The Main Keys To Success For Solly Aviation

Published Date: 02 Nov 2017

INTRODUCTION

The purpose of this report is to prepare a business plan for the establishment of an aircraft Maintenance, Repair and Overhaul (MRO) facility in Nigeria whilst analysing the current maintenance system in the country. According to Hessburg (1999), maintenance is the action that sustains or restores the aircraft’s airworthiness and performance. He further indicated that an aircraft is bound to deteriorate with time, when this happens, some corrective actions should be carried out which involves servicing, adjusting or any form of maintenance to restore the airplane back to its original state.

Certain factors must be considered before a Maintenance, Repair, and Overhaul facility can be established in such a region. Some of the factors are: environment for the location of the facility, the available man power and facilities, to top it all up, the licensing requirements for MRO. All this factors will be analysed later in this business plan.

Solly Aviation (SA) is a company that will focus on repairing and servicing aircrafts. The company will also concentrate on providing high quality services to airlines both in Nigeria and its neighbouring countries (West Africa). The current high demand will favour establishing this facility and will also boost Nigeria’s economy because there is currently no complete MRO facility that carries out all maintenance checks (A, B, C, and D) in the country.

Aircraft Maintenance Checks: Kinnison (2004) described all aircraft maintenance checks as follows: A Check is performed every 100-300 hours of flight depending on the aircraft type; it is carried out by using an inspection manual or task cards. B Check is usually carried out after an A Check that is, they are similar in nature but performed every 4-6 months. C Check on the other hand is carried out only once a year (12 – 18 months) depending on the aircraft model. It is more detailed and more complex than the ‘A’ and ‘B’ checks because almost the whole aircraft is inspected. It takes about two weeks (4 – 14 days) to complete this task depending on the airplane. Furthermore, D Check also referred to as heavy maintenance check is so far the most demanding type of check compared to other types. In this check, the whole aircraft is taken apart and thoroughly inspected. Due to its expensive nature, airlines often carry it out every five years, more or less. All these services (checks) will be provided by a team of experts, in compliance with the norms and standards already laid down by the Nigerian Civil Aviation Authority (NCAA, 2012) and thus will reduce the amount airlines such as Arik Air and Aero Contractors spend on repairs because their aircrafts are serviced abroad.

MISSION

Although it can be quite daunting to establish an aircraft facility in such a region, however, with the right plans and considerations, Solly Aviation will emerge as a world class company with its impeccable customer service. SA will provide services for private jet owners in Nigeria as well as commercial airlines. As reported by Peter (2012), there are about 200 private jets in Nigeria considering this, the proposed facility will be operated using the latest technologies in aviation to ensure low marketing and servicing costs thus providing a good customer service and job opportunities for the unemployed.

OBJECTIVES/GOALS

The proposed MRO facility’s key objectives are:

To gain grounds as a reputable and qualified MRO linking Nigeria with its neighbouring countries. By been a reliable company, West African countries such as Ghana, Benin and Togo will service their aircrafts with Solly Aviaiton and thus boosts Nigeria economy.

To deliver airworthy aircrafts in time to customers with accordance to the Directorate of Airworthiness Standard rules and regulations (DAS, 2012).

To provide full time employment for aspiring young engineering graduates in Nigeria. This will be achieved by sending them for training and obtaining the licenses required with accordance to NCAA’s licensing requirements (NCAA, 2012).

To develop partnership with commercial airlines and private jet owners thereby enabling the proposed company expand and grow within the first two years of operations.

To ensure all safety requirements in the working environment are met (NCAA, 2012). Safety is the number one priority in any organisation; adhering to the safety rules will mitigate work hazards.

To constantly improve maintenance and update maintenance facilities. This objective concerns the frequent training of staff members.

To generate yearly revenue by the end of the second year of operations.

KEYS TO SUCCESS

The main keys to success for Solly Aviation are:

Use of good marketing strategies that would identify the company as a fast growing one; well trained professionals, fair pricing, concentrating on safety and good customer service will form good backbone of the marketing strategy.

Adhering to Nigerian Civil Aviation Authority’s laid down rules and regulations on aircraft maintenance (NCCA, 2012).

Employing highly skilled and professional management team.

Being flexible would enable the company to adapt to any change of market conditions.

