Want to start your own airline? You should not be surprised that this requires a very large capital. But just having money is not even half the success, but only the foundation on which it will be installed.
To start your own business in the field of air transportation, you need to understand in detail all the intricacies of the business. We suggest you study the indicative business plan of the airline.
But remember: it is better not to save on drawing up a development plan, but to entrust it to professionals. Every business needs an individual approach. And when it comes to such serious areas as opening an airline, it’s definitely not worth the risk.
However, our business development plan will help you get an idea of the approximate cost of goods and services needed to start your own air freight company.
Functions of airlines and analysis of the demand for the sphere
Airlines are known to provide air transportation services, both passenger and cargo.
Airlines can be private or public (eg AirFrance in France, Aeroflot in the Russian Federation and ThaiAirways in Thailand).
Let’s estimate the demand for services in different regions of Russia:
| Moscow | St. Petersburg | In Russia | In the European part | In the Far East | |
|---|---|---|---|---|---|
| Number of people in the village | 11.514 million people | 4.484 million people | 142.9 million people | 112.53 million people | 30.37 million people |
| Volume of services rendered by airlines in 2012 | 71.52 billion passenger-km | 12.47 billion passenger-km | 195.78 billion passenger-km | 154.17 billion passenger-km | 41.61 billion passenger-km |
| Number of airlines in 2009 | 72 | ten | 133 | 105 | 28 |
| Number of airlines in 2012 | 86 | fifteen | 166 | 130 | 36 |
| Number of operating airports: | 260 | 37 | 486 | 380 | 106 |
| of which are international. | 39 | 6 | 72 | 57 | fifteen |
| Number of air passengers: | 20.75 million people | ||||
| – international flights; | 1.97 million people | 846.72 thousand people | 26.17 million people | 5.41 million people | |
| – domestic flights. | 2.09 million people | 898.56 thousand people | 27.69 million people | 22.01 million people | 5.67 million people |
| Growth of the industry in 2010-2011 | From 20% to 35% | From 20% to 35% | From 20% to 35% | From 20% to 35% | From 20% to 35% |
| Shortage of airlines in the transport business (rough estimate) | 6 | a | 12 | 9 | two |
Who uses airline services the most?
- Tourists.
- Entrepreneurs.
- Regular and occasional passengers.
- Representatives of commercial organizations.
- Scientific workers (conferences, expeditions).
Charter flights and long-haul cargo routes are in high demand among passengers.
It is difficult to predict the development plan of the air transportation market. Indeed, as can be seen from the graph, in the period from 2000 to 2014 there was a steady increase in demand for air travel. But already from 2014 to 2016, demand began to fall.
This decrease in demand is explained by the fact that some of the popular tourist flights to Turkey and Egypt were canceled due to political conflicts. At the moment, the sphere demonstrates stability, which is becoming fertile ground for entrepreneurs who want to open an airline.
What should be taken care of in the first place when drawing up a business plan?
The introduction of the airline will require a lot of effort. After all, for this you, as an entrepreneur, need to take care of:
- about finding investors who are ready to invest their money in your business;
- draw up a detailed business plan, which will indicate all possible risks and financial penalties;
- on the lease or purchase of a territory that will house the main office, premises for ocean liners, a hall for passengers;
- in the selection and training of qualified personnel, as well as decent wages for employees.
Before ennobling the territory for the construction of a transport complex, the airline must be documented. You will also need to register your business with the tax office, pass a fire safety check, etc.
Next, we will dwell on the organization of activities in more detail.
How to start writing an airline business plan?
You are determined to start your own business, and you have a natural question: “Where to start?”.
Follow the guidelines to plan your next steps:
- Stage 1: Development of a detailed business plan for the airline.First of all, in this document it is necessary to calculate as accurately as possible the amount of expenses for rent, paperwork, car maintenance and purchase of equipment.You should also indicate the expected dynamics of the airline, the strategy for the near future after opening, approximate revenue, as well as the payback period.
