Professional Documents
Culture Documents
PRP2 - Chapter 4 Operations Management
PRP2 - Chapter 4 Operations Management
Basically, the operation process of an airline business is partly different with another
business because airlines business offered a flight between two points to another for the
customer. There are no manufacturing or developing a tangible product such as creating a
bicycle, developing a new concept car or even manufacture car parts. The continuous flow is
basically the flow to move a single unit in each step of process, rather than make them in batches
for each step. This process can actually saving the time and the cost in any manufacturing
process. It can give advantages to any industries that trying to decreasing the operation cost and
keep up with high demands from the consumer.
Basically, a lot of airlines using this type of operation. It is because of the airlines
operation is continuous process. It can be in daily process, monthly process, and also in yearly
process. A lot of peoples travel crossing to another country every day. Based on that situation,
every airline will provide ticket everyday without stop. They know if they stop producing
available ticket, the process will not running smoothly. For example, Air Asia knows that people
from Malaysia often fly to Singapore. So, they always produce available ticket for flight Kuala
Lumpur to Singapore without stop.
4.2 TRANSFORMATION PROCESS FLOW
View
Advertisement Book
Advertisement
Check in
Receive boarding
(Passenger + Payment
pass
Baggage)
The process flow chart is basically telling the operations flow of the company. Every
company has their own operations chart. The process shows each of the stages to help guide
users through all the process of the operation. It can tell people visually each process when the
company operates. It can show how the company in scheduling an efficient time at each of the
operations. Furthermore, each stage shows requiring steps to complete before they proceed to
another step. The process flow enables customer to jump stages if any of the steps are fulfilled.
Both stages and steps are highly configurable to fit the organizational needs. In addition, it is not
an automated process in the company. It is meant to be guided and aid the user in completing the
process. Above shows the process flow of Elite Air Sdn Bhd, and below is the explanation each
stage and steps of the process flow.
Advertisement
Start from the advertisement, it is the first stage in the process flow. The advertisement is
one of the promotion methods so that the customer can know the available flight ticket the
company’s offered. The advertisement that Elite Air Sdn Bhd had chosen to use is on online
advertisement because it is convenient to people notice the advertisement. The company will use
these methods through YouTube, Social Media such as Facebook, Twitter and so on. This is
because these media are easy to access and to attract customers. As result, the target market will
be easy to achieve.
View Advertisement
At this process, the customer will view the advertisement and the customer will continue
with their choices which flight they want.
Book
On the next stage is where the customers make a booking flight for the selective flight.
The reservation can be done in two methods, which are online booking and counter booking.
Online booking is where the customer makes a reservation through our website and all the
booking information are provided there. It can be accessed at any stage of age. The reservation is
a straight forward method and easy to understand. The steps to make a reservation are where
customers need to choose the date and the route of the flight and the type of the flight which is
return or one-way trip. Next, state the number of the passengers, number of children and the
ticket class. If there are no children leave the columns empty. Following this, the flight
information will be showed and the customer may select the flight. After that, they will proceed
to the payment statement and pay the price ticket. Online reservation will use only online
banking system to pay the ticket.
The counter booking is where the customer goes to the ticket counter or walk-in method
to purchase the ticket. This is the method where the customer will purchase ticket on the spot
from the ticket counter for the reservation. Basically, people who live nearby the airport or at any
Elite Air Sdn Bhd kiosk can purchase the ticket from there. They can purchase the ticket
whenever they want to make the reservation. The company make a decision to have ticket
counter for counter reservation it is because to ease the customer that cannot access through
online. As usual, steps in making reservation through ticket is same as the online reservation and
the only different is the payment method which using cash or credit card.
Payment
The payment stage is where the method that available for customer to purchase the ticket.
It is can divided into several methods that available at Elite Air Sdn Bhd provided to the
customer which is online banking, cash and credit card. First of all, the online banking payment
method can be done through an online reservation. The company has state to use online banking
system only when making a reservation the ticket through online system. It is to protect the
payments that have been done with legal information provided. Next, the payment method is
cash and credit card. Both of these method only uses when the customer makes their purchases
through ticket counter. Elite Air Sdn Bhd provided this method to ease customer who have
limited access on online site.
After the customer makes payment, the airline will confirm the payment and the customer
will receive a boarding. If the customer buy it through online website, the airline will send the
boarding pass through e-mail and the customer have to print it and bring it at the embark gate. If
the customer buys at the counter, boarding pass will be given during check in at the check in
counter.
