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The Low Cost Carriers Recipes

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© 1 BlueHorizon Group 2014 | PROPRIETARY INFORMATION | All Rights Reserved …

© 1 BlueHorizon Group 2014 | PROPRIETARY INFORMATION | All Rights Reserved
Beyond the Low Cost Carrier Model - The Blue Ocean strategy applied to the airline industry

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  • 1. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 01BHG | Low Cost Carrier Model Recipes P R O P R I E TA R Y I N F O R M AT I O N LCC MODEL RECIPES RECIPES TO FOLLOW FOR BUILDING A DIFFERENT BUSINESS MODEL… March 2014 Updated The ‘idea factory’ thinking ahead strategies www.1bluehorizon.com Comfort Pricing X As the Aviation is a very competitive industry, this document is confidential and is intended solely for the use and information of the client to whom it is addressed. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from 1BlueHorizon Group BLUE PAPER    
  • 2. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 11BHG | Low Cost Carrier Model Recipes The low cost phenomenon has penetrated global aviation starting in the U.S. in 1971 – but now the LCC sector is crowded ‘(Red) Horizon’ Industry pioneers SouthWest (1971) Ryanair (1985/1991) Early Adopters Late Adopters e.g. AirTran (1992), West Jet (1996) e.g. Norvegian (1993), EasyJet (1995) e.g. Air Arabia (2003), Nasair (2007), Fly Dubai (2009)  Southwest  AirTran  Jet Blue Airways  West Jet  ...  Ryanair  EasyJet  Norvegian Air  Germanwings  FlyBe  BMI  Helvetic  Niki  SkyWork  ...  IndiGo  AirAsia  Bangkok Airways  Kingfisher Red  Air Blue  FlyScoot  ...  Virgin Blue  Freedom Air  Tiger Airways  ...  AirArabia  Bahrain Air  Fly Dubai  Jazeera Airways  NasAir  Wataniya Airways  ...  Azul Brazilian  Gol Airlines  EasyFly  ... FlyScoot (2012) Note: The LCCs mentioned above are of course not exhaustive…
  • 3. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 21BHG | Low Cost Carrier Model Recipes The full liberalization of civil aviation is progressing with opportunities coming in Africa, Caribbean and Latin America Closed Markets Liberalization New Business Models Power Play & Consolidation Stable Market Segmentation Protected markets Large carriers with governmental support Financially solid / state owned Liberalization of markets Emerging airlines to serve profitable routes Traditional carriers still have highest market shares Liberalization of markets allows emergence of LCC Strong initial growth of LCC carriers Build-up of an LCC network (P2P) LCC growth slows down Traditional carriers and LCC consolidate to super carriers Synergies and economies-of- scale Super carriers split markets by customer segment, price and service offering Stable market split between carriers Africa Asia Europe North America Caribbean Latin America ChinaRussia Malaysia India ‘ R e d H o r i z o n ’‘ B l u e H o r i z o n ’ Middle East Source: 1BlueHorizon Group Research & Analysis
  • 4. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 31BHG | Low Cost Carrier Model Recipes Air traffic liberalization typically shows significant passenger growth development patterns - Typical Range of Air Traffic Growth Rates - … Source: IATA, InterVistas, GAD Post- liberalization Pre- liberalization Global Average Min Max 12-35% 4-7% 2-5% Typical Pre-Liberalization Setting Governmental authorities understanding air services as provisioning of transportation infrastructure (esp. for domestic markets) Protection of (state-owned) flag carriers against ... – … international competitors (esp. for international markets) – … market forces of supply & demand (esp. for domestic markets) Typical Post-Liberalization Setting Leaving elaboration of operated networks and routes to market forces of supply & demand Often requires privatization of (formerly state-owned) flag carriers upfront Emergence of alternative airline business models (LCC) Typically a fast network / route expansion is experienced shortly after the liberalization step
  • 5. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 41BHG | Low Cost Carrier Model Recipes … and it clearly appears from analysis of the distribution of alternative customer Travel Method) that in fact LCCs are creating new demand in the market – Basically a LCC creates ‘1BlueHorizon ’ Source: Liberalization of European Air Transport 2011 No data 4% Shift within airline market 37% New demand 59% Otherwise by rail Otherwise by car Others Otherwise would have not travelled 71% 15% 6% 8% Is the Low-Cost Carriers the ultimate model, the wonder recipe to save the whole airline industry? Unfortunately not!
