Gray Matter proposes an entry strategy for Bon Avion airline in India. They will focus on demand drivers like GDP, disposable income and tourism. Competition includes Air India, Indigo, Jet Airways and others. They will use a hybrid hub-and-spoke and point-to-point model on profitable routes connecting tier 1 and 2 cities. Financial projections show profits in 2019-2020 as costs are controlled through single aircraft fleet, high utilization and other measures. A five month launch plan outlines obtaining approvals and permits before beginning operations in March 2019.

1. Team : Gray Matter
Mayank Agrawal - 9930840608
Ashwin Jain - 9971063087
Tejas Shah - 9833232218
Entry Strategy for Bon Avion
The Consigliere 2.0

2. SLIDE NO. SLIDE DETAILS REMARKS FILES
1 Demand & Cost Drivers Demand & Cost Drivers References - DGCA, IATA
reports
2 Competitive Landscape Analysis of existing
market players
CAPA Aviation reports
3 Entry Strategy Details of aviation
strategies to be adopted
NA
4 Pricing Analysis of Yield Pricing
model
NA
5 Route Planning Factors affecting Route
Planning
6 Scheduled Routes Details of Routes
selected for operation
NA
7 Income Statement 5 year Income statement
with analysis
8 Breakeven Analysis Calculations regarding
Breakeven point
9 Airline Launch Plan Five month launch plan NA
INDEX

3. Demand and Cost Drivers Competitive Strategy Route Planning Financials
Cost drivers -
demand for
Air Seats
Trade
Real GDP
GDP per capita
Labor Force
Network Structure
Infrastructure
Business Model
Type of Service
Regulatory
Environment
Tourism
Disposable Income
Component
Costs as % of
Total variable
costs
Driving Factor
ATF (Airline turbine
fuel)
40-60%
Fuel Efficiency,
Engine Option
Maintenance 20-30% Age of Aircraft
Lease Rentals 15-20% Tenure of lease
Marketing 2-3% Online/Print
Reservation, Online
Sales
3-8%
Commissions,
Systems, ITES
Network Upkeep
Costs
3-5% Planning
Navigation, Flight
and routing charges
1-3% Planning
HR 2-10%
Training, Expat
pilots, Outsourcing
US – Aircrafts
7,000
India – Aircrafts
400
Passengers – Airlines
84 Million a year
Passengers – Railways
8.4 Billion a year
Market Potential
Time taken in train
Delhi – Mumbai 16 hours
Time taken in Flight
Delhi – Mumbai 02 hours
Time taken in train
Kolkatta –Agartala 60 hours
Time taken in Flight
Kolkatta –Agartala 45 mins.
Costs Incurred by airlines

4. • Largest International network to support
its domestic operations
• Advantage of being the national airline
• Highest penetration
• Large fleet & 108 employees per aircraft
Air India
• Lowest Aircraft Maintenance cost
• Standard and uniform base fares
• Point to point model & Single fleet
• Same day returns
• Lowest turnaround time
• Best on time performance
• Sale & lease back model - procurement
Indigo
• High fuel efficiency
• Experience and International tie ups
• Strong and Growing loyalty program
• Strong corporate tie ups
• Excellent customer experience
• Highest leg room and comfortable seat
Jet Airways
• Predatory pricing
• Highest load factor
Spicejet
• Premium Economy
• World class experience
• Full Service – Multi
cuisine food, other
services
Vistara
• Low fares
• Focus on Tier 2
connectivity
• Extra charges for
Check In Baggage
Air Asia
• Low fares
• Focus on Tier 2
connectivity
• Single fleet - 19
Go Air
Demand and Cost Drivers Competitive Strategy Route Planning Financials
Competitive
Rivalry
Supplier
Power
Threat of
substitutes
Buyer
power
Entry/Exit
Barriers
High
• ATF – Fluctuations in
international prices
• Aircraft – 2 major
players(oligopoly)
• Labor - Unions
Low/Mid
• Train
• Bullet Train
High
• Capital
• Initial
Expendi
ture
• Operati
on costs
Porter’s Five Forces
1
1
Low/Mid
• Fewer options
• Low supply of train
tickets

