The Flying Centre Airline’s Business Plan

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Table of Contents

Introduction
Essentials of the project
Technology
Marketing
Porter’s generic Competitive strategy
Conclusion
References

Introduction

Air transport is one industry that has experienced modern development. With the current economic climate, many firms in this industry are constantly formulating strategies to achieve a competitive advantage. The result is that players in this industry have been forced to invent new and latest designs of airlines that can not only satisfy the requirements of clients but also achieve world class recognition and hence provide them with a competitive advantage. (Klein de, & Augustinian, 2002, p.214)

Consumers in the modern economy have become sensitive to services and products offered by organizations. This paper introduces the reader into understanding the concept of innovation in an airline industry by typically analyzing some of the interesting and strategic components in a business idea if success is to be achieved. As it has been discussed, the airline industry has become very dynamic and volatile, new players are making entry every time, the environment is changing so fast and it’s difficult to predict how many players will exit or remain in the industry. (Klein de, & Augustinian, 2002, p.215)

Consumers in this industry who are mainly business executives, professionals and tourists are also changing their tastes with time. The changing fashions have become a challenge and this is why investors in this industry need to move with speed so that they are not left behind. In this paper, a great emphasis is paid to the implementation of the idea. The main aim of the idea is to make air transport the most luxurious experience that a traveler can ever enjoy on this earth. (Klein de, & Augustinian, 2002, p.215) For successful implementation of this idea, the following are important.

Essentials of the project

Capital: This is defined as any property or money that is used to produce other goods and services. Capital adequacy is instrumental for the success of this project. In any case, an airline project is a capital intensive investment and therefore adequate funds must be sourced to realize effective implementation of the idea. In this particular project, the following costs will be incurred. (Bart, 2000, p.485)

Research and Development Costs: This is an expenditure that will be incurred in carrying out market research, feasibility studies, research on new flight designs and production. In many projects, initial research costs are always treated as a capital expenditure. Since airline is a rapidly changing industry, a lot more research and development activities need to be done. Some airline companies like KLM, British Airways, and Kenya Airways carry out research studies on a regular basis that may cost approximately $ 50,000 annually. (Bart, 2000, p.486)

Equipment cost:This is the actual cost incurred in purchasing materials for the flight manufacture. Materials used for these flights are expensive. A modern and ordinary business flight would cost like $ 600,000. The project comprises a unique flight design including shops for people who want to shop, a gaming room for kids, resting rooms, conference rooms for business executives, and latest communications technologies to offer the customers FAX, internet and telephone lines and cable TV for news. With the current inflation, this would cost approximately over a million dollars. (Bart, 2000, p.486)

Staff costs: this will include costs incurred to pay salaries for the staffs.

Human personnel: this industry requires professionals who are competent and qualified with an outstanding academic and professional experience and qualifications. To implement this idea, the following personnel will be required:

Engineers: these are professionals who will mainly consist of experts in the field of engineering and charged with the responsibility of overseeing the overall mechanical and technical flight designs and the operations.
Pilots: these are professionals who will be flying the planes on a daily basis. (Klein de, & Augustinian, 2002, p.245)
Marketers: the industry is very competitive and therefore the marketing team will consist of highly trained and competent personalities who will use innovative techniques of marketing to woo customers from across the globe.
Finance officers, accountants, and auditors:The finance and accounting departments will be charged with making financial decisions and budgeting for the company while auditors will report on the entire activities of the company including planning and performance and give advice as appropriate.

Technology

The project is about designing flight with the latest technologies in communication, information and shopping. This implies a heavy reliance of technology and therefore suitable technological platform should be adopted to ensure the success of the project. One of these technologies could be; Radio Frequency Development Technology. (RFDT) This can be used to manage the flight movement to and from different destination schedules. It may also be used to provide security from any activities of terrorism while the flight is on schedule. (Klein de, & Augustinian, 2002, p.246)

Large corporations also use RFDT in stock management. In this case all the materials procured could be monitored in the warehouse to eliminate the risk of stock theft. Apart from RFDT, online marketing could also be used to reach the international clients. The organization can use a run-off technology where the name of the company and the service appears on every search page as accessed by client. This could go a long way in increasing the organizations client base. (Bart, 2000, p.489)

Flight production can be automated; this is a common technology and is also used by BMW which is an automobile company. Automating production means quality standard flights that would offer a world class service to clients at a reduced cost and hence a competitive advantage to the company. Through internet marketing customers would get an opportunity to book the flight at wherever they are without the need to travel to designated booking points and therefore provide them with the greatest convenience. (Bart, 2000, p.489)

Marketing

Any business plan must contain a good marketing strategy. The essence of marketing is to provide clients both from within and international market with appropriate information regarding the company and its services. The airline is characterized by strong competition occasioned by the existence of many giant firms and therefore a marketing strategy is required to penetrate the industry. (Peteraf, 1993, p.114)

The following could be applicable:

Michael Porters generic competitive strategy
The five forces Module
Ansfox Marketing strategy
The 4ps strategy.

Porter’s generic Competitive strategy

The question here is about entering an airline industry as a new player. Porter identified three main competitive strategies that a firm can use to penetrate into a competitive market. (Peteraf, 1993, p.115)These are:

Cost- leadership: this refers to a situation where a firm decides to offer the same services and products as its competitors but at the lowest cost possible. The rationale here is to maximize profits by lowering costs. The airline industry is already dominated by giant organizations like British Airways, Atlantic Airways, Kenya Airways, KLM, and many others. The proposed project is about producing a world class plane with latest technological designs; if the production and operation can be done at the lowest possible cost then this will be advantageous to the company and hence competitive advantage. (Peteraf, 1993, p.115)
Differentiation: This is a process where a firm decides to differentiate its products and services completely through design, presentation, package, and price. The aim is to ensure that a firm’s product appear different and unique. In this respect, the project is proposing the production of a completely different design of an aircraft that will match the changing needs of consumers in the market. This could be a first competitive strategy. (Peteraf, 1993, p.116)
Market focus: this refers to a situation where a company can use neither cost leadership nor differentiation. In this case, a firm chooses a market niche and the competitive advantage is achieved when costs are minimized or products and services differentiated. In this scenario, the decision is upon the marketing managers. The company can decide to choose a market niche in lets say Africa, North America, South America or Europe and then maximize its energies. However, this can not be applicable where plans are underway to ply long routes. (Peteraf, 1993, p.117)

Conclusion

Many entrepreneurs have failed to implement project ideas for lack of a clear business plan. An idea can only be effective once it’s implemented. In this case, proper procedures need to be followed in order to achieve the objectives of the projects. For this project to succeed, there must be adequate capital, innovative use of technology, clear competitive strategies including marketing, innovative workforce, and time. These are requirements in any implementation of an idea.

References

Bart, C.K. (2000). Mission Use and Innovation in the Airline Industry: An Exploratory Investigation. International Journal of Technology Management, 2(5), 475-489, Web.

Klein de, W & Augusdinata, B. (2002). The dynamics of airtime alliances. Journal of Air Transport Management, 8 (4), 201-211.

Peteraf, M.A. (1993).The Cornerstones of Competitive Advantage: A Resource Based View. Strategic Management Journal, 14(1), 110-191.

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