Next stage is where the check-in process after they purchasing the ticket and ready to
board on aircraft. Check-in process is the process where passengers will be allocated their seats
in the aircraft and the terminal of departure. Basically, check-in process can be done into three
ways which is online check-in, counter check-in and self-check-in. Online check-in it is where
passengers check-in their ticket through an online system and provided with seats number and
which terminal passengers have to go. It is only for the international flight. Furthermore, the
counter check-in is where passengers check-in their ticket through counter and will be allocated
their seats and terminal of departure. Last but not least is the self-check-in where the check-in
process through a machine provided from airline so passengers do not have to get in line at the
counter. Elite Air Sdn Bhd only provided counter check-in because the flight is not an
international flight and the self-check-in machine is too expensive.
Issue ticket
At this point, the staff in charged will check the boarding pass to make sure that the
passenger boarding is at the right terminal and right gate. The customer will have to show
Identification Card (IC) and the staff will check it to make sure the passenger's information is
same. After that, passengers will be boarded into aircraft if the passenger's information is valid.
Embark
The next stage is the last process flow of the Elite Air Sdn Bhd. The stage is where
passengers are ready to boarding on the aircraft. Before them boarding on the aircraft they will
wait at the particular terminal as stated on the boarding pass. Furthermore, the terminal
sometimes can be change even the previous terminal has been stated. The boarding gate will be
open once the aircraft is ready to be boarded. Basically, the priority people will be boarded fist
such veteran citizens, parents with kids and disable passengers.
Inquiry Inform
Inquiry
confirmation supplier
Supplier
Boarding accept order
Deposit Return
payment
Full payment
Check
Quality & Received
Quantity order
Yes No
Inquiry
At this stage, the company will make a deal with supplier about food and beverages that
will be board into the aircraft. The deal will be on how many food and beverages those suppliers
have to prepare. When dealing with supplier on food and beverages , the company has to know
on how many passengers that will fly per flight . At this point, the company has to make sure the
inquiry per flight is sufficient to make sure the company will not use too much cost on the deal.
Inquiry confirmation
At this point, there will be inquiry confirmation just in case it is not the amount needed
for the flight. If it's not, the airline will count and recheck the amount needed. If the amount is
correct the airline will inform to supplier.
Inform supplier
The airline will inform the supplier about the inquiry needed for the flight. After that, the
airline will wait the supplier to accept the order.
The supplier will accept the inquiry order and inform back to Elite Air that they receive
the order information.
Deposit payment
After Elite Air receives confirmation from supplier, the airline will make deposit
payment to supplier. This is to make sure that if anything happen during delivery process, the
company will not be responsible.
Received order
The airlines will received order from the supplier without makes full payment yet. It is
because the items will be on quality and quantity check to make sure everything is in a good
condition.
At this point, the items will be check if there are any damages to the items. If the item is
in a good condition, the items are allowed to board. If it's not, the items will be return to supplier
about the damaged item and will go through back the same process.
Full Payment
After ensuring the items are good and can be boarded into aircraft, the company will
make a full payment. This is to show that the company is satisfied with quality of the items
delivered without any damages.
Boarding
After company make payment, the items will be board in to aircraft and ready to be
served to passengers.
4.3 RECEIVING, LOGISTICS AND STORING
Fuel
ATR 72-600 is the aircraft that is use for Elite Air Sdn Bhd operation. This aircraft has
efficiency in fuel consumption better than any other aircraft. Elite Air Sdn Bhd will make
Petronas Aviation as the fuel suppliers. The Petronas Aviation will supplying Jet A-1 fuel to
Elite Air Sdn Bhd. Jet A-1 is a type of aviation fuel designed for aircraft powered by gas-turbine
engines. It is a kerosene-type fuel. The fuel is use for all turboprop and turbojet aircraft. It is
required a low freezing point of minus 47 C or below.
Petronas will deliver the fuel by using fuel truck for every month. Elite Air Sdn Bhd does
not have any fuel storage to keep the fuel. Every flight Elite Air have the truck must be on time.
The flight that Elite Air provides is two flight per day which on 11:00 p.m. and 16:00 p.m. The
refueling process will occurred according to the flight time. Basically, the refueling process will
occurred at Kota Bharu Airport, which the main airport. It is because the refueling at the
destination airport is quite rare to happen.