5. Low
Operational
Costs
Leveraging Seasonal Traffic
• Multi sector flights covering seasonal
high traffic destinations
Example:
• Feb to November Delhi – Bengaluru
• Dec to Jan Delhi-Goa-Bengaluru
Single Cabin Class
• Maximum seat capacity 180-189
• Minimum time in boarding
• Low turnaround time. Target 25-30
minutes
• High Load Factor: >75%
Customer Relationship
• Initially offering free return flights
instead of discounting
• Loyalty Program
• Strategic industry Tie Ups
• Standard and uniform fares
thereafter
• Lower base fares on 2/3/4 month
advance bookings
Recruitment
• Recruiting staff from point of
origin/destination to reduce hotel costs
• Minimum dependence on Expat pilots
• Fewer employees per aircraft. Target –
95 per aircraft
Red Eyed Flights
• Blue ocean strategy
• High aircraft utilization rates > 11 hours
• Covering longer distance routes, 3
hours and above
Hub & Spoke - Point to Point Hybrid Model
• Taking advantage of low airport fee at
Tier II/III airports
• Operating only on profitable routes
• Ensuring On time performance.
Target 90%
Single Fleet
• Low training costs for Pilot/Crew
• Learning by doing
• Bulk purchase/Lease discounts
• Leasing(Dry/Wet) 5 Aircrafts initially to
ensure risk minimization.
• Purchasing aircrafts after 2 years of
operations through Sale and Lease
Back Model
Low Maintenance Costs
• Young Aircraft Fleet – A320 Neo
• Maintaining average age of
aircrafts within 5 years
Demand and Cost Drivers Competitive Strategy Route Planning Financials
High operational efficiency of Cabin
Crew and Ground staff through
digitization of manual operations, both in
flight and on ground

6. Demand and Cost Drivers Competitive Strategy Route Planning Financials
Choice of Aircraft
2/3/4 Month
Low fares
Last 2 week
high prices
Based on Number of days before flight
2 weeks –
2 months
prices
BaseFare
Number of tickets 
Tuesday
Monday Morning
Friday Evening
Based on Day and time of the week
Friday/Sa
turday/S
unday
Day
BaseFare
Number of tickets 
Rest of
the week
Airbus A320 Neo
with CFM LEAP Engine option
• 20% per seat fuel burn saving
(approx. $250,000 a year)
• Low maintenance costs
• Capacity of 189 seats with single class
configuration
• Faster deliveries within 2-3 years
Pricing - Yield Pricing
• Limiting to seats to 180
enhance leg room
• Food and beverages in flight
on demand @price
• 7Kg + 15 Kg Free Baggage
• Extra Baggage @250 per Kg
• Competitive pricing for cargo
targeting e-tailing cargo
companies
Demand and Cost Drivers Competitive Strategy Route Planning Financials

7. 0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
9000000
10000000
HYDERABAD
KOLKATA
CHENNAI
BANGLORE
MUMBAI
DELHI
POTENTIALITY MATRIX
• The strategic importance is gauged by the business
activity, tourist destination and potential smart city.
• This matrix lists tier-2 & 3 cities according to their
potential air traffic.
• The growth is measured in terms of year on year
increase in the domestic passengers handled by
the airport.
• These cities can play a role in our hub and scope
model.
HIGHLY
STRATEGIC
HIGH GROWTH LOW GROWTH
LESS
STRATEGIC
• GOA
• AHEMDABAD
• PUNE
• BHOPAL
• NAGPUR
• LUCKNOW
• AGARTALA
• VIJAYWADA
• TIRUPATI
• VISHAKAPATNAM
• COCHIN
• BHUBANESWAR
• JAMMU
• AGARTALA
• INDORE
Demand and Cost Drivers Competitive Strategy Route Planning Financials
*Data from DGCA Reports
Monthly domestic passenger traffic at 6 busiest airports in India
• Delhi and Mumbai handle the highest number of domestic
passengers.
• Bangalore, Chennai, Kolkata and Hyderabad follow them
interchangeably
• These cities have an ever increasing demand and require a
good frequency of cross flights.

