GGL FUSION LTD
Business plan
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Table of Contents
FOREWORD ............................................................................................................................................................ vii
ACKNOWLEDGEMENT ..................................................................................................................................viii
EXECUTIVE SUMMARY ..................................................................................................................................... ix
Introduction ...........................................................................................................................................................................11
1.0 Background ...........................................................................................................................................................11
1.2 Ownership ...............................................................................................................................................................11
1.3 vision .........................................................................................................................................................................11
1.4 Mission Statement .................................................................................................................................................11
1.5 Core Values .............................................................................................................................................................11
1.4 Objectives ................................................................................................................................................................. 12
1.6 Core values ..............................................................................................................................................................13
2.0 TARGET MARKET ANALYSIS ..............................................................................................................................15
2.1 Industry Analysis ...................................................................................................................................................17
3.0 MARKETING PLAN....................................................................................................................................................20
3.1 Anticipated Demand............................................................................................................................................20
3.2 Marketing Methods .............................................................................................................................................21
3.2.1
Public Relations ...............................................................................................................................................21
3.2.3
Marketing Strategy.........................................................................................................................................22
3.3 Pricing Strategy......................................................................................................................................................23
3.4 Communication Strategy .....................................................................................................................................24
3.5 MARKETING ANALYSIS .................................................................................................................................25
3.5.2 Market Positioning ...........................................................................................................................................25
3.6 Competitive Edge ..................................................................................................................................................27
OPERATIONAL PLAN ....................................................................................................................................................28
Development plan......................................................................................................................................................30
5.0 GOVERNANCE AND MANAGEMENT STRUCTURE ....................................................................................32
5.1 Share Capital Structure ......................................................................................................................................... 32
5.2 Office Location ...................................................................................................................................................... 32
5.3 Shareholding Structure ........................................................................................................................................ 32
5.4 Board of Directors ..................................................................................................................................................33
7.0 FINANCIAL ANALYSIS.....................................................................................................................................38
7.1 Introduction .....................................................................................................................................................38
7.1 Financial Accountability ..........................................................................................................................38
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7.2 Financial Objectives..................................................................................................................................... 38
7.3 FINANCIAL PLAN ...................................................................................................................................41
7.3.1 Funding Requirements ..............................................................................................................................................41
7.3.1 Offering.................................................................................................................................................................41
7.3.2 Exit Strategy ........................................................................................................................................................41
Appendix A: Competitive Matrix ...................................................................................................................................43
Appendix B: Income Statements ...........................................................................................................................44
Appendix C: BALANCE SHEET ............................................................................................................................45
Appendix D: cash flow statement..................................................................................................................................46
Appendix E: Break Even Analysis .................................................................................................................................47
Appendinx E: Financial computations ........................................................................................................................48
Appendix F: Breakdown .....................................................................................................................................................49
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LIST OF figures
Figure 1:Review of market potential ....................................................................................................................... 16
Figure 2: market analysis pie .................................................................................................................................... 26
Figure 3: ORGANIZATION STRUCTURE ................................................................................................ 37
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LIST OF TABLES
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LIST OF ABREVIATIONS
LGG
---- Lucas, Geofrey and Githengi
KCA ------- Kenya Civil Authority
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FOREWORD
This Business plan for the LGG fusion Ltd has been prepared through an in-depth
consultative process with all the relevant stakeholders, In this regard, the Business
Plan conforms to the Aviation Standards, National transport Strategy and
Performance Contract Guidelines.
The Business Plan provides a broad framework within which the Company will
develop and implement annual strategies over the planning period. It also provides the
basis for LGG Fusion Ltd to measure and monitor the performance of the Company
in achieving its desired objectives and targets. The Business Plan will also be used
by LGG to determine and approve its annual budgets and recommend appropriate
tariff structure for its services for Sustainable development.
It is expected that this Business Plan will be a critical tool of achieving the
Company’s mission and vision and hence improvement of service delivery to the
company’s customers. This Business Plan provides a platform for LGG to
operationalize its strategies in effort to achieve its strategic objectives. This
Business Plan serves as a guide for day to day operations of the company in a
structured and organized manner in order to realize highest results.
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ACKNOWLEDGEMENT
LGG Fusion Ltd gratefully acknowledges the various stakeholders who actively
contributed and enabled the development of this key document which will guide the
Company to execute its functions with clear direction. The participation and
involvement of the Company’s directors, management and members of the Board
of Directors is acknowledged. Last but not the least, the facilitation of consultancy
service by Ansoff Consulting Limited,
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EXECUTIVE SUMMARY
Market factors favour inauguration of a new airline to meet the demand for additional, higher quality
services linking various counties and countries with the rapidly growing markets of Africa and western
countries
The new aviation company will base its business and marketing strategies on achieving high, and
profitable, load factors through absorption of unmet demand in three key categories: resale aircraft,
aircraft leasing and general transport to the unserved routes on which high unmet demand currently
exists or can be rapidly developed; serving key niche markets where demand is either unmet or poorly
served; and meeting peak traffic demands on certain key regional, seasonal, and variable routes where
very high load factors can be predicted despite existing but lower-quality competition, or where
competition cannot meet the demand.
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 customer - that will assure the proposed company’s rapid acceptance in the
marketplace and its long-term growth and success.
Opportunity: Every day, thousands of travelers waste hours and hours of time waiting at airport check-in
counters, in security lines, and near baggage claim carousels. Numerous editorials and countless
customer complaints showcase the hassles of post 9/11 air travel. In fact, on a scale of 1 to 10 survey
respondents ranked their satisfaction with commercial air travel as a 5.5. The need for service
improvement in the $126 billion domestic air travel market is clear. According to 2005 data from the
National Business Travel Association, wealthier business travelers and first-class flyers are searching for
commercial alternatives. On the West Coast alone, these markets constitute a $2+ billion opportunity.
LGG’s Service, one needed to charter an entire aircraft or own a plane to fly privately. With the new
class of cheap-to-buy, cheap-to-fly, LGG offers fares for single seats. Using Slipstream Air’s advanced
air taxi scheduling system, LGG will offer its services in all parts of Kenya, East Africa, Africa and parts
of western countries.
How will LGG add value? LGGFusion Limited will add value by offering flights to un-crowded regional
airports with no check-in, security, or baggage claim waits, LGG provides a time saving alternative for
today’s west coast regional business and first-class travelers. Marketing Strategy; the company will
market its business by placing print ads in local lifestyle magazines (e.g. The daily nation), directly
targeting local businesses, handing out brochures at commercial airports and advertising through
Television stations and Social media platforms, and this will effectively reach its target audience and
position itself as a time saving alternative to commercial air service. Competitive Advantage; Although
LGG competes with commercial airlines, private air charters, fractional aircraft ownership services, and
other air startups, its regional airport service, unique pricing model, and first mover status create
competitive advantages for the company. Management; Combining the leadership and financial skills of
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their executives, along with the technical marketing know-how team Inc. will ensure that LGG soars to
new heights. Financial Projections; LGG’s five-year revenue will be approximately $30 million, and the
company expects to break even after 12 months. LGG predicts 55% gross profit margins in year five.
Funding: LGG plans to raise $4 million in a round of series A financing surrendering 35.7% of the
company from its director’s contribution.
