Captial Airways Business Plan (running thread)
I just started writing this yesterday, so its nowhere near complete, but Im going to be constantly updating this as I write more to it. As I have no idea what Im doing, any and all feedback would be appreciated. Also note, I have no plans on starting this any time soon, as Im only a sophomore in high school. My plan is to obtain a business degree, then look into starting an airline.
Executive Summary
Business Model
The low-cost carrier model is currently attractive due to the current economic recession as people are less likely to spend large amounts of money on flights domestically.
Goals/Mission
To make air travel in America fun again by:
• Maximizing the in flight experience through in-flight Wi-Fi, in-flight television, and friendly flight attendants.
• Minimizing airport hassle through helpful customer service personnel, VIP lounges, and an advanced luggage sorting and tracking system
• Minimizing delays through an efficient aircraft turnaround timetable
• Maximizing customer-to-corporation communications through effective and constant use of social networks, such as Facebook, Twitter, and Google+, and other forms of social media
• Minimizing fares though various fuel efficiency and energy saving methods, also keeping bag fees to a minimum, preferably to a level of non-existence.
Aircraft
Capital Airways prefers to lease the 737-800 over the A320 because of more attractive pricing, better fuel efficiency, and the Boeing Sky Interior, which enhances passenger experience. Boeing is also an established aircraft builder, having built and delivered over 7000 737s alone, making it the best-selling commercial jet in the world.
Capital is also considering E190 jets for shorter range, lesser capacity flights, such as flights around the northeast, given its lower price point than 737-600.
Routes
Capital plans to enter into service with routes from Dulles International Airport to Charlotte/Douglas International, as indirect competition with the likes of other low cost carriers such as JetBlue and Southwest, also to capitalize on rising fares by US Airways. Capital also plans to enter other cities on the east coast like Philadelphia, New York, Boston, Tampa, and Miami. Capital also has an interest in entering smaller markets such as Jacksonville, Buffalo, Richmond, and Raleigh.
Within 3 years of the founding of Capital Airways, we hope to establish a presence beyond the Mississippi River, in cities such as Los Angeles, San Francisco, Houston, and Seattle.
Target Market
While our airline hopes to have a mixed customer base, Capital Airways main target market is business travelers. To reach out and entice the target audience, Capital Airways offers in flight Wi-Fi, to allow businessmen to work, even in the air. Another business-friendly amenity Capital Airways plans to offer within several years of commencement is VIP lounges in the terminal for a quiet, relaxing pre-flight experience.
Operations
Marketing
Prelaunch Marketing
Capital Airways prelaunch marketing will primarily focus in the city of Charlotte, as Washington is one of the largest Meccas of tourism on the east coast. As most of our new “Capitals” are added out of district, especially our launch destination, Charlotte, about 80% of our launch marketing funds will go toward making sure our new destination knows we’re coming and that new non-stop flights to Washington are coming. The other 20% of the prelaunch marketing funds will go toward advertising in Washington. The actual percentages will be based on market research. Capital Airways plans to take out humorous advertisements in the form of online video and text advertisements, television commercials, and radio commercials.
General Marketing
Capital Airways plans to raise awareness for our brand by capturing the younger generation of America (younger as in mid-30s and younger) by establishing a large and ever active new media presence, such as active social network profiles, constantly updated blogs, and intuitive and easy to use websites and mobile apps.
Generally, Capital Airways’ advertisements will contain elements of humor while still promoting the Capital Airways brand name. Humor is often the best way to get new customers.
Promotional Marketing
Capital Airways “DC Deal Days” will be run during summer months in which lower fares will be offered to and from the district to and from certain Capitals. Airfare will be reduced by up to 20% on up to five city pairs each week from Memorial Day to Labor Day. However, DC Deal Days will not begin until we have at least 15 city pairs.
Routes
Initial Route(s)
As Capital Airways plans to be headquartered in Reston, in Fairfax County, Virginia, it just makes sense for our base city to be Washington. The District’s three major airports were all considered, but Washington Dulles was eventually chosen because of its proximity to our headquarters, its lack of a noise abatement policy, its planned and recent expansion developments, and its ability to handle international traffic once Capital Airways begins to establish Canadian and South American Routes.
