MGT

368

ENTREPRENEURSHIP
BUSINESS PLAN

NORTH SOUTH UNIVERSITY

SECTION 1
MGT 368
Prepared By:

Nafees Imtiaz – 102 0009 030

Abdullah Al Zubair – 082 044 030

Al Inzamam Akhtar – 101 0676 030

Salman Daud – 101 0600 030

Mohammad Towaha Sakin - 091 0218 030

Prepared for:
Abdullah Al Mamun (Ahm)

Lecturer, North South University.

MGT368

Section 1

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INDEX

Topic Page no.

EXECUTIVE SUMMARY 4

PROFILE OF THE TEAM 7

COMPANY OVERVIEW 8

INDUSTRY OVERVIEW AND ANALYSIS 21

MARKET OVERVIEW 24

VALUE CHAIN AND OPERATIONAL PLAN 25

MARKETING PLAN 27

HUMAN RESOURCE STRATEGY 31

FINANCIAL PLAN 39

CONCLUSION 42

APPENDIX 43

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EXECUTIVE SUMMARY
Ababil Airways is a new low cost consumer airliner in its formative stages. It aims to locate in
Dhaka city, with its head office based on Gulshan area and hub in Hazrat Shajalal International
Airport, Dhaka. This report has been prepared to illustrate a carefully detailed Business Plan for
starting our company. The major highlights of this report includes a Company Overview, which
includes the Mission and Vision Statement of our company as well as Key services and
strategies, Industry Analysis and Market Overview of our company, Value Chain Analysis and
Operation Plan, Marketing Plan and HR Strategy and lastly, a Financial Plan, showing the
projected profit and loss for 5 years, as well as a Balance Sheet, showing the amount of capital
required, which is Tk. 114,093,750.

Ababil Airlines looks forward to start its operations by providing low cost passenger
transportations in the following routes:

i. Dhaka to Chittagong Chittagong to Dhaka

ii. Dhaka to Sylhet Sylhet to Dhaka
iii. Dhaka to Cox's Bazar Cox's Bazar to Dhaka

The pivotal competitive advantage of Ababil Airways is its extra-ordinary low fares for the
customers, which will be possible due to its low cost business strategies. High aircraft
utilization, productive, skilled and multi functioning employees, no frills, courteous but limited
passenger service with an aggressive and focused management structure should allow it to reach
its goals.

Market factors favour inauguration of a new airline in Bangladesh to meet the demand for
domestic passengers linking the major cities with fast mode of air transportation. This new
airline will base its business and marketing strategies on achieving high and profitable, load
factors through absorption of unmet demand, on which high unmet demand currently exists or
can be readily developed. Market research shows that "mean-and-lean" operations in
Bangladesh airline industry while still meeting the needs and desires of the traveling public,
with the low fares, will not only survive, but can prosper.

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 In addition, the proposed new airline will be designed around, and operated utilizing, the most
up-to-date electronic, informational, and aviation technologies to ensure low operating and
marketing costs, maximum efficiency in deployment of its resources, and a high level of
customer service and convenience. And it is this final element - dedicating the airline, its staff,
and its organization to providing a high level of customer service and convenience, and
efficiently meeting the needs, wants, comfort, and safety of the passenger - that will assure the
proposed airline's rapid acceptance in the marketplace and its long-term growth and success.

The characteristics leading to the success and profitability of this new carrier will be:
 Provision of low cost but high-quality service on domestic routes that currently are poorly
served, or under-subscribed by existing carriers, thereby setting both a new trend and a new
pace in air service in the country.
 High Aircraft Utilization: Implementing the regions fastest turnaround time at only 25 minutes,
assuring lower costs and higher productivity.
 Low Fare, No Frills: Providing guests with the choice of customizing services without
compromising on quality and services.
 Employment of cost-effective, up-to-date regional aircraft that will be sized right for the market
and the route, leading to higher load factors, reduced costs, improved efficiency and flexibility,
greater passenger comfort and satisfaction, and higher net profits. Outfitting these aircraft with
the latest aviation technologies and navigational equipment will help ensure the highest level of
reliability, punctuality, safety, and customer satisfaction.
 Utilization of the latest electronic and informational technologies in sales and marketing;
reservations, ticketing and check-in; scheduling and resource planning; cargo tracking; and
operational oversight. Such techniques as internet marketing, reservations, and sales; electronic
ticketing and check-in; online quality control, resource planning, operational oversight, cargo
and baggage tracking, and customer service, all will reduce staffing requirements while offering
ease-of-use and greatly enhanced access by, and convenience to, the customer.
 Ensuring a low cost, friendly, cooperative, enjoyable, yet highly professional face to the
customer. In short, the goal of this new airline is to be known to the passenger by its proposed
tagline, “Low Fares. Superior Service”.

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 Rate of Return
20

15

10
Rate of Return
5

0
2012 2013 2014 2015 2016 2017
-5

The above chart shows the Rate of Return our company will be generating for the next five
years. Initially, for the first two years, we will be incurring negative rate of returns, but from
2014 onwards, we will be having positive returns.

This shows that, the feasibility of our company is high and the future prospects of our company
are profitable.

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PROFILE OF THE TEAM
Nafees Imtiaz:

Majoring in Finance and Accounting, his contribution to the business plan was analysing the
Company profile and coming up with proper Mission and Vision Statement for our company.
His work further included listing the Key Products and Services of Ababil Airways, and most
importantly, detailing our company‟s Value Chain Analysis and Operational Plan.

