Let’s make a new airline… A business plan for BlueSky Air?

On 17/04/2012, in Managers' corner, by steve

It did not take long after Malev, the Hungarian national airline stopped operations a few months ago that experts started to think about making a new one. An airline that would carry on the Malev tradition but be more of a commercial venture, hopefully able to stand on its own in the cut-throat environment of to-day’s aviation world.

Of course with even the strongest network carriers like Lufthansa and Air France-KLM scrambling to cut costs and looking at the future with wary eyes, even dreaming about a new airline may seem like audacity. On the other hand, there are new ventures and some of them are succeeding too.

I have written about what I thought were the most important considerations in setting up a successor to Malev and I continue to believe that those items are still valid.

However, investors are unlikely to give you their money without a good, convincing business plan. Writing a business plan is not easy but it has the added advantage of being a brutally honest reality check. Before you even approach the investors, the business plan will tell you in no uncertain terms whether your dreams have any reality at all.

You will notice that this write up is much more about business than flying. This is not a mistake. An airline, like it or not, is connected to aviation only by the incidental fact that it uses aircraft to carry people and goods. Other than that, it is a business… or should be if it wants to survive.

There must be many among our readers who have written numerous business plans and who are better qualified to do the job than I am. Nevertheless, I thought it might be useful to put together a straw-man of a business plan which could be used as first step in the creation of a real plan for the new airline I decided to call BlueSky Air.

A few general considerations

BluSky Air’s Business Plan is special in as much as it is aiming to prove that this initiative will be better than what was there before it… in other words, very soon one has to face up to the political aspects of the Malev failure and there is no place for obfuscation here. One has to assume that the investors will be aware of the details or if not, they will make sure that they get the relevant (and correct…) information and we should not find ourselves in a situation where they are asking questions to which we do not have the answer… It is much better to have all the answers there right from the start so that people don’t have to ask.

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Technologists vs. Economists

On 21/10/2011, in Managers' corner, by steve

It is not a secret that some people considered Boeing’s decision to forego the New Small Aircraft and follow Airbus’ lead in re-engining their existing product a poor one and something that will delay the appearance of a really novel aircraft by a decade if not more. I must confess that I am one of those who would have loved to see the two airframers rush to bring the single-aisle of the future to market.

Commenting on the same subject in a recent issue of Aviation Week, Richard Aboulafia , VP for analysis at the Teal Group, while approving the Boeing decision, divided the world in two groups of people. There are the Technologists and the Economists.

For Technologists, “aviation is a technology driven business, with new equipment stimulating demand and therefore creating its own market”. Economists on the other hand “view technology as a means to an end: profit”. He also points out that most airlines and aircraft companies are run by Economists.

Reading this very interesting article, I stopped to do some soul searching. Which camp did I really belong to?

Some years ago, still as an assistant director infrastructure at IATA, I was called to hold afternoon-length sessions for ATC supervisors at EUROCONTROL’s school in Luxemburg with the aim of outlining to them what the airline industry wanted from air traffic management in the future. I usually started out shocking them by the statement: airlines were just a business and air traffic management must behave in a way that facilitates that business. By proxy, ATC was just a part of a complicated business environment.

I have also often argued for having a business case for just about everything… New channel spacing? Business case. Air/ground digital link services? Business case. Mode S Enhanced Surveillance? No, I did not want that even if there was a business case (there never has been, not a credible one anyway).

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Interim managers: ”corporate nomads” of the 21st century.

On 28/02/2011, in Managers' corner, by andras

An ash-cloud from an Icelandic volcano disrupts flights throughout Europe. Deliveries of new aircraft from major producers are seriously delayed causing customers to re-write their fleet-replacement programmes. Unexpected engine-problems lead to the grounding of several aircraft, disrupting timetables and making would-be passengers furious. Sky-rocketing fuel-prices force major airlines into mergers with competitors – if they don’t want to disappear once and for all. Overcrowded air-routes in the US and most of Europe cause severe stress to flight-crews; meanwhile, fierce competition among carriers results in increased work-hours and less time for mental re-generation and much-needed rest. On the ground, ATC- and other airport-staff are reduced to a minimum as airports struggle to remain profitable in crisis-struck times.

