Zambia

• Infrastructure
• Airline project (passenger/cargo)
• US$ 150.000.000
• Debt Funding

Executive summary

Current market factors favor the inauguration of a new airline to carry the Zambian flag and meet the demand for additional, higher quality passenger and cargo service, linking Western Europe with the rapidly expanding markets of Southeastern Europe and America and linking to trans-Atlantic and global destinations.

The new airline will base its business and marketing strategies on achieving high and profitable load factors through the absorption of unmet demand in three key air-traffic categories:

1. Unserved and underserved routes on which high unmet demand currently exists or can be readily developed.
2. Serving key niche markets where demand is either unmet or poorly served.
3. Meeting peak traffic demands on certain key regional, seasonal, and variable routes where very high load factors can be predicted despite existing but lower-quality competition, or where competition cannot meet the demand. In addition the proposed new airline will be designed around and operated utilizing, the most up-to-date electronic, informational and aviation technologies to ensure low operating and marketing costs, maximum efficiency in deployment of its resources, and a high level of customer service and convenience. And it is this final element - dedicating the airline as Zambia Airline to replace Zambia Airways, its staff, and its organization to providing a high level of customer service and convenience, and efficiently meeting the needs, wants, com-fort, and safety of the passenger - that will assure the proposed airline's rapid acceptance in the marketplace and its long-term growth and success. Particularly in the post-1995 environment, experience has shown that those carriers which can maintain a "mean-and-lean" operation while still meeting the needs and desires of the traveling public, with the right fares, will not only survive, but can prosper.

The six key characteristics leading to the success and profitability of this new carrier will be:

1. Provision of high-quality service on routes and in markets that currently are either Serviced, poorly served, or under-subscribed by existing carriers, thereby setting both a new trend and a new pace in air service to and within the SADDC region and  European region.
2. Employment of cost-effective, up-to-date regional aircraft that will be sized right for the market and the route, leading to higher load factors, reduced costs, improved efficiency and flexibility, greater passenger comfort and satisfaction, and higher net profits. Outfitting these aircraft with the latest aviation technologies and navigational equipment will help ensure the highest level of reliability, punctuality, safety, and customer satisfaction.
3. Utilization of the latest electronic and informational technologies in sales and marketing; reservations, ticketing and check-in; scheduling and resource planning; cargo tracking; and operational oversight. Such techniques as internet marketing, reservations, and sales; electronic ticketing and check-in; online quality control, resource planning, operational oversight, cargo and baggage tracking, and customer service, all will reduce staffing requirements while offering ease-of-use and greatly enhanced access by, and convenience to, the customer.
4. Recognition that not everyone is geared for the electronic world, leading the pro-posed airline to provide a high level of non-electronic service as well, particularly to the many newer, less-experienced travelers - but future loyal customers - found in the region.
5. Ensuring a friendly, cooperative, enjoyable, yet highly professional face to the customer.
6. Development and implementation of corporations, associations, and partnerships with other larger, more established, and highly regarded airlines both within and beyond the region to provide an extensive range of connections, through fares, frequent-flyer mileage sharing, and other passenger and client advantages through interline arrangements, code shares, common hub, and so forth.

In short, the goal of this new Zambian airline is to be known to the passenger and the cargo customer by its proposed motto:
                                                                        " FLYING IN PURSUIT OF CUSTOMER SATISFACTION’’

Primary financial results anticipated during the first year of operations include:

• Average passenger load factors in the 60-80 percent range, depending on route and season, reached within the first year of flight operations, and increasing thereafter to the 75-90 percent range.
• Revenues approaching 105 million USD within the first six year of flight operations, exceeding 170 million USD by the end of the second year. 
• A gross operating margin of close to 30 percent achieved within the first year of operations, reaching close to double that by the third year, and with steady growth enabling rational expansion of the airline thereafter. Even in the first year of operations, a pre-tax profit of over 10 million USD is anticipated. This is applying a very conservative business model, and is achieved on an initial investment of less than 25 million USD, yielding a return on equity of 10 percent. The accompanying chart illustrates the growth and profit potential present.

A key element contributing to the success of this new carrier will be its organizational and management team. A leading technical team with Airline experience will be sought internationally, with the SADDC region being preferred, as that is regional base in Central and Southern Africa and which knows the region and its business needs. The technical partner will identify business and profit opportunities and develops projects and strategic partnerships to implement and benefit from them.