Abdullah Al Zubair:

Majoring in both Accounting and Finance and Marketing, he is the most experienced member
of our team. His major contribution to the plan was analysing the market for our services, and
coming up with a Market Overview, which in turn led to the creation of the Marketing plan,
done by him. Another major contribution was forming the Financial Plan, which was done with
a joint effort with another team member, Al Inzamam Akhtar.

Al Inzamam Akhtar:

Also majoring in Accounting and Finance, he and Zubair worked together to create the
Financial Plan of Ababil Airways. Coming up with the necessary costing and revenue
calculations, he and Zubair both created a projected Income Statement as well as Balance Sheet,
which showed the profitability and the feasibility of our company.

Salman Daud:

The second most experienced member of our team, his excellent work in the Human Resource
Strategy and Implementation led to a strong analysis of the recruitment and training procedure
and structure of our company. His major is Human Resource Management.

Mohammad Towaha Sakin:

Another major in Marketing, Sakin used his skills to come with the Industry Analysis for our
company, with valuable insight regarding the SWOT and PEST analysis required to understand
the position our company will be in.

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COMPANY OVERVIEW

Name: ABABIL AIRWAYS

Tagline: Low Fares. Superior Service.

Mission Statement:

To offer our customers the most cost effective air transportation service ensuring the best
quality, every day.

Vision Statement:

To be the best low cost airline in the country- in the eyes of our customers, shareholders,
communities and serve people who are currently underserved with poor connectivity and high
fares.

Values

• Commitment to Safety

In each decision and each action, every time, every day.

• Honesty, Trust and Integrity

In all actions with one another, our suppliers and our customers.

• Technical excellence and continuous learning

We strive to do it right, then we improve to do it better.

• Compliance with Regulatory Standards

In all actions and all decisions, every time, everyday.

• Acting with purpose and urgency

We make decisions to do the right thing and then act on it.

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• Respectful Communication and Constructive Disagreement

To get to the best result, together.

• Hard work

We strive to do the difficult things that make our airline better than the others.

• Fun

We are positive people who cherish success, learn from mistakes and enjoy our work.

• Profit

We deliver a sustainable profit to support the growth and improvement of our company.

Company Guidelines for Employees

• Employees should be courteous, well behaved, respectful to all stakeholders of the

company, esp. the passengers

• Employees must not disclose any confidential information about the company to any
external sources including the press, employees of other companies or family members

• Employees should not discriminate between persons based on reasons of race, creed, sex,
social status, religion, nationality, age or physical or mental disability

• Employees must comply with all applicable laws and regulations of Bangladesh, and
perform their tasks with ethics and responsibility

• All assets, funds, inflows and outflows must be recorded in the books

• Bribes or illegal payments of any sort are strictly prohibited

• Alcohol in any form and usage of drugs, except under medical advice, is prohibited

• Employees are expected to maintain a productive work environment free from any sorts of
harassment and disruptive activities, which include:

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a) Unwelcome remarks or jokes about issues such as race, religion, disability or age

b) Displaying racist or other offensive pictures or posters

c) Inappropriate physical contact such as touching, patting, pinching or punching

d) Physical assault

e) Employees should give utmost priority to cleanliness of work areas

f) Threats, intimidation and verbal abuse

Corporate Social Responsibility

Ababil Airways have a longstanding commitment of addressing the needs of the society, in
view of its belief that for any economic development to be meaningful, the benefits from
business must trickle down to the society at large. Ababil Airways thinks that the corporate
goals must be aligned with the larger societal goals. The following are some of the societal
responsibilities that the company looks forward to undertake:

Education

• Supporting local primary schools that provide education to underprivileged children

• Merit-based scholarship programs for underprivileged students

Community

• Employment quota for disabled people

• Sponsoring local activities that benefit the youth of the area

Health

• Free eye clinics in remote villages

• Blood donation programs in all the divisions

Environment

• Environment friendly engines in all the aircrafts ensuring less carbon emissions

• “Go Green Project”-creating awareness among the employees about the environment

• Reducing and recycling wastes

• Minimising air and noise pollution

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KEY PRODUCTS & SERVICES
In order minimize costs and hence ticket fares, the products and services offered will be kept
simple. “No-frills” policy will be adapted.

 Flight services -Ababil Airways aims to provide flight facility to three destinations in
Bangladesh as follows:
I. Dhaka to Chittagong Chittagong to Dhaka
II. Dhaka to Sylhet Sylhet to Dhaka
III. Dhaka to Cox's Bazar Cox's Bazar to Dhaka

• Online reservations (e-reservations) and sales (e-sales) that will provide quick and easy
access to airline schedules, flight availability, reservations, and ticketing to a wide range of
customers. This eliminates payment of agency commissions and shall keep overall costs
low - savings that can be passed on to the customer.

• Baggage handling services will be provided to all customers in all the airports.

• Electronic ticketing (e-ticketing) which will enable passengers to obtain their tickets
online and avoid the need to obtain paper tickets from airline offices, travel agencies, or at
the airport. It also frees the airline from having to stock, track, and issue tickets and
maintaining paper trails of them. Again, more savings for both the airline and the customer.

• Electronic check-in (e-check-in) that will virtually eliminate waiting in line to check-in for
e-ticketed passengers, enabling them to confirm their identities, obtain their boarding
passes, and check-in their baggage (and even purchase tickets upon check-in) utilizing a
user-friendly kiosk that eliminates those last-minute frustrating waits to get to the counter.
And it also greatly reduces the airline's needs to staff check-in desks, control long lines,
employ local contract ground staff, and expend money and resources on an antiquated
system that only adds to the traveler's inconvenience and frustration. Another win-win
situation for both airline and passenger.

