Universal Airlines

i

The case requires a three-step process including the understanding of the MRO business, segmentation of the market & estimating market size. Candidates are free to study more aspects or have a broader structure, but the interviewer should try to keep the structure centered around these 3 steps.

Once the candidate gives his response, the interviewer can share additional information with the candidate so that he has a clear view of the business.

Additional information that can be shared:

• Maintenance of aircraft is either done during pre-flight, during the light check, or the heavy check.
• A second service component is an overhaul which includes retro-fit of the aircraft layout or cleaning & repairing carpets and plane seats.
• These cleansing & overhaul services are typically done during light & heavy checks.

The candidate should come up with initial ideas regarding the MRO business and the kind of products that are offered. 

Possible ideas:

• MRO (Maintenance, Repair, Overhaul)
• Maintenance: pre-flight checks, an inspection of major components every 4 months
• Repair: repair of damages during the maintenance period
• Overhaul: entire retrofit of the interior (carpets, seats, …)

Possible answer:

To save time & money, maintenance providers typically carry out multiple MRO tasks in parallel so that they don't have to ground the aircraft when there is no need to.

The interviewer should challenge the candidate to come up with his way of segmentation before sharing info with the candidate.

The candidate should now look into segmenting the market and the candidate should ask for information on this and the proper way to segment the market.

The candidate should note that the business-jet segment is quite dominant in terms of numbers and that this validates the client's focus on that particular segment.

Possible answer:

The widebodies could generate more revenue since their size is much bigger than the business jets. However, given their limited numbers, it would be difficult to enter this segment since the market might be saturated with existing players.

A second reason is that servicing widebodies would mean a much larger capital investment in terms of materials & facilities due to their size.

Additional information that can be shared:

The main revenue drivers are labor cost, manhours, and the cost of materials.

Overhead can be left out for now, since those costs are minimal.

• Also, line maintenance should be outside the scope since most airlines have their own onboard engineers to conduct pre-flight checks.
• That leaves with the light & heavy checks only to take into account.

The candidate should indicate that in order to size the market, we would need to estimate total revenues for the business jet segment. Important revenue drivers are labor costs, hours of labor required & cost of materials & potentially some overhead.

The candidate should also ask for data and information on those aspects.

The market size is around $620 m for roughly 4,000 business jets who receive 3 light checks each year and one heavy check every 3 years.