the new business class

Business Case Summary – Strictly Confidential

© Mango Aviation Partners Ltd 2013Whitetail, NOW Airlines, Airmada, OPS Control and TETRA Finance are project names only

The “New Business Class”



The New Business Class

• Ad-hoc business travel• Regular business travel• Connection to long-haul flights• Leisure travel• Light freight and parcels

WHAT’S THE POINT…

Focus on Purpose



Business Rational

Low Cost

High Cost

Basi

c Serv

ice

Perso

nalise

d S

erv

ice

LOW COST CARRIERS LEGACY CARRIERS

PRIVATE CHARTER

UNCHARTERED

TERRITORY !



Business Rational

Low Cost

High Cost

Basi

c Serv

ice

Perso

nalise

d S

erv

ice


PRIVATE CHARTER

Business &

Leisure

New Groupof Travellers

VVIP’s& Select Few



Business Rational

Low Cost

High Cost

Basi

c Serv

ice

Perso

nalise

d S

erv

ice


PRIVATE CHARTER

Passenger

Migration

BUSINES

S

CLASS

ECONOMY CLASS

FIRSTCLASS

New technology, material and manufacturing processes have reduced the cost and increased performance of aircraft, making new applications viable

New Groupof Travellers

VVIP’s& Select Few



• Ad-hoc travel demand predicted to increase as the region comes out of recession

• Several premature attempts have failed resulting in fleet availability

• Airport security makes traditional business travel impractical

• The geography and regulatory structure, makes Europe operationally ideal

The European market ready for the service

“The New Business Class”

SHORT SECTOR AIR TAXI…

predictably !

500m inhabitants In 27 countriesover 4.5m sqkm andpr capita income between€5,500 - €55,000




• Considerable time saving– Airlines restricted by slot availability at large airports– Security issues makes scheduled travel time consuming and frustrating

• Substantially cost savings compared to traditional charter operators and scheduled packages

• Flexibility – Departure/arrival times to suit– Smaller airports with executive ground handling

• Personalised service

PASSENGER PROPOSITION…

So, are Light Jetsand air-taxia “no-brainer “?




1. Critical mass2. Pricing3. Utilisation4. Crewing5. Perception

THE 5 HURDLES…

...also the main ingredients

for the success of LCCs!

Availability at short notice; without failBased on a functional product; not a luxury

Crewing hours, positioning and maintenanceRecruitment, training and retention

An environmentally unfriendly luxury



The Hurdles

1. CRITICAL MASS…

Passengers need to go to where they need be from where they are and often at short notice• Define Market• Pre-position aircraft• Target Clients• PAX, parcels, organs, etc• Establish Basic Business

The New Business Class= Public Transport !



The Hurdles

x3 Passengers, inc ground transport, airline tickets and accommodation

*) Full flex / Business class Pr sct:

Oxford (UK) – Bremen (D) €4,200 06:15

Limoges (F) – Graz (A) €4,150 07:30

Den Haag (NL) –Turku (SF) €4,650 08:00

Liege (B) - San Marino (I) €5,300 09:00

Halmstad (S) – Bern (SCH) €5,350 09:00

2. PRICING…

00:5001:20

01:45

01:0501:20

Light Jet

...but this is what

you’ll be

compared to !

This is the real value proposition...*



The Hurdles

US charter rate examples*:€2,250/hr€1,500/hr€2,400/hr

EU sample rate:€1,850/hr+ €150/sct

*) based on 2:30 hrs utilisation



The Hurdles

x3 Passengers, inc ground transport, airline tickets and accommodation

*) Full flex / Business class Pr sct:

Oxford (UK) – Bremen (D) €4,200 06:15

Limoges (F) – Graz (A) €4,150 07:30

Den Haag (NL) –Turku (SF) €4,650 08:00

Liege (B) - San Marino (I) €5,300 09:00

Halmstad (S) – Bern (SCH) €5,350 09:00

€3,385

€4,950

€6,775

€4,310€5,235

Air Taxi

00:5001:20

01:45

01:0501:20

Light Jet

2. PRICING…

...but this is what

you’ll be

compared to !

Charter rate at€1,850/hr+ €150/sct

*

-19%

+19%+45%

-19%

-2%



The Hurdles

A relentless focus on cost reduction !• Productivity• Fleet financing• Maintenance programmes• Regulatory compliance management • Fuel buying• Recruitment and training

OUTSOURCING !

2. PRICING…

Without compromisingsafety and quality of service !



The Hurdles

TECHNOLOGY SOLUTION !!!

Which aircraft to chose, considering:• Proximity to departure point• Destination site to base• Maintenance cycle• Crew hours• Aircraft utilisation

OPTIMISATION !

3. UTILISATION…



The Hurdles

4. CREWING…

The crew is part of the product• So far, a VLJ currency has low perceived value• Limited crew availability• Little experience in type• Lower salary levels than Executive Jets• Pilots want to fly an A380 or a B787 Dreamliner

THINK OUT OF THE BOX !

“Boys” and toys !!!



The Hurdles

5. PERCEPTION…

A mix of misunderstanding and misconception• Unjustifiably expensive• Luxury for the few• Not compatible with the (client’s) business• Lifestyle with no value• Environmentally damaging

PERCEPTION = REALITY !



Overcoming the Hurdles

• Clearly defined product and strategy – realistic tactical plan!• Critical mass to a select market – you only have to say NO

once!• Competitive pricing – price is a deciding factor!• Utilisation – the right balance between position

and revenue flights!• Crewing – focus on retention!• Efficient business – optimisation!

CRITICAL SUCCESS FACTORS…

THE MISSING PIECE...

A relentless focus on cost control !



Key Performance Areas

FOCUS ON MARGIN

Get the variables right

Price will drive demand

Cost management will drive profitability

Revenue flights will decrease with increased business

Margin is not linear

LOW

HI

GH

SMALL FLEET SIZE LARGE

PRICING

DIRECT & OPERATING COST

REVENUE FLIGHTS MARGINPR A/C

Not to scale



...how does the concept fit the market?STRENGTHS… WEAKNESSES…

OPPORTUNITIES… THREATS…

• Market potential

• Timing

• Aircraft availability

• Aircraft prices

• Barrier of entry

• Early entry advantage

• Diversification

• Legacy airline partnerships

• Scalable project

• Blocking competitors

• Further financial deterioration

• Potential levies & taxes

• Misguided “green” lobby

• Legacy airlines reactions

• Accidents

• Lack of available finance

• Crew availability

• Perception

• Time to critical mass

• Untested concept

The Market:




TANGIBLE BENEFITS BEYOND CONVENIENCE…• Travel “Just-in-Time”• To and from where you are and where you want to be• Avoiding busy airports• Reducing wasted time• Value for money at affordable pricing

...winning concept from

the IT industry !!!



...another little known fact!

WALMART…

Walmart may be the best example of how to open people’s minds to business aviation

They are certainly not known for their spendinglargesse and might even be considered cheap :-)

Yet, they operate one of the largest business aviation fleets in the world!

Some 25 aircraft fly almost 25,000 people a year to its 3,800 or so U.S. stores. Passengers include middle managers, store managers, buyers, inspectors and employees

…a Wal Mart

Global Express at

Stockholm

…a WalMartLearjet 35A at Quebec



The new generation Light Jets

The Business Class

...an emerging opportunity for the new generation Light Jets to overcoming the hurdles

by adding the missing piece of the air transport jigsaw puzzle

PrivateJet

Regional

LCCs

Legacy Carriers

Low Cost

Air

Taxi

New

the new business class

Documents

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new business class ad

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ops control

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travel demand

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