https://www.youtube.com/watch?v=H8sef06FRhs
Uber ‘flying taxi’ trips could cost as little as $70 | Nine News Australia
https://www.youtube.com/watch?v=WA7ly8AIL1M
The “Sky Taxi” company is considering a proposal to offer an aerial based taxi service between five locations in and around the city of Perth. It intends to do this by the construction of five docking stations to be located in the Perth City CBD, Perth Airport, Fremantle, Karryinup and Booragoon shopping centers. They are proposing to use a total of ten fully electric Vertical Take Off and Landing
(VTOL) crafts to be used as taxis. As part of the project, a network of solar panels would also be installed at various locations to minimise the reliance of sourcing power from the main electricity grid. A solar rebate will be offered by the WA government to Sky Taxi to encourage the use of renewable energy.
The VTOL crafts can carry up to 4 passengers and a pilot. What would normally take 30 minutes of travel time by land based transport, is estimated to take only about 10 minutes in peak hour traffic.
This would be a significant infrastructure project to be undertaken in Western Australia and if the above trial is successful Sky Taxi would be looking to expand their service network to other capital cities in Australia.
It is proposed that the Sky Taxi trail would be run as a fully costed, stand alone project and a self sustaining business venture. This assumes that all approvals have been given by the Civil Aviation Safety Authority (CASA) to allow the VTOL crafts to operate.
Imagine that you are employed as an engineering consultant and you have been assigned to work with the Sky Taxi planning design team on the proposed new transport links.
The total construction cost of the project is estimated to be $25 million in today’s dollars. In addition to the construction costs, the 10 new VTOL taxis will each cost $650k and will be purchased upon completion of construction so that they can start earning revenue as soon as construction is complete. Use these figures to determine the total amount you will be required to borrow to finance the project. These figures include the complete construction costs associated with the the five docking stations.
Revenue will be generated via taxi fares, the solar panel rebate and also from the electronic advertising to be placed both on board the VTOL craft and at the Perth city CBD, Perth Airport, Fremantle, Booragoon and Karrinyup docking stations.
The total expected revenue from advertising is estimated to be $200k per year.
Note: Curtin University does not endorse or promote Uber Air technology, but we are only referring to it as an example.
The taxi fare pricing will be calculated using the figure of $N per kilometer.
| Destination Link of Service Provided | Total Distance
(one way) |
Expected number of
passengers per year |
| Perth Air Port to Perth city | 15 km | 180,000 |
| Perth Air Port to Fremantle | 30 km | 68,000 |
| Perth City to Karryinup | 14 km | 20,000 |
| Perth City to Booragoon | 16 km | 22,000 |
Table 1
Where $N / km is the cost of the air taxi fare / km of a one way trip
Financing Structure of the Project
To finance the project the state government intends borrowing the total amount of money with an annual interest rate of 2.9%. The borrowed funds will help cover the cost of the preparation of all the documentation, contracts, public consultation, the tendering process, the actual construction and commissioning. It is possible that during the early stages of the completed project some of the borrowed funds will in part cover, staff wages and the ongoing operation and maintenance costs.
The proposed financing arrangement for the loan is to be financed over a 10 year period.
The Sky Taxi company has stipulated that if the project was to go ahead, the initial project scoping must start on the 1st of Jan 2021 and has stated that the project is to break even at the end of the 10th year. This goal is to be achieved from revenue generated via Sky Air taxi fares, solar power rebates and from the advertising while also taking into account the expected annual ongoing power supply tariff, maintenance and operational costs.
The Sky Taxi company requires that the air taxi fare price ($N) has to set at a value that is competitive with a standard land based taxi fare, which is deemed to be equal to $3/km. Thus to be competitive $N/km must be less than or equal to $3/km. A second constraint stipulates that the project must break even in less than or equal to 10 years.