- Step 2: Look for airlines that provide similar services in your area.Compare your strengths and weaknesses in order to establish effective company performance at a decent level with competitors. Make a market development plan, designate the most popular routes among passengers.
- stage 3: business planning.First, you need to start the process of servicing passengers, organizing flights and building your reputation in the service market.No need to rush and try to squeeze the maximum in the first bars of the airline. Configured to start with 50% possible performance. And then, with the favorable work of the airline, to scale the business and gain momentum.
- Stage 4 – collect a package of documents necessary for the official conduct of business and the launch of flights.
- Stage 5: Finding funds to open a business.If you do not have authorized capital, contact the bank to provide you with a loan for the development of the airline. At the same time, an important component, thanks to which the bank will approve your loan application, is the same well-written business plan.Also look for an investor, because you will not be able to fully cover the costs of opening an airline on your own. Offer them a block of shares and keep part of the business.
- Stage 6 – development of advertising.Think about how you can attract buyers to your airline, as well as the system of interaction with potential passengers: a site for booking tickets, the procedure for issuing boarding documents, etc.
- stage 7: take care of the organization of the airline.Buy equipment, equip the territory, establish contacts with airports in other cities and countries where you plan to fly, hire and train staff.
Checkout opening. How to start selling tickets?
Step by step description of the stages.
The initial budget of the airline must be properly distributed so that the funds are enough for the first time of the commercial project, until a stable income is received.
Acquisition of additional vehicles and hiring of personnel can be done gradually, as the airline develops.
What documents are needed to register a business?
Before you start creating a business implementation plan, you need to register your business with the relevant authorities. To formalize the case at the official level, you must contact the tax office at the place of residence.
What documents are required:
- Request to the Treasury: you must specify your personal details and the type of activity that you intend to carry out. Request a copy and have it notarized.
- State fee payment receipt: must be submitted along with the application.
- TIN (in the form of a photocopy). If you don’t have it yet, contact the tax office at your place of residence.
- Original and photocopies of all pages of the passport (even blank ones).
The business registration process will take no more than 5 days. Upon receipt of the document (certificate of registration), you must have a passport with you.
Registration of IP for doing business. How to open?
IP registration on the website of the Federal Tax Service of Russia (FTS).
However, one must understand that for a large organization to have the status of an individual entrepreneur is not strong. Also, if you are planning to open an airline with partners, there is no other option but to register as an LLC (Limited Liability Company).
The list of documents required for registration of LLC:
| Document’s name | Number of copies |
|---|---|
| Application for registration of LLC (form Р11001) | a |
| Decision of the founder (if sole) | a |
| Minutes of the meeting of founders (if there are 2 or more founders) | a |
| Agreement on the establishment of a company (if 2 or more founders) | a |
| Letter from S.R.L. | two |
| Receipt of payment of the state duty (4000 rubles) | a |
| • Guaranteed letter of legal residence. — or — • Owner’s consent, proof of ownership, and resident’s consent (some documents may not be required) when registering at the residential address. | a |
| In addition, you may need: | |
| Power of attorney to submit and / or receive documents (required if the applicant is not able to submit documents on his own or pick them up at the tax office). | two |
A limited liability company differs from an individual entrepreneur in its legal status. So, in the event of bankruptcy of an organization, an individual entrepreneur will have to sacrifice personal property to pay off debts. In the event of bankruptcy, the LLC is liable only with the authorized capital and property of the enterprise.
The entrepreneur can manage their income on their own, while LLC members receive a percentage of dividends, because the income received is wholly owned by the business, and not by a specific person in the business.
When registering an LLC, you already need to decide what it will be called. You can specify it in the following forms:
- Full/incomplete company name in Russian.
- Full/incomplete company name in a foreign language.
- Full/incomplete name of the company in commonly used dialects on the territory of the Russian Federation.
For example:
| Full company name in Russian | Limited Liability Company “Romashka” |
| Abbreviated company name in Russian | Romashka LLC |
When registering an LLC, you must specify your legal address. This may be the address of a rented business premises, the address of the founder’s house (however, this option is fraught with difficulties), etc.
