to avail our services in groups.
5.2.2 Foreign Officers
Our second target group comprises high officials who need to travel on regular basis to meet their job responsibilities. This group is also expected to avail of our first class and business class travel tickets.
Our third target group will comprise tourists who board airplanes frequently to reach out to remote locations. This category is expected to travel mostly in economy and premium economy class.
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5.2.4 General Public
Lastly, general people who have to travel far-off places on an urgent basis will also be our target customers. This group is expected to avail mostly our economy class service.
|Potential Customers||Growth||Year 1||Year 2||Year 3||Year 4||Year 5||CAGR|
5.3 Business Target
- To earn a profit margin of $49k per month by the end of the third year
- To achieve an average rating above 4.77 by the end of the second year
- To achieve a CSAT score above 92 by the end of the first six months
- To increase our travel destinations from 45 to 55 within three years of our launch
5.4 Product Pricing
Our prices will lie within the same ranges as that of our competitors. However, we will offer several discounts in the startup phase.
Bruce Airlines will come up with several competitive aspects to get ahead of its competitors. In this airline marketing strategy pdf we’re providing the marketing strategy of Bruce Airlines. So that you can have help in making your own airline marketing business plan.
6.1 Competitive Analysis
We expect to get popularity among our customers due to the following competitive aspects.
- Electronic booking and ticketing facility
- Additional amenities
- Discounted rates in the first two months
- Dedicated flight attendants
- Highly customer care oriented policies
6.2 Sales Strategy
To advertise our startup, we’ll
- Promote our services through travel agent companies, social media campaigns, and Google Local ads services.
- Offer a 30% discount on the economy, premium economy, and business class tickets for the first two months of our launch.
- By launching our frequent-flyer program for privileged and loyal customers.
- By making our website SEO and by investing in artificially intelligent chatbots.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
|Unit Sales||Year 1||Year 2||Year 3|
|Economy Travel Class||44,000||46,640||49,438|
|Premium Economy Travel Class||50,000||53,000||56,180|
|Business Travel Class||32,400||34,344||36,405|
|First Travel Class||29,000||30,740||32,584|
|TOTAL UNIT SALES||155,400||164,724||174,607|
|Unit Prices||Year 1||Year 2||Year 3|
|Economy Travel Class||$54.00||$62.64||$72.66|
|Premium Economy Travel Class||$63.00||$73.08||$84.77|
|Business Travel Class||$76.00||$88.16||$102.27|
|First Travel Class||$99.00||$114.84||$133.21|
|Economy Travel Class||$2,376,000.00||$2,921,529.60||$3,592,312.80|
|Premium Economy Travel Class||$3,150,000.00||$3,873,240.00||$4,762,535.90|
|Business Travel Class||$2,462,400.00||$3,027,767.04||$3,722,942.35|
|First Travel Class||$2,871,000.00||$3,530,181.60||$4,340,711.30|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Economy Travel Class||$51.00||$58.00||$66.00|
|Premium Economy Travel Class||$57.00||$66.00||$76.00|
|Business Travel Class||$70.00||$82.00||$91.00|
|First Travel Class||$91.00||$99.00||$119.00|
|Direct Cost of Sales|
|Economy Travel Class||$2,244,000.00||$2,705,120.00||$3,262,934.40|
|Premium Economy Travel Class||$2,850,000.00||$3,498,000.00||$4,269,680.00|
|Business Travel Class||$2,268,000.00||$2,816,208.00||$3,312,822.24|
|First Travel Class||$2,639,000.00||$3,043,260.00||$3,877,543.60|
|Subtotal Direct Cost of Sales||$10,001,000.00||$12,062,588.00||$14,722,980.24|
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An airline company needs a lot of staff to manage operations. Therefore you should make a detailed list of required employees with their job descriptions as you write a business plan for an airline.
7.1 Company Staff
Bruce will be the CEO himself. The staff he’ll hire is listed below:
- 1 Chief Operating Officer
- 5 Pilots with ATP certifications
- 9 Flight Attendants
- 2 Airline Operations Agents
- 3 Avionics Technicians
- 3 Airline Station Agents
- 1 Aviation Attorney
- 2 Sales Executives
- 4 Chefs
- 4 Cleaners
- 1 Social Media Manager
- 6 Security Officers
- General Cabin Crew
7.2 Average Salary of Employees
|Year 1||Year 2||Year 3|
|Chief Operating Officer||$16,000||$17,600||$19,360|
|Airline Operations Agents||$24,000||$26,400||$29,040|
|Airline Station Agents||$34,000||$37,400||$41,140|
|General Cabin Crew||$20,000||$22,000||$24,200|
|Social Media Manager||$8,000||$8,800||$9,680|
The airline company is not like other usual businesses. Starting and running an airline business is extremely expensive due to the high costs involved in
- Purchasing Airplanes
- Recruiting highly qualified pilots
- Fuel costs
- The fee paid to the government and airports
- The fee paid to travel agents
- Frequent loss due to empty seats
- Salaries of a large workforce
- Maintenance costs
- Money spent on marketing and advertisement
Therefore due to the high costs involved in airline operations, you need to be very much careful in managing your finances. Your financial plan for this business must draw a trajectory to earn targeted profits despite these huge expenses.
