The New Business Class

www.mangoaviation.com

Business Aviation Partners !© Mango Aviation Partners Ltd, 2012

THE NEW BUSINESS CLASS

“Opportunities and challenges for light jets”


Business Aviation Partners !© Mango Aviation Partners Ltd, 2012

The new generation Light Jets...

...evolution or revolution ?


“Opportunities and

challenges for light jets”

© Mango Aviation Partners Ltd, 2012

...how do they fit the market?

Low Cost

High CostB

asi

c Serv

ice

Perso

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d S

erv

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LOW COST CARRIERS LEGACY CARRIERS

PRIVATE CHARTER

“THE NEW BUSINESS CLASS”

Q: Why pay $600

when you can get

the same service

for 10%?

A: Because you get a tailored service to suit

your precise needs !Financially and functionally !!





So will it really happen ?

IN A NUTSHELL…

“The New Business Class”

1. New technology, material and manufacturing processes have reduced the cost of new aircraft, making new business applications viable

2. Environmental, political , regulatory and safety considerations will change market dynamics

3. Business travellers are becoming increasinglydiscerning to price, function and performance

The general aviation sector will undergo a similar fundamental shake-up as the scheduled industry





Is the Market clear for Take-Off ?

• With continued financial and political uncertainties in the developed world; the pressure on enterprise to work to ‘Best Practice’ based on sound and rational use of working capital is increasing

• A functional and low-cost air travel solution based on light jetsrepresents and opportunity for forward thinking businesses to increase efficiencies at an over all cost reduction

• The successful “New Business Class” operator will build asustainable value based on a lateral approach focusing on core benefits rather than perceived luxury – just as the LCCs

TO GET IT RIGHT…

The Concept:





• The European geography and regulatory structure, makes it operationally ideal:

– 500m inhabitants in 27 countries– >4.5 m sqkm– Annual per capita income €5,500 - €55,000 – Typical sectors 1 – 2 Hrs– Secondary airports available

• Several premature attempts have failed resulting in fleet availability


THE EUROPEAN MARKET IS READY…

predictably !

The Market:





• The Indian sub-continent represents another ideal market:– 1.2bn inhabitants over 3.3m sqkm– >100m inhabitants in cities– 15 cities with >1.5m inhabitants– GDP growth: 10.4% (2010)– Investment rate: 29.5% of GDP (world rank: 32)– Typical sectors: 1 – 2 hrs– Secondary airports


…AND INDIA IS NEXT

The Market:

Critical Mass !





Who will do it ?

Low Cost

High CostB

asi

c Serv

ice

Perso

nalise

d S

erv

ice

LOW COST CARRIERS LEGACY CARRIERS

PRIVATE CHARTER

“THE NEW BUSINESS CLASS”

Wrong fleet

No money






1. Critical mass

2. Pricing

3. Utilisation

4. Crewing

5. Perception

5 KEY CHALLENGES…

...also the main ingredients

for the success of LCCs!





Key Challenges

1. CRITICAL MASS…

Passengers need to go to where they need be from where they are and often at short notice• Define Market• Pre-position aircraft• Target Clients• PAX, parcels, organs, etc• Establish Basic Business

Availability at short notice; without fail





Key Challenges

A relentless focus on cost reduction !• Productivity• Fleet financing• Maintenance programmes• Regulatory compliance management • Fuel buying• Recruitment and training

2. PRICING…

Based on a functional product; not a luxury





Key Challenges

Aircraft to chose, considering:• Proximity to departure• Destination site to base• Maintenance cycle• Crew hours• Aircraft utilisation

3. UTILISATION…

Optimisation - Crewing hours, positioning and maintenance – Just in Time !





Key Challenges

4. CREWING…

The crew is part of the product• So far, a VLJ currency has low perceived value• Limited crew availability• Little experience in type• Lower salary levels than Executive Jets• Pilots want to fly an A380 or a B787 Dreamliner

Recruitment, training and retention- Think out of the box !





Key Challenges

5. PERCEPTION…

A mix of misunderstanding and misconception• Unjustifiably expensive• Luxury for the few• Not compatible with the (client’s) business• Lifestyle with no value• Environmentally damaging

An environmentally unfriendly luxury- Perception is Reality !





...how does the concept fit the market?STRENGTHS… WEAKNESSES…

OPPORTUNITIES… THREATS…

• Market potential

• Timing

• Aircraft availability

• Aircraft prices

• Barrier of entry

• Early entry advantage

• Diversification

• Legacy airline partnerships

• Scalable project

• Blocking competitors

• Further financial deterioration

• Potential levies & taxes

• Misguided “green” lobby

• Legacy airlines reactions

• Accidents

• Lack of available finance

• Crew availability

• Perception

• Time to critical mass

• Untested concept

The Market:





Key Performance Areas

FOCUS ON MARGIN…

Get the variables right

The optimal price will drive volume and profitability.

Revenue flights will decrease with increased business.

Margin is not linear.

The Market:

LOW

HI

GH

SMALL FLEET SIZE LARGE

PRICING

DOC

REVENUE FLIGHTS MARGINPR A/C

Not to scale






TANGIBLE BENEFITS BEYOND CONVENIENCE…• Travel “Just-in-Time”• To and from where you are and where you want to be• Avoiding busy airports• Reducing wasted time• Value for money at affordable pricing

...winning concept from

the IT industry !!!





Thank you – and Good Luck !

The New Business Class

Documents

Transcript of The New Business Class