• Comfortable economy class seats. Seats in this cabin feature seats ranging from 20 inches
(51 cm) to 20.9 inches (53 cm) in width. Seat pitch on this cabin class is 31–32 inches (79–
81 cm) 31–32 inches.

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 KEY STRATEGIES
Ababil Airways make the low fare model possible and create values through the implementation
of the following key strategies:
Key Strategies
i. Safety First: Partnering with the world‟s most renowned maintenance providers and
complying with the world airline operations.
ii. High Aircraft Utilization: Implementing the regions fastest turnaround time at only 25
minutes, assuring lower costs and higher productivity.
iii. Low Fare, No Frills: Providing guests with the choice of customizing services without
compromising on quality and services.
iv. Streamline Operations: Making sure that processes are as simple as possible.
v. Lean Distribution System: Offering a wide and innovative range of distribution channels to
make booking and traveling easier.
vi. Point to Point Network: Applying the point-to-point network keeps operation simple and
lower costs.

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BUSINESS MODEL

Ababil airways looks forward to changing the definition of airline industry that air travel is a
luxury and it is only for the upper segment of the population. The key objective of Ababil
Airways is to increase our reach and provide the services to a large segment.
Ababil airways follows the Low-Cost-Carrier business model in the airline industry, which can
be characterized as below

 Catering on demand for extra payment

Simple Product
 Planes with narrow seating and only a
single class

Positioning

 Both business and non-business

passengers, especially leisure traffic
and price-conscious business
passengers

 Point to point traffic with high

frequencies

 Aggressive marketing

Low Operation Costs  Low wages

 Low airport fees

 low aeroplane rent cost

 Low costs for maintenance, cockpit

training and standby crews due to
homogeneous fleet

 High resource productivity

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EXHIBIT 1: LOW COST CARRIER BUSINESS MODEL

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INDUSTRY OVERVIEW AND ANALYSIS

PEST ANALYSIS

Political Factors:

• Tax Policy: The Company will not fraud with any type of government legislation
system. The rules given by NBR (National Board of Revenue) will be followed in terms of Tax
related issues. Tax payment will be made as per governmental taxation system and time period.

• Employment Laws: “The Employment of Labor Act, 1965” will be followed for
ensuring the implementation of employment laws of Bangladesh. Employees will be maintained
as per law‟s systems.

• Environmental Regulation: The Company will try to maintain a living friendly

environment.

• Political Stability: Although there are some political instability in Bangladesh, the
company will adopt some policies against these political instabilities.

• Route Charge: Increase of route charge by the government

Trade Union: Increase in trade union pressure
• Government policies :Change in government policies and regulations which will
definitely affect Aviation Industry

• Tourism: Increase in tourism will work in favour for Ababil Airlines- as it is a low cost
carrier

Economic Factors:

• Economic Growth: The economy of Bangladesh is a rapidly developing market-based

economy. Its per capita income in 2010 was est. US$1,700 (adjusted by purchasing power
parity). The economy has grown at the rate of 6-7% per annum over the past few years. So, the
company can go with their low cost services at this type of economic growth easily.

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• Interest Rates: The interest rate in Bangladesh is a little bit higher than outside money
market. Current borrowing rate is decreased to 12.51% and also lending rate is decreased to
12.51%. So, the company will not have trouble to deal with financial issues related to interest.

• Price Ceiling: High price ceiling of petroleum products & fuels increase costs of
production.

• Unemployment Rates: Unemployment rate slash down to 8.7% in 2011.

• Exchange rates: Depreciation of Bangladeshi Taka.

• Fuel Costs: Energy and fuel costs are cause of uncertainty.

Social Factors:

• Health Consciousness: The Company will adopt stringent health consciousness

policies. It will ensure medical facilities for its employees and customers.

• Population Growth Rate: According to World Bank, Bangladesh has a population

growth rate of 1.1% per annum. So, the company will have the opportunity to bring new
exciting services at low cost for the increased population.

• Life style: Increase in travelling life style

• Prosperity: As the economy is increasing at this moment prospects are now more
interested to fly for vacation which will help our Airline Industry.

• Demographic prospects: Low-Cost Airline will help to attract a wide range of

demographic of prospects.
.

• Emphasis on Safety: The Company will introduce Aviation Safety Action Program
(ASAP). The goal of the Aviation Safety Action Program (ASAP) is to enhance aviation safety
through the prevention of accidents and incidents.

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Technological factors:

• Research and Development Activity: The Company will implement airport technology
research and development program. In this program the role of airports will be to
accommodate the increased traffic safely. The Environment and Energy Research &
Development program of Ababil Airlines will try to reduce significant community noise and
air quality emissions impacts in absolute terms, reduce the impact of aviation greenhouse
gas emissions on global climate (including the rate of fuel burn), improve energy efficiency
(including air traffic operations and alternative fuels development), proactively address
other environmental issues.

• Fuel efficiency: High fuel efficiency, less noise pollution and lessening of carbon
emission by the supplier Boeing Technological expansion. Internet competition being raised
Web sales/services. Low fuel consumption cars. Online check-in, self service checks at Airports
for Ababil Airways passengers which might be too technical but in tune with our prospects
which may make them unhappy. By using proper technology a company can reduce its costs
effectively and also can maintain good relationship with customers.