Catering
Elite Air Sdn Bhd will use Kuala Lumpur Airport Services (KLAS) as the main suppliers
for catering. KLAS has the best operation in handling in-flight catering for most airlines in
Malaysia. KLAS will provide the catering service for daily operation. When Elite Air has flights,
KLAS will provide the catering service by using truck. Elite does not have storage to keep the
food and beverages because it is the way in reducing any unnecessary expenses. Any wasted
food or beverages inside the aircraft will be collected by KLAS as the services provided from
them. It will prevent any reused food and beverages inside the aircraft. Any airliners will not
using reused food and beverages to their passengers. It is because can make the airlines look bad
at serving their passengers.
Ground Handling
Ground handling is the servicing of an aircraft while it is on the ground parked at the
terminal gate. Kuala Lumpur Airport Services (KLAS) is the ground handler for Elite Air Sdn
Bhd. KLAS has the global standard in handling aircraft. Ground handling provided from KLAS
including baggage services, aircraft handling, passenger boarding bridge, and so on. Elite Air
choosing the external ground handler it is because can reduce the expenses from this service. The
services that Elite Air will using from KLAS is baggage services, aircraft handling, and
passenger boarding bridge. Baggage services are where the passenger’s baggage can be track if
they lost it. KLAS have the system called World Tracer System and trough that system the
baggage can be delivery to passengers in efficient way. Aircraft handling is the service handling
equipment from the aircraft. The services include the loading and unloading baggage, email, and
cargo. Passenger boarding bridge is the service the loading and unloading the passenger using
bridge.
Paper
For Elite Air paper suppliers, the company will choose from Sonofax Sdn Bhd. This
company has the best and cheapest price supplying papers. Elite Air will use a lot of paper for
ticketing and paper work. Sonofax Sdn Bhd will supply the paper for Elite Air in daily operation.
It is because ticketing will be use a lot of paper. The paper will be delivering using a truck at 9
o’clock. They will supply in twice a week such as on Monday and Thursday. Basically, the paper
will be supply to Elite Air headquarter in Johor Bahru and kiosk in Kota Bharu. The paper will
be stored inside the paper storage. Furthermore, the paper will be kept into two different usage
which is ticketing usage and paper work usage. This will make it easier to employee to
differentiate the purpose each of the paper.
4.4 PROCUREMENT, VENDORS & SUPPLIERS
At this point, suppliers are the most significant thing for a business. Suppliers are the
person or entity of resource for goods and services. Furthermore, a business that acquires for
supplier required a large of cost. Each company has their own suppliers and the frequent timing
when they need the supply. For example, a bolt company supplies the bolt to a car manufacturer
every month so that the car factory did not lose their schedule on completing the car. It can be
numbers of suppliers depending on the company’s needs. Elite Air Sdn Bhd basically will select
some of the suppliers to operate the airlines smoothly. Below are the selected suppliers for Elite
Air:
KL Airport Services is the main airport services in Malaysia and a lot of airports in
Malaysia are using their services. Elite Air Sdn Bhd selecting this company as the main supplier
for the catering and ground handling. First of all, KLAS will be provided flight catering for Elite
Air in the next 5 years. The reason of choosing this company supplying flight catering it is
because the services provided have the high quality service. For example, the quality of the
dishes provided from them is satisfying because the team has their own culinary training to
provide the best catering service. Furthermore, the catering service will supplying Elite Air flight
catering in daily operation because the food is cannot be kept and reuse for the entire day
operation.
Elite Air Sdn Bhd will use KLAS as their ground handler too. KLAS is popular company
in supplying ground handlers in most airports in Malaysia. The ground handler provided from
KLAS is the most efficient services can get. All the staffs from the company have been through
training in order to provide the best ground handler in Malaysia. At this point, the frequency on
having their services for the operation is on daily operation. The services provided including the
baggage handler, aircraft services, and flight operation and so on.
Ticketing can be very hard in use of paper if the airline lack of paper supply in order to
run the operation smoothly. Elite Air Sdn Bhd has chosen the best paper supplier in Malaysia to
supply the cheaper paper for the airline. The company called Sonofax Sdn Bhd is the largest
paper supplier in South East Asia. Elite Air choosing this company it is because the cheaper
price and high quality paper supply. The frequency in purchasing the paper is twice a week
depending on frequency of passengers fly with Elite Air.
4.5 QUALITY CONTROL – INPUT AND OUTPUT
Quality control is a system in maintaining and controlling the business to achieve the
goals it set by itself. Quality control involves setting the right standard for the company. It is can
make the company achieve the vision and mission of the company. Elite Air SdnBhd will set the
best quality control in order for this airline to survive in the aviation world.