The loan draw-down profile of the borrowed funds that follows the typical project life cycle “S curve” expenditure distribution is given in Table 2 below.
| Year of Loan Drawdown | Expected Loan Drawdown Profile |
| By the end of 1st Year | Expected drawdown is 20% of total loan amount. |
| By the end of 2nd Year | Expected drawdown is 32% of total loan amount. |
| By the end of 3rd Year | Expected drawdown is 38% of total loan amount. |
| By the end of 4th Year | Expected drawdown is 10% of total loan amount. |
| Table 2 |
- Note that all the three revenue streams can only start once ALL of the docking stations are built, commissioned and handed
- For simplicity assume all costs and revenues land at the end of each calendar year.
- When calculating the NPV, the same interest rate is to be used as your discount rate for all inflows and
Operations and Maintenance (O&M) Costs
The expected costs associated with the ongoing maintenance and operational cost (in today’s dollars) is estimated to be $10m per year. This costs include the annual CASA licensing fee. Note that the annual Operational and Maintenance costs commence only once all the construction of the five docking stations are built, commissioned and handed over. Also assume that the operation and maintenance costs remain the same each year and that all cost land at the end of each calender year.
Power Supply and Usage costs.
It is estimated that $4m will be the annual power cost tarriff that Sky Taxi will have to pay. Sky Taxi intends to recover $500k /year of the total $4m/year power cost tariff via the proposed solar panel array network which will be installed as part of this project. Note: The annual $500k solar rebate only comes into effect exactly 2 years after the construction of the project has been completed and handed over.
Appendix Information
In the appendices you have been given tables of the work breakdown structures covering the expected Electrical, Mechanical and the Communications / IT engineering scope of works.
You have also been given a table of the Master Plan for the project. Refer to Table 4.
Task List
Your team has been asked to determine what a one way taxi fare, in terms of $N /km, needs to be set to, in order to be able to break even at the end of the 10 year time frame and also be competitive with a standard land based taxi fare.
To help you to provide a response to this request you are required to present the following in your formal report to the Sky Taxi planning design team who will then submit your document at the board meeting.
Task 1. Draw the Gantt charts pertaining to each of the Work Breakdown Structures for the Mechanical, Communication / IT and Electrical scope of work components as per Tables 5, 6 and 7 respectively. (Note: The Gantt charts can be hand drawn but no free hand drawings are acceptable as this is a formal report. All charts are to be clearly labelled showing total time duration in weeks. ) Each Gantt chart drawn is to fit to the size of an A4 sheet of paper.
[24 Marks] Task 2. Draw an AOA diagram for the of the Electrical Engineering scope of works, starting from and
including activity “AE” up to and including activity “RE”. Refer to Table 7.
[10 Marks]
- Find and state the critical path and determine its duration in weeks. [2 Marks]
- State by how many weeks the installation of the interruptible power supply equipment in the main switch rooms(s) can be delayed by, without affecting the completion
time of the overall Electrical Engineering component of the project. [2 Marks]
- State by how many weeks can the upgrade the 66kV substation at Perth airport docking station be delayed by, without affecting the completion time of the overall
Electrical Engineering component of the project. [2 Marks]
- State by how many weeks the installation of the lightning and surge protection equipment
be delayed by, without affecting the completion time of the overall Electrical
Engineering component of the project. [2 Marks]
- Similarly, by how many weeks could the installation of all landing pad lights as per CASA requirements be delayed by, without affecting the overall Electrical component project?