Let’s take a closer look at the available options:
| Rented premises | Quite expensive, but one of the most preferred ways in legal and commercial terms.Some owners, for their own reasons, refuse to provide legal addresses or require the conclusion of an agreement before registering a company, which entails additional costs.Also, changing the rental address, you will have to make changes to the constituent documents of the airline, and this is an additional waste of time, nerves and money. |
| Address of the founder or CEO of the company | This method completely eliminates the cost of a legal address.Keep in mind, however, that although the law does not prohibit the registration of a private address, some tax authorities may refuse to register a company, although legal precedents on this issue are on the side of entrepreneurs. |
| An address purchased or leased from a specialized commercial organization | A relatively inexpensive option for obtaining a legal address, but you need to be more careful when choosing such a company.If you suddenly acquire a massive address at which tens and hundreds of companies are registered, you may then have problems (for example, they will refuse to register a company if the tax office blacklists this legal address).Instead of using the services of a commercial company, it may be more reliable to acquire an address in a local business support center (for example, a business incubator). |
When submitting documents for registration of a company, it is necessary to indicate OKVED codes. This is a kind of encrypted code that indicates the type of activity of your airline.
The list of current OKVED codes for business registration in 2018 can be found on the website https://okvd-2.ru
When searching for codes, pay attention to section 51, which contains information about the activities of airlines:
| 51 | Aerospace transport activities |
| This group includes: • transportation of passengers and cargo by air or in outer space. | |
| 51.1 | Activities of air passenger transportation. |
| 51.10 | This grouping includes: • transportation of passengers on regular routes and according to the airline’s regular schedule; • passenger charter transportation; • tourist flights and flights for scientific purposes.This group also includes: • rental of vehicles with a crew for the transport of passengers; • general aviation activities, such as the transport of passengers by flying clubs for educational or recreational purposes. |
| 51.10.1 | Transfer by passenger air transport according to the schedule of the airline. |
| 51.10.2 | Transportation by air of passengers not included in the schedule of the airline. |
| 51.10.3 | Lease of an aircraft with a crew for the carriage of passengers. |
| 51.2 | Air travel and space travel. |
| 51.21 | Air freight.This grouping includes: • cargo transportation on regular routes and according to the schedule of the airline; • transportation of goods outside the airline’s schedule. |
| 51.21.1 | Air transfer by cargo transport according to the schedule of the airline. |
| 51.21.2 | Air transportation by cargo transport is not according to the schedule of the airline. |
After registering your entrepreneurial activity, you must complete several more important steps in the overall plan for organizing a business:
- Firstly, it is necessary to draw up employment contracts for all founders and select a leader.
- Secondly, it is necessary to obtain codes from the Federal State Statistics Service (Rosstat or Gosstat). This procedure is not mandatory, but will facilitate the process of preparing the airline’s annual accounts, opening a bank account and opening branches of the airline.
- Third, you must obtain your own airline seal. The presence of a seal is not mandatory under the legislation of the Russian Federation, but it gives you some advantages, for example, it provides an additional degree of protection for documents from forgery.
To make an airline stamp, just contact a company that specializes in this. You will be asked to select one of the samples, which indicates the name of the airline, taxpayer identification code, business registration address and the main state registration number (OGRN).
The cost of printing, as a rule, is small – about 500 rubles.
After that, according to the plan, you need to go to the following points:
- Open a bank account.
- Make a list of employees and submit it by the 20th day of the month following the month after registration.
- Buy and register a cash register with the tax office.
- Get an airline license.
Basic needs for the operation of an airline: premises, staff, equipment, advertising
The main expense item in the business plan of opening an airline is the rent or purchase of premises.
The premises that will be required for the operation of the airline:
- The main office to accommodate the head, accounting department, personnel management specialists, call center operators, IT specialists. The main office may be located on the territory of the airport or located outside it. But the first option for the location of the airline’s office is still preferable.
- A room for accommodating passengers and controlling the passage at the exit.
- landing area for aircraft.
- Hangars for technical inspection/repair of cars.