RESEARCH METHODOLOGY

The general principle that guides a research is the research approach; it involves studying the research topic and the issues that needs to be dealt with before choosing a research methodology (Kumar, 2005). Hence, when thinking about research methodologies, differences between qualitative and quantitative or the combination of both (triangulation) must be understood (Rees, 2013). Although the two research methodologies have almost the same research processes, they are differentiated in terms of the method used in data processing, the mode of collecting data and analysis and the style of communicating the results (Kumar, 2005).

2.1 Quantitative research method is used to generate statistics by collecting data through surveys, audits or experiments (Rees, 2013). It is analytical in nature; mainly used to quantify the extent of variation in a situation, phenomenon or issue, it also involves drawing of inferences and conclusions (Kumar 2005). Kumar (2005) further added that figures and measurements are mainly concentrated on in this research process in order to compare two different occurrences and show the statistical connection between them.

2.2 Qualitative research on the other hand is explanatory and narrative in nature, it is mainly used to describe variation in a situation, issue or phenomenon, it goes deep into issues; opinions from the experts involved are required (Kumar, 2005). In addition, this research understands, describes and investigates (individuals) or groups of people (Kumar, 2005).

2.3 Triangulation also referred to as ‘mixed method’ is the combination of qualitative and quantitative research in order to cancel the weaknesses in the two methods (Guthrie, 2010, p.45). Researchers consider triangulation as the best method for carrying out a research; the advantage of one is the disadvantage of the other and vice versa (Rees, 2013). Having said that, the research method that best suits this business plan is triangulation because establishing an aircraft maintenance facility requires a lot of survey and data collection.

The most important part of business planning is obtaining a Buy-In, without this, it is very difficult to develop and successfully implement a business plan; a buy-in is a documented and verified agreement between SA and the stake holders (ACRP, 2012, p.21). Thus, a buy-in will be obtained from the policy makers in Nigeria i.e. Nigerian Civil Aviation Authority to give Solly Aviation the ‘green light’ to establish the facility. Once this is obtained, triangulation research will be used to gather all the required data/information for this business plan.

2.4 APPLICATION OF TRIANGULATION IN THIS BUSINESS PLAN

Expert judgement will be sought i.e. organisations already in aircraft maintenance business will be consulted for opinions. Their opinions will be sought for in quantitative and qualitative manner in order to compare the results obtained. In the quantitative method, structured questionnaire will be used; opinions on establishing the facility at the airport or far away from the airport will be sought for in form of rating it from the scale of 1-10 to get a quantitative data. In the qualitative method, an unstructured interview on the choice of location will be conducted; this however will not be rated but rather in form of a regular conversation between the interviewer and the interviewee.

The capital i.e. the amount required to start this business will be calculated using cost benefit analysis technique. Cost Benefit Analysis is mainly used in calculating the capital of a project and to predict its expected profit (Mishan and Quah, 2007). The required man-power and equipment will be considered here. Once the CBA is calculated, it will be compared with companies such as, Boeing and Airbus that are already in the MRO business. The figures/results obtained will be tabled using Microsoft excel in order to interpret and validate the findings. In addition to this, the CBA technique will also be used to estimate the profit and loss of establishing the facility at the airport or far away from the airport; this will be analysed by considering the monetary costs involved in them. The two results will then be compared and tabled using Microsoft excel.

Opinion polls on the choice of location of the MRO facility will be carried out; major airlines companies and private jet owners in Nigeria will be interviewed about their location preference between Abuja and Lagos. Moreover, further interviews will be carried out to know the total number of aircrafts they have then an estimate of the average number of airplanes in Nigeria will be drawn.

RESEARCH METHODS

Research Methods are tools used in gathering data such as interviews or questionnaires (Rees, 2013). The following methods will be applied when establishing the MRO.

Blue Ocean Strategy: according to Chan and Mauborgne (2005), Blue Ocean companies build a new business where none existed that is, tapping the untapped market space hence making competition irrelevant because there is no competition. They further said that most companies are either trying to reduce their price to get more customers or trying to increase their value or product feature, however, with the Blue Ocean Strategy, companies work simultaneously on their price and value/product feature in an untapped market space as shown in figure 2.1. In contrast, Red Ocean companies compete in an existing market space; they shift demand by modifying product features/attributes there by giving customers more products for a low price which results into reductions of profit and thus because there is competition the ocean is turned red (Chan and Mauborgne, 2005). In this business plan, Nigeria is the untapped market because there is currently no (complete) MRO facility in the country.