Services LGG will offer point-to-point private jet lease service at roughly the cost of traditional firstclass travel, Customers pay for single seats rather than the entire aircraft. Resale: the company will offer
resale service for new and used aircrafts to individuals, government and private organizations at
relatively better price. The company will also offer leasing services to aviation training schools which
will help in bringing revenue to support the company’s operations.
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Introduction
1.0 Background
The company’s business name shall be LGG Fusion limited. The name is derived from directors’ names
which is Lucas, Geoffrey, and Githengi. The owners chose the name because it is easy to pronounce. The
business is an aviation type of business since it involves airport operations. The business undertaking
will be Resale of aircraft, leasing to government agencies, Training schools and private businesses and
other air operations. The business will be a partnership form of business hence it will contain various
legal formalities and various decision making.
1.2 Ownership
Every LGG’s stakeholder owns a pierce of the company. Each of us shall therefore act like an owner,
take initiative, be self-driven and do what we do well to ensure the interests of the company are
safeguarded.
1.3 vision
The Company’s vision is ‘To become the largest, most comprehensive Aviation company in Kenya.’ The
Company has formulated its vision to become a leading Air operations industry in the market. Its
business and development plans are therefore aimed at positioning the Company to capture the potential
growth of these two industries.
1.4 Mission Statement
The Company’s mission statement is ‘To focus on continuous product development in order to provide a
comprehensive and innovative range of high-quality services to the customer.
1.5 Core Values
Customer Service Customer delight remains LGG’s priority. LGG strives to keep their customers happy
and wanting to come back. LGG’ will adopt a culture of speed of service, ready to listen to customer
feedback and complains, its professionalism, and desire to continuously improve will make the company
a better choice in the aviation industry.
1.5.1 Continual Improvement
LGG will apply different successful management and leadership styles that ensure we are better than we
were yesterday, without stopping. This is a mixture of both deliberate training programs informed by
training needs assessment as well as supervisors and managers finding on-the job teaching time as part of
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the business routine.
1.5.2 Team Work and Efficiency
At LGG we believe that together everyone achieves more. We value each and every one inside and
outside the organization. Everyone to us matters. The cliché ‘a chain is a strong as its weakest link’
defines out team spirit we shall therefore drive our business by ensuring everyone is on Board. While
doing this the company, through use of cutting-edge technology and conscious approach will transact at
the lowest unit cost possible without compromising on quality.
1.5.3 Research and Innovation
To ensure we deliver on our mandate, the company values new ways of doing things. Change remains
alive to us as an organization because we expect better and different results all the time. To this end, the
company shall commit a percentage of its resources to research and innovation in the core areas of
operations, processes as well as services delivery.
1.4 Objectives
To ensure the business achieves the best, it will have its primary objectives which include:
1.
To establish and operate a new international service aiming specifically at linking various regions
in Kenya, Africa and western countries with the rapidly expanding markets
2.
To provide service and absorb unmet demand in three key traffic categories: unserved and under-
served routes on which high demand currently exists or can be developed; serving key niche markets
where demand is either unmet or poorly served; and meeting peak traffic demands on certain key
regional, seasonal, and variable routes where very high load factors can be predicted despite existing, but
lower-quality, competition.
3.
To implement an organizational and marketing strategy that will, beginning in the first year of
flight operations, achieve average passenger load factors in the 50-65 percent range, depending on
season, and increasing thereafter to the 75-90 percent range, thereby maximizing revenues and return on
investment while minimizing risk.
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4.
To achieve revenues in excess of 20 million USD per quarter within the first six months of flight
operations, and exceeding 45 million USD per quarter, by the end of the first year.
5.
To achieve net operating profits in the 5 per cent range within the first 12 months of flight
operations, an annualized return-on-investment of approximately 50 percent by the end of the second
year of operations, and steady growth enabling rational expansion of the airline thereafter.
6.
To achieve the projected results starting with three large long range aircraft, growing to four by
the end of the first year of operations, 5 supplementing those aircraft with long-range passenger aircraft
on a wet lease basis to serve peak-demand and intermittent routes and periods, as called for by the
business plan; and incrementally expanding the fleet size and scope on a lease purchase basis to at least
double its initial capacity by the beginning of the third year of operations to accommodate projected
passenger growth and new routes in the business plan's out-years.
7.
To gear operations, and present a professional, serious, growth-oriented image from the outset,
that will set the stage for reasoned, planned expansion, mirroring growth rates projected for the first year
of operations, and that will enable the airline to extend its regional scope and, in future years, to
transition from its initial regional status into a larger continental and intercontinental carrier.
8.
As an element critical to achieving the airline's other key objectives, to identify and develop key
interline alliances, cooperation’s, associations, and partnerships with other larger, more established, and
highly regarded airlines both within and beyond the target region that will enable the proposed airline to
provide an extensive range of connections, through fares, frequent-flyer mileage sharing, and other
passenger and client advantages through interline arrangements, code shares, common hubbing, and so
forth.

1.6 Core values
Customer Service Customer delight remains LGG’s priority. it strives to keep their customers happy and
wanting to come back. LGG’s culture of speed of service, ready to listen to customer feedback and
complains, its professionalism, and desire to continuously improve has made the company a leader in
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water and sewerage services provision.

Employing an experienced, highly professional management team that combines vision; realism;
financial ability; solid knowledge of the aviation business; familiarity with, and belief in, the utilization
and benefits of the latest aviation, electronic, and informational technologies; on-the ground knowledge
of the region and markets to be served; realization of the crucial importance of an organization's
personnel to its success; and a total familiarity with, and commitment to, the overall mission and goals of
the proposed new airline.

Intelligent, progressive, and aggressive marketing that identifies the airline as a different kind of player,
one that is sharper and smarter, and with a higher level of professionalism and operational standard than
is the norm in the target region. Concentration on safety, with highly trained, dedicated, and professional
personnel, caring for the passenger and the passenger's needs and wants, the advantages offered by
advanced technology, and straightforward, understandable, highly competitive tariffs and fare pricing, all
will form key pillars of the marketing strategy.

Identification, through careful market research, of unserved or under-served routes and city pairs in the
target market area with sufficient passenger demand to enable high load factors and profitable operations
utilizing the category of aircraft envisaged.

Use of an all-jet fleet of modern aircraft that offer a high level of comfort, safety, and fuel and
operational efficiency and flexibility, which meet all normal aviation standards, and which offer
sufficient, but not excessive, passenger and cargo capacity on the envisaged routes.

Use of advanced electronic and information technology to reduce staffing and other operational c1.5osts;
expand the potential market base; readily capture sales opportunities; simplify and speed passenger,
baggage, and cargo handling; and enhance customer convenience and satisfaction.
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2.0 TARGET MARKET ANALYSIS
Although the air travel market is at its highest post-9/11 level, the overall number of travelers has
not yet reached its pre-9/11 state. However, potential exists in the first-class market, which is
growing at a faster rate. “Most of the growth is coming from high fare airlines.Over the past
year and a half there has been greater demand for premium airlines. Commercial air carriers are
focusing more and more on features like in flight films and upgraded food service partly to
overshadow the hassles of commercial air travel. In aviation training schools, statistics shows that
there is a shortage of practical planes currently hence LGG will be leasing their aircrafts to the
school hence increasing the revenue collection to the company.