As Bruce had all the knowledge to create a financial plan, he carried out this task himself. In the case of your startup, if you are not a professional financial analyst, you must hire the services of one. To get a rough idea of what to expect from your professional financial plan writer, we are providing the financial plan of Bruce Airlines in this starting airline company business plan.
8.1 Important Assumptions
|Year 1||Year 2||Year 3|
|Current Interest Rate||8.20%||8.24%||8.28%|
|Long-term Interest Rate||8.35%||8.39%||8.44%|
8.2 Break-even Analysis
|Monthly Units Break-even||5340|
|Monthly Revenue Break-even||$132,000|
|Average Per-Unit Revenue||$238.00|
|Average Per-Unit Variable Cost||$0.66|
|Estimated Monthly Fixed Cost||$164,300|
8.3 Projected Profit and Loss
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$10,001,000||$12,062,588||$14,722,980|
|TOTAL COST OF SALES||$10,001,000||$12,062,588||$14,722,980|
|Gross Margin %||7.90%||9.66%||10.33%|
|Sales and Marketing and Other Expenses||$291,000||$320,000||$340,000|
|Total Operating Expenses||$803,330||$887,400||$961,170|
|Profit Before Interest and Taxes||$55,070||$402,730||$734,352|
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash from Receivables||$20,000||$21,600||$23,328|
|SUBTOTAL CASH FROM OPERATIONS||$82,000||$89,380||$96,530|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||$0||$0||$0|
|New Current Borrowing||$0||$0||$0|
|New Other Liabilities (interest-free)||$0||$0||$0|
|New Long-term Liabilities||$0||$0||$0|
|Sales of Other Current Assets||$0||$0||$0|
|Sales of Long-term Assets||$0||$0||$0|
|New Investment Received||$0||$0||$0|
|SUBTOTAL CASH RECEIVED||$83,000||$90,000||$97,000|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|SUBTOTAL SPENT ON OPERATIONS||$60,000||$65,000||$69,000|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||$0||$0||$0|
|Principal Repayment of Current Borrowing||$0||$0||$0|
|Other Liabilities Principal Repayment||$0||$0||$0|
|Long-term Liabilities Principal Repayment||$0||$0||$0|
|Purchase Other Current Assets||$0||$0||$0|
|Purchase Long-term Assets||$0||$0||$0|
|SUBTOTAL CASH SPENT||$63,000||$68,040||$73,483|
|Net Cash Flow||$16,000||$17,000||$18,000|
8.5 Projected Balance Sheet
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$1,000||$1,000||$1,000|
|TOTAL CURRENT ASSETS||$298,000||$333,760||$375,146|
|TOTAL LONG-TERM ASSETS||$23,000||$25,760||$28,980|
|Liabilities and Capital||Year 4||Year 5||Year 6|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$20,000||$22,400||$25,178|
|TOTAL LIABILITIES AND CAPITAL||$316,000||$334,880||$376,740|
8.6 Business Ratios
|Year 1||Year 2||Year 3||INDUSTRY PROFILE|
|Percent of Total Assets|
|Other Current Assets||2.14%||2.37%||2.63%||2.40%|
|Total Current Assets||150.03%||151.00%||151.80%||158.00%|
|Percent of Sales|
|Selling, General & Administrative Expenses||93.89%||96.43%||99.12%||97.80%|
|Profit Before Interest and Taxes||41.10%||42.21%||43.39%||33.90%|
|Total Debt to Total Assets||0.18%||0.17%||0.17%||0.40%|
|Pre-tax Return on Net Worth||73.56%||73.89%||74.30%||75.00%|
|Pre-tax Return on Assets||95.07%||99.82%||104.81%||111.30%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||33.08%||34.11%||35.16%||N.A.|
|Return on Equity||54.88%||56.58%||58.34%||N.A.|
|Accounts Receivable Turnover||7.7||7.7||7.8||N.A.|
|Accounts Payable Turnover||15.4||15.9||16.5||N.A.|
|Total Asset Turnover||2.5||2.6||2.6||N.A.|
|Debt to Net Worth||-0.03||-0.03||-0.04||N.A.|
|Current Liab. to Liab.||1||1||1||N.A.|
|Net Working Capital||$240,000||$253,440||$267,633||N.A.|
|Assets to Sales||0.88||0.88||0.88||N.A.|
|Current Debt/Total Assets||1%||0%||0%||N.A.|
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