  • 6. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 51BHG | Low Cost Carrier Model Recipes Typical Legacy Carrier Cost structure / operating expenses versus Low Cost Carrier with the fuel as key fluctuating cost Source: The Aviation & Aerospace Almanac, ICAO Air Transport Reporting Form EF-1, 1BlueHorizon Group Research & Analysis Labor, Flight Crew 15% Ticket Sales 2% Airport, Landing 18% Depreciation, Amortization 15% Maintenance, Overhaul 5% Fuel & Oil 22% Route Charges Others 13% 10% 19.6% 16.4% 25.4% 7% 10.1% 12% 2.4% 7.1%  Inclusive Aircraft rental (3%)  Passengers services (10.5 %)  Station Expenses (10.8 %)  Landing fees (4.1 %)  Flight Crew (7.4 %)  General Administration (12.2 %) Key Costs for an airline are:  Fuel  Labor  Maintenance Key Costs for a LCC are:  Fuel  Airport  Labor
  • 7. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 61BHG | Low Cost Carrier Model Recipes At this stage it is important to clarify what is ‘1BlueHorizon Group’ understanding and definition of the Low-Cost Carrier Model ■ Low-Cost Carriers (LCC) are also known as a no-frills (LCC/NF), Less Frills Carrier, discount, budget carrier, Low-Fare/High Value Carrier (LFHV), Budget Carrier, Cheap Flight or even New Generation Carrier… ■ The term originated within the airline industry referring to airlines with a lower operating cost structure than their competitors. While the term is often applied to any carrier with low ticket prices and limited services, regardless of their operating models… ■ It has been suggested that the Airbus A380, able to hold up to 853 passengers in an all Economy layout, would enable true low-cost long-haul service. While the per-seat costs of such an aircraft would be lower than the competition, there are fewer cost savings possible in a long-haul operation and therefore a long-haul low-cost operator would find it harder to differentiate itself from a conventional airline… ■ Low-Cost Carriers want to be different than their competitors, the reason why they implement different operational model, different recipes to build success… ‘1BlueHorizon Cookbook’ highlights the main Model Recipes Low-Cost is a mood, is a management strategy, is a mind set ‘If you think well 1BlueHorizon , you will cook well your airline... Source: 1BlueHorizon Group Analysis
  • 8. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 71BHG | Low Cost Carrier Model Recipes Rolling out an innovative airline with ‘1BlueHoriz o n Cookbook’ support requires the design of seven fundamental building blocks (1BHG Framework) Note: 1The costs for an ASK = available seat kilometer are defined as the fraction of all costs which can be attributed to one available seat flown over 1 km distance Source: 1BlueHorizon Group Framework Operational model: – High-frequency shuttle services instead of connecting traffic (via hubs) – Fleet structure Distribution model: – Direct sales (online, call center) – Indirect sales (travel agents/CRS) Tariff model: – Low entry prices (limited volume) – Auction model Required maximum unit cost (per ASK1) Required minimum average yield per flight Break-even seat load factor Master plan for physical roll-out and business building Opera- tional model Distri- bution model Tariff model Cost structure Demand / Destin. portfolio Product concept Operational Implementation 1 2 3 4 5 6 7 Business Model
  • 9. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 81BHG | Low Cost Carrier Model Recipes The LCC Recipes from ‘1BlueHorizon Cookbook’ allow any airline to follow a different operational model with significant differentiation and cost differences 1/5 Note: As example the Southwest Airlines used recipes Source: 1BlueHorizon Group Research & Analysis A single passenger class Recipe doable for Air Carriers?       A single type of aircraft reducing training and servicing costs Development of one of more hubs to maximize destination coverage and defend their market A minimum set of optional equipment on the aircraft, further reducing costs of acquisition and maintenance, as well as keeping the weight of the aircraft lower and thus saving fuel Often pilot conveniences are excluded such as ACARS and auto throttle No in-flight entertainment systems made available For your Project?      
  • 10. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 91BHG | Low Cost Carrier Model Recipes LCCs capitalize on their simple and efficient business model and their extremely lean cost structure 2/5 Note: As example the Southwest Airlines used recipes Source: 1BlueHorizon Group Research & Analysis No seat recliners, seat pockets, window blinds or seat headrest covers Recipe doable for Air Carriers?       A Fast turnaround times (allowing maximum use of aircraft Unreserved seating (encouraging passengers to board early and quickly, thus further decreasing turnaround times) A simple fare scheme, such as charging one-way tickets half that of round-trips (typically fares increase as the plane fills up, which rewards early reservations) Newer more fuel efficient aircraft (launch customer to be involve din the new or improved aircraft development) Flying to cheaper, less congested secondary airports and/or flying early in the morning or late in the evening to avoid air traffic delays and taking advantage of lower landing fees For your Project?      