- Warehouse for tools and materials.
- Premises for service personnel.
1. Plan for the purchase of equipment for the airline.
| Name | Image | Characteristics |
|---|---|---|
| Passenger gangway trailer Sovam PST 9.19 |   | • Maximum docking height – 5.80 m. • Capacity – 102 people. • Extras: spare wheel, footrest, covered hood. |
| Ambulatory lift Sovam HELP 15 HDC |   | • Cargo capacity of the van – 1500 kg. • Height of docking with aircraft – 1600-5900 mm. • Curb weight – 9,000 kg. • Rear light for night work. |
| Check-in counters |   | It is made according to the technical plan of the airline. |
| Terminal seats MASTER BASIC LOW |   | The seats are supplied without a backrest and are upholstered in 30 mm rigid polyurethane foam. |
| Baggage tractor Owls K32 |   | • Maximum towing load – 32 tons. • Weight – from 3,900 to 4,100 kg. • Maximum speed – 25 km/h. • Diesel engine. |
| Baggage tractor F40T, F60T |   | • Weight — 3500 kg. • Four-wheel drive 4WD. • Maximum speed – 30 km/h. • Engine: Detroit Diesel VM Tier III 754TE3 turbocharged, 4-cylinder, water-cooled. |
| TBL6 tape loader |   | • Boom length: 6000 mm. • Boom width — 600 mm. • Hydraulic drive of the lifting mechanism of the front part of the boom. |
| Light Carrier CBD 16 DO2 |   | Light trolley CBD 16 D02 made by SOVAM is specially designed for handling specific loads. |
| Conveyor belt ZW2 |   | • Working width of a tape — 1040 mm. • Conveyor speed — 0.38 m/s. |
| ALSTEF baggage handling and control system |   | ALSTEF integrates explosives and explosives detection systems (X-ray machines and tomographs). |
| Roller table without direct drive |   | The non-driven direct roller table is used on overhead lines for the accumulation and movement of oversized cargo, as well as pallets, boxes, barrels and any pieces in solid packaging manually or mechanically. |
| MARS-15T/25T/40T/60T Emergency Pneumatic Fabric Lifter |   | The pneumatic tissue emergency hoist MARS-15T/25T/40T/60T is designed for lifting aircraft on sealed inflatable balloons. |
2. What kind of staff is needed?
To ensure the efficient operation of the airline, be sure to hire qualified employees:
| Airline employee position | Salary level, rub |
|---|---|
| Airline cashier | From 40 000 |
| aviation technician | From 75 000 |
| Airplane pilot | From 450 000 |
| flight attendant | From 150 000 |
| Airline Human Resources Specialist | From 45 000 |
| IT department manager | From 45,000 to 55,000 |
| Information Security Specialist | From 40 000 |
| Accountant | From 27,000 to 65,000 |
| Recording Manager | From 15,000 to 40,000 |
| luggage porter | From 16,000 to 35,000 |
| room cleaner | From 18,000 to 35,000 |
You will need to determine the number of staff individually, depending on the size of your airline, the flow of passengers you serve, etc.
Requirements for individual airline employees
| a. | A person with a specialized higher aviation education, a first-class pilot qualification, permits for all types of aviation work and training, admission to instructor work and work experience in command positions of at least three years is appointed to the position of instructor Flight Director of the airline |
| two. | The airline’s helicopter commander may be a person who has the qualification of a pilot (pilot) not lower than a civil aviation pilot of the second class, the necessary training and work experience for independent piloting and control of an aircraft of this type. |
| 3. | For airline flight attendants, there is an age limit of 18 years, and in some cases 21 years. High school diploma required, height 158-190 cm. With arm raised, minimum 212 cm to reach the top shelf. Weight is proportional to height. There should be no visible piercings or tattoos on the body. The ability to swim. High level of spoken English. Work experience from 6 months. |
3. Choice of promotion methods.
Advertising is an important component of a marketing development plan. But good advertising is not enough to get passengers interested in your airline. You need to create a positive customer experience.