PORTER`S FIVE FORCES

Bargaining power of suppliers

1. Aircraft Suppliers: Oversupply of Aircraft parts and their engineering technology from
different suppliers. Number of suppliers for Aircraft parts was increased so there is a
fierce rivalry between Airbus and Boeing.
2. Fuel Suppliers: Fuel costs depends on supply and it's supply subject to fluctuations

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Bargaining Power of Buyers

New consumers from different divisions of the country are interested in flying from one
destination to other due to low prices of Airlines.
Distribution power of travel agents is decreasing as prospects used to book tickets from
internet or through direct booking. So it is a threat for travel agents, so they used to offer
complete travel solutions to customers.

Power of buyers is moderate in Bangladesh. The cost involved with switching airplanes is
decreasing as customers can access internet easily to compare and buy air tickets online. More
customers including travel agents and individuals prefer to take the budget airlines rather than
full service airlines.

Threat of substitute products

Availability of Substitutes is quite high for domestic airlines, including bus services, train,
personal cars, etc. These forms of transport may be more convenient and safer than Airways.

Threat of new entrants

Threat of New Entrants is low. The airline industry is so saturated that there is hardly space for
a newcomer even to squeeze its way in. The main concern for this is the cost of entry. The
airline industry is one of the most expensive industries, due to the cost of buying and leasing
aircrafts, safety and security measures, customer service and manpower. Another major barrier
to entry is the brand name of existing airlines and it is really difficult to lure customers out of
their existing brands.

Intensity of Competitive Rivalry

There are more service providers than needed in the local market. The various airlines are
competing for the same customers. The airlines are continually competing against each other in

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terms of prices, technology, in-flight entertainment, customer services etc. Highly competitive
industries generally earn low returns because the cost of competition.

COMPETITIVE ADVANTAGES

With the Low Cost Carrier Ababil Airways have the following competitive advantages over the
competitors in the airline industry, which can be summarized in the following diagram.

EXHIBIT 2: COMPETITIVE ADVANTAGE

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SWOT ANALYSIS

To figure out the internal factors such as strengths and weaknesses, and external opportunities
and threats to business objectives, a SWOT Analysis of Ababil Airways is conducted and
shown below:

Strengths
i. Low cost operations
ii. Fewer management level, effective, focused and aggressive management
iii. Simple proven business model that consistently delivers that lowest fares
iv. Penetrate and stimulate to potential markets
v. Multi-skilled staffs means efficient and incentive workforce
vi. Single type fleet minimize maintenance fee and easy for pilot dispatch

Weaknesses
i. Service resource is limited by lower costs
ii. Limited human resources could not handle irregular situation
iii. Government interference and regulation on airport deals and passenger compensation

Opportunities
i. Huge market share
ii. Adding customer services or operation as full service airline with low fares
iii. New routes and airport deals
iv. Unprofitable competitors

Threats
i. Full service airlines start cut costs to compete
ii. Entrance of other low cost airlines
iii. High fuel price decreases yield
iv. Accident
v. Aviation regulation and government policy
vi. Increase in operation cost.

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THE INDUSTRY AND PRODUCT LIFECYCLE
The lifecycle of the industry elucidates about the various stages of the industry, from the initial
first entry to till eventual decline. These stages explicate the different stages that the industry
undergoes. There are five stages, such as
1. Development stage
2. Growth stage
3. Shake out stage
4. Maturity stage
5. Decline stage

GROWTH STAGE DEMAND TIME FOR ABABIL AIRWAYS

This analysis is very essential for every organization as it gets into the particular market or an
industry and gives a brief analysis. Ababil Airways has to strategize in accordance to the market
growth, opportunities, industry's entry barriers, competitive level and product differentiation.
Outcomes
The scenario of Bangladesh airline industry is in „growth stage'
Motives behind it:
1. High-end competition
2. Low entry barrier

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3. Growth is high
Strategy of low-cost competitor is likely to continue lively in the marketplace.

CORE COMPETENCIES

a) Low cost.
b) Effective, focused and aggressive management
c) Multi-skilled staffs.
d) Online booking
e) Point to point routing
f) Operation of On-Time delivery
g) No Frills Strategy
h) Route policy strategy

Additional Strategic Considerations

Ababil Airways emphasise on information technology has driven fundamental changes in the
nature and application of technology in business. The implementation of information
technology in its value chain provides powerful strategic and tactical tools for Ababil, which if
properly applied and used, could bring great advantages in promoting and strengthening the
competitive advantages. So the additional startegic consideration of Ababil is to adopt
information technologies strategically to integrate the operations and coordinate all the business
and management functions. The followings are few system implementations that Ababil
Airways has done in its marketing and sales activities as well as operation activity in the value
chain.

Yield Management System (YMS)

• Anticipates and reacts to the behavior of customers to maximize the revenue - taking into
account the operating cost and shall aid Ababil Airways to optimize prices and allocate capacity
to maximize the expected revenues by 2 levels:
a) Seat – Seats are available at various prices in different points of time. A reservation done at a
later date will be charged more than the one done earlier for the same seat

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b) Route – By adjusting prices for routes / destinations that have a higher demand when
compared to others.
• Results increased revenue (3-4%) by taking advantage of the forecast of the high / low demand
patterns,lower prices as YMS has aided Ababil Airways to increase the revenue by offering
higher discounts, more frequently during off-peak times while raising prices only marginally for
peak times.
Computer Reservation System (CRS)
• An integrated web-enabled reservation and inventory system suite that includes Internet, call
center, and airport departure control functionality.
• Satisfy the unique needs of Ababil Airways implementing a low-cost business model to
transform the business process to efficiently streamline operations.
Enterprise Resource Planning System (ERP)
• An integrated ERP solution powered by Microsoft Business Solutions (MBS) on Microsoft
technology platform which is implemented by Avanade consultants in May 2005.
• With the robust ERP technology platform, Ababil Airways is able to successfully maintain
process integrity, reduce financial month-end closing processing time, speeds up reporting and
data retrieval process.