  • 11. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 101BHG | Low Cost Carrier Model Recipes The LCC Recipes from ‘1BlueHorizon Cookbook’ are tips on how to consider the airline differently 3/5 Note: As example the Southwest Airlines used recipes Source: 1BlueHorizon Group Research & Analysis Simplified routes, emphasizing point-to-point transit instead of transfers at hubs (again enhancing aircraft use and eliminating disruption due to delayed passengers or luggage missing connecting flights) Recipe doable for Air Carriers?      Encourage the use of direct flights. Luggage is not automatically transferred from one flight to another, even if both flights are with the same company Generation of ancillary revenue from a variety of activities, such as à la carte features and commission-based products Emphasis on direct sales of tickets, especially over the internet (avoiding fees and commissions paid to travel agents and computer reservations systems) Passengers paying charges for extras, such as hold luggage, online check in and priority boarding For your Project?     
  • 12. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 111BHG | Low Cost Carrier Model Recipes The LCC Recipes from ‘1BlueHorizon Cookbook’ are the cornerstone of the airline project or restructuring 4/5 Note: As example the Southwest Airlines used recipes Source: 1BlueHorizon Group Research & Analysis Employees working in multiple roles, for instance flight attendants also cleaning the aircraft or working as gate agents (limiting personnel costs) Recipe doable for Air Carriers?      A disinclination to handle special service passengers, for instance by placing a higher age limit on unaccompanied minors than full service carriers Aggressive fuel hedging programs Avoiding using jetways wherever possible to board and alight passengers by using a mobile stairway which is a cheaper alternative Not supplying meals in a flight, but offering snacks, sandwiches and drinks instead to purchase on board For your Project?     
  • 13. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 121BHG | Low Cost Carrier Model Recipes The LCC Recipes from ‘1BlueHorizon Cookbook’ are not finalized, plenty need to be added under ‘1BlueHorizon creation 5/5 Note: As example the Southwest Airlines used recipes Source: 1BlueHorizon Group Research & Analysis No refunds or transfers to later flights in the event of missed flights, i.e. If the aircraft leaves on time without a passenger who arrived late, he will have to buy a wholly new ticket for the next flight Recipe doable for Air Carriers?     Developing freight activities (cargo) with the aircraft belly hold to generate additional revenues Seeking the extra mile by maximizing revenue per flight, which implicitly includes all ancillary revenues as well as the airfares paid To pay for using the toilet (if the passengers don’t use it then it is potentially more space for seats!) (empty for a new recipe) For your Project?     
  • 14. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 131BHG | Low Cost Carrier Model Recipes The selected recipes from ‘1BlueHorizon Cookbook’ are the cornerstone of the business model, but never underestimate the specific situation in the region you are in - Examples of implications/critical questions Source: 1BlueHorizon Group Framework & Analysis Opera- tional model Distri- bution model Tariff model Cost structure Demand / Destin. Product concept Operational Implementation 11 22 33 44 66 77  Lowest price vs. value for money  Convenience of travel chain  Specific process needs/amenity expectations in the particular country  No frills vs. frills for money  Competitive scenarios  Home base? Maintenance locations?  Achievable average stage length?  Achievable frequencies per route?  Achievable block hours per day?  Fleet size, A/C type?  Master plan for launch  Funding  Managerial/operational capacities  Availability of fleet, maintenance  Creation of service contracts and required processes  Achievable productivity, salary level  Realizable airport/handling fees  Product/frills concept (cf. 6)  Fleet homogeneity, maintenance  Fuel subsidies? p y  Customer/demand segments  Accessibility of latent demand (leisure, religious/ethnical travel)  Sustainable destination portfolio for LC operation within the country  Catchment area/airport affinity 55 Business Model  Booking behavior of local (National) passengers  Customer segments (cf. 5)  Favorable pricing logic (e.g., auction model)  Internet penetration/acceptance of online booking within the country?  Presence of travel agencies?  Availability of call centers/ respective resources?