After investigating different cities to launch as a starting route to Capital Airways has determined that our initial destination should be Charlotte’s Douglas International Airport. Charlotte Douglas was chosen because of its low delay rates, rising fares to Washington by US Airways, and the city’s association with the financial industry, as Capital Airways targets business fliers. Another reason Charlotte was selected is because of the general scarcity of flights from Washington to Charlotte operated with mainline equipment.
Another city Capital Airways plans to start routes to as a launch city is Tampa. Tampa’s International Airport can serve as a gateway to Latin America, and is also relatively not crowded. Tampa International is also not very prone to delays.
Atlanta’s Hartsfield-Jackson International Airport was also considered as a launch airport, but was then decided against as a Delta’s presence there does not easily allow for new airlines to enter the market. As Hartsfield-Jackson is also the busiest airport in the world, Capital Airways predicts getting out of the airport easily will not be possible resulting in delays.
East Coast Corridor
While this does not include all markets on the East Coast, it does include our plans for entering major markets such as New York, Boston, Miami, Orlando, Atlanta, and other major cities.
New York is a market Capital Airways is hesitant on entering. With Jetblue, a direct competitor based there, as well as many other airlines, all three of New York’s major airports are expected to give us trouble. But Capital Airways realizes that New York is an important market to get into, so we plan to enter the New York metro area when traffic at LaGuardia or Newark eases up or within two years of our entry into service, whichever comes first.
Boston, as a center for the New England market, is somewhat of a neutral location to Capital Airways. While we still intend on entering Boston’s Logan International, it will not be for at least 3 years after our entry into service. However, as Boston is both an important financial city and the fourth largest “cybercity” in the US, we still have our eye on Bostonian business fliers.
Miami, Orlando, and the rest of the Florida market is of vital importance to Capital Airways, as the “Sun State” is a very popular vacation destination for people all over the US. Capital Airways has already expressed interest in entering the Tampa market, but we also plan to enter South Florida through Palm Beach International and Miami International. Orlando, however, is a market that Capital Airways is somewhat cautious about entering, as Jetblue operates many Caribbean destinations from there, as well as “Jetblue University” where Jetblue staff are trained. Overall, unless market conditions change, Capital Airways has no intention of entering Orlando until our yearly revenues surpass $500 million and we are profiting.
Midwest/Great Lakes Region
Capital Airways intends to revitalize air transport in the Midwest. As other airlines have moved out of the area, Capital plans to move in, by establishing a focus city in the region.
The Chicago metro area is a location Capital Airways does have plans on reaching. However, both Chicago’s O’Hare and Midway are overcrowded, with Midway especially dominated by a direct competitor, Southwest Airlines. So capital Airlines plans to operate its Chicago flights from the smaller Gary/Chicago International, establishing daily flights to at least 15 destinations across America within 6 years of our opening Washington-Charlotte route. The Midwest is an area Capital wishes to connect with, so we will also be serving intraregional destinations out of Gary/Chicago to airports such as Cleveland Hopkins International, Cincinnati/Northern Kentucky International, Detroit Metropolitan Wayne County Airport, and Indianapolis International using our ERJ-190 fleet. While these will not be the only flights to these cities, people traveling out of these cities will likely prefer to fly to Chicago to get to the rest of the US as it is the nearest focus city. Chicago will also serve as a gateway to the west serving destinations such as Seattle, San Francisco, and Los Angeles.
While Chicago will operate as a focus city for the region, non-stop flights to Washington will occur in other cities such as St Louis, Kansas City, and Minneapolis, markets Capital Airways plan to bring great service to within seven, eight, and seven years of entry into service, respectively. While these markets are important to us, our primary focus in the region is our Chicago focus city.
West Coast Corridor
Capital Airways plans to enter the west coast region within 4 to 5 years of entering service, by establishing a west coast city hopping schedule between Seattle –Tacoma International, Portland International, Oakland International, LA/Ontario International, and San Diego International. All five cities will be served, non-stop, between each other, aside from San Diego and LA/Ontario. Additionally, a west coast hub at Oakland International will serve as a center to move east from the Pacific, to cities like Chicago, Washington, New York, and Miami.
The San Francisco Bay area was chose to be our Pacific center of operations for both geographic and economic reasons. Geographically, the Bay area is centrally located on the west coast of the United States, minimizing distances to locations both up and down the Pacific coast, as well as eastward to other cities. Economically, San Francisco appeals to us because it is synonymous with the technology industry, as Capital Airways has already expressed interest in the business travelers market. Oakland International was chosen because it is a less crowded, secondary airport in the San Francisco Bay area. Within 5 years of our entry into service. Capital Airways intends to have Oakland International serving at least 10 destinations across the United States.