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 MARKET OVERVIEW:

In Bangladesh, the market power of airline companies for local or regional traveling is not too
high. It is well known that Bangladesh is a poor developing country in which per capita income
is below 2 dollars. So the potential customer base is not very strong.

TARGET MARKET:
We divide the market share of the company based on two issues:
1. Income: Mainly people whose monthly income is 40,000 thousand taka minimum use airline
for local traveling. The pie chart of market segment based on income level is given below:

EXHIBIT3: MARKET SEGMENT BASED ON INCOME LEVEL

5%
10%

40,000-50,000
55% 30% 50,000-80,000
80,000-100,000
100,000+

2. Profession: This is a market segmentation based on profession. In Bangladesh, the business people
and the service holders mainly travel by airlines, which includes many foreigners.
For domestic traveling, the pie chart will give a clear view of that the category of professions and their
percentage of traveling.

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 EXHIBIT 4: MARKET SEGMENT BASED ON PROFESSION

5% 10%

Business People
10% Service holder
Tourist
55%
Students
20% others

COMPANY VALUE CHAIN ANALYSIS AND OPERATIONAL

PLAN

Existing core competencies

 Low Fare, No Frills- Providing guests with the choice of customizing services without
compromising on quality and services.
 Safety- Partnering with the world‟s most renowned maintenance providers and
complying with the world airline operations.
 World class customer services and agreements with airports
 Engineering workmanship. Ababil aims to operate one of the most efficient aircraft
engineering and maintenance organization in the domestic airline industry of
Bangladesh, providing maintenance, inspections, upgrades, re-fits, inventory
management.
 Online booking

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 Point to point routing

Future Competencies
 Ababil`s unique resources are its human resources that are its employees. It can build on
this resource by training and developing its existing staff in their jobs to increase their
skills and for achieving excellence in service delivery. It also an impressive number of
fleet which it can further increase by purchasing new carriers for business expansion.

 Ababil Airways can further develop its customer services by developing and delivering
standardised way of delivering customer service throughout the organisation. This will
enable everyone to deal with customers in the Ababil Airway`s way. It can also
negotiate cost effective agreements with airports to reduce costs and avail tax incentives
from them.

 Competent leadership. This can further be improved by encouraging new and young
talent and by training and developing key employees to become tomorrows‟ leaders.
Ababil aims to hire knowledgeable pilots. These pilots need to keep themselves
informed of the changes in international flying regulations to efficiently do their jobs.

Equipment
We will be leasing three Dash-8-Q 300 planes from US-based commercial aircraft
leasing and financing firm GE Capital Aviation Services (GECAS) for 5 years.

Value Chain
To better understand and analyze the specific activities through which Ababil Airways
can create a competitive advantage, a value chain analysis for airline industry has been
conducted as below to model Ababil Airways as a chain of value creating activities. The
goal of these activities (Inbound logistics, Operations, Outbound logistics, Marketing
and
Sales, and Service) is to create value that exceeds the cost of providing the product or
services, thus generating a profit margin.

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 EXHIBIT 5: VALUE CHAIN ANALYSIS OF AIRLINE INDUSTRY

MARKETING PLAN

Ababil Airways targets the travellers who look for low cost flights. The company promises low
cost but the best service fordomestic traveling.

Sales and marketing:

The company targets customers from various income brackets. To make tickets easily available
Ababil Airways sells it online.
The marketing will be in commercial T.V. channels, radio, business magazines etc.
To advertise Ababil Airways the company targeted some magazines which are very popular to
the business people and also by the service holders.

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Distribution:

Initially we will start the business with three routes and we will take fewer passengers because
we are new in this business. To keep things simple, our tickets will be available for online
purchases only. No travel agencies will be used to avoid commission expenses. There will be no
ticket counters in any airports as a part of the low cost strategy.

Advertising / Product promotion :

Initially, we would distribute 20,000 leaflets in major city centre sites in Dhaka, Chittagong,
Sylhet and Cox`s Bazar. After that we would not engage in any direct promotional campaign
throughout the next year. This decision is taken with regard to the fact that the company and its
service, although has an identified market, will start off in a small scale. Then, after break-even
and profit making, the company will think of going larger-scale. So, initially due to the small
size of the business, we would not go for more promotional campaigns for feasibility purposes.

We can also arrange some TVC advertisement so that every potential customer gets to know
about Ababil Airways and its low cost service. When our business will carry its full fledged
activities, we will gain some loyal customers who will always travel through us, we can offer
them the privilege card which will contain 10% discount in every flight. For that reason we will
specially have to focus on the business people. It is also true that students are also our main
target customers, but we have to give special attention to our corporate businessmen, they travel
everyday and they need a low cost airplane service that will serve them the most and will cost
them less. So here we are, Ababil Airlines to help them satisfy their needs and attract them will
some new and exciting promotional features.

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We will also give some discounts to all our customers during the month From October to
December and also during the month of Ramadan. That‟s how we will carry our promotional
campaigns and advertisings.

Customer Service :
We will have special arrangements for the customers who will travel in our airlines. We will
provide paid foods inside the aircraft and we will also provide the foods for free to our privilege
card holders. As our business is low cost, so the lowest possible plane fare would be the main
service for the customers.