Input Output
All the renovation work will be at the headquarter. The renovation will start with the
wiring connecting the electricity for the office. Next, is the piping work where the work is to
make sure every water flows working. Then, the renovation process goes to lighting works to
provide the light to the office. After that, the WIFI installation, including modem setup and WIFI
ID verification. Furthermore, the painting job for the office wall, toilet, and so on. The painting
job might take several days to finish up because of the painting materials.
80
’
Receptio
nist
Meeting
Room Workstation
Section 2
22
Pantri
’
Office
Room 1 es
Office
Room Workstation Stora
2 Section 1 ge
Office
Room
3
Toil
et
1,760 sqft
Figure 4.6.1: Elite Air office floor plan
Renovation Supplier and Address
Wiring Electric E.T Sdn Bhd
On this site are the equipments that will be use or installed in the office. The air condition
will be installed to make sure the office comfort without heat and cooling the environment. For
the office furniture and equipment it's including workstation, stationary, and office chair to make
sure every employee has place to work. Next, the fridge will be put at the pantry to keep all the
foods and drinks. After that, the telephone will be put on every workstation to communicate
between customers about any inquiries. Furthermore, the cleaning equipment for the cleaning
purposes to keep the office clean and neat.
The company only will purchase one fax machine, at first, to receive and post any fax
files. The printer to copy any important file or paperwork and the company will use two printers
to ease the work. In the pantry the cabinet will be installing to place things such as mug, spoon or
food. The computer will be installed on each workstation for the employee and this device is the
main process of operation from daily based. Lastly, there will be an installation of two CCTV at
best corner to monitor the office in any situation.
Office furniture Chai & Chai Tradingture For the staff doing the 3 Years
and equipment (Malaysia) Sdn Bhd. works
Fax machine DSOP Sdn Bhd To receive and post any 2 Years
fax files
2688, Jalan Perusahaan, Kawasan
Perusahaan Prai, 13600 Prai,
Penang
Safety and security in airline can be very crucial sometimes because guarding the
company in a safety situation is not easy. Safety is the feeling of freedom from danger, risk or
any other danger situation while security is taking the action in preventing or setting warning to
avoid the danger in any situation. Safety and security can be different depending on a situation
occurred. In the airline business, safety and security can be divided into several situations which
are cargo security, passenger security, aircraft security and office security. Below is the
explanation each of the securities needed for Elite Air Sdn Bhd.
Cargo Security
Cargo security is related to the cargo and baggage in the aircraft. The security on this site
is crucial to airline service because any damages to a passenger's baggage. Elite Air Sdn Bhd will
use the security service from KL Airport Services (KLAS) in order to reduce the cost of
operation. Security on cargo can prevent any illegal thing that passengers bring on the aircraft.
Every baggage must be checked before the baggage is put into the aircraft. Furthermore, any
illegal things that have been scanned will be thrown away according to the rules. The rules are
that not to bring any dangerous things such as knife, scissor, or any sharp things. In addition, if
any, passengers want to bring some liquid stuff it is must be maximum of 10 ml. It is to prevent
any incident inside the aircraft.
Passenger Security
Basically, passenger security related to the security at the boarding time into the aircraft.
The passenger movement while boarding will be provided with the safety and security needed.
For this security Elite Air Sdn Bhd also hired the KL Airport Services staffs in securing
passengers into the aircraft. On this site, they passengers must provide their boarding pass in
order to get into the aircraft. This is the way to prevent any illegal entity inside the aircraft. The
passengers will get into the aircraft, accordingly started with families, veteran citizens, old
citizens, disables, and then normal people. As stated, this can prevent any harm to other
passengers when boarding the aircraft safely.
Aircraft Security
Aircraft security is a significant thing in airline business. The security must be perfect
without any problem because it will impact the airline operation. An airline operation must be
smooth through the entire day in order the company to control the operation in high standard.
Furthermore, the aircraft security is related to the aircraft availability to fly for a flight confirmed
from an in charged engineer. KL Airport Services hired to this security site through entire daily
operation. The services will be at the parking slots for aircraft inspection, aircraft maintenance on
each schedule, and so on. This particular security system is crucial to an airline in order the
airlines always operated in the high standard. For example, the aircraft from Penang International
Airport (PEN) to Malacca International Airport (MKZ) will be inspected from an in charged
engineer to confirm the aircraft is ready and available for the flight. It operated on every flight in
daily operation.
Office Security
Office security is a security regarding to the safety of the office. Each of security at Elite
Air office will be using the CCTV and one security guard to supervise the office at every time.