Trends in the business market are harder to pinpoint, though data is revealing. Since 2000the
airline industry has lost 50 percent of its normal business travelers due to extended wait times, lack
of regional service, and poor customer service levels. Additionally, increasing numbers wealthy
business travelers are electing to fly privately for security reasons. IATA surveys show a growing
use of private jets and charters since the 2020 Covid-19 pandemic. In fact, in 2021 26% of U.S.
companies used private jets. By 2022, that figure had risen to 33%. Research from the IATA shows
the is increasing.
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According to the North American Industry Classification System (NAICS), LGG will be entering and
competing in the Nonscheduled Chartered Passenger Service industry.
Figure 1:Review of market potential
In 2019, Kenya’s top ten overseas markets by departure seats accounted for 65 percent of the total
international seats available. In total it is connected by non-stop scheduled flights to 45 countries around
the world.
Neighbouring Tanzania remains Kenya’s largest market with almost 695,000 departure seats this year,
up by 37 percent compared with the figure in 2014. A total of nine carriers serve the Kenya - Tanzania
market, led by Kenya Airways which offers 53 weekly frequencies (w/c 14 October 2019). The biggest
route by capacity links Nairobi Jomo Kenyatta International with Dar Es Salaam.
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A total of 12 airlines operate in Kenya’s domestic market. Flag carrier Kenya Airways commands an
18.8 percent share of capacity, while its low-cost subsidiary Jambo-jet has 16.5 percent. Jambojet was
launched in 2014 to stimulate the domestic market and now operates a fleet of five Dash 8 turboprops.
Air Kenya Express has also recorded impressive growth in recent years. Its domestic capacity has more
than doubled from 286,160 seats in 2014 to 591,040 in 2019. This clearly shows that there is enough
market in the travel industry. First within east Africa.
Customer Characteristics
It is estimated that there will be steady growth in the number of connections as more extensions are
done and the population keeps on increasing in the served area as shown in. The current estimated
population of the service area is at 169,467. The existing companies currently serves a population of
over 695,734, representing a market size of 94.4%. A growth rate of 3% per annum (adopted from OAG
schedules analyser) has been applied. Consumption of services is estimated at 94.54% domestic, 0.25%
Government institutional users; while industrial/commercial takes 5.07%. Other users namely schools
and communal points take the balance of 0.14.
2.1 Industry Analysis
On the one hand, the commercial airline industry is currently dominated by entrenchedplayers
with a myriad of strategic alliances and partnerships. Publicly held airlines, such as United and
American, control most of the national market share. However, smaller, lower- cost operations such
as Southwest have been slowly eating away at the incumbents’ market share as fuel prices (and
therefore ticket prices) rise.
On the other hand, private travel is not dominated by specific companies. The market is extremely
fragmented; most aircraft charter services have less than 10 planes. During the early 90’s the
concept of fractional aircraft ownership gained traction in the ultra-high-end segments of the private
market. Companies such as NetJets and Citation Shares dominate the fractional ownership arena.
The new force in the industry is the Kenya airways carrier. Start-ups like Jambojet and Fly 540 have
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invested hundreds of millions of dollars into new VLJ (very light jet) aircraft and sophisticated
scheduling systems to offer on demand air service where the customer can book a seat rather than
the whole aircraft. VLJs’ low operating costs are enabling air start-ups to offer per-seat fares and do
away with long term fractional contracts.
Distribution Channels
Traditional commercial carriers rely on two main channels to effectively distribute their tickets:
resellers and direct-to-consumer. The reseller channel can be broken down even further into internet
channels consisting of normal online travel brokers and reverse auction travel brokers. Traditional
travel agents also play a big role in the reseller channel handling company bookings or bulk ticket
purchases. The direct-to- consumer model relies heavily on the airline’s own website and telephone
systems. The simplified supply chains are represented below:
(Reseller)
Airline  Reseller  End User
(Direct-to-Consumer)
Airline  End
User
The Competitive Environment
Competition within the industry is incredibly fierce. The number of travelers is just beginning to
reach pre-9/11 levels, but the industry faces more and more entrants with an almost static market
size. One must steal market share to survive. The industry is currently dominated by the traditional
commercial airlines. Fractionals, air charters, and air fight in the upper echelons of the market for
wealthier travelers’ business.
Price is the focal point of commercial carrier competition. Ever increasing fuel costs have shown
consumers and investors that the lower priced commercial carriers almost always win. However,
fractionals, and charters compete on three main factors: convenience, luxury, and price. While
fractionals and many charters focus more on luxury, aviation start- ups stress convenience with
more affordable prices. This is due in part to the small physical size of the new VLJ class aircraft.
Rivalry in both the commercial and private segments is very high, due to the decreased number of
travelers and increased cost of operation.
There are no air taxi companies currently operating in Kenya. Although other air taxi companies
do exist in the United States, they will not be direct competition. Fractional jet ownership and
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direct air charter programs are available in our market, but starting at
$4000 an hour LGG Fusion Ltd seeks to capture a different market. Review the competitive matrix
in appendix A for more detailed information.
Barriers to Entry
Startup costs create the industry’s largest entry barrier. The Eclipse 500 is the least expensive VLJ
though 50 aircraft would still cost $75 million. Fortunately, a startup need not buy 50 aircraft just to
compete. Although economies of scale are necessary to compete in the commercial realm, the private
segment of the industry does not require large fleets of aircraft.In fact, many charter companies only own
one aircraft. Aircraft manufacturing lead-time and Kenya Civic Aviation certification lead-time create
another formidable entry barrier. Currently, both lead- times are around 2 years. Commercial carriers are
also subject to other entry barriers. For instance, strategic alliances are common in the industry and force
smaller competitors to join or lose market share.
Hostility toward new entrants will be pronounced due to the almost static market size and rising
operating costs. We anticipate that hostility will rise dramatically (e.g. more price wars) if smaller
air taxis start eating away at large portions of commercial carriers’ market share.
Customer loyalty is a moderately strong entry barrier. While it does not play a major role in the
commercial market, loyalty is strong amongst travelers who already fly privately. Moreover, private
travelers with long term fractional ownership contracts will almost certainly maintain their current
relationship until the contract has expired. To work around this issue, air taxi startups will need to
draw customers who do not already fly privately.
Switching costs are relatively low for consumers, except those with long term fractional contracts.
While commercial customers may lose out on the chance to redeem frequent flyer miles, fractional
ownership customers would waste hundreds of thousands of dollars toswitch to air taxi services.
Access to distribution channels only poses a problem if a company would like to deal through the
online reseller channel. Websites such as Orbitz or Travelocity require a proven track record prior
to publicly listing flights. Setting up a website or contracting with a scheduling/ordering company
is relatively simple in comparison.
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3.0 MARKETING PLAN
To better understand the current problems with traditional air travel and expose what businessand
leisure travelers desire, LGG Fusion limited surveyed its target markets. LGG strategically and
deliberately seeks to bridge the demand gap by getting more air crafts to customers through more
purchase . The leadership has already identified service gaps that exist in our current market area which
are not adequately served. At the same time the company has to address the issue of managing time
loses and poor services.
Primary research results




Recognition of Need: On a scale of 1-10, the average score was a 5.5 for overall
commercial airline satisfaction.
Drivers of dissatisfaction with airlines can be traced to the hassle and time it takes
to fly commercially. 51% of respondents indicated that security checks are the
worst part of commercial flight averaging 48 minutes.
68% of respondents leave their house or work 2.5 hours before their scheduled flight
to account for traffic, finding a parking spot, checking-in, and going through
security.
84% of survey respondents stated they were interested in flying with JetLink and
werewilling to pay $500-$1000 per ticket.
