OVERVIEW
The final project will require you to synthesize the information presented in the course by creating an airline and adjusting operational parameters to accommodate changes in demand, routes, and schedules. You will write a paper based on one of three possible scenarios. You will be given operational parameters from which you will select where and how you will fly the new airline, based on what you have learned during the course. You will select the type of aircraft, city-pair routes, passenger/cargo matrix, type of financing, alliances, and other operational requirements to create your own airline. You must support these selections and explain why you did so. For example, why you selected to lease aircraft instead of buying, or why you selected to fly cargo to one destination and not another. Additional research is necessary in some areas, such as financing and city-pair routing.
________________________________________
FINAL PROJECT GUIDELINES
Imagine that you have just been hired as the operations manager for PDQ Airlines. Under the following constraints, you have been tasked with expanding service to the following destinations:
Scenario One Scenario Two Scenario Three
• Ski resort
• British Caribbean island
• South American historical site • Canadian tourist site
• Central American city
• City with an elevation above 5,000 feet • Country within 300 nm (nautical miles) of the Arctic Circle
• Country in which French is spoken
• Mexican city on the ocean
Note: Each of these scenarios require an international flight. Review IATA, ICAO, and Chapter 9 of the textbook (Cook, G. N., & Billing, B. G. (2017). Airline operations and management: A management textbook).
Compose an 8- to 10-page report (2000 to 2750 words) that describes how you plan to add these destinations. Present your report in APA style. Provide at least three outside references written within the last five years.
Include the following in your report:
1. Analysis process of the supply and demand to your chosen destinations. Include specifics of the destinations.
2. Route structure that considers revenue and demand.
3. Product offering (LCC, Regional, H&S, etc.) that accounts for load factors and aircraft efficiency.
4. Flight schedule development and control that accounts for maintenance events and unforeseen delays.
5. Economics and financing (lease, purchase, cost structure, fleet selection) that considers cash management, ideally without the need of operational financing.
6. Pricing and revenue generation that takes into consideration the cost per seat mile.
7. Distribution plan that clearly describes the type of marketing used and why it will be effective.
Design Constraints
You currently operate from the hubs, ATL and JFK. From those hubs, you serve the following cities: Nashville, Charlotte, Washington DC, Richmond, Cincinnati, Savannah, Birmingham, and Lexington. In addition, you can add up to 10 more cities of your choosing. Be sure to identify your selection. Each new city will cost you $4.5M to get established.
You have a maintenance facility in Savannah. You can select any two other cities to be maintenance facilities. Be sure to identify your selection and explain why. A maintenance facility will cost you $10M to get established. A, B, and C checks are every 1,500 hours. A D check is 6,000 hours.
Available Aircraft to Lease or Purchase
B-737 154 seats $122M or $233,000/month (5-year lease) 10 available Operating cost: $9,000/hour
B-757 288 seats $192M or $388,000/month (10-year lease) 5 available Operating cost: $14,000
Working Capital: $245,000,000
Total Price
Flights < 500 nm $130
Flights 500 to 800 nm $230
Flights > 800 nm $450
Be sure to include why you made your decisions, such as why you chose to lease particular airplanes and why you selected a particular route/destination. For example, you might have selected a route of flight originating in ATL to DAB, then to ARUBA. You selected Aruba because of a lack of competition and cheap rent. You stopped in DAB (Daytona Beach) because it was better to add that potential load factor. But then you realized that each month you would need a B check and you did not have a maintenance facility at either location and would have to pay to subcontract maintenance. Explain all the factors that would enter into your decision-making process.
The goal of your model is to select the right airplanes to fly the best routes in the most efficient and profitable manner. Not all the factors that go into your decision making are available, so it is okay to state any assumptions that you made to arrive at your decisions.
When making the financial calculations, present any data as if you have been operating your airline for 12 months, so data will be for one year of operation.
Load factors throughout the year are as follows:
• Winter: 67%
• Spring: 81%
• Summer: 91%
• Autumn: 76%
Note: Any facts that you present must be cited using APA style. For example, if you write that you added Nassau as a Caribbean island destination because of cheap fuel, you would need to cite that fact to support your claim.