  • 15. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 141BHG | Low Cost Carrier Model Recipes The implementation of the business model based on selected recipes from ‘1BlueHorizon Cookbook’ should follow a defined framework... Source: 1BlueHorizon Group Framework for illustrative purpose Coverage 1) Core Questions  Market potential, achievable market shares  Required cost structure  Appropriate positioning of product and brand  Conceptual design of product Action  Inquiry of current/future transportation streams (also other carriers)  Discussion of attractive destinations (traffic stream, yields, competition)  Evaluation of the offers of competitors and different airports of that region  Economical evaluation of different scenarios (simplified business plan)  Benchmarking of the cost structure of charter airlines + low cost carriers  Determination of target cost structures (top-down)  Definition of valuation rate  Benchmarking of the positioning of other LCC  Analysis of brand attribute of main line vs. low cost carriers  Analysis of the own positioning  Client segmentation, characterization and -quantification  Benchmarking of business models of other LCC  Discussion of product concept (service level, rates, restrictions) Source Result  Traffic data  Flight plans of relevant competitors (e.g. from OAG)  Other transportation streams (e.g. IATA, MIDT, AEA, ICAO)  Official Saudi Arabia sources: – Presidency of Civil Aviation – SV flight plan/fares  Current cost/yield structure  Annual report, Press Releases of competitors  Booz Allen database  Analyst report  Future traffic streams  Possible market share  Target size of business (Fleet, frequency shares etc.)  Operation approach (destinations)  Yield return  Target passenger/-utilization  Target productivity airplane  Cost structure  Market and competition analyses concerning the brand perception  Own brand positioning  Own client-/ passenger data  Target positioning of the brand  Target client segment  Mission statement  „Best Guess“ of (external/internal) experts  Brainstorming with the team  Operation Approach (destinations)  Product-/price concept (rough)  Target size of business (Fleet, frequency shares etc.) 1 2 3 4 5 6
  • 16. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 151BHG | Low Cost Carrier Model Recipes … and the operational implementation of the seventh fundamental building blocks can occur in 14 operational modules Network structure/ design  Position  Destinations  Frequencies, Schedule etc. Pricing/ Yield Management  Tariffs  Classes  Logic of pricing/yield management Flight operations  Resource scheduling  Capacity requirements  Organization Product concept/- management  Board products „Frills“  Ground products Sales/Distribution  Choice of distribution channels/partners  Reservation system  Key account management Ground Ops  [s. Flight Operations] Fleet composition  Choice of airplanes  Planning Roll-Over  Funding Communication  Marketing strategy (channels etc.)  Communications concept  Partner Maintenance  Own added value  Make or buy Branding  New Brand?  Positioning  Concept for launch, communication Accounting  Client accounting (e.g. credit cards)  Profit and loss account  Reporting Supplier manag./ Sourcing  Fuel  Airport management  Other suppliers Concept/ Layout Commercial processes Commercial processes Operational Processes Operational Processes IT-Profile  Internet platform  Reservation/ distribution systems  Operation systems  Controlling systems  System integration 22 66 1010 33 44 55 99 131312121111 77 88 1414 Project management  Planning of business  Planning of organization  Controlling of project  Controlling of implementation 7 Source: 1BlueHorizon Group Framework
  • 17. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 161BHG | Low Cost Carrier Model Recipes Even the temptation to start a new venture is big due to the fact that the Airline business is known to be ‘sexy’, the Go / No GO decision should follow an uncompromising six-step evaluation approach Source: 1BlueHorizon Group Framework Understand the Strategic Objectives of the project owner in the selected Marketplace Conduct Workshop with Key Stakeholders to Reach a Go / No Go Decision 6 Define and Evaluate Alternative Options for a New Entrant in the Domestic Marketplace Assess Market Demand in the Domestic Marketplace Evaluate the Competitive Landscape & Profile Leading Players in the Domestic Marketplace Determine the Implications of the Proposed Changes in Aviation Regulations for the Domestic Marketplace 3a 1 2a Define and Evaluate Alternative Options for a New Entrant for the Regional Marketplace Assess Market Demand in the Regional Marketplace Evaluate the Competitive Landscape & Profile Leading Players in the Regional Marketplace Determine the Implications of the Proposed Changes in Aviation Regulations for the Regional Marketplace 2b 3b 4a 4b 5a 5b Domestic Assessment Regional Assessment
