The Low Cost Carriers Recipes
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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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The Low Cost Carriers Recipes The Low Cost Carriers Recipes Presentation Transcript

  • P R O P R I E TA R Y I N F O R M AT I O N 1BLUEHORIZON COOKBOOK 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… Comfort © 2014 1BlueHorizon Group - www.1bluehorizon.com 0All rights reserved1BHG | The Low Cost Carrier Recipes 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
  • P R O P R I E TA R Y I N F O R M AT I O N The low cost phenomenon has penetrated global aviation starting in the U.S. in 1971 – but now the LCC sector is crowded ‘(Red) Horizon’ 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 ... AirArabia Bahrain Air Fly Dubai Jazeera Airways NasAir Wataniya Airways ... © 2014 1BlueHorizon Group - www.1bluehorizon.com 1All rights reserved1BHG | The Low Cost Carrier Recipes 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) Virgin Blue Freedom Air Tiger Airways ... Azul Brazilian Gol Airlines EasyFly ... FlyScoot (2012) Note: The LCCs mentioned above are of course not exhaustive…
  • P R O P R I E TA R Y I N F O R M AT I O N 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- Super carriers split markets by customer segment, price and service offering Stable market split between carriers © 2014 1BlueHorizon Group - www.1bluehorizon.com 2All rights reserved1BHG | The Low Cost Carrier Recipes state owned market shares network (P2P) economies-of- scale 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 | Management Consulting Research & Analysis
  • P R O P R I E TA R Y I N F O R M AT I O N Air traffic liberalization typically shows significant passenger growth development patterns - Typical Range of Air Traffic Growth Rates - … 12-35% 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 ... 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 © 2014 1BlueHorizon Group - www.1bluehorizon.com 3All rights reserved1BHG | The Low Cost Carrier Recipes Source: IATA, InterVistas, GAD Post- liberalization Pre- liberalization Global Average Min Max 4-7% 2-5% Protection of (state-owned) flag carriers against ... … international competitors (esp. for international markets) … market forces of supply & demand (esp. for domestic markets) (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
  • P R O P R I E TA R Y I N F O R M AT I O N … 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 ‘1 B lue H oriz on ®®®® ’ Shift within airline New demand 59% Otherwise would have not travelled 71% © 2014 1BlueHorizon Group - www.1bluehorizon.com 4All rights reserved1BHG | The Low Cost Carrier Recipes Source: Liberalization of European Air Transport 2011 No data 4% airline market 37% 59% Otherwise by rail Otherwise by car Others 15% 6% 8% Is the Low-Cost Carriers the ultimate model, the wonder recipe to save the whole airline industry? Unfortunately not!
  • P R O P R I E TA R Y I N F O R M AT I O N Typical Legacy Carrier Cost structure / operating expenses versus Low Cost Carrier with the fuel as key fluctuating cost Labor, Flight Crew 15% Ticket Sales 2% Airport, Landing 18% Depreciation, Amortization 15% 19.6% 16.4% 25.4% 7% Inclusive Aircraft rental (3%) Passengers services (10.5 %) Station Expenses (10.8 %) Landing fees (4.1 %) Flight Crew (7.4 %) General Administration (12.2 %) © 2014 1BlueHorizon Group - www.1bluehorizon.com 5All rights reserved1BHG | The Low Cost Carrier Recipes Source: The Aviation & Aerospace Almanac, ICAO Air Transport Reporting Form EF-1, 1BlueHorizon Group | Management Consulting Research & Analysis Amortization 15% Maintenance, Overhaul 5% Fuel & Oil 22% Route Charges Others 13% 10% 7% 10.1% 12% 2.4% 7.1% Inclusive Aircraft rental (3%) Key Costs for an airline are: Fuel Labor Maintenance Key Costs for a LCC are: Fuel Airport Labor
  • P R O P R I E TA R Y I N F O R M AT I O N 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 Low-Cost is a mood, is a management strategy, is a mind set © 2014 1BlueHorizon Group - www.1bluehorizon.com 6All rights reserved1BHG | The Low Cost Carrier Recipes 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… ‘1 B lue H oriz on ®®®® Cookbook’ highlights the main Model Recipes ‘If you think well 1 B lue H oriz on ®®®® , you will cook well your airline... Source: 1BlueHorizon Group | Management Consulting Analysis
