Feasibility study for setting up an airline of Aerothai

Abstract

To study the aspects of marketing, engineering and financial. In the marketing feasibility study, the methodology started with the SWOT analysis to find out the critical success factors in the airline business. Then the location analysis, the market situation, market segmentation, the target market and the marketing mixed were identified respectively. The outcome showed that the southern part of Thailand has been the most appropriate location base due to its territory that attracts many of foreign tourists. Moreover, in the southern part, the air transportation was the most convenience mode. It was appropriate to set up an airline in the south rather than other parts since there was less short route provided by the Thaiways in this region. Our target market was the foreign tourists markets, which had the more purchasing power, and have limited time for travelling. From the engineering feasibility study, starting with the fleet planing. After the plan, we got the aircraft specification, which have, short range, convenience, under high frequencies and save cost. It was the Jet Stream 31 that its performance was matching to our specification. The fleet planing should be synchronized with the cost calculation because how well we can plan the fleet that means a great amount of profit were generated. The cost calculation must be precise because it has an effect to our profit. The fare has been fixed under the regulation of IATA, 12 Baht/Nautical mile. For the routing, this airline plans to distribute the tourists to the others clean and clear environment, so the route will connect Phuket with Krabi, Ranong, and others. From the financial feasibility study, the project will feasible, under the demand of 50% of the arrival passenger. The company will be deficit in the first 3 years. Then it will turn to be surplus in the year 2005 and 2006. Until the 5 years project life, with the 10% discount factor the project NPV would be 10.95 million Baht with the internal rate of return 19.85%. It can be summarized that the Aerothai's project to set up an airline in Thailand was feasible in marketing, engineering and financial aspects. From the study, suggested that, the minimum demand in each route should not be lower than the 50% of the passenger's arrival to each airport. However, these amount were possibly since, we had only focus on the customers that arrival by plane. Indeed, there will be some demands, which came from the others mode of transportation like, car, bus or cruises. From the study, to set up an airline, the initial investment was about 16.8 million Bahts. This study is very important for Aerothai to investment in the new business. The results form the marketting, engineering and financial feasibility study have ensured that the companies will not loss from the investment