Final Project
Name
Institution
Course
Instructor
Date
Final Project
PDQ Airlines Service Expansion
Business expansion is a vital part of all companies, particularly those that are rapidly growing. PDQ Airlines as a multinational company is bound to expand given the growing globalization and technological advancement. PDQ Airlines aims to expand to other cities and establish two maintenance facilities in different cities. The success of this move will be determined by a reliable expansion plan that analyzes all the vital aspects of the plan that needs to be considered, as this paper will elaborate.
PDQ majorly identifies as PDQ Airspares and PDQ Specialist Courier Services (PDQ Airlines) given the types of services it provides. PDQ Airspares was established in 1990 and has since established itself as the leading provider of consumable/expendable solutions to the Airline and MRO industry (Apollo, 2022). PDQ Airspares is headquartered in the UK and has its offices in the US, China, Australia, Dubai, and Singapore. Currently, it has Next Generation ConsumableCare support packages that offer tailored programs that save Time and Operational costs and help companies to recoup losses on surplus inventory (Apollo, 2022). On the other hand, PDQ Specialist Courier Services provide efficient air freight services to pharmaceutical, medical, and hazardous industries (PDQ Specialist Courier Services, 2020). PDQ airlines ensures that its air freight services are temperature-controlled and deliver air freight shipping consignments directly to the intended destination.
PDQ Airlines, currently operate globally and has for itself a maintenance facility. However, in a hypothetical situation in which PDQ airlines operates from two hubs, ATL and JFK, and in cities such as Nashville, Charlotte, Washington DC, Richmond, Cincinnati, Savannah, Birmingham, and Lexington, expansion opportunities are plausible. In this hypothetical situation, the PDQ maintenance facility is located in Savannah. PDQ aims to expand to ten more cities and add develop two more maintenance facilities in two different cities. In Scenario two provided, PDQ Airline will expand to Canadian tourist sites, Central American cities, and Cities with an elevation above 5,000 feet. This paper will develop an expansion plan for PDQ Airlines using this hypothetical scenario to highlight some of the considerations that will be made to ensure success.
Additional Cities
- Canadian tourist site – Vancouver, Niagara Falls, Toronto, Montreal,
- Central American cities – Costa Rica, Guatemala, Panama,
- Cities with an elevation above 5,000 feet – Laketown, Mexico City, and Bogotá.
Propose locations for the Maintenance facilities
The additional maintenance facilities will be allocated and Atlanta and New York City because they are located closer to both ATL and JFJ hubs where most operations will be based. This will make it easier and faster to move the airplanes for checkups anytime they are brought back to the hubs.
The analysis process of the supply and demand to your chosen destinations
The supply chain for airline industries is a potent way of estimating the impact of the industry on the economy as well as the supply and demand. Business generally thrives where there is a high demand and limited supply of the goods and services required (IATA, 2021). As such, PDQ Airlines will have to determine the supply and demand factors before deciding on the areas to operate.
Among the locations to be considered are Canadian tourist sites. The value of exports and spending on foreign tourists in Canada can tell the level of demand for air cargo in the country. According to IATA (2019b) data, Canada generated $20.3 bn, $1.1 trillion, $511 bn from foreign tourist expenditure, FDI, and exports respectively (IATA, 2019b). Among the top 5 busiest air cargo routes were the US, China, and UK in which PDQ Airlines majorly operate. US was number one among the top ten city pairs with which Canada has direct service connectivity and UK and People’s Republic of China also being among the top 5. Landing and takeoffs 2.3m being served by only 123 operating airlines (IATA, 2019b). This shows a huge demand and limited supply for air freight services, along with the associated convenience.
Central American Cities are also showing the same promising market for air cargo as shown by the current trends of supply and demand. However, IATA (2021) reports that air cargo demand is yet to go above pre-crisis levels. There was a 6.6% decrease in international cargo volumes in central America as of October 2021. This decline was smaller compared to the 17% of September 2021, showing growth potential IATA (2021).
