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 Eurosky – Operations

6.1 Aircraft Operations

All activities pertaining to the operation of Eurosky’s aircraft will be handled by Eurosky Management LLC. This company will take flight orders from customers and maintain aircraft schedules. Eurosky Management LLC will be responsible to ensure availability of an aircraft for each flight order from share owners. Operations will use another aircraft from Eurosky’s fleet or charter additional capacity, should the customer’s own aircraft not be available. In such cases, Michael Beckmann’s experience and market knowledge will enable Eurosky Management LLC to efficiently source charter capacity that meets Eurosky’s quality standards. Eurosky will further exploit this competency by offering charter services as well as charter brokerage on the open market, which will generate additional revenue streams.

Eurosky Management LLC will also hold all relevant operator insurance. However, the company will not act as a certified operator of Eurosky’s aircraft, since obtaining an operating license is both time-consuming and costly. In addition, setting up an aircraft operation does not lie within Eurosky’s field of expertise. Eurosky therefore contracts out the actual aircraft operation to an established partner that is known in the industry for safe and reliable aircraft operations.

6.2 Operator Partner

Eurosky’s partner Augusta Air, which is based in Augsburg in Southern Germany will be the certified operator of Eurosky’s aircraft. Augusta Air is the air charter subsidiary of the German Beechcraft masterdealer (Beechcraft Sales & Service GmbH). It currently operates a fleet of 8 jets and turboprops, 6 of which are King Airs. Additional aircraft are available from the dealer inventory. Due to its close link with the aircraft dealership, Augusta Air maintains one of the youngest fleets in the industry.

Initially, Eurosky’s aircraft will fly out of Augusta Air’s home base at Augsburg airport, 54 km (32 miles) to the northwest of Munich. The airport has the full range of facilities and no slot constraints, which will allow maximum operational flexibility. In addition, landing fees are substantially lower than for the major German airports. Eurosky will link its operations function to Augusta Air’s flight operations through the use of a common software (Air Support PPS). In case of aircraft shortages, Augusta Air will provide additional capacity from its charter fleet to Eurosky at preferred rates. Reciprocally, Eurosky will provide its aircraft for Augusta Air’s charter operations, generating additional income for the Aircraft LLP.

Augusta Air will operate Eurosky’s aircraft under an aircraft management contract. Augusta Air will take full responsibility for all operational requirements, such as providing crew and flight planning. Crews are primarily assigned to a particular aircraft within Eurosky’s fleet which is ensured by a special provision in the aircraft management contract (“Primary Crew” concept). Knowing the pilots personally has proved very important to potential customers participating in Eurosky’s market research. Augusta Air will charge all services at cost plus a markup of 10% for the crew and 5% for all other cost items.

Aircraft maintenance will be undertaken by Beechcraft Sales & Service GmbH (Beechcraft Augsburg), the parent company of Augusta Air. Beechcraft Augsburg is the largest certified maintenance station for Beechcraft products in Europe and operates since 25 years. It offers the full range of services, including paint shop and avionics repair. It holds the largest stock of Beechcraft spare parts in Europe, which will ensure quick turnaround times of Eurosky’s aircraft.

The general manager of Beechcraft Augsburg, Hans Obermeier, has been an advisor throughout the creation of this business plan and will serve on Eurosky’s board.

6.3 Operating Performance

Eurosky has carefully modeled aircraft operations to ensure aircraft availability for share owners and to assess the associated costs and revenues of aircraft operations. The model includes over 800,000 simulated flight requests from share owners. The key component driving service levels is the number of flight orders per share owner received in each month. Even with high seasonal peaks, monthly flight orders per aircraft will remain below 20 in 95% of all cases. With one single aircraft, this results in a service level of 84% or better. Due to the pooling effect, the service level for a fleet of five aircraft will rise to 93% or better (see Exhibit 11 on the facing page). Using a more probable scenario of 14 monthly flight orders per aircraft, Eurosky has determined the number of flight hours it has to charter externally to meet the aircraft availability guarantee. As can be seen from the table in Appendix 8.1.2, the proportion of hours chartered externally never exceeds 9%.

After serving demand from share owners, Eurosky may charter out available aircraft capacity in order to generate revenues for the Aircraft LLP. Eurosky Management LLC will act as a broker for this charter capacity and earn a commission of up to 10%, which is the typical rate in the industry. The number of hours of revenue charter performed have been assumed very conservatively using a cap for the demand in each of the three bases. The total number of charter hours performed by the whole fleet can also be seen in Appendix 8.1.2.

Using typical flight patterns obtained from Eurosky’s customer interviews, Eurosky has determined an average ferry time of 0.3 hours per revenue flight hour. Exhibit 12 on the opposite page summarizes the operations performed by one aircraft.

6.4 Operating Cost

A deep understanding of aircraft operating cost is the key to profitable operations. Assuming 500 hours of annual utilization, the expected cost structure for the operation of Eurosky’s King Air B200s is as depicted in the Exhibit 13 on the following page. Note that a special “free maintenance” deal with the aircraft manufacturer will allow Eurosky lower outlays for maintenance in the first two years of operation. For Eurosky’s operations, the item depreciation will be replaced by a usage fee paid to the Aircraft LLP.

Table of Contents Appendices
1. Executive Summary
2. Market Analysis
3. Products
4. Company
5. Marketing and Sales
6. Operations
7. Financials
Pro-forma Financials
Resumes of the Founder Team
Board of Advisors
Key Advisors
The information and ideas herein are the confidential,
proprietary, sole, and exclusive property of Eurosky’s founders.

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