3.1 Anticipated Demand
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The growing demand for air services is estimated to be inexcess of 60,000 per annum with
a very high demand for First and Business class seats in travel. Thus, if LGG captures all
of the premium class operations who pay up to 10,000 USD for First and Business Class
seats, it will be seen that 45 million USD in annual sales would accrue.
LGG Fusion Ltd plans to have premium class services available. Hyperlocal marketing
methods will be employed in Cape Town and Gaborone. Upper class seats will be
marketed in Johannesburg which has a continuous shortage of Business class seats and
offer prospective First-Class passengers private charter flights to and from Gaborone, if
necessary. According to IATA statistics 3,000,000 passengers travelled to sub-Sahara
Africa in 2021 and the majority, over 90%, landed in South Africa. The new airline’s
target will be to capture 5% of the annual traffic figure and it will market aggressively to
ensure all flights are full.
Extrapolated, at an average of 1,500 USD per seat, there is the potential to achieve 200
million USD plus in annual turnover. We have identified a cargo demand from the Kenya
Meat Commission to deliver 40 tons of chilled beef to the China market on every flight.
We estimate this business to be worth 50 million USD per annum. There is considerable
demand for cargo from Europe Nairobi serving the mining industry, business and
government and NGOs. In addition underutilized cargo space will be marketed in
Tanzania. The value of inbound cargo is estimated to be 50 million USD per annum. It
should be noted that our new airline will contribute to Kenya’s balance of payments in a
very positive manner.
3.2 Marketing Methods
LGG Fusion Ltd understands that advertising only reinforces, it does not generally sell.
Therefore, in addition, it will establish a 24 hour call center where all enquiries will be
followed up to ensure all of its customers experience a very personal service including, a
personal point of contact to resolve any problems arising during their flight. Agents will
be appointed locally and internationally tasked with promoting our airline and selling
seats.
3.2.1 Public Relations
A Public Relations manager will be appointed to ensure our airline attracts maximum
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publicity of the beneficial type and to assure our passengers thatwe take their comfort
and safety very seriously.
3.2.3 Marketing Strategy
The Marketing Mix will encapsulate the following strategies (4Ps):
Product (service offering)
Price (fares)
Promotion
Fare structure Revenue
managementPricing / yield
Place (sales and distribution)
Internet (direct)
Other (kiosks, etc)
Internet (wholesale/3rd party)
Airport ticket counters
Call Center
City Ticket Offices
Global Distribution Systems (GDS)
Corporate sales
The market combines a variety of elements all of which demand a higher quality of air service than often
currently available:
Business travelers requiring convenience, reliability, speed, and schedules built around
business needs, Government and international organization travelers, requiring the same
elements. We will target personal and leisure travelers from the Southern African region
who have the money to travel byair and who increasingly demand a higher level of
service and convenience, but at an economical cost. We will also target aviation schools
who offer Aviation trainings of which it will also improve our market.

A complete market analysis and segmentation will require a specific passenger
and destination survey, the cost of which is included in the Start-up Costs for the
airline. Preliminary analysis (based on a variety of methods, including observation,
interviews
with
travel-
and
airline-industry
professionals,
economic
segmentation, future projections based on marketing plans, and experience with
the region and market) for planning purposes, however, indicates the following
approximate market segmentation overall (considerable variations, of course,
would be anticipated depending on route, season, and other factors):
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
Business - 25%




Government and International Organizations - 15%
Regional Resident Personal and Leisure Travellers - 25%
Diaspora Personal and Leisure Travellers - 10%
Seasonal Holiday Travellers - 25%
The seasonal/holiday travel segment of the market to some degree distorts the overall
market percentages, but might initially be anticipated for two reasons: first, it compensates
for the drop in business and government travel that can be expected during the peak
summer holiday travel season; second, a significant portion of this traffic is likely to be
carried on flights employing specially chartered or wet-leased supplemental aircraft. To
achieve this end, an agreement will be negotiated Jambo-jet to provide wet leased their
planes as and when required.
3.2.4 Product/Service Strategy
LGG will initially serve five regional airports with ten aircraft. The company will add two aircraft
in year three, followed by three more in year 4, and five more in year 5. Also, the company will add
two service locations per year. Unfortunately, this highlights LGG’s main weakness. There will
inevitably be many customers who wish to fly to locations our company will not service, at least
during early phases. As routes expand, LGG may need to add another headquarters location to
ensure that flight duration is approximately one hour. It will be possible to fly between more distant
locations. However, because the Eclipse is notequipped with a lavatory, LGG does not anticipate
high demand.
3.3 Pricing Strategy
Customer’s Departure Time Window
Less than 1 hour
Less than 2 hours
Less than 3 hours
Less than 4 hours
Over 4 hours
Ticket Price per Flight Hour
$875
$775
$675
$575
$475
Table 1: pricing strategy
This strategy considers the aircraft’s probability of reaching maximum passenger capacityand
allows LGG to minimize revenue loss due to unfilled planes. Ticket prices also fluctuate according
to flight duration and fuel prices. The current pricing structure has been calculated using a
$3.82/gallon fuel price. Although ticket sales are handled by Slipstream, they do not charge a per23
ticket commission. Therefore, the price stays consistent throughout the channel.
3.4 Communication Strategy
LGG has determined that print advertising, direct email campaigns, and grassroots promotional
efforts are the most efficient and effective means of reaching its target audience.16 All of the
company’s marketing efforts strive to communicate three things: convenience, luxury, and value.
3.4.1 Print/Web Advertising
LGG confirmed that print advertising Will be the most effective way to reach our target market.17
Initially, the company will place half- or full-page ads in the following magazines and a banner ad
on websites:

Daily nation (circulation = 125,000)

The stanard (circulation = 361,000)

The Nairobian (circulation = 45,000)

The Star (3.2 Million Online subscribers)
These magazines were selected according to the market segments they target. The first three
selections are the prominent lifestyle publications in their markets (e.g. Denver’s 5280). The San
Jose Business Journal is a print magazine and an online journal. LGG will place a 728x 90 banner
ad on the homepage. Normal magazine readers earn near or over $100,000 annually, have high net
worth’s ($500,000+), and live in LGG’s service area.
The company anticipates a large need for initial marketing and will therefore advertise in every
magazine issue for the first year. As consumers become more familiar with the product,
advertisements may drop from unsuccessful magazines and become predominant in others.
3.4.2 Direct Email Campaigns
In conjunction with print advertising, LGG’s team will produce an initial “teaser” email bulletin
outlining the service’s features and benefits. The email will provide readers the option to sign up
for further updates. In order to effectively distribute the email, LGG will obtain lists of businesses
from targeted counties’ economic development departments. However, the company will only
24
target business travelers with email. LGG believes that many first class travelers will be annoyed
by direct email campaigns.
3.4.3 Billboards
LGG will set up airport billboards at international terminals in its service area. These billboards
will be easy to view from security and check-in lines, further showcasing LGG’s advantage.
3.5 MARKETING ANALYSIS
3.5.1 The Target Market
LGG Fusion Ltd targets market not only includes prospective customers within the country but also
outside the country who experience a perennial dissatisfied service and seek for better and cheap
services. Market research shows that the airlines currently operating maintain very high load factors on
the route. In addition, for instance First and Business class seats will be marketed in Entebe, where there
is a shortage of upper-class seats to London. A code sharing agreement will be negotiated with a carrier
operating the route. Among the targeted inviduals within the country are Aviation training centers,
individual and government bodies who may want to lease the aircrafts.
