Eagle Airlines A Case Study
Eagle Airlines
Keith Russell, president of Eagle Airlines, a small airline operating in south-eastern
Australia, had been considering expanding his operation and now the opportunity was available. An acquaintance had put him in contact with the president of a small airline in the west that was selling an aeroplane. Many aspects of the situation needed to be considered however, and Keith was having a hard time sorting them out.
The Company
Eagle Airlines (“Eagle”) owned and operated three twin-engine aircraft. With this equipment,
Eagle provided both charter flights and scheduled commuter service between several cities in eastern Australia (Melbourne, Sydney, Canberra, Adelaide, Hobart, Launceston and smaller communities in the area). Scheduled flights constituted approximately 60% of Eagle’s flights, averaging about 2 hours of flying time and a distance of some 700 kilometres. The remaining
40% of flights were chartered. The mixture of charter flights and short scheduled flights had proved profitable, and Keith felt that he had found a niche for his company. However, he was aching to increase the level of service, especially in the area of charter flights, but this was impossible without more aircraft.
This case is based on Clemen and Reilly, Making Hard Decisions, Duxbury, and is only intended to be used as a basis for class discussion.
The Opportunity
A Piper Chieftain was for sale at a price of $600,000 (Australian Dollar). This twin-engine aeroplane (see Exhibit 1) had been maintained according to the regulations and safety standards of the Civil Aviation Safety Authority (CASA), and the engines were in a good condition. One would easily get five years of normal use out of the aeroplane. Furthermore, having been used by another small commercial charter service, the Piper Chieftain contained all the navigation and communication equipment that Eagle required. In the aeroplane, there are seats for 10 passengers and the pilot, plus
Keith Russell, president of Eagle Airlines, a small airline operating in south-eastern
Australia, had been considering expanding his operation and now the opportunity was available. An acquaintance had put him in contact with the president of a small airline in the west that was selling an aeroplane. Many aspects of the situation needed to be considered however, and Keith was having a hard time sorting them out.
The Company
Eagle Airlines (“Eagle”) owned and operated three twin-engine aircraft. With this equipment,
Eagle provided both charter flights and scheduled commuter service between several cities in eastern Australia (Melbourne, Sydney, Canberra, Adelaide, Hobart, Launceston and smaller communities in the area). Scheduled flights constituted approximately 60% of Eagle’s flights, averaging about 2 hours of flying time and a distance of some 700 kilometres. The remaining
40% of flights were chartered. The mixture of charter flights and short scheduled flights had proved profitable, and Keith felt that he had found a niche for his company. However, he was aching to increase the level of service, especially in the area of charter flights, but this was impossible without more aircraft.
This case is based on Clemen and Reilly, Making Hard Decisions, Duxbury, and is only intended to be used as a basis for class discussion.
The Opportunity
A Piper Chieftain was for sale at a price of $600,000 (Australian Dollar). This twin-engine aeroplane (see Exhibit 1) had been maintained according to the regulations and safety standards of the Civil Aviation Safety Authority (CASA), and the engines were in a good condition. One would easily get five years of normal use out of the aeroplane. Furthermore, having been used by another small commercial charter service, the Piper Chieftain contained all the navigation and communication equipment that Eagle required. In the aeroplane, there are seats for 10 passengers and the pilot, plus