[2 Marks]
Task
- On one A4 sheet of paper using the data given in Table 4 of the Appendix and incorporating information attained from question 1, draw the complete Gantt chart of the “Master Plan”
for this project. Total duration time is to be given in weeks. [8 Marks]
- Using the now completed Table 4 determine the overall expected project completion time from the initial tender, “Activity A” to the commissioning and handover of the complete project, “Activity K ”. (a) Clearly state how many weeks in total it will take to build and commission the five docking stations. This is a critical number as it will determine when the project can commence earning revenue. [2 Marks]
(b) Show the derivation of the total annual revenue equation expected during the 5th year of operation. [6 Marks]
- Draw on one A4 sheet of paper and clearly label the pre-tax cash flow diagram for the total projectshowing all relevant contributing cash inflows and [ 10 Marks]
- The project is to break even at the end of 10 years (this includes all feasibility and construction times). Determine the value of a one Sky Taxi fare in terms of $N /km, if Sky Taxi can negotiate an interest rate of 9%. (Show your working and equations used*). Comment if your calculated figure is competitive when compared with a land based taxi fare. [20 Marks]
- Alternative Scenario: By holding the interest rate of 9% and setting the price of a one way ticket to $N/km = $3.00/km, calculate how many years it would take to break even. (Show your working*)Is this in breach of the required time constraint for the project? [20 Marks]
- You are asked to look at a further scenario, where Sky Taxi wants to set the price of a
one way fare to $N/km = $3.00/km and also that the project must break even at the end of 20 years. Calculate the required interest rate value to be negotiated in order to achieve this. Give your answer as a %, to an accuracy of nine significant figures. (Show the equations used to calculate this*). Comment on the calculated interest rate. [20 Marks]
- Part of your role is to select the engineering contracting company to carry out the build of the Electrical, Mechanical and Comms IT construction The list of accredited tenderers has been narrowed down to two companies. Both companies have provided their respective financial statements for the past two fiscal years. Refer to Appendix 2. Calculate the solvency, liquidity and profitability ratios for each company (for both financial years) and display your calculations. Based on your calculations in about 500 words make your recommendation as to which company would be better placed to undertake this project. In your own words clearly
explain your reasoning.
- On one A4 sheet of paper using the data given in Table 4 of the Appendix and incorporating information attained from question 1, draw the complete Gantt chart of the “Master Plan”
for this project. Total duration time is to be given in weeks. [8 Marks]
- Using the now completed Table 4 determine the overall expected project completion time from the initial tender, “Activity A” to the commissioning and handover of the complete project, “Activity K ”. (a) Clearly state how many weeks in total it will take to build and commission the five docking stations. This is a critical number as it will determine when the project can commence earning revenue. [2 Marks]
(b) Show the derivation of the total annual revenue equation expected during the 5th year of operation. [6 Marks]
- Draw on one A4 sheet of paper and clearly label the pre-tax cash flow diagram for the total projectshowing all relevant contributing cash inflows and [ 10 Marks]
- The project is to break even at the end of 10 years (this includes all feasibility and construction times). Determine the value of a one Sky Taxi fare in terms of $N /km, if Sky Taxi can negotiate an interest rate of 9%. (Show your working and equations used*). Comment if your calculated figure is competitive when compared with a land based taxi fare. [20 Marks]
- Alternative Scenario: By holding the interest rate of 9% and setting the price of a one way ticket to $N/km = $3.00/km, calculate how many years it would take to break even. (Show your working*)Is this in breach of the required time constraint for the project? [20 Marks]
- You are asked to look at a further scenario, where Sky Taxi wants to set the price of a
one way fare to $N/km = $3.00/km and also that the project must break even at the end of 20 years. Calculate the required interest rate value to be negotiated in order to achieve this. Give your answer as a %, to an accuracy of nine significant figures. (Show the equations used to calculate this*). Comment on the calculated interest rate. [20 Marks]
- Part of your role is to select the engineering contracting company to carry out the build of the Electrical, Mechanical and Comms IT construction The list of accredited tenderers has been narrowed down to two companies. Both companies have provided their respective financial statements for the past two fiscal years. Refer to Appendix 2. Calculate the solvency, liquidity and profitability ratios for each company (for both financial years) and display your calculations. Based on your calculations in about 500 words make your recommendation as to which company would be better placed to undertake this project. In your own words clearly
explain your reasoning.