  • 18. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 171BHG | Low Cost Carrier Model Recipes Keep in mind a few advises before to open the Airline venture door because even you have the best operational model or an unique market opportunity (niche), only once the operations start you will know the truth… ■ As within the Aviation & Aerospace industry you will find a lot of ‘sharks’ looking to make money, be extremely careful and don’t take everything for granted… ■ As the Aviation is a very competitive industry, keep everything confidential and avoid talking about your project until you are very close to start operations… ■ I f you are giving the right kind of segmentation strategy and good execution, there will be enough room in the market for multiple service offering…. ■ The future performance of your project will depend on the strength of the selected business model and the focus going forward… ■ Finally, don’t copy/paste an existing airline. Benchmark them, learn from them and find out where is a niche, where is potentially (one) ‘1 B l u e H o r i z o n ‘… A maxim never to be forgotten before to start an airline venture: ‘How does a Billionaire become a Millionaire? Start an Airline…’
  • 19. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 181BHG | Low Cost Carrier Model Recipes We therefore recommend to consider a multi-phased approach along four main Phases to move forward with the new airline venture Source: 1BlueHorizon Group Framework PHASE IV Do it! Implementation PHASE I Should we do it? Go/ No Go  Understand the regulatory environment  Assess competitive activity  Analyze demand for air travel  Identify target segments  Define and evaluate potential options to be pursued  Go/ no go decision to proceed with next phase PHASE III How to do it? FinancingBusiness Planning PHASE II What to do? Major Activities Key Deliverables  Refine target segments  Define value proposition  Define network and fleet structure and operating requirements  Evaluate partnering options  Address regulatory issues  Build business case  Define implementation timetable  Go/ no go decision to proceed with next phase  Detail value proposition  Detail network and fleet structure  Detail operating requirements  Establish partnering agreements  Complete outstanding regulatory submissions  Build detailed financials  Obtain financing  Finalize network arrangements  Acquire fleet  Hire staff  Initiate partnerships  Implement operating procedures  Launch marketing activities  Launch operations  Assessment of regulatory environment  Competitive assessment  Demand assessment  Target segments  Option evaluation  Go/ No Go decision to proceed  Refined target segments  Value proposition definition  Network & fleet structure definition  Operating req. definition  Partnership options  Regulatory submissions  Financial assessment and business plan  Detailed value proposition  Network and fleet structure details  Operating requirements details  Partnership agreements  Regulatory submissions  Financial statements  Financing  Implementation timetable  Operational airline service(s)
  • 20. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 191BHG | Low Cost Carrier Model Recipes Many Low Cost Carriers have not moved far enough towards customer satisfaction, leaving money on the table – The model of the future ? Costs Revenues Increasing Passenger Satisfaction IncreasingOperationalComplexity Innovation Legacy Carriers Traditional LCCs HCC / LCLH / LCHR 1BlueHorizon Doable by youFulcrum High Capacity Carrier (HCC) Low Cost Long Haul (LCLH) Low Cost High Revenue (LCHR) Note: Airlines that find the right balance - their ‘innovation fulcrum’ - can dramatically improve their performance Source: 1BlueHorizon Group Framework
  • 21. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 201BHG | Low Cost Carrier Model Recipes Emirates Airline (EK) is a good example of ‘1BlueHorizon ’ creation by implementing Low-Cost Model Recipes to a Legacy Carrier : The High Capacity Carrier (HCC) model for ‘Long Haul’ is born in the Middle East 9,128 +188% 169,469 92,294 28,700 58,786 30,527 ‘MEB3’ carriers have 3 times the ordered seat, in the next 10 years compared to the ‘EUB3’ in Europe Source: © 1BlueHorizon Group Analysis, Ascend, www.anna.aero (without the last Dubai Air Show orders…)
  • 22. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 211BHG | Low Cost Carrier Model Recipes To support EK growth, the airline industry is fully vertically integrated in Dubai from the Regulator to the Airport, Airport Services and the airline Fleet: Dual Fleet of aircraft (by 2020)  Airbus A380  Boeing 777 & B777X ‘Long Haul’ Network:  Hub and Spoke system  Emirates Airline for ‘Long Haul’ (FlyDubai for ‘Short Haul’) Airport - One Hub:  Dubai International Airport (DXB)  The future Dubai World Central beyond 2020 Cargo operations:  Emirates SkyCargo with full Freighters  Fleet Belly hold for major ‘extra’ revenues Note: Vertical Integration is best understood by applying Michael Porter’s Value Chain model. It refers to the degree of integration between a firm’s value chain and the value chains of its suppliers and distributors. Air Services  Aircraft ground handling, Cargo, Travel, and Flight catering services Regulator  Dubai Civil Aviation Authority