PRICING

The base fares of our flight services are as follows:

ROUTE TICKET FARE

Dhaka to Chittagong / Chittagong to Dhaka 2800 B.D.T

Dhaka to Sylhet / Sylhet to Dhaka 2500 B.D.T

Dhaka to Cox's Bazar / Cox's Bazar to Dhaka 3350 B.D.T

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PRICE BASED ON TIER SYSTEM

EXHIBIT 6 : TIER BASED PRICING

The company will also follow a tier system for pricing. We shall adopt a simplistic fare structure based
on time value relationship for seats. The earlier the customer books, the cheaper will be the fare will be.
There are 12 fare buckets, each bucket is priced according to our specification. The first few tiers are
targeted to value conscious passengers, but they can only get their hands to extremely cheap tickets if
they book way ahead of time. The mid tier buckets target the captive market. Ones the revenue
collected is sufficient to cover all the operational costs to the flight, the system will then move to the
top tier bucket. This is when prices will start to creep up and our profit grows.

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HUMAN RESOURCE STRATEGY
Key Issues
• Employee branding
• Recruitment process
• Training and development
• Performance appraisal
• Payroll and employee benefit

Employer branding

It is defined as “the image of your organization as a „great place to work‟". Employer branding
creates this image. The company will try to increase the image of Ababil Airways so employee
will find it as a great place to work .

Recruitment process

Recruitment refers to the process of attracting, screening, and selecting a qualified person for a
job. All companies in any industry can benefit from contingency or retain professional recruiters
or outsourcing the process to recruitment agencies.

Recruitment process in ABABIL AIR WAYS

• Initial selection
• Substantive selection
• Contingent selection

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Initial selection:

It‟s goals are to use for preliminary “rough cut” to decide whether the applicants meets the
basic qualification for a job .
Example: applicants form , background check

Substantive selection:

It‟s goal is to determine the most qualified applicants from among those who meets the basic
qualifications
Example: written test, performance test, interview.

Contingent selection:

It‟s goal is to make final check before making offer to applicants .

Example : drug test , background check .

Applicant receives job offer

Training and development

In the field of human resource training and development is the field which is concerned with
organizational activity aimed at bettering the performance of individuals and groups in
organizational settings. It has been known by several names, including human resource
development, and learning and development

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Types of training

In our airline we give four types of training. The four general skill categories are :

• Basic literacy skill

• Technical skill
• Interpersonal skill
• Problem solving skill
• And new addition of training is ethics training.

Ababil Airways trains its flight crews to the absolute highest standards in the industry. Pilots
with corporate and airline experience are considerately selected to operate Ababil Airway‟s
premier aircraft. These flight crews are then provided with the highest quality initial and
recurrent flight training at FlightSafety International, the most highly regarded flight training
school in the world. At FlightSafety our pilots go through rigorous simulator and classroom
sessions taught by the most talented aviation professionals in the industry. These lessons are
taught to advance our pilots overall knowledge in the aviation industry and more specifically the
aircraft we fly, the Hawker 400xp. To conclude training, our crews are evaluated by FAA
examiners who test their skill and knowledge in the classroom and the simulator. This training
is repeated on a semiannual basis guaranteeing that when you fly with Ababil Airways you are
getting a meticulously trained top quality flight crew.

Performance appraisal

Performance appraisal, employee appraisal, performance review, or (career) development

discussion is a systematic and periodic process that assesses an individual employee‟s job
performance and productivity in relation to certain pre-established criteria and organizational

Page | 33
objectives. Other aspects of individual employees are considered as well, such as behavior,
accomplishments, potential for future improvement, strengths and weaknesses, etc.

The three most popular sets of criteria of employee the company shall evaluate:
• Outcomes
• Behaviors
• Traits

EXHIBIT 7: 360 DEGREE EVALUATION

Methods of performance evaluation

• Written essay
• Critical incidents
• Graphic rating scale
• Behaviorally anchored rating scale
• Forced comparison

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Benefits and perks

For employee career

• A 5 days work a week

• Performance bonus
• Long service awards
• Examination leave
• Career progression opportunity for employee health and wellness

For employee‟s health and wellness

• Hospitalization and surgical expense

• Personal accident and term life insurance coverage
• Food and drinks subsidies

For employee‟s inner wanderlust

• Yearly free flight coupons

• Up to 90% discounts on concession travel

For employee‟s family

• Paternity leave
• Compassionate leave
• Hospitalization expense for employee‟s spouse and children.

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Structure

There are six elements that managers need to address when they design their organization‟s
structure:

• Work specialization
• Departmentalization
• Chain of command
• Span of control
• Centralization
• Decentralization

Staff requirement

Staffs of ABABIL AIRWAYS

• Pilot
• Co pilot
• Ground engineer
• Flight engineer
• Air hostess

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EXHIBIT 8: DELEGATION OF AUTHORITY

AUTHORITY OF PRINCIPALS:

Name Specialization Graduated From Designation

Nafees Imtiaz Finance & North South CFO
Accounting University
Abdullah Al Zubair Finance & Marketing North South CEO
University
Al Inzamam Akhtar Finance & North South CFO
Accounting University
Salman Daud HRM North South C HR O
University
Mohammad Towaha Marketing North South CMO
Sakin University

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Roles and Responsibilities:

CFO will take care of the financial side, the managers under him will manage the financial
data and information and any kind of barriers in work will be monitored by the CFO.

CMO will delegate works to the marketing managers and they will be conducting the
marketing campaigns. Marketing assistant are there to flow the commands by the upper level
regularly, all the outdoor works will be followed by them.

The COO will take care of all the operations going and the operational manager maintain the
designers and artists work who will be involved in creating new designs and conduct the paint
service. All services will be observed by this COO‟s department.