8. AIRC
RAFT
NO.
ROUTE TOTAL
MONTHLY
PASSENGERS
JOURNEY
S PER
DAY
AIRCRAFT
UTILISATI
ON RATE
MONTHS OF
OPERATION
ALTERNATE ROUTE TOTAL
MONTHLY
PASSENGE
RS
JOUR
NEYS
PER
DAY
AIRCRAFT
UTILISATION
RATE
MONTHS
OF
OPERATI
ON
HUB
1 DELHI-MUMBAI-
DELHI
472005 2 9.5 hrs Jan,Feb,Mar,A
pr,Jul,Sep,Oct,
Nov,Dec (9
months)
(a)Delhi-Ahmedabad-Mumbai-
Delhi
(b)Delhi-Nagpur-Mumbai-Delhi
(c)Delhi-Bhopal-Mumbai-Delhi
366177
272891
260653
2
2
2
11 hrs
12 hrs
12 hrs
May
June
August
Delhi
2 MUMBAI-
BANGLORE-
MUMBAI
270434 2 8.5 hrs Feb,Mar,Apr,M
ay,Jun,Jul,Aug,
Sep,Oct,Nov
(10 months)
Mumbai-Goa-Banglore-
Mumbai
248404 3 10 hrs Dec,Jan Mumb
ai
3 DELHI-BANGLORE-
DELHI
278022 2 12.5 hrs Feb,Mar,Apr,M
ay,Jun,Jul,Aug,
Sep,Oct,Nov
(9 months)
(a)Delhi-Goa-Banglore-Delhi
(b)Delhi-Pune-Banglore-Delhi
212021
261911
2
2
13.5 hrs
14.5 hrs
Dec,Jan
May
Delhi
4 DELHI-HYDERABAD-
DELHI
171440 2 11 hrs Jan,Feb,Mar,A
pr,May,Jun,Jul,
Aug,Sep,Oct,D
ec(11 months)
(a)Delhi-Hyderabad-Cochin-
Delhi
108640 2 14 hrs Nov Delhi
5 DELHI-KOLKATA-
DELHI
147849 2 9.33 hrs Jan,Feb,Mar,A
pr,May,,Jul,Au
g,Sep,Oct,Nov,
Dec
(10 months)
(a)Delhi-Lucknow-Kolkata-Delhi
(b)Delhi-Agartala-Kolkata-Delhi
137466
99717
2
2
10.5 hrs
15 hrs
June
May
Delhi
The routes have been selected by analysing the monthwise peaks in passenger traffic according to the DGCA reports for 2014-15
Demand and Cost Drivers Competitive Strategy Route Planning Financials

9. Demand and Cost Drivers Competitive Strategy Route Planning Financials
Income Statement 2017-2020
Income Statement For Bon-Avion
Particulars-Rs in Crs 2017F 2018F 2019F 2020F
Revenue 346.63 693.25 1039.88 1386.50
Operating Cost 329.04 651.14 966.31 1274.55
EBIT 17.59 42.11 73.57 111.95
Non-Operating Cost
Marketing 8.77 8.68 12.88 13.60
Reservation, Online Sales 13.16 21.70 21.90 28.89
Network UpKeep cost 13.16 17.36 12.88 22.09
Navigation, Flight and routing
charges 4.39 8.68 10.31 11.90
HR 8.77 13.02 14.17 18.69
Total 48.26 69.46 72.15 95.17
Profit -30.67 -27.34 1.41 16.79

10. Demand and Cost Drivers Competitive Strategy Route Planning Financials
Breakeven Analysis – Bon Avion India
2017F 2018F 2019F 2020F
Operating
Profit
17.59 42.11 73.57 111.95
Net Profit -30.67 -27.34 1.41 16.79
Calculations for the cost analysis are attached in the Excel

11. December
2015
January
2016
February
2016
March
2016
April
2016
March
2019
8 15 22 29 5 12 19 26 3 10 17 24 29 7 14 21 28 5 12 19 2 9 1 23
Stage 1: Apply for FIPB approval for
commencing its operations in
India
Activity 1: Application
Activity 2: Expected Approval
grant (recent Vistara, Air Asia)
Stage 2: Permission to Schedule
Aircraft and transport passengers
Activity 1 : Application
Activity 2 : Approval & Leasing
Stage 3: Incorporate Joint Venture
Activity 1: (51% Indian Conglom-
erat. 49% Bon Avion)
Activity 2: Recruitment
Stage 4: Air Operator permit, Test
run, Scheduling flights
Stage 5: Flights on Offer
Stage 6: Breakeven Milestone
Bon Avion India Launch Plan

12. Thank You