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Feasibility Study for Supply Chain of Low Cost Airline in Australasian Market

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Added on  2019-09-30

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AirAustralasia is seeking a feasibility study to determine the feasibility of a supply chain being set up to support the business venture of establishing a low cost airline to cater for the Australasian market. The report will analyze the current local supply chain and logistics infrastructure to support the airline growth. The client requires a 6,000 word report and an 'A3 Report' summarizing the approach to the project. The project duration is 6 months starting from 5th May till 30th September 2016.
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Project:- Airline Start upProject Brief AirAustralsia is a company looking to establish a low cost airline to cater for theAustralasian market and is seeking a feasibility study to determine the feasibility of asupply chain being set up to support the business venture. Background Context“The global airline industry continues to grow rapidly, but consistent and robustprofitability is elusive. Measured by revenue, the industry has doubled over the pastdecade, from US$369 billion in 2004 to a projected $746 billion in 2014, according tothe International Air Transport Association (IATA).Much of that growth has been driven by low-cost carriers (LCCs), which now controlsome 25 percent of the worldwide market and which have been expanding rapidly inemerging markets; growth also came from continued gains by carriers in developedmarkets, the IATA reported. Yet profit margins are razor thin, less than 3 percentoverall.In the commercial aviation sector, just about every player in the value chain —airports, airplane manufacturers, jet engine makers, travel agents, and servicecompanies, to name a few — turns a tidy profit. Yet it’s one of the enduring ironies ofthe industry that the companies that actually move passengers from one place toanother, the most crucial link in the chain, struggle to break even.Airlines need to make large and ongoing improvements to operate more efficiently.With few exceptions, the most successful airlines are those with the strictest costcontrols. The biggest (albeit cash-intensive) lever to reduce costs lies in fuelefficiency, as jet fuel typically accounts for 40 to 55 percent of operating expenses.Cost reduction can also be achieved through enhancements in organizationalstructure, operating model, and work practices. In particular, legacy airlines haveoften built up complex processes over decades that cost far more than the streamlinedprocesses of the LCCs.” (Price Waterhouse Coopers, 2015)“Theaviation industry in Australiahas a long history and currently it has a number ofairlines operating within the country and all over the world. The importance ofairlines in Australia has grown very rapidly because the country is an island and alsohas a thriving economy. Defunct airlines and planned airlines are the two types ofairlines which are in operation in this country. The main sectors of the Australian civilaviation industry are the international airlines sector, general aviation sector and itssafety and the domestic regional airlines sector. Theaviation industry ofAustraliaalso comprises of some small segments like hand gliding, gliding, autogyrosandultra-lightaircraft.“The internationalairlines in Australiacarry cargo and passengers to and from variousparts of the world. The total number of international airlines which provides servicesto Australia is 49. As Australia is an island more than 90% of the visitors to thiscountry come by air. The total annual average of passengers who come to Australiafrom around the world is about sixteen million. Though airlines are the main carrier of
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