Brief presentation About the business niche This is a brief presentation of Tango plan to operate (mainly) in South America serving special interest groups of travelers, operating charter flights.
This business is focused in a niche where none or few other operators are competing.
In fact, there are:
Traditional (and low cost) airlines serving regular routes
Business and first class services in these same companies, and
Executive charters and air taxi companies serving small groups of travelers,
Then the offer is as follows:
A little research shows that there are some groups looking both for a flexible schedule and at least business class comfort:
And a reality check confirms they are willing to pay for that kind of service.
High spending players traveling to casinos in the region
Soccer and other sports teams
Government and executives delegations Traditional airline Charter company Executive charter Comfort Limited to the few 1st & business class seats Same plane, same problem Even fewer "good" seats, but they are ALL good Cost $$$ $$ $$$$ Schedule Passenger accomodates to airline schedule Schedule accomodates to passengers needs Same as charter Number of seats 10 20 80 40 100 200+ F a r e
$ $$ $$$ Not profitable Traditional Commercial Flights and low Cost airlines First class In traditional Commercial airlines Executive charters Still there is room in the skies
Tango will go in this phase for the VIP passengers market in a niche that is presently not served neither by traditional airlines nor by the small executive charters in the region.
New 5 stars hotels and casinos in the region have generated an incoming flow of VIP passengers creating this demand for comfort and luxury for charters of 40 60 pax.
Potential clients All the mentioned potential clients have already been contacted and have confirmed their intention to make business with Tango.
Some have provided projections.
For Conrad also Chile has to be considered, now the hotel & casino is property of a chilean group.
Basic research and contacts have been performed in Uruguay, but there have been also high level contacts in Argentina as well, with AFA (national soccer association) and their interest is also high.
Uruguayan government has the need for this kind of service for their international flights, as also confirmed by their interest during the initial contacts.
Thus, this is a first approach to the potential market.
Further contacts in the region (Brazil, Argentina, Paraguay, Chile) would show other interest groups to offer Tango VIP services. Clients have already confirmed interest
The 2 most important hotels/casinos in Punta del Este (the VIP destination for casino players, plus the rich people in the region) have already confirmed their interest in these charters.
Also, the Uruguayan Soccer Association (AUF), Tenfield (TV group of Paco Casals group, the main soccer players manager), the Uruguayan government for their official representations and commercial missions, have confirmed in advance their interest, too.
Soccer is not only about teams in 2014
In 2014 the FIFA World Championship will be held in Brazil, comprising several cities in this vast country.
This implies a lot of people who is going to attend the matches of their national teams.
Among this people there also is the high spending profile group that is Tangos focus.
Such and opportunity cannot be lost. And do not forget 2014
2014 is the year where Brazil is to host the FIFA WORLD CUP, within a continent whose inhabitants are big soccer fans. People from Argentina, Chile, Uruguay, Peru, Colombia, and the rest of the continent will travel to Brazil to attend the tournament.
And 2016 will have Brazil in the worlds eyes, again Only 2 years after the FIFAs World Cup, Rio de Janeiro will be the city of the Summer Olympic Games.
Once again, high spending travelers from all the region will be attending a great event in Brazil.
It is estimated that today, Rio would only be able to house 52,000 tourists; the expected number is 1 million. There is a massive need for housing, and transportation development.
(from Seven Pillars Institute for Global Finance and Ethics report)
That means a need for extra capacity in all transports, including flights.
And Tango will be positioned to offer premium service to the special interest groups of athlets, teams, and visitors to the games. nor 2016
And in 2016 Rio de Janeiro will be the host city for the Summer Olympic Games, once again creating a high traffic scenario in the region, for high spending profile travelers.
The plane
These one and another like this are already set for Tango needs and currently available. Our birds for these skies
For this first initial operations Tango will fly with 2 (two) Boeing 727 airplanes, specially configured for the VIP passengers its going to serve.
The B727-200 Among all the options, the Boeing 727-200 is considered the more suitable for a startup in this kind of operation.
PROs
There is a lot of available aircrafts of this type, ready to fly now. That is, no waiting time for startup.
Lower cost of acquisition or leasing.
There are trained pilots in the region and everywhere.
The plane has the required flying autonomy for the considered distances.
CONs
High fuel consumption
But,
this can be bettered by modifying the structure and adding winglets, and with an upgrade in the type of engines used.
This upgrade (winglets) has been considered as the first step in the evolution of operations. Estimated cost: USD 250.000 Time: 3 months to perform upgrade The 727s for this operation
The 727 is an old but yet very good airplane, still in operation worldwide in many regional airlines.
The fuel cost is its main disadvantage but in this case, due to the high fares this market can afford and is willing to pay, is a suitable option.
In the other hand, the airplane purchase cost (leasing item in costs breakdown) is considerable lower than newer models, thus making this a very good option for an entry to the market.
First estimation
This first projection is based on potential clients expressed needs.
Only the main clients and most firm interested are considered.
Chile is also an interest for Conrad, but projections have not been update because lack of their estimated traffic and destinations within this country.
Even though, in the financial projections a second scenario, with a third of block hours sold is considered, to offer a more conservative view. Making the math
Based on the numbers provided by Mantra and Conrad hotels, plus the estimation from AUF (soccer teams participating in international tournaments), here is a projection of the operations block hours (flight and pre take-off and post landing operations).
BLOCK HOURS :: DETAIL Hours round trip Weekly round trips Monthly round trips Hours per month Conrad (1) Rio de Janeiro 6 1 4 24 Sao Paulo 5 2 8 40 Porto Alegre 3 2 8 24 Curitiba 3 1 4 12 Buenos Aires (2) 1,5 11 44 66 Mantra (3) Rio de Janeiro 6 1 4 24 Sao Paulo 5 1 4 20 Porto Alegre 3 1 4 12 Curitiba 3 1 4 12 Buenos Aires 1,5 1 4 6 Soccer teams (4) 6 0,25 1 6 Government delegations (5) TBD 0 0 0 0 0 0 22,25 89 246 BLOCK HOURS :: SUMMARY Weekly round trips Monthly round trips Hours per month Conrad 17 68 166 Mantra 5 20 74 Soccer teams 0,25 1 6 Government delegations 0 0 0 22,25 89 246 2 PLANES FLEET 2 PLANES FLEET (1) Based on their programmed schedule (2) 1 rt/day from Tuesday to Thursday, 2 rt/day from Friday to Monday (3) Estimated (4) 1 charter/week during 2 to 3 months = 12 trips/yr = 1 trip/month (5) To be determined (TBD) Calculations Calculations have been performed for 2 scenarios.
1) 80 block hours sold
The more conservative
2 crews needed
Less hours flying increases the weight of fixed costs in per-hour cost
Less landings and navigation fees, more parking fees to be paid
Maximum number of hours to be served with this fleet
If business is larger than expected, more planes should be added
Information has been taken from public sources and market research.
Sell price has been checked with potential customers
Projections
The numbers, based on standard costs for the 727 plane, and the projected block hours show this is a profitable business, even for a more conservative estimation of block hours of operation (1/3 of what has been calculated).
Phone: +598 99272002 Summary There is an attractive market niche to be exploited. Clients have expressed their interest. Plus: 2 high-traffic generating events in Brazil: FIFA world cup + Olympic Games Projections show a profitable business. If we dont take this opportunity, someone else will do it.