Panama serves 89 international destinations and recorded 159,800 landings and takeoffs in 2019 with only 30 operating airlines (IATA, 2019c). Guatemala has 4 airports and 21 operating airlines and recorded 40,600 landings and takeoffs in 2018 (OXFORD ECONOMICS, 2018a). As for Costa Rica, Boeing reported that the country is experiencing a wave of cargo aircraft orders due to globalization and the rise of electronic commerce. Costa Rica has 67 aircraft and 32 operating airlines and recorded 124,000 landings and takeoffs in 2018 (OXFORD ECONOMICS, 2018). The opportunities presented in these cities bear so much promise to PDQ Airlines to expand and thrive in the industry.
Among the cities with elevations above 5,000 feet, the expansion will consider Laketown, Mexico City, and Bogotá with elevations of 5,974 ft, 7,350 ft, and 8,660 ft respectively. Bogotá is part of Colombia where aviation contributes US$ 7.5 billion in GDP (IATA, 2019a). The route Bogota moved 442.116 passengers in 2018, representing the highest capacity in Colombia. Colombia has 36 operating airlines, serving 53 international destinations, and recorded 562,800 landings and takeoffs (IATA, 2019a). In Mexico, aviation contributes about 1,4 million jobs and 3.5% of the GDP. Mexico has 69 operating airlines, serving 134 international destinations and recorded 1.3 million landings and takeoffs (IATA, 2019). Laketown and Salt Lake City are cities in Rich County, Utah, the United States that bear much promise to the aviation industry. Salt City alone records about 20,790,400 passengers and 389,321 flights on annual basis (STAT Logistics, 2022). The data provided here shows that PDQ still has opportunities to expand to these areas to enable optimum performance in air freight services.
Route structure that considers revenue and demand
PDQ may have to consider new routes for the additional cities to which it will expand. Currently, PDQ operates from two hubs, ATL and JFK. Assuming that PDQ will begin most of its journey from the hubs, most of the cities selected can be accessed via direct routes, except for Laketown where there is no international airport. In this case, PDQ will use the Salt Lake City airport which is 5km away from Laketown. However, PDQ can consider an indirect flight to deliver cargo to places on its paths before proceeding to the final destination.
ATL Routes
From ATL to the selected places (Vancouver, Niagara Falls, Toronto, Montreal, Costa Rica, Guatemala, Panama, Laketown, Mexico City, and Bogotá), the routes can be;
ATL to Montreal (Montréal-Pierre Elliott Trudeau International Airport) then to Toronto (Toronto Pearson International Airport).
ATL to Vancouver (Vancouver International Airport)
ATL to Buffalo Niagara International Airport followed by a train to Niagara Falls
ATL to Tocumen International Airport in Panama City
ATL to Juan Santamaría International Airport in Costa Rica
ATL to La Aurora International Airport in Guatemala
ATL to Salt Lake City International Airport the drive Laketown
ATL to Cancun (Cancun International Airport) them to Mexico City (Mexico City International Airport)
ATL to Bogotá (BOG)
JFK Routes
From JFK to the selected places (Vancouver, Niagara Falls, Toronto, Montreal, Costa Rica, Guatemala, Panama, Laketown, Mexico City, and Bogotá), the routes can be
JFK to Vancouver (Vancouver International Airport)
JFK to Buffalo Niagara International Airport followed by a train to Niagara Falls
JFK to Toronto (Toronto Pearson International Airport)
JFK to Montreal (Montréal-Pierre Elliott Trudeau International Airport)
JFK to Juan Santamaría International Airport in Costa Rica
JFK to La Aurora International Airport in Guatemala
JFK to Tocumen International Airport in Panama City
JFK to ATL then to Salt Lake City International Airport then drive then Laketown
JFK to Mexico City (Mexico City International Airport)
JFK to Bogota (BOG)
A product offering that accounts for load factors and aircraft efficiency
PDQ airline will adopt the low-cost carrier (LCC) as it expands into new territories to attract new and more customers. LCC offers low prices and simplified services to gain competitive advantages over full-service carrier (FSC) that are more complex and elaborate (One Education, 2022). LCC does not provide all the key elements of airline services but can narrow down to passenger air-service and ancillary offers (Rozenberg, Szabo, & Šebeščáková, 2014). However, in the case of PDQ Airlines, the focus will not place on passenger services but not on cargo and freight services. This approach will automatically eliminate services such as comfortable seating, catering onboard, free refreshment, providing newspapers, in-flight entertainment, or magazines.