3.5.2 Market Positioning
First, Business, Premium Economy and Economy will be offered on all of flights. The emphasis will be
on marketing the upper-class seats, being the most profitable, locally, by offering the Kenyan
Government official services r higher levels of service than he or she would get if they take the longer
transit route . In addition, Economy class seats will be Nairobi Town at very competitive fares, ensuring
maximum load factors. Unsold seats will be marketed through the so called ‘Bucket Shops” at low fares
to ensure we have the highest load factors. Though it is a detested but economically necessary practice, it
will be the airlines policy to overbook all flights, but offer free flights or cash inducements to those
passengers who voluntarily agree to change to later flights. By using this strategy, we will ameliorate the
unavoidable problem where full fare passengers do not show or book multiple flights.
25
3.5.3 Market Analysis (Pie)
European Personal &
Leisure 11%
Regional Personal &
Leisurse
Other 21%
Business Govt.
& NGOs
Holiday Travel
Seasonal 16%
Diaspora Perconal &
Leisure
Holiday Travel Seasonal
European Personal &
Leisure
Other
Figure 2: market analysis pie
Table: Market Analysis
Potential
Customers
Regional
Personal &
Leisure
Business
Government &
International Org.
Diaspora Pers. &
Leisure
Holiday Travel
Seasonal
European Pers. &
Leisure
Other
Total
Growth Year 1
Year 2
Year 3
Year 4
Year 5
CAGR
20%
18,000
24,000
30,000
36,000
42,000
20.00%
15%
13,500
13,500
22,500
27,000
31,500
15.00%
10%
9,000
15,000
18,000
21,000
15.00%
6,000
7,500
9,000
10,500
13,500 18,000
22,500
27,000
31,500
15.00%
5%
15%
4,500
12,000
5.00%
10%
20%
9,000
18,000
12,000
18,000
15,000
30,000
18,000
36,000
21,000
42,000
10,00%
20.00%
100%
90,000
120,000
150,000
180,000
210,000
33.3%
3.6 Competitive Edge
3.6.1 Corporate Identity
Based on the SWOT analysis, informed by market surveys, it is evident that LGG has a major strength
courtesy of its registration as a Private water and sewerage company that is supported by the government.
OPERATIONAL PLAN
4.0 Introduction
LGG’s operation will provide value to its customers through three main benefits: time savings and lower
cost. By cutting out modern airport check-in, security, and baggage claim waits, customers will save 2
hours of wasted time. Furthermore, LGG’s flexible scheduling allows customers to leave when they want,
minimizing wasted time due to major airlines stringent schedules. In conjunction with LGG’s obvious timesaving benefit, utilizing the Eclipse 500 aircraft allows LGG to reduce operating expenses and pass the
savings on to the traveler. For example, chartering a Jambojet, often the cheapest alternative, from Nairobi
to Eldoret would cost $40.19 In comparison, a LGG ticket for the same flight would cost at most $25. With
a flexible schedule, the ticket could cost as little as $23. With Slipstream’s scheduling expertise and LGG’s
Eclipse 500 aircraft, customers who were not previously able to charter an entire aircraft will be able to
afford private air travel. By emphasizing LGG’s value to the end customer—maximum flexibility at an
affordable price—the company will capture travelers from traditional airlines. However, the company will
not tout itself as the most luxurious carrier or the cheapest means of traveling other than driving. LGG must
focus efforts on its core competences to succeed.
4.1 Scope of operations
Operation
No of aircraft
10
Model
Gulliver 200
Manufacturer
Eclipse aviation
Unit cost
$1,500,000
Total cost
$15,000,000
Table 2: scope of operation
LGG’s airplanes will be stored on the tarmac at our home base in Wilson Airport and our regional bases
in Jomo Kenyatta International airport. Where most Fixed Base Operators (FBO’s) offer free tarmac
parking if customers purchase fuel.
4.2 Order Fulfillment
All order fulfillment and processing for GGI will be subcontracted to Kenya Airways. Unfortunately,
Kenya Airways has not yet determined its own pricing structure. However, company representatives
have informed LGG that the initial setup fee is $250,000.
4.2.1 Customer Service
Most customer service issues related to booking and reservations will be handled by Slipstream Air. Any
other customer service issues regarding the actual flight and overall LGG experience will be handled by
management or an in-house LGG customer service representative, staffed at the Wilson Airport 8am –
6pm M-F at $30,000.
4.2.2 Aircraft Maintenance
As required by civic aviation certification regulations 2018 for all non-scheduled flights LGG will hire
one full time head mechanic to oversee all plane maintenance. Kenya Civic Aviation provides a
maintenance program that we will use for routine and planned maintenance. KCA’s maintenance
expenses are built directly into the aircraft’s operating costs.
4.2.3 Facilities
A small office space will be required for LGG’s operation. Since the company and some aircraft will be
based out of Wilson Airport, NV, renting hangar space with an attached office will keep corporate
employees in close contact with pilots. GGIL will attempt to find office and hangar space for $8,000 per
month. LGG has chosen Eldoret Airport for its comparatively inexpensive cost of living and cost of
operations. Furthermore, LGG will require $15,000 in tools for aircraft maintenance, ten computers
totaling $10,000, and additional office furniture costing $15,000 to start the company. LGG aims to
purchase this equipment.
4.2.4 Personnel
Position
Salary
CEO
$150,000; Stock options possible after 2 year
evaluation
CFO
$150,000; Stock options possible after 2 year
evaluation
CMO
$150,000; Stock options possible after 2 year
evaluation
FAA 135 required employees (COO, Chief
$65,000 each
Pilot, Chief Mechanic
24 Pilots
$50,000 each plus 20% benefits
Administrator
$30,000
Customer Service Representative
$30,000
Table 3: personel
Development plan
Task
Completion Date
Recruit management team and secure
Months 1-7
financing for LGG
Secure debt financing for aircraft and purchase
Acquire office space in Wilson Airport
Month 1
Month 5
Form relationship with Kenya airways
Month 6
Hire office employees
Month 6
Develop marketing campaign
Month 7
Subcontract website development
Month 8
Launch marketing campaign
Month 10
Beta test and debug Slipstreams scheduling
Month 12-18
technology
Hire pilots and maintenance personnel
Month 22
Receive aircraft from eclipse
Month 24
Table 4: Development
4.2.5 Competitive advantage
LGG’s most formidable competitive advantage lies in its aircraft choice. The Gulliver 200 short takeoff
and landing distances allows the company to operate from small airfields, thereby saving each customer
at least 1 hour and 45 minutes of wasted time due to check-in, security, and baggage claim. Furthermore,
the aircraft enables LGG to directly serve small, regional airports that would not be
direct routes for
major carriers. When evaluated against traditional air charter companies, LGG’s Gulliver 200s once
again create the advantage. The aircraft’s low operating costs allow LGG to charge passengers for
individual seats, rather than requiring them to charter the entire aircraft. By charging passengers per-seat,
private air travel is available at roughly one-quarter of the cost.22 Although competition from other
regional air taxi startups is anticipated, LGG’s first mover advantage in the Central will allow the
company to annex market share while competitors are still waiting for aircraft delivery and KCA
certification.