  • 23. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 221BHG | Low Cost Carrier Model Recipes   SOLUTIONS PACK 1BLUEHORIZON GROUP GENERETING THRUST TO PROPEL YOUR BUSINESS FURTHER... March 2014 We generate 1B l ue H o r i z o n® out of the Rough... www.1bluehorizon.com P R O P R I E TA R Y I N F O R M AT I O N   A s s e t M a n a g e m e n t | M a n a g e m e n t C o n s u l t i n g | I n t e r i m M a n a g e m e n t A b u D h a b i | B e r n | L o n d o n | P a r i s
  • 24. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 231BHG | Low Cost Carrier Model Recipes Source: © 1BlueHorizon Group Corporate profile 1BlueHorizon Group® value proposition is simple — Deliver great value through a network of senior aviation executives worldwide  1BlueHorizon Group® (Asset Management | Management Consulting | Interim Management) was established in 2007 as a network of International aviation professionals, providing objective, independent, evidence-based analysis, advice and implementation support. We build on the experience of our team to help clients realize real and measurable results, quickly. Start-ups, restructuring, cost cutting, project management office, due-diligence or exploiting growth opportunities, we have experts who have faced these challenges.  Our senior experts have experience from leading companies in both management roles within their disciplines and as senior level professional advisors throughout diverse and complex locations in the Middle East, Europe, Africa, Asia Pacific and North America.  Privately owned, 1BlueHorizon Group® is independent of any financial institution, manufacturer, operator, insurance company or maintenance provider assuring our clients the benefit of truly unbiased, comprehensive and flexible provision of service.  1BlueHorizon Group® believes in working closely with client staff to transfer our knowledge and experience, which means 1BlueHorizon Group® continues to deliver value long after the project is complete.  A unique blend of languages, age groups, cultural backgrounds and skills qualifies 1BlueHorizon Group® to provide turnkey solutions for any and all of your aviation requirements - worldwide.  1BlueHorizon Group® range of services is continuously tailored and adapted to suit the geographical scope and needs of our customers.
  • 25. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 241BHG | Low Cost Carrier Model Recipes Wataniya Airways - Chairman Mr. Abdulsalam Al Bahar with Mrs Ghaida Abdul Latif, vice chairman – director general & CEO of Syrian Arab Airlines. Flydubai - CEO Mr. Ghaith Al Ghaith Gulf Air - Ex CEO Samer Majali H.E. Mohamed Hamad bin Azzan Al Mazrouei, WRDC's Director General and Acting Under Secretary of the Court of the Ruler's Representative in the Western Region (al Gharbia) of Abu Dhabi Emirate Democratic Republic in Congo (Transport) AerospaceOne Company in India Jet Green in Pakistan Ababeel Air in Libya His Highness Sheikh Ahmed Bin Saeed Al Maktoum, President of the Dubai Civil Aviation Authority, Chairman of Dubai Airports, Chairman & Chief Executive of Emirates Airline & Group Note: Detailed references upon request For the last ten years we have been actively involved with our Senior personnel in major airlines, start-ups or Economic development ventures
  • 26. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 251BHG | Low Cost Carrier Model Recipes Interim Manage- ment Managing Consulting Asset Management  The Management Consulting (MC) Practice will work side by side with you with senior personnel having experience in various corner of the world and quickly understanding what you need when the margin of error is thin…  The Interim Management (IM) Practice can help by giving comfort and control, ready to field a team of relevant seasoned advisors whenever and wherever they are needed…  The Asset Management (AM) Practice works individually with each of our clients to develop creative strategies and solutions for all types of aviation equipment.… Source: © 1BlueHorizon Group Practices Knowledge transfer Turnkey solutions Innovative Hands-on The 1BlueHorizon difference 1BlueHorizon Group® is build around three dedicated Practice to propel clients business further with a comprehensive approach ahead of strategies