Airlines with a loyalty system and discounts for regular users are in great demand among passengers.
Advertising can be placed:
- On radio and television.
- In travel magazines and websites, in travel company brochures.
- Billboards, bulging billboards, city lights.
The price of advertising on radio and television depends on the broadcast schedule, as well as its duration.
For example, evaluate the rates for advertising on radio “Russia” (rubles per air on air):
How to open an air ticket office: detailed final calculations
| Part of the air (per Moscow hour) | Advertising video up to 30 seconds on weekdays and weekends | Advertising materials up to 2 minutes on weekdays/weekends |
|---|---|---|
| 06:00 – 07:00 | 46 730 | 102410/26470 |
| 07:00 – 08:00 | 67 850 | 144 020/72 010 |
| 08:00 – 12:00 | 91 530 | 170500/96010 |
| 12:00 – 14:00 | 67 850 | 164 100/96 010 |
| 14:00 – 16:00 | 48 490 | 150420/72010 |
| 16:00 – 18:00 | 46 730 | 116 820/56 010 |
| 18:00 – 00:00 | 29 140 | 43 210/24 000 |
It should be noted that the airline’s business plan, which we provide to our readers, is only indicative. To draw up an individual development plan, you need to establish cooperation with economists and lawyers in your region, who will take into account all the features of doing business in the realities of your city.
Business plan for expenses to ensure the operation of the airline
| Item of expenses | Cost, rub. | ||||
|---|---|---|---|---|---|
| Quantity, pcs. | Per month | In year | One-time purchase | Total expenses per year | |
| Construction of buildings, technical premises of the airline | a | 1 500 000 | 1 500 000 | ||
| Purchase of equipment | ten | 467 865 200 | 467 865 200 | ||
| Purchase of computer equipment | a | 120 000 | 120 000 | ||
| Fixed costs for the purchase of jet fuel and other consumables | From 100l | 1 093 500 | 13,122,000 | 2,187,000 | 15309000 |
| Fixed costs of advertising a business | 12 months | 500000 | 600000 | 100000 | 600000 |
| Staff salary | 12 months | 2795650 | 33547800 | 33547800 | |
| – taxes included | 12 months | 840650 | 10087800 | 33547800 | |
| Unforeseen business expenses | 47189800 | 47189800 | |||
| Total: | 2 795 650 | 47 269 800 | 519 082 000 | 566 251 800 |
Plan for the volume of services provided during the billing period
| Airline operating period | Kind of transport | Conclusion and sales per month, pcs. | price, rub. | Airline sales revenue, thousand rubles. |
|---|---|---|---|---|
| 1-12 months investment | Passenger | From 4500 passengers | 4,480–16,800 | 20 160 000 – 75 600 000 |
| 1-12 months investment | Transport | From 10 000 tons | From 1,120 rub/t | From 11 200 000 |
| 13-24 months of operation | Passenger | From 5400 passengers | 5000-18900 | 27,000,000 – 102,060,000 |
| 13-24 months of operation | Transport | From 12,000 tons | From 1,250 RUB/t | From 15 000 000 |
Airline marketing plan. How to develop a business plan?
Detailed instructions for bringing ideas to life.
What tax payments does an airline have to make?
| Name | Base | Period | Bargaining |
|---|---|---|---|
| Airline income tax | Benefit | Month | twenty% |
| VAT | Added value | Month | eighteen% |
| Property tax | Property value | According to the established payment schedule | 2.2% |
| Income tax | Salary fund | Month | thirteen% |
| Social payments | Salary fund | Month | thirty% |
Therefore, we have analyzed in general terms what an airline’s business plan might look like. With the most conservative estimates, the amount of starting capital for opening an airline is at least 566,251,800 rubles.
As you may have noticed, creating your own airline is not an easy task. You will need not only to draw up a competent business plan and analyze the service market in your region, but also to find investors, control the stages of construction and purchase of equipment.
But if you decide on this, then the business will begin to bear fruit after 1.5-2 years of the company’s operation. In general, this is a promising and profitable line of business.
