BAC SG Rush Case Submission by I3

Tejasri Jayakanth | Debasmita Roy Chowdhury | Rajat Shivnani | Prashant Gusain | Soham Bansal
 Slide 1 Approach and Methodology
Teez Airways (“Client”) is a low-cost domestic career in India which has been in operations since 2007. As on date, Client does
not offer any meals on its flights. However, in order to tap the rising demand in the aviation sector on account of betterment of
the COVID-19 situation, the Client is considering to provide full-ticket meals as a part of the ticket cost on its busiest routes.
The approach used in order to arrive at the decision is as follows:

1 Estimation Revenue
Avg. no. of passengers X Avg. ticket price

2 Estimation of Revised Revenues due to offering of meals

Avg. no. of passengers X (Avg. ticket price X factor for increase in ticket price)

3 Estimation of Costs due to offering of meals

(No. of Veg Passengers X Cost of Veg Meal) + (No. of Non-Veg Passengers X Cost of Non-Veg Meal) + (Requirement
of Fuel per litre X Cost of Fuel per litre)

4 Estimation of Profit
3 2

5 Final Decision
Profit? -> Yes -> Go Ahead
 Slide 2 Assumptions, Results and Recommendation
Assumptions
Particulars for Estimation of Profit/Loss Rationale
Increase of 15% in the price of each flight ticket To account for increase in meal and fuel expenses.
20% dip in no. of consumers due to raise in ticket price It is stated that overall demand for flight tickets is increasing.
However, with an increase in price, demand is bound to decrease.
Proportionate decrease in the number of vegetarian
and non-vegetarian meal preferences due to decrease Proportionate decrease in no. of vegetarian and non-vegetarian
customers has been assumed for the sake of simplicity.
in no. of customers.
Given that Client is servicing non-major airports in a higher proportion than other airlines, it is unlikely that the surge in ticket
pricing will significantly affect demand in these markets. Hence, we expect that the demand for Teez Airlines will not decrease
in non-major cities.
Each flight will be operated 270 days in a year.

1. On average, we find that there is an average profit of Rs. 300 on each ticket sold. This translates to
an average profit of Rs. 30,104 per flights, giving an average profit margin of 7.55%.
Key Results and
2. Annual operating revenue is found to be Rs. 341.37 crores, with an annual cost of Rs. 316.98 crores.
Recommendation
This gives an annual profit of Rs. 24.38 crores.
3. Client may go ahead with providing in-flight meals on its busiest routes.