Even though PDQ Airline is able to eliminate the passenger aspect of airline services, it will have to include many other aspects that will bring the product offering much closer to FSC to ensure aircraft efficiency and account for the load factor (One Education, 2022). For instance, it will use a network of travel agencies to offer its capacity to freight and cargo transport (Rozenberg, Szabo, & Šebeščáková, 2014). The establishment of two more maintenance facilities in addition to the one in Savannah shows that maintenance will form an integral part of the company. PDQ Airline has opted to work under two hubs ATL and JKF to cover a wide range of demand categories in the air cargo and freight services in terms of city pairs via connectivity optimization in the hubs.
PDQ Airline will try to cover both domestic and international markets from the hubs to reach as many customers as possible. Vertical product differentiation in which travel rules, internet check-in and other electronic services, and ground service are involved to ensure that all possible markets are covered will be employed (One Education, 2022). There will be fare restrictions to ensure that charges are refunded and rebooking is enabled whenever necessary (Rozenberg, Szabo, & Šebeščáková, 2014). Among the ancillary services include advertising space and luggage charges to generate revenue (One Education, 2022). PDQ Airline will have to hire most of its airplanes (either B-737 or B-757) to ensure smooth operations in the various countries and convenience of operation before it can purchase enough aircraft.
Flight schedule development and control those accounts for maintenance events and unforeseen delays
During this expansion, PDQ airline will do adequate planning of its activities and cargo forecasting to ensure the efficiency of operations, control operational costs, reduce emissions, and improves safety. A fight schedule is developed within this plan to allow the optimum utilization of the available resources and capture multiple scenarios (SMARTER AIRPORTS, 2022). A flight schedule must be developed after a thorough evaluation of the reliability and quality of all seasons to exploit their varied potentials (SMARTER AIRPORTS, 2022). In this case, the load factors for the season were 67%, 81%, 91%, and 76% for Winter, Spring, Summer, and Autumn respectively. The plan will develop a flight schedule plan by applying formats seen in multiple sources. PDQ airline will consider using a digital platform that can automate error handling to ensure high data quality as well as the conversion of multiple schedule entries to speed up the process. Below is the developed Flight schedule to be used.
ATL to Montreal
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 5 | 2115 | 0220 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 5 | 1800 | 1000 | B-737 | (1) | ||
Montreal to Toronto
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 5 | 0600 | 1000 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 5 | 1100 | 1600 | B-737 | (1) | ||
JFK to Montreal
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | 1 | – | 3 | – | 5 | – | – | 7 | 0600 | 1300 | B-737 | (1) |
| Back flight | 1 | 3 | – | 5 | – | 7 | 1400 | 2100 | B-737 | (1) | ||
JFK to Toronto
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 2.5 | 0800 | 1100 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 2.5 | 1300 | 1400 | B-737 | (1) | ||
ATL to Vancouver
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 10 | 1300 | 0400 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 10 | 0800 | 1800 | B-737 | (1) | ||
JKF to Vancouver
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 7 | 2100 | 0400 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 7 | 0700 | 1400 | B-737 | (1) | ||
ATL to Niagara Falls
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 5 | 0000 | 0500 | B-737 | (1) |
| Back flight | – | 2 | – | 4 | – | 6 | – | 5 | 0900 | 1400 | B-737 | (1) |
JKF to Niagara Falls
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 3 | 0600 | 0900 | B-737 | (1) |
| Back flight | – | 2 | – | 4 | – | 6 | – | 3 | 1100 | 1400 | B-737 | (1) |
ATL to Panama
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 7 | 1600 | 2300 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 7 | 0500 | 1200 | B-737 | (1) | ||
JFK to Panama