5.0 GOVERNANCE AND MANAGEMENT STRUCTURE
The company is governed by a Board of directors comprising various stakeholders representing the
County Government (shareholder), the Government, the business community, the consumers and the
women. The Board has two roles; supervisory and advisory roles to the management of LGG. The top
management of LGG is led by the Chairman and supported by other directors and managers from both
technical and commercial sections. The Board of Directors provides strategic direction to the company by
ensuring that the company comes up with proper strategic objectives and sound strategies to address
those strategic objectives. The management team will carry out regular monitoring, review and
evaluation of various programmes to improve efficiency and effectiveness for sustainability and conduct
market survey for benchmarking and improvement of customer service. The MD and the managers will
continuously scan the environment to identify opportunities, write proposals and engage consultancies to
ensure sustainability of LGG as a business unit.
5.1 Share Capital Structure
The authorized share capital of the Company is $5,000,00, comprising 5,000,000 ordinary shares at
$1.00 each, whilst its issued and paid-up share capital is $1,000,000, comprising 1,000,000 ordinary
shares of $1.00 each.
5.2 Office Location
The Company will be operating from an office headquarters located on Lot 155, Wilson Airport,
Kenya.
5.3 Shareholding Structure
Based on the Register of Members of LGG, the direct interests of the shareholders in the issued and
paid-up share capital of the Company are as follows:
Shareholders
No of shares
Percentage%
1. Geoffrey Rugut
200,000
20ia S
2. Lucas Kanyotu
200,000
20
3. Githengi Iregi
200,000
20
4. William Onyango
100,000
10
5. Rodah Kangogo
100,000
10
6. Pius Arwa
100,000
10
7. Priscilla Waweru
50,000
5
8. Aurel Atieno
50,000
5
1,000,000
100
Total
Table 5: Board of directors
5.4 Board of Directors
The board of directors of LGG comprises the following members:
Board of Directors
1. Mr. Geoffrey Rugut
2. Mr. Lucas Kanyotu
3. Mr. Githengi Iregi
Position
Chairman
Chief Executive Officer
Chief Financial Officer
Board of Directors Profile
1. Mr. Geoffrey Rugut – Chairman
He is the director representing the professionals and has over twenty-five years’ experience from both the
private and public sector. He holds a Master of Business Administration degree in Aviation management
from the University of Nairobi. He is an accomplished leader and will be involved in various social and
local development initiatives
2. Mr. Lucas Kanyotu
He is the director representing the business community. she is a professionally trained businesswoman and
has over thirty years’ experience from both the business and private sector. Her academic qualifications
Bachelor of Business management from the University of Nairobi. She is also an accomplished leader
and is involved in various social and local development initiatives.
3. Mr. Githengi Iregi
He is a director representing resident associations and is a professionally trained teacher with over thirty
years’ experience from both the teaching and private sector.
He is a P1 teacher and an accomplished leader involved in various social and local development initiatives.
4. Ms. Aurel Atieno
She is the director representing women organizations and is a professionally trained teacher with over
thirty years’ experience from both the teaching and private sector. She is a P1 teacher, an accomplished
leader involved in various social and local development initiatives.
5. Mr. William Onyango
He is the director r, has over forty years’ experience in public service. He is an economist with a Master of
Science from University of Nairobi and a Bachelor of Science in Development Organization from the
University of Nairobi. He is also an accomplished leader and is involved in various social and local
development initiatives.
Description of the Functional Areas
1. Managing Director
The Managing Director’s office will oversee all the Company’s functions and
implementation of the decisions of the Board of Directors. The Managing Director
(MD) is the accounting officer of the Company and the pillar of good governance
practice. To effectively discharge these roles, the MD’s office is proposed to have
the internal audit function report administratively and other critical divisions and
departments report both functionally and administratively. The proposed
organizational structure depicting these functions is given in Figure 2 above.
2. Technical Services
The purpose of this division is to oversee the planning, design, construction of
Water and Sewerage facilities and to ensure that the technical assets of the
Company are acquired, maintained and operated according to standard
specifications.
Key Result Areas (KRAs): KRAs for this position in the short term include
delivery of a divisional operational plan, working internal processes, performance
standards, and effective and smooth operation of all technical functions together
with delivery of tangible results in key aspects of technical work. In the long term,
the KRA will include expanded and well maintained and functioning infrastructure
measured by the regularity and reach of both water and sewerage services.
3. Finance and Strategy
The purpose of this division is to ensure that all financial resources of the Company
are acquired, disbursed, prudently invested, fully accounted for and reported
efficiently. In addition, it will also ensure that the Company develops long, medium
and short term plans and strategies to guide in the effective realization of the
mandate of the Company.
Key Result Areas (KRAs): The KRAs for this position in the short term include
establishment of functional financial systems and policies, regular financial
reporting to the Board and development partners, and timely disbursement of and
accounting for funds. In the long term, an integrated management information
system measured by the effectiveness in receiving transactional information, will be
the main KRA. In addition, it will ensure that the Strategic Plan and Business Plans
are effectively implemented through establishment of appropriate work plans,
budgets as per the approved annual performance contracts.
4. Human Resource and Administration
The purpose of this department is to ensure that human resources and administration
matters are efficiently run to facilitate smooth operation of the Company. The
department will ensure that appropriate work environment is always maintained and
staff matters are addressed in accordance with the relevant legal framework and
company policies.
5. Information Communication & Technology
The purpose of this department is to ensure that Company’s operations match the
latest and expected level of service delivery to the customers through the application
of appropriate systems of information, communication and technology (ICT). The
department will therefore ensure that all the ICT systems in place meet the relevant
quality standards, legal requirements and are efficient to allow ease of business.
6. Supply Chain
The purpose of this department is to ensure that all goods and services procured by
the Company meet the required quality standards and procurement methods used
fully comply with the Public Procurement and Assets Disposal Act 2015. According
to the Act, the Head of the Supply Chain department reports directly to the
Accounting Officer. The department will also be responsible for inventory/stores
management.
7. Commercial Services
In addition to the existing structure, during the planning period the company will
establish a Commercial Services Department to be responsible for Business
Development and Customer Relations. The purpose of this department is to deal
with all commercial aspects of the company and develop unique business models
for customers to attract customers to connect to the Water and Sewerage Services
including all the other allied services offered by the Company. The department will
also ensure that all customers’ complaints are promptly handled and reported
through an
established system. In addition, the department will support the Managing Director
to promote and maintain the best corporate image of the Company through effective
and efficient means of promotion and publicity.
8. Legal Services
In addition to the existing structure, during the planning period the company will
establish legal services department.
The purpose of this department is to provide the necessary advice on all legal
matters relevant to the Company’s affairs. The department will undertake litigation
on behalf of the company, manage and co-ordinate the court cases filed by or against
the Company, be the custodian of all legal documents, prepare and execute legal
contracts. The head of this department will also be the Secretary to the Board and
will therefore be responsible of taking minutes for all the Board meetings and
functions.
NB: The Management team will be categorized as follows:1. The Top Management Team – Managing Director, Head of Technical Services
and the Head of Finance & Strategy Departments/Divisions.
2. Management Team – Managing Director, Head of Technical Services, Head of
Finance & Strategy, Chief Water & Sewerage Engineer, Chief Internal Auditor,
Head of Human Resources & Administration, Head of Information,
Communication & Technology, Head of Supply Chain, Head of Business
Development & Customer Relations and
Head
of Legal Services
Divisions/departments.
