- Aviationsociety

The new Greek long-haul hybrid low-cost airline
market opportunity
 to capture the market vacuum left by OA
 to serve the unfulfilled diaspora travel needs
 to stimulate untapped new travel segments
market overview
 shrinking OA abandons long-haul network
 high fares in the market by remaining airlines are turning air travel
into luxury priced service
 no Greek airline flying intercontinental routes presently
 Greek diaspora feels abandoned as historical ties to
the motherland are severed abruptly
 ethnic traffic is expected to support a new Greek airline offering fair
prices and “value-for-money” level of service
 Intercontinental markets never stimulated by low fares
general market overview
 global recession resulted in dramatic traffic declines and airline
capacity constriction
 economic crisis unfolding currently in Greece, impacted traffic
demand significantly
 in times of economic malaise, low-cost carrier sector performs better
than traditional airline sector
 historical low aircraft lease rates (A340 monthly lease rate c.$200k
from $500k a couple of years ago)
 A true long-haul low-cost airline in Europe not existing… still
company concept
Capitalize on the market gap opportunity
Maintaining technical legacy of the brand
re-launching service offering
market size analysis
 historical traffic levels at 150,000 passengers/year on OA alone
arrival of foreigners to Greece
2009 2008
Greeks outside of Greece
380,611 +6%
135,599 +19%
S. Africa
15,801 -11%
19,101 +91%
S. Africa
¹ United States Census Bureau (2008)
² General Secretariat of Greeks Abroad (2004)
³ General Secretariat of Greeks Abroad (2004)
competition analysis
 limited or no nonstop services
 US market is served nonstop year round by only one US airline.
Two more US airlines operate seasonal service (summer only)
 No year-round nonstop flights to Canada
No nonstop flights to S. Africa nor SE Asia
 only legacy carriers as long haul operators
 no charter, nor LCC presence
 high fares in the market
no Greek-based long haul airline
Competitor Analysis
Delta Airlines
Dependent on high yield passengers, a
shrinking market
Highly exposed to economic downturns
Influential Trade Unions
Various aircraft types, mostly old aircraft
Complex organizational structure and slow
Dependent on transfer traffic (competing
with strong network carriers)
Advantage on FFPs and distribution
through travel agents
Moderate service standards
Star Alliance and BA
High-cost base
Highly exposed to economic
Influential Trade Unions
Complex organizational structure and
slow adapting
Multiple aircraft types
Dependent on transfer traffic
(competing with strong network
Advantage on FFPsand distribution
through travel agents
market niche
 filling in the market vacuum after OA abandoned several long-haul
 providing low fares on the most popular long-haul destinations
from/to Greece
 becoming the first true long-haul low-cost carrier in Europe
 becoming the only Greek long-haul airline
 Fill in gap existing in the European long-haul charter / ACMI market
OAX concept
 a start up airline set up to fill in the big void in long-haul services
from/to Greece; and widebody charter / ACMI market
 truly long-haul low-cost Greek carrier
 no frills
 initially based in Athens
 operating a fleet of ex-OA A340s
 sustainable and risk-free business model – scheduled trans-Atlantic
‘ethnic’ routes; scheduled services to seasonal leisure destinations;
both inbound & outbound travel; charter & ad-hoc ACMI services
e.g. Hajj flights, military flights; cargo services
OAX advantages
lowest cost base
lowest but money making fares
commercial and operational simplicity – no frills
Greek related but at the same time market-neutral
using OA planes, pilots and mechanics the new airline - while
making a fresh start - will be a natural claimant of OA’s technical
and operational reputation and will inherit the brand loyalty
Average gross fare
OAX target market
 ethnic market & VFR segment
• Greeks living in the US, Canada and South Africa
 inbound leisure market to Greece
 outbound leisure market from Greece – sold via tour operators on
hard-block basis, and direct to the public
 business traffic, SMEs initially in US market and later in China
 charter and ad-hoc ACMI services on long-haul aircraft
on opportunistic basis, e.g. Hajj flights, highly demanded military
flights to Afghanistan and Iraq
OAX aircraft choice
 A340-300 ex-OA aircraft
 very high safety record - no fatal incidents
A340-300 characteristics
Seating capacity
Seat pitch
Maximum range
4 x CFM56-5C
OAX network
route & weekly flights year 1 year 2 year 3
New York - Athens
Chicago – Athens
Johannesburg - Athens
Toronto – Athens
Bangkok – Athens
Peking - Athens
OAX pricing policy
 low-cost pricing policy
 very attractive starting fares to
• stimulate market and
• siphon off traffic from high-fare legacy carriers
the earlier the ticket is booked, the lower the price
no fuel surcharges
no frills
non-refundable fares but upgradable and changeable for a fee
general pricing strategy: match the fares of connecting carriers and
always be 30-40% lower than nonstop competitors
OAX ancillary revenues
 strong focus on ancillary revenues
 keeping fares 40% below non-stop competitors
 making up the difference on
optional services (baggage, seat assignment, catering)
affiliate services (hotels, hostels, car hire, airport transfers, insurance)
advertising (in-flight magazine, aircraft livery, overhead bins, trays)
sales (in-flight duty-free)
OAX ancillary revenues
 providing choices to the guests as everybody is different
guest type
airfare¹ (each way)
baggage (registered)
baggage (excess)
seat assignment
priority check-in
travel insurance*
car hire*
airport transfers*
onboard catering*
onboard duty-free*
in-flight entertainment*
total net revenues
¹ based on advance purchase and demand
* net revenue / commission on sale
OAX marketing positioning
 truly Greek long-haul low-cost airline
 online / e-commerce brand = .com
• domain name already secured
 modern & fresh brand that is linked to Greece but at the same time
is market neutral
fly – reference to the airline business
OA – drawing on the legacy of Olympic Airlines brand
X – eXtended, long-haul flights (e.g. AirAsiaX)
.com – reference to the key point of sale -
Growth Strategy
 OAX plans to establish itself as a sustainable competitor by the first
three years of services
 After the 4th year introduction of new aircrafts will be considered as
well as network expansion
 The latter shall be directed towards China, Brazil and Singapore
 Cooperation with low cost (short-haul) carriers in OAX’s destinations
will be strongly encouraged in order to create “feeding traffic” and
achieve economies of density.
• JFK with JetBlue
• Canada with WestJet
• SE Asia with Tiger and JetStar
financial projections
Almost break-even in first year
Op. margin 5% in second full operating year
key performance indicators
profit & loss projections
Summary of OAX business model
 OAX will act as the successor of former Olympic Airways on its longhaul routes
 Business model: Low Cost (no-frills), Low Fare airline
 Demand stimulation
 Fares at 30% discount from legacy nonstop competitors
Simple fare structure and ticket purchasing procedure
Focus on ancillary revenues (menu priced service offering)
Single aircraft type (A340)
Economy and limited “Premium” class configuration (e.g. AirAsiaX)
e-commerce and social media potential to be fully capitalized
Interline feeding at both origin and destination
 Mission: evolve into the best Value For Money Airline