The level of security at Elite Air is very high for better and convenience to staffs works in Elite
Air Sdn Bhd. As a CEO of Elite Air Sdn Bhd, a manager will be in charged on installing the
CCTV and hiring the right security guard at the office. This is because the manager can control
and supervise the security guard as the stated the security needed. Furthermore, CCTV will be
operating 24 hours monitored by security guard on the office hour and at the night time. As
mentioned, the safety of the office is important and all the data and information about passengers
and airline data base kept there. This is the prevention Elite Air Sdn Bhd does to avoid any lost
to the company.
4.9 OPERATING SYSTEM
On this topic, it is about the operating system that involved in daily operation of the
company. Operating system is system software that manages computer software and hardware. It
also allows the user to communicate the computer without knowing the computer language. It
can save the system information using the right application. Operating system can help the user
to keep memories or data safer and clear. Elite Air Sdn Bhd will choose Point of Sales (POS)
system, Global Distribution System (GDS), and as the IT system to adopt to assist in the daily
operations.
Global Distribution System (GDS) is an online system that delivers rates, airlines seats,
hotel reservation, rental cars, and other online reservation sites. The GDS system supports the
high traffic site such as Expedia, Hotels.com, and any other online reservation sites. This system
will take between 4-6 weeks and another 2 weeks for visibility. The user will need to be
registered and create a new account according to the information provided. This system is
significant to the company because all the information will be keep in there. Other than that, it is
easier to the customers to search any available flights in there.
This system only can be used to one system. The system cannot be connected with
another GDS system provider. If the users want to change, the user is required to send a switch
letter. The switch letter consists of cancelation and to change to another activation of GDS
system. The process of this system is to complete the contract, sign and return, then, the
implementation of the process will be start. After signing the contract, the user will be provided
with steps for setup the GDS system. All setup process via online. It is important to user to
include specific information for the system to display proper information through this system.
Elite Air using this system is because to make it easier for the customer to reserve any available
flights. This is the way Elite Air approach customer in the fastest way.
Point of Sales (POS)
Point of Sales (POS) is the computerized system than the cash register. It is much
standardizing system better than using the cash register. It can use to monitor any changes costs,
calculate reorder items or stock, track money usage, and analyze basis item in the inventory. By
using this system the user can get much information about the sale rather than using the manual
system. Other than that, the user can make a better decision about ordering and merchandising.
This is system is user-friendly with graphical interface. The systems will using a code to enter
inventory manually or automatically. Once the code is entered, information will pop up about
sales price, the quantities and sales information. (entrepreneur.com)
This system will automatically update the inventory and accounts records once the sale is
entered. Security on this system is the best. It is important to keep and control cash receipts in
order to prevent theft. This system provides audit trails to trace any problems occurred during
sales. Elite Air using this system is to maintain sales history so that any information about the
customers can be kept safe and secure. Furthermore, through this system it can improve Elite Air
pricing accuracy while sales process. It is because pricing in airlines sometimes can be changed
fast.
CHAPTER 5 – FINANCIAL MANAGEMENT
5.1 SYSTEM
On this topic, Elite Air Sdn Bhd will use IT system for the account and finance function
from Sage 100 ERP software. Sage 100 ERP is the financial system that provides most of the
financial and account system to any business. It is the product developed from the US and has
Out of the box, Sage 100 ERP delivers comprehensive financial and operational
functionality, including manufacturing and inventory management. Visual Process Flows offer
novice or advanced users a graphical interface that show the steps necessary to complete
business processes. In addition, there are a large number of add-ons available for purchase that
provides vertical industry functionality. Sage 100 ERP products can be used by a wide range of
manufacturing, distribution and services companies, and more granular verticals such as
Sage 100 ERP supports remote access and nightly back-up operations. Automated
disaster recovery services can restore the products in the event of unexpected damage. For
additional customization not initially available, Sage Development Partners can supply product
modifications upon request. Sage 100 ERP is a powerful, yet easy-to-use, tool for creating
custom reports and uses the reporting in a wizard-driven environment with the added benefit of
the presentation-quality output and quick-click reports.