CEO is the top most level, and he is going to look over all the aspects of the business. The
CFO, CMO, COO will directly report to the CEO and they all will work as a team like board of
directors.

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 FINANCIAL PLAN
Projected Income Statement

Year 2012 Year 2013 Year 2014 Year 2015 Year 2016 Year 2017

Sales ৳ 354,750,000 ৳ 372,487,500 ৳ 391,111,875 ৳ 430,223,062.50 ৳ 473,245,368.75 ৳ 520,569,905.63

Less Variable Costs ৳ 236,500,000 ৳ 248,325,000 ৳ 260,741,250 ৳ 286,815,375.0 ৳ 315,496,912.5 ৳ 347,046,603.8

Contribution ৳ 118,250,000 ৳ 124,162,500 ৳ 130,370,625 ৳ 143,407,687.50 ৳ 157,748,456.25 ৳ 173,523,301.88

Less Fixed Expenses

Office Rent ৳ 1,200,000 ৳ 1,200,000 ৳ 1,200,000 ৳ 1,200,000 ৳ 1,200,000 ৳ 1,200,000

Plane Rent ৳ 90,000,000 ৳ 90,000,000 ৳ 90,000,000 ৳ 90,000,000 ৳ 90,000,000 ৳ 90,000,000
Admin Overhead ৳ 6,000,000 ৳ 6,300,000 ৳ 6,615,000 ৳ 7,276,500.0 ৳ 8,004,150.0 ৳ 8,804,565.0
Utilities ৳ 120,000 ৳ 126,000 ৳ 132,300 ৳ 145,530.0 ৳ 160,083.0 ৳ 176,091.3
Salaries ৳ 2,400,000 ৳ 2,520,000 ৳ 2,646,000 ৳ 2,910,600.0 ৳ 3,201,660.0 ৳ 3,521,826.0
Membership Fees ৳ 120,000 ৳ 120,000 ৳ 120,000 ৳ 120,000 ৳ 120,000 ৳ 120,000
Promotional Budget ৳ 12,000,000 ৳ 12,600,000 ৳ 13,230,000 ৳ 14,553,000.0 ৳ 16,008,300.0 ৳ 17,609,130.0
Maintenance ৳ 12,000,000 ৳ 12,600,000 ৳ 13,230,000 ৳ 14,553,000.0 ৳ 16,008,300.0 ৳ 17,609,130.0
Total Overhead ৳ 123,840,000 ৳ 125,466,000 ৳ 127,173,300 ৳ 130,758,630 ৳ 134,702,493 ৳ 139,040,742
Total Profit Before Tax -৳ 5,590,000 -৳ 1,303,500 ৳ 3,197,325 ৳ 12,649,057.50 ৳ 23,045,963.25 ৳ 34,482,559.58

Tax 37.5% -৳ 2,096,250 -৳ 488,813 ৳ 1,198,997 ৳ 4,743,396.56 ৳ 8,642,236.22 ৳ 12,930,959.84

Profit After Tax -৳ 3,493,750 -৳ 814,688 ৳ 1,998,328 ৳ 7,905,660.94 ৳ 14,403,727.03 ৳ 21,551,599.73

Net Profit Ratio -0.98% -0.22% 0.51% 1.84% 3.04% 4.14%

Rate of Return -3.06% -0.71% 1.75% 6.93% 12.62% 18.89%

Page | 39
 Forecasted Balance Sheet and Cash Flow Statement (Percentage of Sales Method):
Forecasted Balance Sheet: 2012 2013 2014 2015 2016 2017

Current Assets:
Cash ৳ 10,000,000 ৳ 10,281,889 ৳ 10,565,703 ৳ 10,851,130 ৳ 11,124,819 ৳ 11,386,335
Other Current Assets ৳ 12,000,000 ৳ 12,405,920 ৳ 12,819,106 ৳ 13,239,266 ৳ 13,646,678 ৳ 14,040,199

Total Current Assets ৳ 22,000,000 ৳ 22,687,808 ৳ 23,384,809 ৳ 24,090,396 ৳ 24,771,497 ৳ 25,426,534

Long-term Assets
Licensing ৳ 11,100,000 ৳ 11,447,315 ৳ 11,799,115 ৳ 12,155,072 ৳ 12,498,489 ৳ 12,828,576
Office Interiors ৳ 3,000,000 ৳ 3,025,370 ৳ 3,049,942 ৳ 3,073,726 ৳ 3,095,686 ৳ 3,115,936
Office Leasing ৳ 1,000,000 ৳ 1,002,819 ৳ 1,005,519 ৳ 1,008,104 ৳ 1,010,466 ৳ 1,012,624
Plane leasing ৳ 100,000,000 ৳ 128,188,865 ৳ 172,304,132 ৳ 248,212,626 ৳ 391,416,265 ৳ 715,152,539

Total Long-term Assests ৳ 115,100,000 ৳ 143,664,369 ৳ 188,158,707 ৳ 264,449,528 ৳ 408,020,906 ৳ 732,109,675

Total Assets ৳ 137,100,000 ৳ 166,352,178 ৳ 211,543,516 ৳ 288,539,925 ৳ 432,792,403 ৳ 757,536,210

Current Liabilities
Short-term borrowing ৳ 15,000,000 ৳ 15,634,249 ৳ 16,290,459 ৳ 16,968,983 ৳ 17,638,279 ৳ 18,295,673

Total Liabilities ৳ 15,000,000 ৳ 15,634,249 ৳ 16,290,459 ৳ 16,968,983 ৳ 17,638,279 ৳ 18,295,673