The list could go on and on – events which create unexpected challenges to airlines, service-providers and various members of the aviation-industry, demanding firm and fast decision-making in a rapidly changing environment. And behind all of these events, there is one single, fundamental element that never changes: the enormous task of carrying out the steps needed to re-structure, save, keep on track, control the individual company involved lie on the shoulders of key executives, top managers, CEO’s, CFO’s, Directors and Presidents who carry the responsibility of making these decisions. Decisions, the rightfulness of which can never be judged before-hand. Decisions, which will always be the subject of in-depth analysis and harsh criticism after their effects are known. From this aspect, every company is the same, no matter what business it pursues. Every company is made up of people, and having said that, there are general rules and lessons that can be applied on a universal basis.

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Surviving SESAR and the economic crisis

On 07/02/2011, in Managers' corner, by steve

BluSky Services (BSS) has been a recognized supplier to EUROCONTROL since the beginning. As one of the so-called Framework companies, we were able to respond to the Requests for Proposals and we were also lucky to win quite a few. We attributed our success to two factors: on the one hand, our professional pedigree was right there alongside the best and brightest and with our airspace user network we were in fact better placed to respond to some critical task than anybody else in the market; at the same time, our prices were always extremely competitive. We have managed to keep the overhead very low and passed on the savings to our customers. If I say that on occasion the Boeing Company was one of our subcontractors, you will get an idea of the high esteem BluSky Services has always enjoyed.

Then, almost from one day to the next, the world collapsed. The first to feel the blow were those companies who made most of their living from EUROCONTROL projects. These all but disappeared when SESAR kicked into high gear and work was allocated to the inner circle of SESAR members of various kinds. A few subcontractors remained but most of the others found themselves out in the cold. Other companies who earned their living from placing experts with EUROCONTROL faced the prospect of a near-death experience when their biggest client decided to fire most of the outside contract personnel.

In other words, almost overnight the bright green pastures of European ATM contracting became a nightmarish nuclear landscape. How does a smallish company survive something like this?

I do not know about the others but I would like to share with you BluSky Services’ approach to survival. We are still here and may be hearing about our solution will inspire others to do something similar. If not now, next time disaster strikes.

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Performance and its measurement – some coaching aspects

On 23/12/2009, in Managers' corner, by andras

The author is a member of the Business Coach Association in Hungary. More information about the Association is available here (the English language page is under construction).

I don’t think anyone having worked as a manager for any company in any profile whatsoever has had the luck to avoid being the target, or the executor, of PERFORMANCE-MEASURMENT (PM). This category seems to be an above-all factor in many an organisation, and even the survival of the company itself can depend on whether these figures meet the EXPECTATIONS.

Figures, charts and spreadsheets dominate. Headcount and HR-decisions are based on results from PM. But is there an alternative? Can top-notch executives be persuaded to apply other ideas and depart from these fundaments? This question can become an exceptionally exciting issue once a company (or, rather, its management) faces problems that cannot be solved by traditional methods, and when the decision is made to ask the assistance of a coach.

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Trust Your Dolly Grip!

On 30/09/2009, in Managers' corner, by andras


camera

Recently I attended a seminar on business-coaching where István Szabó, the Hungarian director awarded the Academy Prize for his film ”Mephisto”, told us a story dating back to his early years in the business. It happened during the shooting of a film about a young couple in the 1960-s’ Budapest. The dramatic effect of one given scene required that after the first few moments, when both actors were to be visible, the camera gradually closes in on one of the two stars, the other person vanishing from the angle of the shot. Szabó was determined that this should be a no-cut scene, meaning that no “jump” is allowed from one angle to the next. However, he had no idea how to make this happen in a way that would be unnoticed  by the audience. He felt totally helpless, and not one single solution came to his mind. The shooting, well underway and progressing fluently until then, abruptly stopped. All eyes turned to him, the Master, as if asking: “What now? No instructions? No guidance?”

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