Rocky Mountain Region
Capital Airways sees Rocky Mountain destinations as an unneeded waypoint to transcontinental flights. Because of this, unless the airline industry in America sees drastic changes take place regarding the region, Capital Airways expresses no desire to enter any markets in any state east of California and west of Kansas for the foreseeable future. When the proper time to enter such markets presents itself, city pairs and airports will be re-evaluated.
Fleet
After researching the subject, Capital Airways has determined that our fleet will consist primarily of the Boeing 737 Next Generation -800 model, leasing 3 aircraft at a rate of $700 thousand per month initially, growing to 10 aircraft within 5 years win an overall goal load factor of at least 80%. We also intend to purchase Embraer E-195s within 7 years of entering service, to satisfy 100 seat market and allow for more destinations to smaller, less important markets.
Boeing 737 Next Generation -800
Capital Airways chose to fly the Boeing 737 as opposed to the Airbus A320 on a cost basis only. The Boeing 737 Next Generation is a newer engineered aircraft, with Boeing’s blended winglets coming standard, to help reduce fuel costs and enhance range. Boeing is also known to be a leader, rather than a follower in the commercial aviation industry, pioneering the widebody jet in the 1969 with the 747, and creating the blended wingtip helping to reduce aircraft fuel burn. Our selection of Boeing aircraft ensures a good cooperative relationship with the company as we continue to shape the future of air travel. Boeing also offers the -800 model at a purchase cost of $84.4 million, $3.9 million lower than the Airbus equivalent A320’s $88.3 million.
As previously mentioned, Capital Airways intends to lease 3 737-800s, initially in a wet lease, converting them to dry leased aircraft after our flight crew training is completed. We also intend to obtain new aircraft on a dry lease at a rate of $700 thousand per month. We also intend to begin purchasing our aircraft, beginning by placing orders for 5 aircraft within 4 years of entering service.
Capital Airways intends to outfit its 737 fleet with 16 “Senate” class leather seats forward of the cabin, along with 144 Economy class cloth seats laid out in the typical 6 abreast seating pattern for a Boeing 737. Additionally, call of our 737s will be outfitted with satellite Wi-Fi provided by Row 44, as well as satellite television provided by DirecTV.
We intend to operate our 737s primarily on our flights between larger markets, inter-regional flights and transcontinental flights. During increased periods of travel, 737s may be temporarily replacing E-190s on intraregional routes such as New York to Boston and Chicago to Detroit, but this is only on an as-needed basis.
Boeing 737-8 MAX
Capital Airways also has an interest in Boeing’s 737 MAX program, expected to take flight in 2016, with airline introduction in 2017. Capital wants to operate a young, efficient, and clean fleet, as an outdated fleet is among the top complaints customers have in the airline industry, so the improvements Boeing has made over the already efficient 737 Next Generation are very important to us. According to Boeing, the re-designed 737 will offer a 13% reduction in fuel burn and CO2 emissions over today’s most fuel efficient narrow-bodies and 9% over the A320neo, saving up to $1 million per aircraft on fuel costs at today’s fuel prices. The 737 MAX will also be the most reliable airliner in the world, building on the 737 Next Generation’s already record breaking 99.7% reliability rate,
Livery
Instead of one livery for our entire fleet, Capital Airways’ planes will consist of a “Jelly tail” scheme, somewhat similar to Jetblue, but each tail representing a different Census Bureau-designated area:
Horizontal bars of various sizes represent the large cities of the Northeast, like New York, Boston, and Philadelphia. Vertical three pronged fork-like lines represent the deciduous trees of the mid and south Atlantic. The water droplets represent the Great Lakes region. Five slanted horizontal bars represent the south and its love of racing (i.e. Kentucky Derby) , Vertical bars represent the Midwest, and its primary cash crop, corn. Two rivers represent the Texas region (Texas, Louisiana, Oklahoma, Arkansas), representing the Rio Grande and the Mississippi River. Jagged lines serve to represent the mountain states. Waves represent the Pacific states, while an arrow represents the non contiguous states of Alaska and Hawaii.
The artwork on the tail itself features a white Capital Airways logo, a slanted line-drawn representation of the Capitol building, set on a navy blue background.