Paid-in Capital ৳ 125,593,750 ৳ 125,593,750 ৳ 125,593,750 ৳ 125,593,750 ৳ 125,593,750 ৳ 125,593,750

Retained Earnings -৳ 3,493,750 -৳ 4,308,437.50 -৳ 2,310,109 ৳ 5,595,552 ৳ 19,999,279 ৳ 41,550,878

Total Capital ৳ 122,100,000 ৳ 121,285,312.50 ৳ 123,283,641 ৳ 131,189,302 ৳ 145,593,029 ৳ 167,144,628

Total Capital and Liabilities ৳ 137,100,000 ৳ 136,919,561.97 ৳ 139,574,100 ৳ 148,158,285 ৳ 163,231,308 ৳ 185,440,301
Additional Funds Needed ৳ 29,432,615.62 ৳ 71,969,417 ৳ 140,381,640 ৳ 269,561,095 ৳ 572,095,908

Forecasted Cashflow Statement: 2012 2013 2014 2015 2016 2017

Cash flow from Opearating Activities:

Net Income -৳ 3,493,750 -৳ 814,688 ৳ 1,998,328 ৳ 7,905,661 ৳ 14,403,727 ৳ 21,551,600

Cash provided by changes in Current Assets and Liabilities:

Increase in Other Current Assets ৳0 -৳ 405,920 -৳ 413,187 -৳ 420,160 -৳ 407,412 -৳ 393,521
Increase in Short term Borrowing ৳0 ৳ 634,249 ৳ 656,209 ৳ 678,525 ৳ 669,296 ৳ 657,394

Net Cash provided by Operating Activities ৳0 ৳ 228,330 ৳ 243,023 ৳ 258,365 ৳ 261,883 ৳ 263,874

Cash provided by changes in Financing Activities:

Capital Expenditure ৳0 -৳ 28,564,369 -৳ 44,494,338 -৳ 76,290,821 -৳ 144,252,478 -৳ 324,088,769

Net Cash provided by Financing Activities ৳0 -৳ 28,564,369 -৳ 44,494,338 -৳ 76,290,821 -৳ 143,845,652 -৳ 324,088,769

Increase/Decrease in cash -৳ 3,493,750 -৳ 28,922,398 -৳ 42,252,987 -৳ 68,126,795 -৳ 129,180,042 -৳ 302,273,295

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Percentages Used in Forecasting:
Percentages: 2013 2014 2015 2016 2017

Current Assets:
Cash 2.82% 2.76% 2.70% 2.52% 2.35%
Other Current Assets 3.38% 3.33% 3.28% 3.08% 2.88%

Long-term Assets
Licensing 3.13% 3.07% 3.02% 2.83% 2.64%
Office Interiors 0.85% 0.81% 0.78% 0.71% 0.65%
Office Leasing 0.28% 0.27% 0.26% 0.23% 0.21%
Plane Leasing 28.19% 34.41% 44.05% 57.69% 82.71%

Current Liabilities
Short-term borrowing 4.23% 4.20% 4.17% 3.94% 3.73%

Paid-in Capital 0.00% 0.00% 0.00% 0.00% 0.00%

Retained Earnings 0.00% 0.00% 0.00% 0.00% 0.00%

Assumptions:

 Sales are expected to rise by 5% for the first two years, and 10% from year 3 and onwards.
 Some short-term borrowing might be needed, in case of purchase of certain equipment or advance purchase of fuel,
in case fuel prices rise.

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CONCLUSION

Ababil Airway‟s will be providing a whole new strategy that is not yet present in Bangladesh‟s
Airline Industry, which is a no frills, lowest fare airline service that will capture our target
market.

We hope to hold this competitive advantage in the near future, by standing by our Mission
statement, and carrying out the objectives we have outlined in the Plan.

Our biggest strength is the size of our operations, which are small-scale. This gives us a better
advantage in terms of Management and achieving low cost in every possible aspect of our
operations. This gives us a further competitive advantage than our competitors, who not only
provide Domestic air travel, but also International. This causes them to lose focus on their
domestic goals, and gives us the chance to grab this opportunity to become the market leader in
the Domestic air travel market in Bangladesh.

Furthermore, as our financial plan shows, we have consistently achieved a positive net profit
margin as well as rate of return, excluding the first two years of operations, which shows that
Ababil Airways has the potential to be a highly profitable venture.

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 Appendix:
Variable Cost per Flight

Variab
Particulars Cost

Fuel 50000
Co-pilot 10000
Air-Hostess Wage (2) 10000
Pilot Wage 20000
Maintenance 5000
Airport Charges 10000
Sales Commision 5000
Total ৳ 110000 x 2150 flights = ৳ 236,500,000

Sales Calculation Price Total

30 passengers/flight up/down 2500 75,000

20 passengers/ flight up/down 3000 60,000
30 passengers/flight up/down 1000 30,000
total 165,000
Flights Per Week 3 routes
Revenue per
Number Total Flights per
Day Zones Flight Yearly Revenue
of Shifts year
Sunday 3 3 450 165,000 ৳ 74,250,000
Monday 2 1 100 165,000 ৳ 16,500,000
Tuesday 2 3 300 165,000 ৳ 49,500,000
Wednesday 2 1 100 165,000 ৳ 16,500,000
Thursday 3 3 450 165,000 ৳ 74,250,000
Friday 3 2 300 165,000 ৳ 49,500,000
Saturday 3 3 450 165,000 ৳ 74,250,000
TOTAL 2150 ৳ 354,750,000

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