  • P R O P R I E TA R Y I N F O R M AT I O N Rolling out an innovative airline with ‘1 B lue H oriz on ®®®® Cookbook’ support requires the design of seven fundamental building blocks (1BHG Framework) Operational model: – High-frequency shuttle services instead of connecting traffic (via hubs) – Fleet structure Distribution model: – Direct sales (online, call center) Opera- tional Distri- bution Tariff model 1 2 3 Business ModelBusiness Model © 2014 1BlueHorizon Group - www.1bluehorizon.com 7All rights reserved1BHG | The Low Cost Carrier Recipes 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 | Management Consulting Framework – 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 tional model bution model model Cost structure Demand / Destin. portfolio Product concept Operational Implementation 4 5 6 7
  • P R O P R I E TA R Y I N F O R M AT I O N The LCC Recipes from ‘1 B lue H oriz on ®®®® Cookbook’ allow any airline to follow a different operational model with significant differentiation and cost differences 1/5 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 For your Project? © 2014 1BlueHorizon Group - www.1bluehorizon.com 8All rights reserved1BHG | The Low Cost Carrier Recipes Note: As example the Southwest Airlines used recipes Source: 1BlueHorizon Group | Management Consulting Research & Analysis 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
  • P R O P R I E TA R Y I N F O R M AT I O N LCCs capitalize on their simple and efficient business model and their extremely lean cost structure 2/5 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 For your Project? © 2014 1BlueHorizon Group - www.1bluehorizon.com 9All rights reserved1BHG | The Low Cost Carrier Recipes Note: As example the Southwest Airlines used recipes Source: 1BlueHorizon Group | Management Consulting Research & Analysis 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
  • P R O P R I E TA R Y I N F O R M AT I O N The LCC Recipes from ‘1 B lue H oriz on ®®®® Cookbook’ are tips on how to consider the airline differently 3/5 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 For your Project? © 2014 1BlueHorizon Group - www.1bluehorizon.com 10All rights reserved1BHG | The Low Cost Carrier Recipes Note: As example the Southwest Airlines used recipes Source: 1BlueHorizon Group | Management Consulting Research & Analysis 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
  • P R O P R I E TA R Y I N F O R M AT I O N The LCC Recipes from ‘1 B lue H oriz on ®®®® Cookbook’ are the cornerstone of the airline project or restructuring 4/5 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 For your Project? © 2014 1BlueHorizon Group - www.1bluehorizon.com 11All rights reserved1BHG | The Low Cost Carrier Recipes Note: As example the Southwest Airlines used recipes Source: 1BlueHorizon Group | Management Consulting Research & Analysis 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
  • P R O P R I E TA R Y I N F O R M AT I O N The LCC Recipes from ‘1 B lue H oriz on ®®®® Cookbook’ are not finalized, plenty need to be added under ‘1 B lue H oriz on ®®®® creation 5/5 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 For your Project? © 2014 1BlueHorizon Group - www.1bluehorizon.com 12All rights reserved1BHG | The Low Cost Carrier Recipes Note: As example the Southwest Airlines used recipes Source: 1BlueHorizon Group | Management Consulting Research & Analysis 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)
  • P R O P R I E TA R Y I N F O R M AT I O N The selected recipes from ‘1 B lue H oriz on ®®®® 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 11 22 33 Lowest price vs. value for money Convenience of travel chain Home base? Maintenance locations? Achievable average stage length? Achievable frequencies per route? Achievable block hours per day? Fleet size, A/C type? Business ModelBusiness 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? © 2014 1BlueHorizon Group - www.1bluehorizon.com 13All rights reserved1BHG | The Low Cost Carrier Recipes Source: 1BlueHorizon Group | Management Consulting Framework & Analysis Opera- tional model Distri- bution model Tariff model Cost structure Demand / Destin. Product concept Operational Implementation 11 22 33 44 66 77 Convenience of travel chain Specific process needs/amenity expectations in the particular country No frills vs. frills for money Competitive scenarios 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? Catchment area/airport affinity 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