5.2 SUMMARY OF START UP COST
Start - up cost is the beginning of cost that the business operation will use to operate the
company. The cost including of two types of spending which is expenses and assets. Below is
the start - up cost table of the Elite Air Sdn Bhd. In order to get the amount of the company's
started up cost, the total asset will plus with total expenses. The total asset of Elite Air is RM
216, 477.84 and the total expenses are RM 11,480,802.14. So, the total asset plus total expenses
equal to start up cost. After add up both total asset and total expenses, total start up cost of Elite
Total Asset Total Expenses Start Up Cost
+ =
RM 216,477.84 RM 11,492,802.14 RM 11, 709, 279.98
Table 7.2.3: Start Up Cost Calculation
Asset
Expenses
RM11,492,802.14
At this sub-topic, it is about the amount of the company’s capital and the how much the
company will borrow from the resources. Capital is the start-up cost of the company such as
assets and expenses. On the other hand, borrowing is the load that the company took to operate
the business. Both of these things is important to an airlines company because it can tell that the
company is high with liability or not. Elite Air Sdn Bhd will take loan from Maybank because it
is the most reliable bank to make a loan. The amount of Elite Air Sdn Bhd needed to operate the
airlines is approximately RM 11, 880, 000.00. Elite Air Sdn Bhd will take 20% loan from
Maybank and 80% capital of the investment from the shareholders of Elite Air Sdn Bhd.
The interest rate loan provided from Maybank is 5% and the amount that Elite Air Sdn
Bhd takes is RM 2,376, 000.00. At this point, Elite Air Sdn Bhd must pay the loan interest in 5
years as the required. Below is the calculation of the interest rate of Elite Air Sdn Bhd:
Amount principle = Loan Repayment
Number of
month
RM2, 376, 000 = RM47, 520.00
50 months
Loan Interest
Amount Principle Interest Rate Interest Per Anum
x =
RM2, 376, 000.00 5% RM118, 800.00
Interest Per Number of
Annum Year Total Interest
x x
RM118, 800.00 5 RM594,000.00
Total Interest = Monthly Interest Amount
Number of
month
RM594, 000.00 = RM11, 880.00
50 months
From the calculation above, Elite Air Sdn Bhd must pay monthly loan interest of 5% in 4
years of RM 11, 880.00 to Maybank. The total loan repayment is RM 59, 400.00.
5.4 SUMMARY OF PAYMENT AND COLLECTION TERMS
On this topic it is about the payment method of a company that been used to your
customers. The method can be divided into options, which is credit basis and cash basis. Credit
basis is that the company giving the customers to pay using the credit card that it can give the
company many creditors. On the upper hand, cash basis term is the practice of recording the
revenue when cash is receives and recording expenses when expense is paid. Elite Air Sdn Bhd
will using cash basis because it will secure the cash flow without having many liability with the
customers or suppliers.
The payment collection terms that Elite Air uses are by cash, credit card or debit card,
online banking and through redeem point. All of these are the basic payment method that Elite
Air practice to ensure the operation running smoothly. Firstly, customer can pay using cash
which is that the customer pay directly through counter and the payment collection is using POS
system. This is the common payment method in any business. The payment data from POS
system will integrated to the account system that Elite Air uses so there will be no problem
according to the payment.
The customer also can pay using credit card or debit card where they want fast payment
for the ticket. Credit card payment basically where some business man use for quick payment
when comes to purchasing airline ticket. Everything handled from the bank. Elite Air has the
term when come to credit card or debit card payment. Elite Air will make sure that the card is
still valid to use for the payment. Next is the card must belong to the right person in order to
avoid any credit card scams that may harm to the company or the customer. If the card is not
belongs to the right person, charges will be taken according to the top management decision.
Furthermore, customer can use online banking to purchase the ticket in case the ticket
counter is not near. There will be several steps to be followed accordingly to pay the ticket
trough online banking. This is to avoid the online banking scams in order to keep company's
secret. The first step is to double check the ticket booking details so that the customer is paying
the right amount for the right flight. Second step is the customer must filling in the customer
personal details in the required blank space. This is where the data will record into the company
system if any problem happens, Elite Air will have the upper hand. The third step is the customer
must fill in the banking details with the right information to avoid online scam. The bank that
Other than that, the customer that has points from the Frequent Flyer Program, called
More Elite, the customer can redeem points to upgrade flying experience with Elite Air. The
upgrades such as, free flight, purchase flight only using points, and have in-flight meal. As the
information of the customer is complete through online booking or counter purchase, the data
will update into the system. After that, system will recognize if the customer is in More Elite
programmer, the points will be updated into the customer account. At the meantime, if the
customer does not in More Elite programmer, the points collected until the program subscribed.
The customer can redeem their upgrades through online booking and ticket counter. Customer
redeem through online can select which upgrades they want after filling in the booking details. If
the customers redeem their upgrades through ticket counter, asking the staff to use the point and
Share evaluation or stock evaluation is about the share value of the company in market. It
can determine the par value of the company is it bad or not. The value of the company can be
affected by the action and opinions of investors. These situations can an impact to a company’s
shares. Furthermore, it stated in the balance sheet of the company. In business, the company can
sell their shares to public or not. It depending on the company type whether its public limited
company or private limited company. Private limited company is not easily sell the shares to
public. In that case, the valuation is necessary. Below are the calculation and explanation about
the shares valuation of Elite Air Sdn Bhd:
On this topic, it is the process of the declaration of dividend to the shareholders in the
particular company. Dividend is the payment to the shareholders who invest in the company.
