Weekly Case Challenge

Pricing Optimization
Broadband on-board
Deadline: 23h59 - 26.03.2022
Problem statement narrative
Our client is a startup with the ability to deliver broadbrand internet to commercial airlines. The company
owns a patent on a necessary technology.
Guidance for interviewer and information provided upon request
• The airline industry has a general interest in broadband internet.
• The startup would charge customers on a per flight pricing model
• 2000 flights per year per airplane
• #commercial airplanes in the world: 3000
 Key question

01 How big is the market for on-board internet in long-distance flights?

02 How many customers are necessary to break even?

Exhibit 1: General information on the aviation market (global average)

First Economy

Seats per plane 20 180

Load factor 0.75 0.75

Business travellers (%) 100 30

• At the beginning only business travellers are seen as potential clients.

Exhibit 2: information on pricing

Penetration (%)

• Price for flat-rate internet vs. penetration, i.e. % of business passengers

expected to use the service on any given flight
Exhibit 3: Cost structure of new service

Fee for satellite use 50.000

Fixed cost Licenses fee for airline 100.000

(Dollar per plane and year

Investment costs amortized per year 50.000

Variable cost Data fee (dollar/MB) 0.1

• It is assumed that the average client loads 50 MB per flight

• the total revenue per client are set to 15$, independent of the loaded data
volume.
• Submit your video on time via link: https://forms.gle/aKAwkh6jLQqv8Rdo8
• Deadline: 23h59 - 26.03.2022 (Saturday)
• If you need any further supports, please contact fanpage The Trainee Club or reply email
from thetraineeclub@gmail.com.
• Wish you all the best!