AVIA3101 Airline Management Individual Assessment 1 Brief T2 2025-26 | UNSW

AVIA3101 Background

In late December 2020, the national airline of The Republic of Montenegro (a small Balkan country bordering Croatia on the Adriatic coast) – Montenegro Airlines - ceased flying due to a combination of events. The impact of Covid-19 was devastating, resulting in the failure of many airlines since the onset of the pandemic, but the problems that this airline had, preceded the additional challenges that Covid caused.

Montenegro Airlines was a full service airline that had a small fleet of 4 aircraft (3 Embraer’s and 1 Fokker) and primarily served to connect the country with its single biggest market of nearby Serbia, in addition to key hubs across Europe. The country heavily relies on tourism (almost 25% of its GDP is connected to tourism) and the road and transport infrastructure to/from Montenegro, is very poor. Flights by other carriers to Montenegro are extremely seasonal, hence the importance of the need to maintain air connectivity to the country.

The previous airline suffered from a lack of scale, which resulted in a very poor and inefficient cost structure. Its network and schedule were limited, coupled with poor aircraft utilisation. It was also poorly managed, which taken together, resulted in the airline having an accumulated debt of over EUR100M. So by the time that the full effects of covid-19 were felt across the entire aviation industry, this proved to be the final fatal blow to Montenegro Airlines, causing it to cease operations.

Task

Understanding the importance of having a national airline, the Government of Montenegro has called for proposals from interested parties to submit plans on the launch of a new airline, which is to be based in the capital, Podgorica. They have not prescribed any specific business model ie. FSC, LCC or Hybrid – this will be up to the consortia submitting the proposal and will need to be made clear in the proposal (and reasons why), as it will impact on fleet size, aircraft utilisation and other aspects of the airline.

They have set the following criteria for the proposed plan to include: 

Aircraft type : A320CEO (assume 180 seats)  

-  Frequencies and city pairs:

• TGD-BEG 3x daily (av fare $70 one way)
• TGD-IST 2x daily (av fare $90 one way)
• TGD-LHR 1 x daily (av fare $140 one way)
• TGD-SVO 2x daily (av fare $160 one way)
• TGD-VIE 2x daily (av fare $80 one way)
• TGD-CDG 1x daily (av fare $130 one way)
• TGD-FCO 1x daily (av fare $80 ne way) 

STUDENT HANDY HINT:

• These have all been shown by sector ie. TGD-BEG with a one-way fare. However, aircraft that fly out from its base, also have to fly back to base. So TGD-BEG 3 x daily, in reality, means TGD-BEG-TGD 3 x per day. So you would have 6 sectors here – TGD-BEG (3 x) and BEG-TGD (3 x). Similarly, the one-way fare TGD-BEG is $70, so the TGD-BEG-TGD roundtrip fare, would be $70 x 2 = $140.)   Assessable components – 1. You need to determine how many aircraft you believe will be required to deliver the above operating plan and clearly justify/support your decision as to why. You will also need to calculate the daily aircraft utilisation (hours/day) for your A320 fleet. Remember to ensure that this be consistent with your chosen airline business model and be sure to cite industry or academic references where relevant/necessary to support your plan. This will be key to maximising your marks.
• Your decision regarding how many aircraft you believe you will require, is your own decision, based on meeting the requirements that the Govt of Montenegro has set with regards to the cities to be flown and their required frequency.
• When you propose what you believe should be the daily aircraft utilisation, you MUST support your position with strong industry based rationale and reasons why you have applied them to your own case. ie. look to real airlines and understand what their average aircraft utilisation is. Think back to the literature and to the Guest Presenter’s lecture in which he discussed the aircraft utilisation differences between LCC’s and FSC’s.