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    Strategic Analysis For Chicago Based Airline: 07/03/2024 Sukanya Saha SAFCBA - 07.03.2024v.1

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    Strategic Analysis For Chicago Based Airline: 07/03/2024 Sukanya Saha SAFCBA - 07.03.2024v.1

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    46 views9 pages

    Strategic Analysis For Chicago Based Airline: 07/03/2024 Sukanya Saha SAFCBA - 07.03.2024v.1

    Uploaded by

    Prity Roy

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 9

    Strategic Analysis

    For Chicago Based


    Airline
    07/03/2024 Sukanya Saha SAFCBA_07.03.2024v.1
    Agenda
    Introduction
    Loss analysis
    Profitability analysis
    Strategic considerations for adding Chicago to Atlanta route
    The end

    2
    Loss analysis:
    Aircraft analysis:
     The most common type of aircraft across all
    flights is- B737
     B737 has the highest fuel cost per mile which
    is one of the major reasons for revenue loss
     Below 5 flights which generate the least
    revenue- Flight no. -2455,5839,463,6928,4083
     The maximum average ticket price for all types
    of aircraft is 5500$. Flight ID vs Aircraft Type
     A320 has the lowest revenue and number of 5000
    4500
    flights, suggesting potential areas for 4000

    improvement. 3500
    3000 Total
    2500

    Route analysis: 2000


    1500
     ORD-SLC has the lowest revenue and average 1000

    ticket price, indicating underperformance. 500


    0
    Investigate factors like: A319 A320 B737

     Low customer awareness


     Frequent delays B737 is the most common
     Insufficient service type of aircraft
    3
    Profitability analysis:
    Aircraft analysis:

     The most common type of aircraft across all flights


    is- B737
     Flights which generate the highest revenue- Flight-
    8202, 8279, 6243, 1819
     B737 aircraft has the highest average ticket price
     Route ORD-LAX contributes highest revenue(9.63%)
    Route analysis: Flight ID vs Aircraft Type
    5000
    4500
     The ORD - LAX route stands out with the highest 4000
    3500
    overall revenue and a strong average ticket price. 3000 Total
    We should consider increasing the frequency of this 2500
    2000
    route or exploring similar high-demand 1500
    destinations. Analyze if further optimization is 1000
    500
    possible through: 0
    A319 A320 B737
     Targeted marketing
     Premium service offerings.

    4
    Business case: Should we add ORD-ATL?

    The outlays from the Project evaluation are presented below.

    Project flows (Outlays) 1.Project planning estimates a $250K


    $ 400,000
    initial investment to secure capacity.
    $ 300,000 2.The marketing and sales department
    $ 200,000 provides an estimate a $100K
    increment in profit for the first year
    and $50k for the next 4 years.
    $ 100,000

    $0
    1 2 3 4 5 6

    -$ 100,000
    For any profit below 57%, the net present
    -$ 200,000 value of the Project is above zero.
    -$ 300,000

    IRR 57%

    5
    Business case: Should we add ORD-ATL?
    The airline operations team determined the demand in the coming year, and the simulation of
    profit based on the probability of Passenger occupancy gives the following conclusion
    Route Miles per Flight Annual Flights Proposed Total Miles

    ORD-ATL 510 385 196,350


    Likelihood bins Passengers per flight Annual passenger revenue

    0% 150 $8,662,500.00
    40% 175 $10,106,250.00
    70% 185 $10.683,750.00
    90% 135 $7,796,250.00

    Summary Information
    Average annual profit $1,439,004

    Probability of profit 87%

    Establish the route? YES


    6
    Business case: Should we add ORD-ATL?

    Operating Income
    $2,500,000

    $2,000,000

    $1,500,000

    $1,000,000

    $500,000

    $0
    Baseline High growth with Low Growth with
    margin impact margin impact

    In every scenario the operating


    income is positive.

    7
    IRR 57%

    Positive
    operating
    income
    High probability of positive
    profit in the coming year

    Observation & Recommendation:


     Revenue growth rate is consistently increasing from FY2025 to FY2028
     Profit per Flight on the proposed Chicago-to-Atlanta route would be around $5100
     Average annual income would be around $1,630,573 with 83% probability of profit
     It is highly recommended to commence the new route- Chicago to Atlanta

    We recommend that the


    company add the Chicago
    Atlanta route

    8
    Thank you

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