FLYBABOO:

HOW HIGH CAN IT FLY?

SYNDICATE 3 : HASHINA NURUL NIDA – 29118026 I GUSTI PRASTA RADITYA – 29118041

LILIFLY – 29118113 RICHARD - 29118118
FLYBABOO

Flybaboo is an airline company start-up founded by Julian Cook. Flybaboo began its
debut by serving regional flight and aimed to take advantage of the growth potential of
low-volume routes with high yield. It’s business was initially framed in highly
opportunistic terms, Cook as its CEO having emphasized speed and opportunity rather
than strategic planning.

In the four months since the inaugural flight from Geneva to Lugano, Flybaboo had
generated revenues of over SFr 1.4 million. Moreover the airline was already serving the
Geneva-Venice route and could look forward to breaking even in the foreseeable future
through healthy sales growth.

However, Cook had to make critical decision to shore up its position in the turbulent
Swiss regional airline industry.
 • In July 20013, Swiss International Air Lines (successor to the bankrupt
Swissair) announced drastic reductions in its network.
•

Swiss Regional
Some regional routes were abandoned and withdraw from the
schedule. One of them was the route between Geneva (Cointrin airport)
and Lugano (Agno airport). The route can attract 50,000 passengers a
year with the price SFr 600 per return trip.

Airline Industry
• On August 23, 2003 FOCA released new regulations that banned
landings at Agno with aircraft that did not have certification for descents
ar more than six degrees. This meant that a number of aircraft types
could not land in Lugano.
• The battle for interesting routes promised to be fierce between
Swissair’s successor Swiss, network carries such as Lufthansa, low-
cost airlines such as easyJet, and regional players like Flybaboo.
 COMPANY STRATEGY AND BUSINESS MODEL
The market gap provide the perfect launch pad for Julian Cook’s new idea, a regional low-cost airline to fill the growing hole created by the gradual
retreat of Swiss from low-volume routes out of Geneva. Flybaboo had chosen to fly a Dash 8-300, an aircraft certified for steep descents with an
approach path of more than 6 degrees, make it the only airline that is granted the concession of Geneva to Lugano route.

Start-up Strategy
● Test the market and refine their business and operating model
● Flybaboo requires an Air Operator Certificate (AOC) to star
operating. To obtain AOC in a short period of time, Flybaboo use
“wet lease” from Lufthansa partner Cirrus Airlines.
Operating Strategy
● Point-to-point and short-haul flight, and increase the frequency of
fight with point-to-point-to-point basis (Geneva-Lugano-Venice).
● To keep minimum cost start with just one aircraft without catering
on board.
● To reduce operating cost by obtaining its own AOC by the end of
March 2004, coupled with a two-year dry lease on a Dash 8
aircraft.

Pricing Strategy
Marketing, Sales and Distribution Adopting low-cost airlines strategy by selling seats on a first-come,
• Low fares for early booking first-served basis
• Targeting both business and leisure customers
• Distributing flight electronic tickets by using company website or call
center
Growth Strategy
• Short-term: Offering daily flight to increase frequency on the Geneva-
Communication Strategy Venice route
• Medium term: Adding interesting short-haul destinations such as
• Pointing Trimedia Public Relation (PR) agency Marseilles, Bordeaux, Valencia, Prague and Berlin.
• Using billboard and local newspaper • Long-term: Expanding to medium-haul destinations using a second
aircraft type and open a new operating base.
 PORTER’S FIVE FORCES
Buyers Threats of Suppliers
Threats of New
Power Substitutes Power Rivalry
Entrants