The company can pay the shareholders in a term of cash or anything that can be paid. Below is
the explanation and calculation declaration of dividend of Elite Air Sdn Bhd:
The dividend percentage above has slightly increased from the second year until the fifth
year. On the first and second year there are no dividends because of the operation of the airlines
started on the second year and the dividend payment is on third year.
The reason Elite Air has to have a cash flow is that to monitor the cash moving in and out
the business. The reason behind this to make sure the company did not spend the cash that can
make the company running out of business. Other than that, the cash flow statements can help
with financial decisions such equipment purchasing, upgrading company's capacity or adding
inventory. From this point, the company can make a decisions based on the cash flow statement
about the remain cash. As the result, the company can consider the best things to purchase
Furthermore, the cash flow statements can provides the investing activities of the
company such as long term investments, plant and equipment. (accountingcoach.com,N/A). Elite
Air has investing a lot in order to make sure the company is under control. Next, it can show the
supplemental information for the company to know such as item that did not involve cash or
taxes paid and interest paid.
Mth1 Mth 2 Mth 3 Mth 4 Mth 5 Mth 6 Mth 7 Mth 8 Mth 9 Mth 10 Mth 11 Mth 12 Ye ar 1
Incom ing
Capital 9,504,000.00 9,504,000.00
Loan 2,376,000.00 2,376,000.00
Cash Sales
O utput Tax
Tax Credit - Asset 360.00 9,945.84 768.00 11,073.84
Tax Credit - Expenses 75.00 547.80 128.88 351.00 380.94 471.00 1,311.00 1,250.94 1,221.00 1,245.00 1,634.94 88,418.28 97,035.78
Fixed Deposit (3.1%)
9,504,435.00 547.80 128.88 10,296.84 1,148.94 471.00 1,311.00 1,250.94 1,221.00 1,245.00 2,377,634.94 88,418.28 11,988,109.62
O utgoing
Deposit Rental 3,600.00 3,600.00
Deposit Utilities 2,400.00 2,400.00
Air Conditioner 35,000.00 35,000.00
Air Conditioner (2)
O ffice Chair 9,800.00 9,800.00
O ffice Chair (2)
W orkstation 1,800.00 1,800.00
O ffice table 10,000.00 10,000.00
O ffice table (2)
Fridge 1,000.00 1,000.00
Fridge (2)
Sage ERP Software 4,000.00 4,000.00
Sage ERP Software (2)
W IFI Router & Modem 2,400.00 2,400.00
W IFI Router & Modem (2)
Telephone 9,800.00 9,800.00
Telephone (2)
Computer 68,600.00 68,600.00
Computer (2)
Renovations 20,000.00 20,000.00
Sofa 4,000.00 4,000.00
Sofa (2)
Printer 6,000.00 6,000.00
Printer (2)
Fax Machine 4,000.00 4,000.00
Fax Machine (2)
Floor Burnisher 2,100.00 2,100.00
First Aid Kit 400.00 400.00
CCTV 2,120.00 2,120.00
CCTV (2)
Fire Extinguisher 496.00 496.00
Cabinet 2,800.00 2,800.00
PO S Sytem 8,800.00 8,800.00
PO S System (2)
Carpet Vacuum 2,000.00 2,000.00
Janitor Cart 700.00 700.00
Dustbin 2,548.00 2,548.00
W aste Receptacles 200.00 200.00
Reinvestment
Fixed Deposit
Expe nse s
Management Salary Year 1 76,243.20 76,243.20 76,243.20 76,243.20 76,243.20 76,243.20 457,459.20
Management Salary Year 2
Training 15,000.00 15,000.00 30,000.00
Cost of salary 0.00
Aircraft Fuel 0.00
Aircraft Lease 1,444,188.00 1,444,188.00
Landing Fees (SZB)
Landing Fees (KBR)
Parking Slot (SZB)
Parking Slot (KBR)
Rent 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 15,000.00
External Auditor 2,700.00 2,700.00
External Secretary 1,500.00 1,500.00 3,000.00
SSM License 1,700.00 1,700.00
AOC License 4,000.00 4,000.00
ASL License 2,000.00 2,000.00
MBJB License 180.00 180.00
Stationery 500.00 500.00 500.00 500.00 500.00 500.00 500.00 3,500.00
Cleaning Chemicals 800.00 800.00 800.00 800.00 800.00 800.00 800.00 800.00 800.00 7,200.00
Broom, Brushers & Dusters 800.00 800.00 800.00 800.00 800.00 800.00 800.00 800.00 800.00 7,200.00
W indow Cleaning Tools 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 4,500.00
Sponges & Scouring pads 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 4,500.00
Restroom Care Products 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 4,500.00