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 6.5 | 1600 | 2230 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 6.5 | 0500 | 1130 | B-737 | (1) | ||
ATL to Costa Rica
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 7 | 1600 | 2300 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 7 | 0500 | 1200 | B-737 | (1) | ||
JFK to Costa Rica
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 6 | 1600 | 2200 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 6 | 0500 | 1100 | B-737 | (1) | ||
ATL to Guatemala
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 6.5 | 1600 | 2230 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 6.5 | 0500 | 1130 | B-737 | (1) | ||
JFK to Guatemala
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 5.5 | 0600 | 1130 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 5.5 | 1300 | 1830 | B-737 | (1) | ||
JFK to ATL
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 2 | 0600 | 0800 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 2 | 0600 | 0800 | B-737 | (1) | ||
ATL to Salt Lake City to Laketown
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 6 | 0900 | 1800 | B-737 | (1) |
| Back flight | 2 | 4 | 6 | 6 | 2300 | 0500 | B-737 | (1) | ||||
JFK to Salt Lake City
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 6 | 0900 | 1500 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 6 | 0900 | 1500 | B-737 | (1) | ||
ATL to Cancun
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 5.5 | 0500 | 1030 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 5.5 | 0600 | 1130 | B-737 | (1) | ||
Cancun to Mexico City
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 4 | 1200 | 1630 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 4 | 2200 | 0230 | ||||
JFK to Mexico City
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 6 | 0900 | 1500 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 6 | 0900 | 1500 | B-737 | (1) | ||
ATL to Bogotá
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 8 | 0900 | 1700 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 8 | 0900 | 1700 | B-737 | (1) | ||
JFK to Bogotá
| Days of service | Duration (hrs.) | Departure Time | Arrival Time | Aircraft Type | No. of Stop | |||||||
| Going flight | – | 2 | – | 4 | – | 6 | – | 6.5 | 0900 | 1530 | B-737 | (1) |
| Back flight | 3 | – | 5 | – | 7 | 6.5 | 0900 | 1530 | B-737 | (1) | ||
Economics and financing that considers cash management (without operational financing)
PDQ airline plans to purchase 5 aircraft and lease 5 more for the 10 additional countries for the start. The airline will observe the progress of the business for the first five years before deciding whether to expand further or not. PDQ airline will only consider B-737 (154 seats) because it is cost-effective and enough for cargo. Besides, most flights will be going one route and this will limit the volume of cargo and freight per flight (Endrizalova et al., 2018).
PDQ airline plans to work under a dry lease that goes for 5 years. Dry lease mostly takes about 3-8 years (Endrizalova et al., 2018). This is a good approach because it gives PDQ airline the possibility of making necessary adjustments after every five years as Endrizalova et al. (2018) explain. The company also will keep changing the fleet so that they always appear new. A young fleet of low-aged aircraft is perceived to be safer and more reliable. Having new aircraft will also reduce maintenance costs because the first year of operation will be covered by the manufacturer’s warranty. The practise is common among competitors (mid-line aircraft) until the first overhaul inspection where they escape this cost by transferring it to the new owner (Endrizalova et al., 2018). Below is a draft of the budget for the PDQ airline fleet to be considered.
Cost of expansion
Airplane to be used
| Airplane | Ownership | Units | Amount per unit | Total amount |
| B-737 | Purchase | 5 | $122M | $610M |
| B-737 | Leased | 5 | $233,000/month
$2.796M/Year |
$1.165M/month
$13.98M/Year |
Additional countries and Maintenance facilities
| Item | No. of units | Cost per unit | Total cost |
| Additional countries | 10 | $4.5M | $45M |
| Additional maintenance facilities | 2 | $10M | $100M |
| Total | $145M |
Pricing and revenue generation that takes into consideration the cost per seat mile
Operational days calculations
- Winter: 67%
- Spring: 81%
- Summer: 91%
- Autumn: 76%
