P
ProHub
English 简体中文 繁體中文
Medium Profitability Market Sizing

The Flying Metro

#Airlines/Infrastructure #Transportation
ProHub Comment

This is a comprehensive market sizing and financial modeling case emphasizing supply-side analysis. The candidate must accurately calculate airport capacity, passenger flow, market demand, and apply financial metrics (NPV via perpetuity formula) to determine investment viability. The case tests quantitative precision and strategic thinking about competing transportation modes.

Estimated Time 15 minutes
Difficulty Medium
Source IESE
50 / 100
Your client “Y Invest” is a Private Equity (PE) firm that is considering to buy the rights to construct, build and operate a solo metro line that would connect Times Square in Manhattan (the City Center) to JFK Airport (major airport and one of the world’s busiest airports) in New York. The line operates in both directions (from & to the airport). The firm has hired you to help them determine whether this is a good investment opportunity or not?

Clarifying Information

  1. The goal is to have a positive NPV and to sell the asset the first year that is ready to operate
  2. We forecast that the construction time will be of 1 year
  3. No other metro lines go from the City Center to this airport
  4. Initial Investment is not an issue
  5. 2 Major companies are competing with us
  6. The PE firm has an expertise and has a focus on metro/subway projects
  7. There are 3 Major Airports in NYC – Just focus on JFK for this case, others are not relevant
  8. There are 4 Runways at John Kennedy (JFK) International Airport
  9. Assume that the PE firm has the rights to operate the project for 99 years (only needed for perpetuity formula later on)