Newcomers airlines Business and Leisure Alternative modes of Lufthansa provided Hello and Darwin are two
might interested in are two targeted transportation such as the necessary AOC potential direct competitors
serving the low-volume customers. For now, road and rail. and was responsible on Geneva-Lugano route.
route. Flybaboo is the only The substitutes does for all Flybaboo’s For other routes, numbers
High entry barrier - airline serving not provide better operations. of players were looking to
There is little chance Geneva-Lugano route. performance - Ground Low potential for expand their operation in
for newcomers to start But for other targeted travel required 4 hours integrated backward Switzerland, including
with several planes in routes, other airlines by cars and 5 to 6 hours - since it is difficult to network carries and LCC
the current difficult might serve with other by train (Geneva - obtaining Air Operator such as easyJet, that
environment. more interesting Lugano), Certificate (AOC) for known for its reliability
pricing strategies, young airline. and high quality service.
making the buyers There also Helvetic
power stronger. Airways, offering more
attractive pricing model.

Low Medium Low High High


Tangible
Financial resources
Organizational resources
Physical resources
Technological resources
Tangible
INTERNAL ANALYSIS
(Resource)
Description Intangible Description
Have many investor that Human resources Flybaboo CEO had a lot of
interested to invest experience in airline industry
and aviation finance
System for booking electronic
tickets exclusively via the Innovation resources -
Flybaboo website and call
center
Aircraft Dash 8-300 Reputation resources Flybaboo is “low cost” focus
airline and is backed by high
Air Operator Certificate (AOC) profile investors
for a short period of time by
“west lease from Lufthansa
Intangible
 INTERNAL ANALYSIS
(Capability)

Is the capability
Is the capability Is the capability Is the capability Competitive Performance
Capabilities costly to
valuable? rare? nonsubstitutable? consequences implications
imitate?
Stimulate demand by
using pricing strategy Temporary Average returns to
(offering low fares to
Yes Yes No No competitive above-average
a limited number of advantages returns
passengers)

Easy-to-reach and
cost effective Yes No No Yes Competitive parity Average returns
distribution channel

Manage to keep
operating costs to Yes No No Yes Competitive parity Average returns
minimum

• Offering low fares: It could produce the possibility for Flybaboo to enhance demand for 70,000 passenger by the second year of operations as the only airline
offering Geneva-Lugano route and low fares as well.
• Easy-to-reach and cost effective distribution channel: By distributing electronic tickets exclusively via the Flybaboo website or call center, Flybaboo got 85%
reservations in three months of operations. However this strategy closely followed the Ryanair/easyJet model.
• Minimum operating cost: It’s valuable because with low operating cost we can offer the company’s pricing strategy
 SWOT ANALYSIS

• Low cost airline

• Point to point haul flight
• Its certified aircraft “Dash 8-300” was qualified to
SW • High cost operations by doing cooperating
with Lufthansa
Land in Lugano. • Still requiring a load factor of around 60% to
• Getting “wet lease” from Lufthansa break even
• Having the remarkably high level of public
awareness of the new airline

● Be a leader on LCCs aircraft
● Getting its own AOC so it can decrease its
operating cost and increase the revenue
● Wave of consolidation and concentration
● Its Dash 8 has not been certified yet
● Existing competitors like Hello and Darwin
having high capital
● Other potential entrants on low volume
airlines

O T
 STRATEGY
Certification Brand Awareness
Getting AOC as soon as possible Increase public awareness of Flybaboo

Collaboration Operation
Build cooperation with other airlines Reduce operating costs in order to
lower load factor to break even

Expansion Pricing
Add new destinations and more services and Create more competitive price in LCCs segments
expand to medium-haul destinations using a
second aircraft type
STRATEGY (cont.)

Short-term Strategy

Flybaboo need to increase its brand awareness to

compete with future direct competitor (Hello and Darwin
Airlanes). Both direct competitor are supported by
powerful politician and local business, so Flybaboo also
need considering to cooperate with outside the airline
industry.

Medium to Long term strategy

To be able to stay ahead in present and future

competition in European airline industry, Flybaboo can
coexisted with network carrier as in regulated market,
to increase its brand awareness through marketing and
to expansion through network agreement.
THANK YOU