  • P R O P R I E TA R Y I N F O R M AT I O N The implementation of the business model based on selected recipes from ‘1 B lue H oriz on ®®®® Cookbook’ should follow a defined framework... Coverage 1) Core Questions Market potential, achievable market shares Required cost structure 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 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 Future traffic streams Possible market share Target size of business (Fleet, frequency shares etc.) Operation approach (destinations) Yield return Target passenger/-utilization 1 2 3 4 © 2014 1BlueHorizon Group - www.1bluehorizon.com 14All rights reserved1BHG | The Low Cost Carrier Recipes Source: 1BlueHorizon Group | Management Consulting for illustrative purpose cost structure Appropriate positioning of product and brand Conceptual design of product Determination of target cost structures charter airlines + low cost carriers Determination of target cost structures (top-down) Definition of valuation rate Analysis of brand attribute of main line 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) Annual report, Press Releases of competitors Booz Allen database Analyst report 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.) 4 5 6
  • P R O P R I E TA R Y I N F O R M AT I O N … and the operational implementation of the seventh fundamental building blocks can occur in 14 operational modules Network structure/ design Position Destinations Frequencies, Schedule etc. Product concept/- management Board products „Frills“ Ground products Fleet composition Choice of airplanes Planning Roll-Over Funding Branding New Brand? Positioning Concept for launch, communication Concept/ Layout IT-Profile Internet platform Reservation/ distribution systems Operation 22 66 33 44 55 9977 88 1414 Project management Planning of business Planning of organization Controlling of project Controlling of implementation 7 © 2014 1BlueHorizon Group - www.1bluehorizon.com 15All rights reserved1BHG | The Low Cost Carrier Recipes Source: 1BlueHorizon Group | Management Consulting Framework Pricing/ Yield Management Tariffs Classes Logic of pricing/yield management Flight operations Resource scheduling Capacity requirements Organization Sales/Distribution Choice of distribution channels/partners Reservation system Key account management Ground Ops [s. Flight Operations] Communication Marketing strategy (channels etc.) Communications concept Partner Maintenance Own added value Make or buy Accounting Client accounting (e.g. credit cards) Profit and loss account Reporting Supplier manag./ Sourcing Fuel Airport management Other suppliers Commercial processes Commercial processes Operational Processes Operational Processes Operation systems Controlling systems System integration 66 1010 99 131312121111 77 88
  • P R O P R I E TA R Y I N F O R M AT I O N 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 Understand the 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 4a 5a Domestic Assessment © 2014 1BlueHorizon Group - www.1bluehorizon.com 16All rights reserved1BHG | The Low Cost Carrier Recipes Source: 1BlueHorizon Group | Management Consulting 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 61 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 4b 5b Regional Assessment
  • P R O P R I E TA R Y I N F O R M AT I O N 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 © 2014 1BlueHorizon Group - www.1bluehorizon.com 17All rights reserved1BHG | The Low Cost Carrier Recipes 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…’
  • P R O P R I E TA R Y I N F O R M AT I O N We therefore recommend to consider a multi-phased approach along four main Phases to move forward with the new airline venture 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 PHASE III How to do it? FinancingBusiness Planning PHASE II What to do? Major Activities Refine target segments Define value proposition Define network and fleet structure and operating requirements Evaluate partnering options Address regulatory issues Build business case Detail value proposition Detail network and fleet structure Detail operating requirements Establish partnering agreements Complete outstanding Finalize network arrangements Acquire fleet Hire staff Initiate partnerships Implement operating procedures Launch marketing © 2014 1BlueHorizon Group - www.1bluehorizon.com 18All rights reserved1BHG | The Low Cost Carrier Recipes Source: 1BlueHorizon Group | Management Consulting Framework Go/ no go decision to proceed with next phase Key Deliverables Build business case Define implementation timetable Go/ no go decision to proceed with next phase Complete outstanding regulatory submissions Build detailed financials Obtain financing 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)
