Airline start-up

Air Arabia

We provided full business planning and strategy for the start-up of the United Arab Emirates based Air Arabia.

Aviation Economics was commissioned by the Sharjah Airport Authority, of the United Arab Emirates, to carry out a feasibility study into the establishment of the first LCC in the Middle East. The study, which was Phase 1 of a three phase project, involved researching the relevant markets; projecting traffic and revenues; determining a suitable business model for the LCC; writing a preliminary business plan; and establishing its commercial viability or otherwise. A key aim of the project was to arrive at a “Go/No Go” decision for moving to Phase 2, the development of a more detailed, bankable business plan.

In Phase 2, Aviation Economics produced detailed reviews of the traffic and revenue potential on a route by route basis, including competitive response considerations. We finalised the market feasibility study and the network planning and designed the network schedule. Also included in this phase was: constructing the aircraft utilisation schedule, conducting a more detailed analysis of resources (personnel, E&M facilities, IT etc.) and refining costings, finalising the marketing and distribution policy, modelling financial projections using refined revenue and cost data, finalising estimates of capitalisation required and reviewing alternative capital structures, identifying risks and running risk scenarios on the forecast. Once this had been completed, Aviation Economics produced our final recommendations and final Business Plan, which at this phase included an implementation plan defining the timetable to airline start-up.

In the final phase of the project, Aviation Economics provided consultants to assist the CEO and the Board with implementing the business plan, specifically assisting with: project management support covering management and coordination of the implementation project and tracking changes to the business plan, cash flow forecasts etc.; we supported work-stream leadership and advised on the refinement and development of the business plan; and the development of detailed budgets for the new airline.