Bills 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 13,500.00
Promotion Year 1 14,000.00 14,000.00 14,000.00 14,000.00 14,000.00 14,000.00 84,000.00
Promotion Year 2
Brochure 400.00 400.00 800.00
W ebsite Creation 898.00 898.00
W ebsite Maintenance 499.00 499.00 499.00 1,497.00
Insurance 400.00 400.00
Fixed Based O peration
Food & Beverages
Aircraft Maintenance Engineer 6,000.00 6,000.00 12,000.00
Tax Remittance
Dividend 0.00
Taxation 0.00
7,685.00 9,677.80 22,276.88 181,910.84 20,297.94 8,321.00 114,404.20 98,343.14 97,814.20 98,238.20 164,527.14 1,712,699.48 2,536,195.82
Balance 9,496,750.00 -9,130.00 -22,148.00 -171,614.00 -19,149.00 -7,850.00 -113,093.20 -97,092.20 -96,593.20 -96,993.20 2,213,107.80 -1,624,281.20 9,451,913.80
Cum Balance 9,496,750.00 9,487,620.00 9,465,472.00 9,293,858.00 9,274,709.00 9,266,859.00 9,153,765.80 9,056,673.60 8,960,080.40 8,863,087.20 11,076,195.00 9,451,913.80 9,451,913.80
Reinvestment
Fixed Deposit 4,550,000 7,770,000 7,770,000
The reason to have an income statement to show the gross profit, operating expenses, net
earnings and problem areas. It shows the pricing of products is correct or the discount is too
much. Other than that, it can tell the cost of business and what the company spends to create the
product. The item includes rent, salaries, advertising, and other operating expenses. At this
point, if the expenses are rising, the company can check to cut back any items driving to more
sales.
Furthermore, the income statement can shows net earnings where are the bottom line on
how much the company loss or gaining profit.(smallbusiness.chron.com, N/A).As the new
company may have losses the company can analyze the data for the type and stage of the
company. Next, an income statement can show the company any problematic area if the
company did not hit the goals or targeted revenue. Here, the company can compare revenue
The reason to have a balance sheet statement is that it gives a quick view of the business's
financial standing. Without the statement the company may have a negative impact on the
company's financial. It is also can shows what the company owes and own in the data. From this
point, the balance sheet is important as the company may not alert about the company's financial
Other than that, it also can tells the bank whether the company is qualifies for a loan or
credit.(sage.com, 2015).As the result, investors can understand better about the potential of the
company to survive in the future. In addition, the company can make better decision based on
the data to make sure the business is not in a big liability. Current performance of the business
significantly gives the ratio analysis about the past and present position of the company.
ELITE AIR SDN BHD
Balance Sheet as at year 5
Liabilities
Current Liabilities
Bank Loan 2,280,960 1,710,720 1,140,480 570,240 -
Total Liabilities 2,280,960 1,710,720 1,140,480 570,240 -
Return on investment (ROI) is a measure of profit earned from each investment. Like the
“return” (or profit) that you get from your portfolio or bank accounts, it is calculated as a
percentage.
Internal rate of return (IRR) for investment is the percentage earned on any amount
invested for each period in which they are invested. IRR is also another term people use for the
benefit. Finally, the IRR gives way to compare alternative investments based on their products.
(RM9,504,000 42
RM9,451,914 RM2,959,257 RM861,220 RM952,507 RM4,752,496
) %
Table 5.10.3: IRR Table for 5 years
The payback period is the time in which the initial cash flow investment is expected to
recover from the inflow of cash generated by the investment. It is one of the easiest to evaluate
investments.
[Capital - [NPAT 1 + [RM9,504,000 - [(RM2,189,630) +
NPAT 2 + NPAT 3] = RM3,814,909 + RM6,240,534]
NPAT (Next year) RM9,717,889
= RM9,504,000 - RM7,199,031
RM9,400,533
= RM2,304,968.76
RM9,400,533
= 0.25
= 2.94 Months
Payback Period = 3 years 3 months
Table 5.10.1: Payback Period Calculation