  • P R O P R I E TA R Y I N F O R M AT I O N Many Low Cost Carriers have not moved far enough towards customer satisfaction, leaving money on the table – The model of the future ? Costs Revenues IncreasingOperationalComplexity Legacy Carriers HCC / LCLH / LCHR 1BlueHorizon High Capacity Carrier (HCC) Low Cost Long Haul (LCLH) © 2014 1BlueHorizon Group - www.1bluehorizon.com 19All rights reserved1BHG | The Low Cost Carrier Recipes Revenues Increasing Passenger Satisfaction IncreasingOperationalComplexity Innovation Traditional LCCs 1BlueHorizon Doable by youFulcrum Low Cost High Revenue (LCHR) Note: Airlines that find the right balance - their ‘innovation fulcrum’ - can dramatically improve their performance Source: 1BlueHorizon Group | Management Consulting Framework
  • P R O P R I E TA R Y I N F O R M AT I O N Emirates Airline (EK) is a good example of ‘1 B lue H oriz on ®®®® ’ 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 +188% 169,469 28,700 © 2014 1BlueHorizon Group - www.1bluehorizon.com 20All rights reserved1BHG | The Low Cost Carrier Recipes 9,128 92,294 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 | Management Consulting Analysis, Ascend, www.anna.aero (without the last Dubai Air Show orders…)
  • P R O P R I E TA R Y I N F O R M AT I O N To support EK growth, the airline industry is fully vertically integrated in Dubai from the Regulator to the Airport, Airport Services and the airline Airport - One Hub: Dubai International Airport (DXB) The future Dubai World Central beyond 2020 Air Services Aircraft ground handling, Cargo, Travel, and Flight catering services Regulator Dubai Civil Aviation Authority © 2014 1BlueHorizon Group - www.1bluehorizon.com 21All rights reserved1BHG | The Low Cost Carrier Recipes 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’) 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.
  • P R O P R I E TA R Y I N F O R M AT I O N MANAGEMENT CONSULTING SOLUTIONS PACK P R O P R I E TA R Y I N F O R M AT I O N 1BlueHorizon Group | Management Consulting Management Consulting: How assisting management to solve a wide range of critical issues… © 2014 1BlueHorizon Group - www.1bluehorizon.com 22All rights reserved1BHG | The Low Cost Carrier Recipes 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 g r a t e d C o m m u n i c a t i o n We generate 1BlueHo rizo n ® out of the Rough... www.1bluehorizon.com March 2014 Updated
  • P R O P R I E TA R Y I N F O R M AT I O N 1BlueHorizon Group | Management Consulting (MC) from business plan to first flight, or through the transformation of becoming more competitive Every month 1BlueHorizon Group senior personnel are invited to look at new airline start up projects or to solve a wide range of critical issues within the airline & Aerospace industry by entrepreneurs, investors and Senior management and board members. In our experience, concepts which look great on paper don’t reflect the reality of taking the business to market, the reason why our turnkey solutions have continuously an implementation focus. HOW WE CAN HELP – GENERETING THRUST TO PROPEL YOUR BUSINESS FURTHER... If you want a feasibility study, a business plan or a Due Dilligence to assess the case for an airline start-up or existing burning cash and running into trouble, an airport our MRO facility, or are burning cash, we draw on our experience of assisting the airline & Aerospace industry in Africa, Middle East and Europe, to provide focused analysis and results-oriented decision support. Our team members have worked on the airline start-up of Maximus Air, Fly Dubai, MTMKN (all U.A.E.), Silkroad Cargo (Uzbekistan), Wataniya Airways (Kuwait), Blue Airways (Nepal), Saba Airlines (Yemen), JetGreen (Pakistan), Punto Azul (Guinea Equatorial), for various airlines aiming to © 2014 1BlueHorizon Group - www.1bluehorizon.com 23All rights reserved1BHG | The Low Cost Carrier Recipes Source: © 1BlueHorizon Group | Management Consulting Saba Airlines (Yemen), JetGreen (Pakistan), Punto Azul (Guinea Equatorial), for various airlines aiming to restructure a poorly performing business or for airports in need of a strategic business review like N’djili International Airport in Kinshasa (RDC) or technical support for Al Najaf International Airport (Iraq). Our core team and associates have management expertise in strategy, operations revitalization and restructuring, commercial, asset management, finance, maintenance & engineering across over twenty airlines. As example, we can advise on planning an airline start-up and provide an interim team to launch the business – from AOC through fleet acquisition, negotiations support with financiers, required due diligence, branding & marketing, recruitment, pilot training, IT infrastructure etc. – a full turnkey solution. We are used to generate 1BlueHorizon® out of the Rough...
