| Category | Coursework | Subject | Management |
|---|---|---|---|
| University | University of Westminster | Module Title | 7TRAN034W Airline and Airport Management |
You are required to produce a business plan for a new start-up airline intending to launch services on a route from London to Milan. This will involve the following steps:
The work should be written in a report format (e.g. with numbered sections, sub-headings etc). You do not need a list of references or bibliography, but you do need to include a list of data sources at the end. You don't need an Executive Summary, but a limited number of appendices can be used if appropriate and necessary. The report should be around 2,500 words (+/- 10%), and the word count should be given (excluding the list of data sources). This report is worth 50% of the marks. It must be submitted on Blackboard by 1300 on Tuesday, 6 May.
Assess existing services on the route (including airlines, schedules, and fares) and the background to the market.
The full schedule of flights (times, operators and aircraft utilised) are available on Blackboard.
2023 visitor data (data are not yet available for 2024) from the UK Office for National Statistics (the International Passenger Survey IPS - Travel trends - Office for National Statistics (ons.gov.uk) showed that 1,696,000 Italian residents travelled to the UK in 2023 compared to 4,889,000 UK residents (1,095,000 from the London region) visiting Italy. You may also be able to obtain further background information on tourism or travel websites.
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Order Non-Plagiarised CourseworkEstimating passenger numbers
You can obtain recent traffic data from the CAA website (aggregate together the services from all London airports - Heathrow, Gatwick, London City, Stansted, Luton) and produce a simple estimate of the market share you expect to obtain. You can examine historic traffic data and produce a more sophisticated forecast or analysis of trends if you wish. Monthly traffic data is also available for 2024. Passenger numbers in the CAA statistics are NOT single journeys but the sum of both arriving and departing passengers at London (a return journey counts as two passenger trips on the route; approximately half the total passengers on the route will be travelling in one direction and half in the other). The route traffic statistics are on Airports | Civil Aviation Authority (caa.co.uk). Table 12.1 will have the relevant flight data.
Estimate the total market size and the market share you hope to achieve. Choose the number of frequencies (round trips per day you wish to offer.
Designing the product features and distribution strategy, including a name for the airline
Determine whether you are operating a low-cost carrier or a full-service carrier. Identify your product features (for example, food offerings, free baggage, etc.) and distribution strategy - remember this is a short-haul operation. You can compare with existing airlines if you wish. As part of your marketing strategy, remember to choose a name for your airline.
Choosing an airport in London and Milan
You can use Gatwick (LGW), London City (LCY), Luton (LTN), Stansted (STN), or Southend (SEN) (not Heathrow). If using LGW, no services can be scheduled to arrive or depart between midnight and 10:00. There are also no operations at LCY between noon on Saturday until noon on Sunday. No flights may depart or arrive at any London airport between midnight and 06:00.
For Milan, you can use Milan Linate (LIN), Milan Malpensa (MXP), or Bergamo (BGY). Milan Linate operates from 06:00-23:30; Milan Malpensa operates 24 hours a day; Bergamo operates 24 hours a day.
Selecting the aircraft type
You can operate either 1 or 2 aircraft. You have the choice of the following aircraft types and product specifications:
(A) Embraer E190 82 seats (10 Business + 72 Economy) full service
(B) Embraer E190 112 seats High density Economy 'no frills'
(C) Boeing 737-700 118 seats (16 Business + 102 Economy) full service
(D) Boeing 737-700 150 seats High density Economy 'no frills'
If operating from London City Airport, only the E190 can be used.
Services are assumed to operate 365 days per year (e.g. one daily round trip with aircraft configuration A offers 82x2x365 = 59,860 seats per annum). If you choose London City Airport, you may modify your schedule to take into account the 24-hour closure over the weekend.
Select an aircraft (and configuration) that is appropriate for your airline type (LCC or FSC).
Producing a Schedule
Use the schedule (OAG Schedule available on Blackboard) as a guide. Assume a journey time of 2 hrs in each direction. There is also a 1-hour time zone change (i.e. London->Milan flights take 3 hrs, Milan->London flights 1 hr). Minimum turn-around time should be 1 hour at each end of the route (30 minutes for an LCC operation).
You will produce a weekly schedule (operations from Monday to Sunday). You should plan to have the same schedule every day that you operate. The exception to this would be operations to London City, which may have a modified weekend schedule because of closure hours.
Estimating costs, revenues and potential profit or loss.
Use the cost information below for estimating total costs:
Total annual costs per daily round trip:
A B C D
1st round trip per aircraft £7.2M £5.7M £8.7M £6.7M
Additional round trips £5.7M £4.2M £6.7M £4.7M
For operations to London City, please modify your costs to reflect closure hours.
For revenues, average round-trip fares are shown below:
You can offer any or all of these types of fare (i.e. with the above conditions). You can also introduce additional fare types with your own specifications. However, it is important to note that you can set fares at any level. To make this a manageable task, you should not use more than four fare levels. No ancillary items other than bag charges are allowed - all your revenue must otherwise come from the fare. Any return fares need to be halved to give an equivalent one-way fare. Multiply by the total passengers for each fare to obtain the annual total revenue.
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Buy Today Contact UsDo not assume a 100% load factor. Please use realistic load factors in your calculations.
The difference between the revenue and the costs gives you an idea of the potential profit or loss.
A critical appraisal of your results
Comment on your results. Do you think there is a good market opportunity for this new airline? To what extent have the assumptions made affected this outcome? Is your appraisal supported by your data and analysis?
And the most important thing to remember is:
Part 1 (25 marks)
Assessing existing services on the route and the background to the market
Estimating passenger numbers
Part 2 (25 marks)
Designing the product features and distribution strategy, including a name for the airline
Choosing an airport at London and Milan (Choosing Heathrow will result in no marks). Selecting the aircraft type
Part 3 (15 marks)
Producing a schedule
Part 4 (20 marks)
Estimating costs, revenues and potential profit or loss
Part 5 (10 marks)
A critical appraisal of your results
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If you want to see the related solution of this brief, then click here: Airline Operations
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