Figure 3:
ORGANIZATION STRUCTURE
INTERNAL
MANAGING DIRECTOR
7.0 FINANCIAL ANALYSIS
7.1 Introduction
Financial analysis enables an organization evaluate its financial position in order
to establish its capability to meet its financial obligations. This involves analyzing
financial statements and giving insights on the position of the organization as far
as financial allocation and obligation is concerned.
7.1 Financial Accountability
LGG will operate as a self-accounting corporate, publishing its accounts annually
from July to June based on Government accounting year. The Company has a
full equipped Finance, Accounting and budgeting section with qualified
accounting staff.
7.2 Financial Objectives
LGG’s financial objectives emphasize the following themes:
 Financial self – sustenance: The Company will move more closely toward






position of financial self-sustenance with regard to operations, maintenance
and development costs over the coming five-year period.
Revenue growth: The Company will ensure its revenues grows by a
minimum of 75 per cent over the period of the plan.
Revenue collection: The plan projects a revenue collection efficiency of
95% in the 1styear which is improved to 97% in the other four (4) years.
Cost recovery: The Company’ intention is to adopt tariff – levels that
achieve full cost recovery, while restricting tariff increases to rates below
inflation overall.
Cost control: To achieve below – inflationary tariff increases and achieve
financial sustainability; the management will institute and effect stringent
measures for cost control. Cost growth will be restricted to below inflation
rate and maintain at a level of 70% or below of the revenue.
Reinvestment of Surpluses: during this period, the company shall ring fence
net surpluses realized. These reinvestments will support future, internally –
financed expansion, while enabling tariff levels to be stabilized at market
predictable levels.
Loan Repayments: The Company will ensure it services any loan
borrowed over the plan period.
 The company plans to seek for commercial financing through the results-
based financing options under the output-based aid or aid on delivery.
LGG’s FINANCIAL PROJECTIONS
Summary Financials ($)
Revenue
Gross Profit
EBIT
EBITDA
Net Earnings
Net Cash from Operating
Activities
Capital Expenditures
Interest Income/(Expense)
Year 1
Year 2
Year 3
Year 4
10,125,000
3,397,270
13,162,50
0
6,159,370
17,111,25
0
8,732,281
1,132,270
1,640,270
(82,730)
3,647,340
4,155,340
1,573,496
5,361,965
5,974,965
2,245,179
22,244,62
5
11,888,62
4
7,636,572
8,399,572
3,464,143
661,430
15,040,000
(1,215,000)
2,934,931
3,025,000
(1,620,000
)
0
7,832,536
Dividends
Cash
0
1,771,430
2,101,176
0
(1,080,000
)
0
2,522,606
Total Equity
3,917,270
5,490,766
7,735,945
Total Debt
12,150,000
10,800,00
0
16,200,00
0
4,326,921
4,500,000
(1,863,000
)
0
10,089,45
7
11,200,08
8
18,630,00
0
30%
30%
30%
Nil
42.7%
54.3%
1.1
1.5
3.8
3.9
0.8
0.7
0.7
0.6
33.6%
19.9%
-0.8%
46.8%
19.1%
12.0%
51.0%
19.7%
13.1%
53.4%
19.1%
15.6%
-0.5%
-2.1%
9.4%
28.7%
9.2%
29.0%
11.4%
30.9%
-0.5%
9.7%
9.4%
11.6%
Growth
Revenue Growth Rate CAGR:
Net Earnings Growth Rate
CAGR:
Ratios
Current Ratio
Debt to Capital (LT Debt
+
Equity)
Profitability
Gross Profit %
Operating Expenses %
Net Earnings %
Returns
Return on Assets
Return on Equity
Return on Capital (LT
Debt + Equity)
7.3 FINANCIAL PLAN
Sustainability is a pressing concern in all sectors, whether public or private. The
economic challenges that face Kenya as well as other African countries have
become a great concern to many investments. This plan seeks to demonstrate the
financial viability of LGG Fusion Limited. The road to sustainability for public
service providers is difficult due to inherent dependency, difficulty of achieving
financial self-reliance, and serving the poorest of the poor and the marginalized.
The Company will, therefore, be a leverage measure and a strategic move to
ensure future financial success of LGG.
7.3.1 Funding Requirements
LGG will secure $4 million in a round of Series A financing to begin operations. $1.5
million of this initial investment will be applied toward a 10% down payment on LGG’s
ten Gulliver 200 aircraft. The remaining $2.5 million will be used as follows:
 SlipStream Air - $250,000
 Rent for headquarters and tarmac fees - $96,000
 Employees (all benefits other than pilots paid with operating revenues)
o CEO - $150,000
o CFO - $150,000
o CMO - $150,000
o COO (FAA 135 Employee) - $65,000
o Chief Mechanic (FAA 135 Employee) - $65,000
o Chief Pilot (FAA 135 Employee) - $65,000
o 24 Staff Pilots - $1,440,000
o Customer Service Representative - $30,000
o Surplus cash to cover other expenses - $39,000
o Total $2,500,000
In addition to equity financing, LGG intends to secure a commercial bank loan
for $13.5million to purchase the remaining 90% of ten aircraft. The aircraft will
be pledged as collateral. All debt will be amortized over 10 years at 10%
interest.24
7.3.1 Offering
Utilizing an air charter industry price-to-earnings ratio of 2425, LGG’s value at the
end of year five is approximately $117.5 million. GG will pursue equity financing
through high net worth friends and family. Offering its investors a 60% internal rate
of return, LGG will surrender 35.7% of the company.
7.3.2 Exit Strategy
After five full years of operation, LGG intends to be acquired by a major
aviation, jet charter, or fractional aircraft ownership company such as Kenya
airways.
3 = Always Available
Appendix A: Competitive Matrix
2 = Sometimes Available1 = Not
Available Indirect Competitors
More Points = More Customer Value
Company
Price
Per Seat
Pricing
Variables
On
Demand
Service
Last Minute
Reservations
Jet
Aircraft
Lavatories
Direct
Regional
Airport
Service
Shortrange
in-flight
meals
(Las Vegas 
San Francisco,
same day round
trip, first class)
Total
Quality
Market
Positioning
Future VLJ
Competition
Points
LGG’s
3
3
3
3
1
3
2
$750-$1000
18
Convenience
N/A
Kenya Airways
3
1
2
3
3
1
1
$1000$1400
14
Reliability
Not likely
Jambo jet
3
1
2
3
3
1
1
$1000-$1100
14
West Coast
Convenience
Not likely
Juba lines
Fly 540
3
1
2
3
3
1
1
$1000-$1100
14
Not likely
3
1
2
3
3
1
1
$1000$1300
14
Not likely
1
3
2
2
2
3
2
$4000+
15
Convenience,
Luxury
Very likely
1
3
3
3
2
3
2
$115,900/yr.
+
17
Convenience,
Ultra-Luxury
Very likely
Automobiles
1
3
3
1
1
3
1
N/A
13
N/A
Bus Service
3
1
2
1
3
2
1
N/A
13
N/A
Train Service
3
1
2
1
3
1
3
N/A
14
N/A
Private Air
Charters
Net Jets and
other Fractional
Ownership
Carriers
Appendix B: Income Statements
Trip Stats
Average Flight/Year = 19.1
% of Flights under 500 miles = 53%
Average satisfaction with current commercial air service (1=very
dissatisfied, 10 = very satisfied)
Average score = 5.5
Worst part of flying commercially
What class are people flying?