  • P R O P R I E TA R Y I N F O R M AT I O N ‘Big Four’Law firm Management 1BlueHorizon Group | Management Consulting (MC) is providing clients a comprehensive approach, no matter how complex the issues Innovative – Hands-on Knowleadge transferconsulting © 2014 1BlueHorizon Group - www.1bluehorizon.com 24All rights reserved1BHG | The Low Cost Carrier Recipes Operational Improvement Creating 1 B l u e H o r i z o n ® to solve a wide range of critical issues BUSINESS DEVELOPMENT IMPLEMENTATION Project Management Office Source: © 1BlueHorizon Group | Management Consulting Business model
  • P R O P R I E TA R Y I N F O R M AT I O N Do you need help starting a new venture? Is it time for a Due Diligence as next step? Are you in need of a strategic business review? Looking for ways to differentiate from competitors? Aiming to restructure a poorly performing business? Are you in need of a sound Project Management office? Illustrative Aviation 1BlueHorizon Group|MC senior personnel core competencies lie in Airlines, General Aviation, Airports, Aerospace and Defense and are deployed on-sites © 2014 1BlueHorizon Group - www.1bluehorizon.com 25All rights reserved1BHG | The Low Cost Carrier Recipes Are you in need of a sound Project Management office? In today’s Aviation & Aerospace business environment, the margin of error is thin; clients need and expect seasoned advisors. With their respective disciplines, 1BlueHorizon Group senior personnel have experience in various corner of the world. 1BlueHorizon Group |MC is ready to field a team of relevant aviation and aerospace experts whenever and wherever they are needed Airlines Air Cargo Corporate Jet Airports MRO GCAA Source: © 1BlueHorizon Group | Management Consulting Industries & Capabilities – Core competencies Aviation
  • P R O P R I E TA R Y I N F O R M AT I O N Project Management Office According to recent studies, 68% of projects do not meet time/cost/scope targets. The PMO strives to introduce economies of repetition in the execution of your projects and Providing innovative solutions, hands-on and knowledge transfer are our difference to maximized value creation - continuously ahead of strategies 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 Interim Management Management trainer 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 1BlueHorizon Group |MC senior personnel assists - ahead of strategies - stakeholders and management of companies in a variety of sectors who are faced with operating challenges, support of a project management office and/or requesting senior executive interim management support. Ahead of Strategies 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 © 2014 1BlueHorizon Group - www.1bluehorizon.com 26All rights reserved1BHG | The Low Cost Carrier Recipes execution of your projects and we participate actively in Strategic project management as facilitator… 1BlueHorizon Group |MC can help give comfort and control through our hands- on experience to maximize value creation… operational improvement is about seeing a company through the transformation of becoming more competitive. 1BlueHorizon Group |MC works side by side with you to maximize the potential of your people… 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. 1BlueHorizon Group |MC quickly understand what you need, with interactive mentoring if more suitable… … and our clients well recognize this! case for entering immunized joint ventures… 1BlueHorizon Group |MC senior personnel helping to maximize your potential, thinking ahead of strategies…
  • P R O P R I E TA R Y I N F O R M AT I O N Published books and decisive management theories that facilitate critical dialogue and support 1 B lue H oriz on ®®®® creation A short selection of inescapable aviation related books © 2014 1BlueHorizon Group - www.1bluehorizon.com 27All rights reserved1BHG | The Low Cost Carrier Recipes “Baseline” (Philosophy) “Low Cost Carriers” “Courier services” “Various” Airlines’ Turnaround “Air Transport Management” Partners network - Aviation Source: © 1BlueHorizon Group | Management Consulting recommended bibliography (non exhaustive)
  • P R O P R I E TA R Y I N F O R M AT I O N Contact: LEONARD FAVRE Partner, Managing Director Email: leo@1bluehorizon.com 1 BlueHorizon Group | Manag ement Consulting| P.O. Box 34154 Abu Dhabi, United Arab Emirates M: +971 50 6164 007 (U.A.E.) M: +41 79 2080 256 (Switzerland) S: leof007 © 2014 1BlueHorizon Group - www.1bluehorizon.com 28All rights reserved1BHG | The Low Cost Carrier Recipes