  • 27. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 261BHG | Low Cost Carrier Model Recipes Family conglomerates (Governance, Portfolio analysis and investment Strategy) Economic development (Business review / Cluster / Project Management office) Air Transportation (Airlines / Airport / General Aviation / Aerospace & Defence) Management Consulting Operational Improvement Our understanding of operational improvement is quite simple: Whereas restructuring is about stabilizing a company and fixing how it does things, operational improvement is about seeing a company through the transformation of becoming more competitive. Asset Management Fleet Strategy & Planning With our Fleet Solutions, we can help you expand your fleet, transition from older models to newer aircraft types, or provide interim capacity. We back our support with a global team of technical experts and industry specialists who will provide you with the fleet solution that meets your specific needs. Interim Management Knowledge transfer Finding talent is difficult even at the best of time. Finding resources to assist for a short- term assignment of a proven heavyweight interim executive manager to manage a period of transition, crisis or change within an organization or to take on critical projects or senior positions for a limited time is even more difficult. Ahead of Strategies Three Practices If you want a feasibility study or business plan to assess the case or are burning cash and running into trouble as you approach launch or help the executive teams assess the case for entering immunized joint ventures or looking for an interim management solution… 1BlueHorizon Group® senior personnel are helping along three dedicated Practices stakeholders and management of companies to maximize their potential by providing turnkey solutions, thinking ahead of strategies… Our Practices Service Lines are focused on Strategy and Performance Improvement, no matter how complex the issues Source: © 1BlueHorizon Group Business model with Sectors (Horizontals) & Practices (Verticals)
  • 28. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 271BHG | Low Cost Carrier Model Recipes 1BlueHorizon Group® Sectors expertise covers the entire breadth of the air-transportation, Economic development and Family conglomerates Airline Economic development Corporate governance structure  Portfolio analysis  Investment strategy  The family element  Performance Management  Organization Improvement  Privatization  Aerospace cluster  Logistic, Cargo, GH Airport Family conglomerate  Restructuring MRO, Aerospace & Defence  Performance Management  Organization and Change Management  Pricing and Revenue Management  Market Forecasting  Branding, Marketing and Sales General aviation Aerospace & Defence  Feasibility, Business Plan  Operations Improvement  Merger & Acquisitions  Due Diligence  Fleet Planning  Business review  Cluster strategy  Project Management office  Public–private partnership (PPP) Source: © 1BlueHorizon Group Core competencies in the main Three sectors … and our clients well recognize this!
  • 29. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 281BHG | Low Cost Carrier Model Recipes “1BlueHorizon Group is the only consulting firm that works successfully on all levels: Board level, middle management, implementation" “1BHG senior personnel come in with strong views but integrate perfectly in our teams" “1BHG has convinced us through it's excellent industry- and technology expertise" "The 1BHG team knows perfectly well how to push the necessary change" “1BHG guys are implementation - oriented and their cooperation with my people is very good " “1BHG Practice has very qualified people who really know a lot about our industry" Testimonials - What do our Customers think about 1BlueHorizon Group Note: Detailed references upon request "In each project step, we could clearly identify 1BHG's added value and improve the overall bottom line" P R O P R I E TA R Y I N F O R M AT I O N THE ONLY WAY TO DO GREAT WORK IS TO LOVE WHAT WE DO… A MILE OF RUNWAY WILL TAKE YOU ANYWHERE NO ONE HAS EVER COLLIDED WITH THE SKY
  • 30. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 291BHG | Low Cost Carrier Model Recipes Published books and decisive management theories that facilitate critical dialogue and support 1Bl ueHor i z on creation A short selection of inescapable aviation related books “Baseline” (Philosophy) “Low Cost Carriers” “Courier services” “Various” Airlines’ Turnaround “Air Transport Management” Source: © 1BlueHorizon Group Recommended bibliography (non exhaustive) P R O P R I E TA R Y I N F O R M AT I O N Partners Network – Aviation Sector
  • 31. © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 30 P R O P R I E TA R Y I N F O R M AT I O N 1BHG | Low Cost Carrier Model Recipes THANK YOU We are used to generate 1BlueHorizon® out of the Rough... Our turnkey solutions have continuously an implementation focus… LEONARD FAVRE Partner, Group Managing Director 1BlueHorizon Group P.O. Box 34154 M +971 50 6164007 (U.A.E.) Abu Dhabi M +41 79 2080256 (Switzerland) United Arab Emirates leof007 leo@1bluehorizon.com www.1bluehorizon.com Abu Dhabi | Bern | London | Paris Any clarifications or questions regarding this document should be addressed to:
  • 32. P R O P R I E TA R Y I N F O R M AT I O N © 2014 1BlueHorizon Group - www.1bluehorizon.com All rights reserved 311BHG | Low Cost Carrier Model Recipes