Price

Blue Ocean

Value/product

Figure 2.1 Blue Ocean Strategy (Chan and Mauborgne, 2005)

3.1 PRINCIPLES OF BLUE OCEAN STRATEGY

According to the pioneers of Blue Ocean Strategy, Chan and Mauborgne (2005), BOS is not about risk taking or avoidance, but about minimizing all risks in a business. They also provided some principle that addresses six different risks associated with the formulation and execution of BOS, they are:

3.1.1 FORMULATION

Search risk: To come up with the right ideas, an organisation must look outside the market boundary then apply the ideas to make the business work out.

Planning risk: BOS uses visual tools to enable business focus on a one page picture. It enables organisations to know the level of their competitors, the level they are and thus minimising the planning risk.

Scale risk: This keeps a business within its scale to reach beyond existing demand and hence, not going after two things at the same time.

Business model risk: Having a business idea that failed is not the end of the world. There is a strategic sequence that addresses it in BOS. However, they must be followed in the right order.

3.1.2 EXECUTION

Organisational risk: Having a good strategy but not having the resources. It could be management or political issues. Blue Ocean uses tools to systematically address the hurdles.

Management risk: A business could crash as a result of poor management.

Some of the tools for the formulation and execution of BOS are: The strategy canvas, four actions framework, Pioneer-Migrator-Settlers map and three tiers of non-customers (Chan and Mauborgne, 2005).

3.2 APPLICATION OF BOS IN THIS BUSINESS PLAN

Applying the Blue Ocean Strategy in this business plan requires some of the BOS tools. As laid down by Chan and Mauborgne (2005) these tools will be used in executing and formulating this business. They are:

Strategy Canvas: This is an action frame work for creating a captivating Blue Ocean Strategy (Business plan). It is a useful tool to predict and solve problems in an organisation. This tool will be used to analyse the current state of aircraft maintenance in Nigeria as shown in figure 3.1

High

Medium

Low

1 2 3 4 5

Maintenance cost servicing abroad foreign expatriate Customer service Employment

Figure 3.1 Strategy Canvas (Chan and Mauborgne, 2005)

= Current condition of aircraft maintenance

= Proposed Future condition

Once the MRO facility is established, the cost of aircrafts maintenance will be reduced, this will entice commercial airlines and hence all aircrafts will be serviced in Nigeria, furthermore, foreign expatriate will be reduced thus job opportunities will be provided for Nigerian graduates. Lastly, good customer services will be provided. With all these in place, BOS will be achieved in this business plan.

Four actions framework involves four main steps in formulating and executing a BOS. The four steps are:

Reduce: factors to be reduced below industry’s standard are considered. Employment opportunities will be provided for Nigerian graduates in Solly Aviation thus reducing the use of foreign expatriate.

Eliminate: factors that are not well considered by Nigerian Aviation industry will be eliminated. Once the MRO is established in Nigeria, the cost of maintenance will be reduced in other to prevent airlines from servicing their aircrafts abroad. This will attract private jet owners and commercial airlines. Thus eliminating maintenance of aircrafts abroad as shown in the figure above.

Raise: factors that will be improved in the Nigerian Aviation Industry will be considered; good customer services and employment opportunities will be provided by Solly Aviaiton as shown in the figure 3.1 above.

Create: a complete MRO facility that carries out all maintenance checks (A, B, C and D) will be inaugurated. Currently, Nigeria does not have a complete maintenance facility; establishing one that offers complete maintenance is the main goal of this business plan.

Three tiers of non-customers are customers that are not currently involved in the industry. They are divided into 3 categories:

Tier 1 non-customers: they are customers who are on the edge of the market waiting to be persuaded. They are always looking for better options because they are never satisfied. Considering the level of aircraft maintenance in the country, launching a new facility in Nigeria that provides good customer services will attract private jet owners as well as commercial airlines waiting to be persuaded thus they are satisfied.

Tier 2 non-customers: they are not willing to join a market thus always choosing against it. Offering aircraft servicing at a low cost will attract non-customers such as private jet owners and commercial airlines.

Tier 3 non-customers: they are customers that have never been explored before. Establishing this facility in Nigeria will be a means of exploring tier 3 non-customers.