Coach = 64%
Business = 4%
First = 32%
Private = 0%
Security = 51%
Baggage Claim = 16%
Everything = 14%
Crowds = 12%
Other = 5%
Check-in = 2%
Most common reasons for flying
Best part of flying commercially
Business = 56%
Personal = 30%
Leisure = 12%
Family = 2%
Emergency = 0%
Good Service = 43%
Price = 30%
Feel Safe = 27%
How early do you leave your house/business to
drive to the airport?
Are you interested in the JetLink Model?
2-2.5 hours = 68%
1.5-2 hours = 14%
1-1.5 hours = 10%
3+ hours = 8%
30-45 min = 0%
Average combined driving time home 
airport  destination
1 hour 7 minutes
Yes = 93%
No = 7%
Willing to pay $500-$1000 per ticket?
Yes = 84%
No = 16%
Appendix C: BALANCE SHEET
Begin
Year 1
Year 2
Year 3
Year 4
Year 5
ASSETS CURRENT
ASSETS
Cash Accounts
Receivable
1,771,430
2,522,606
7,832,536
10,089,457
13,342,896
101,246
109,683
142,588
185,364
250,242
0
0
0
0
0
0
0
0
0
0
17,500,000
1,872,676
2,632,289
7,975,124
10,274,822
13,593,138
0
14,532,000
14,024,000
16,436,000
20,173,000
26,692,000
17,500,000
16,404,676
16,656,289
24,411,124
30,447,822
40,285,138
0
0
0
0
0
0
337,406
365,523
475,179
617,733
833,940
0
0
0
0
0
1,350,000
1,350,000
1,350,000
1,620,000
2,025,000
2,700,000
1,350,000
1,687,406
1,715,523
2,095,179
2,642,733
3,533,940
12,150,000
10,800,000
9,450,000
14,580,000
16,605,000
20,655,000
CommonStock Preferred
4,000,000
4,000,000
4,000,000
4,000,000
4,000,000
4,000,000
Stock Retained Earnings
0
0
(82,730)
0
1,490,766
0
3,735,945
0
7,200,088
0
12,096,198
4,000,000
3,917,270
5,490,766
7,735,945
11,200,088
16,096,198
17,500,000
16,404,676
16,656,289
24,411,124
30,447,822
40,285,138
Inventories Other
Current
Assets
Total CurrentAssets
PROPERTY &
EQUIPMENT
TOTAL
ASSETS
LIABILITIES &
SHAREHOLDERS'
EQUITY
CURRENT
LIABILITIES
Short Term Debt
Accounts Payable
& Accrued ExpenOther
Current
Liab
Current portion oflong
term debt
Total Current
Liabilities
17,500,000
LONG TERM
DEBT (less current portion)
STOCKHOLDERS'
EQUITY
Total Equity
TOTAL
LIABILITIES &
EQUITY
Appendix D: cash flow statement
Year 1
Year 2
Year 3
Year 4
Year 5
(82,730)
508,000
1,573,496
508,000
2,245,179
613,000
3,464,143
763,000
4,896,109
1,021,000
(101,246)
0
0
337,406
0
661,430
(8,437)
0
0
28,117
0
2,101,176
(32,905)
0
0
109,657
0
2,934,931
(42,776)
0
0
142,554
0
4,326,921
(64,878)
0
0
216,207
0
6,068,438
(15,040,000)
0
(3,025,000)
(4,500,000)
(7,540,000)
(15,040,000)
0
(3,025,000)
(4,500,000)
(7,540,000)
FINANCING ACTIVITIES
Increase/(Decrease) Short Term Debt
Increase/(Decrease) Curr. Portion LTD
Increase/(Decrease) Long Term Debt
Increase/(Decrease) Common Stock
Increase/(Decrease) Preferred Stock
Dividends Declared
Net Cash Provided / (Used) by Financing
0
0
(1,350,000)
0
0
0
(1,350,000)
0
0
(1,350,000)
0
0
0
(1,350,000)
0
270,000
5,130,000
0
0
0
5,400,000
0
405,000
2,025,000
0
0
0
2,430,000
0
675,000
4,050,000
0
0
0
4,725,000
INCREASE/(DECREASE) IN CASH
(15,728,570)
751,176
5,309,931
2,256,921
3,253,438
1,771,430
2,522,606
2,522,606
7,832,536
7,832,536
10,089,457
10,089,457
13,342,896
OPERATING ACTIVITIES
Net Earnings
Depreciation
Working Capital Changes
(Increase)/Decrease Accounts Receivable
(Increase)/Decrease Inventories
(Increase)/Decrease Other Current Assets
Increase/(Decrease) Accts Pay & Accrd Expenses
Increase/(Decrease) Other Current Liab
Net Cash Provided/(Used) by Operating Activities
INVESTING ACTIVITIES
Property & Equipment
Other
Net Cash Used in Investing Activities
CASH AT BEGINNING OF YEAR
CASH AT END OF YEAR
17,500,000
17,500,0001,771,430
Appendix E: Break Even Analysis
Year 1
Year 2
Year 3
Year 4
Year 5
10,125,000
13,162,500
17,111,250
22,244,625
30,030,244
Variable
4,200,300
4,321,800
5,237,890
6,547,435
8,655,210
Fixed
2,527,430
2,681,330
3,141,079
3,808,566
4,904,934
Total
6,727,730
7,003,130
8,378,969
10,356,001
13,560,144
Variable
1,316,250
1,711,125
2,224,463
2,891,801
3,903,932
Fixed
698,750
800,905
1,145,853
1,360,250
2,070,485
Total
2,015,000
2,512,030
3,370,316
4,252,051
5,974,417
Variable
5,516,550
6,032,925
7,462,353
9,439,236
12,559,141
Fixed
3,226,180
3,482,235
4,286,932
5,168,816
6,975,419
Total
8,742,730
9,515,160
11,749,285
14,608,052
19,534,561
Variable Costs/Revenue Ratio 0.54
0.46
0.44
0.42
0.42
Break-Even Point Revenues
6,428,843
7,602,399
8,978,905
11,989,715
Revenue
Cost of Revenue
Operating Expenses
Total Costs & Expenses
7,088,082
Appendinx E: Financial computations
Appendix F: Breakdown
Hourly costs
Fuel $8.82 per gallon Jet A
$210.00
Maintenance
Parts
$30.55
Labor
$49.07
Tires & brakes
$20.00
Engine overhaul
$130.00
Total Variable Hourly Costs
$439.62
Annual Fixed Costs
2 Pilots @ $50,000 year
2 Pilot benefits @ $20,000 year
Insurance @ $30,000 year
Electronic Navigation Charts @ $1,548
year
Satellite Weather Aviation Edition @ $600
year
Depreciation 10yr life, zero salvage value
Training @ $4,495 year
Other Maintenance @ $20,500 year
Total Fixed Hourly Cost
Annual Fixed Costs
2 Pilots @ $80,000 year
2 Pilot benefits @ $40,000 year
Insurance @ $60,000 year
Electronic Navigation Charts @ $5,548
year
Satellite Weather Aviation Edition @ $900
year
Depreciation 10yr life, zero salvage value
Training @ $7,495 year
Other Maintenance @ $30,500 year
Total Fixed Hourly Cost =$223,943
Total Costs Per Hour
Total Costs Per Hour