| Season | Total number of days | % of operational days | Number of operation days | Number of weeks | Flight days (3 flights per week) |
| Winter | 89 | 67% | 59.63 | 8.518571 | 25.55571 |
| Spring | 92 | 81% | 74.52 | 10.64571 | 31.93714 |
| Summer | 93 | 91% | 84.63 | 12.09 | 36.27 |
| Autumn | 89 | 76% | 67.64 | 9.662857 | 28.98857 |
| Total number of operational days per year | 286.42 | 40.9171 | 122.751 or 123 |
Revenues generated from flights
| Flight pair | Distance (nm) | Costs per flights ($) | No. of seat | No. of flights per year | Total annual cost ($) |
| ATL Hub | |||||
| ATL to Montreal | 864 | 450 | 154 | 123 | 8,523,900.00 |
| Montreal to Toronto | 274 | 130 | 154 | 123 | 2,462,460.00 |
| ATL to Vancouver | 1949 | 450 | 154 | 123 | 8,523,900.00 |
| ATL to Niagara Falls | 619 | 230 | 154 | 123 | 4,356,660.00 |
| ATL to Panama | 1500 | 450 | 154 | 123 | 8,523,900.00 |
| ATL to Costa Rica | 1419 | 450 | 154 | 123 | 8,523,900.00 |
| ATL to Guatemala | 1191 | 450 | 154 | 123 | 8,523,900.00 |
| ATL to Salt Lake City to Laketown | 1019 | 450 | 154 | 123 | 8,523,900.00 |
| ATL to Cancun to Mexico City | 768 + 694 | 450 | 154 | 123 | 8,523,900.00 |
| ATL to Bogotá | 1230 | 450 | 154 | 123 | 8,523,900.00 |
| JFK Hub | |||||
| JFK to Montreal | 290 | 130 | 154 | 123 | 2,462,460.00 |
| JFK to Toronto | 318 | 130 | 154 | 123 | 2,462,460.00 |
| JFK to Vancouver | 2121 | 450 | 154 | 123 | 8,523,900.00 |
| JFK to Niagara Falls | 275 | 130 | 154 | 123 | 2,462,460.00 |
| JFK to Panama | 1918 | 450 | 154 | 123 | 8,523,900.00 |
| JFK to Costa Rica | 1921 | 450 | 154 | 123 | 8,523,900.00 |
| JFK to Guatemala | 1792 | 450 | 154 | 123 | 8,523,900.00 |
| JFK to ATL to Salt Lake City to Laketown | 660 + 1019 | 450 | 154 | 123 | 8,523,900.00 |
| JFK to Mexico City | 1816 | 450 | 154 | 123 | 8,523,900.00 |
| JFK to Bogotá | 2157 | 450 | 154 | 123 | 8,523,900.00 |
| One-way revenues | 67,054,680.00 | ||||
| Total annual revenue | 134,109,360.00 | ||||
Distribution plan and marketing strategy
PDQ Airlines plans to use the hub-and-spoke network to route their plane traffic which is commonly used by most airlines. This strategy has been used widely since the deregulation of airlines in 1978 because it is convenient and cheaper compared to other forms of distributions channels (Bonsor, 2022). This works by selecting hubs with the capacity to handle large amounts of time-sensitive consignments. In the case of PDQ Airlines, the selected hubs, JFK and ATL are endowed with such capacity. Hub-and-spoke will offer a high throughput distribution because the airline has distribution centres with parcel services.
In this system, the hubs, JFK and ATL will be the central airports through which the flights are routed while the pokes are the routes that planes take out of the hub airports. As such, it is possible to cover all the city pairs without necessarily flying to small markets as was required under the direct-route and point-to-point system used prior to deregulation (Bonsor, 2022). PDQ Airlines has identified central airports in all the countries through which all its flights and consignments will go through before being picked by the owner or distributed by other means like vehicles and trains to their respective recipients (Bonsor, 2022). This strategy offers more convenience because a plane must not fly to several small markets half empty which can increase operational costs.
PDQ Airlines will have to invest highly in its plans to expand to more countries. With a Working Capital of $245,000,000, PDQ Airlines is capable of implementing the move. Even though the move will general a high amount of revenue, it is highly unlikely that PDQ Airlines will get that money back within one year. However, the business will be subsequently profitable in the long run. This discussion has tried to give a rough picture of the move and the operational and financial considerations that PDQ Airlines will have to make. It is reasonable to give the go-ahead to this move because it is promising and profitable.
References
Apollo. (2022). PDQ Airspares Limited Details. https://www.apollo.io/companies/PDQ-AIRSPARES-LIMITED/556d6d4673696411bcc80701?chart=countEndrizalova, E., Novak, M., Nemec, V., Hyrslova, J., & Mrazek, P. (2018). Operating Lease as a Specific Form of Airlines Outsourcing. Business Logistics in Modern Management.
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