Airline Company Business Plan

PUDDLE JUMPERS AIRLINES, INC.

24265 Silver Way
Atlanta, GA 30301

This business plan for an airline company shows how to use competition both as a model for how to run a business and how not to run a business. Acknowledging that a competitor is not only competent but admirable allows the entrepreneur to point to a similar successful venture and concentrate on proving there is enough room in the market for both companies. Conservative business predictions and extensive experience by the owners indicate preparedness. This plan was compiled using Business Plan Pro, by Palo Alto Software.

• EXECUTIVE SUMMARY
• COMPANY SUMMARY
• SERVICES
• MARKET ANALYSIS SUMMARY
• STRATEGY AND IMPLEMENTATION SUMMARY
• MANAGEMENT SUMMARY
• FINANCIAL PLAN

Executive Summary

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 Atlanta, Georgia. The gap in the availability of low cost service in and out of the Atlanta hub coupled with the demand for passenger travel on selected routes from Atlanta 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 of 16 MD-80 series aircraft. Revenues grew to $130 million in a 2-year period from 1992 through 1993.

Our research and projections indicate that air travel to and from Atlanta 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 short-haul 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 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 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 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.

Objectives

The company has the following objectives:

1. To obtain required D.O.T. and F.A.A. certifications on or before March 1, 1997.
2. To commence revenue service on or before July 1, 1997.
3. To raise sufficient "seed" and "bridge" capital in a timely fashion to financially enable these objectives.
4. 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.
5. To add one aircraft per month during year two for a total of 18 at year two end.

Mission

Puddle Jumpers 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.

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. (Southern Air, the dominate carrier in the Atlanta 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 FlyRight at 6.43 cents per ASM.

Company Summary

Services

Market Analysis Summary

Strategy and Implementation Summary

Management Summary

Financial Plan