June2012 question 2b

The strategy seems to depend on reducing costs by 14% to counter the fall-off in revenue. The copany needs to address fuel and staff costs are these are the largest. It will have to try to do this without irritating staff (who seem to be key players). The way to reduce fuel costs is probably to buy more efficient aircraft if theycan be afforded.

The processes the airline uses also need to be improved. For example, the booking process is being used to streamline check-in and reduce commissions payable to travel agents. These process improvements might also allow fuel and staff-saving costs because the airline could develop models that use booking data to allocate suitable planes to each flight. Eg if a flight (and its return) were undersubscribed, then swap in a smaller plane so as to save fuel and staff costs (presumably fewer cabin staff needed on a smaller plane).

Reduction in check-in staff.

% fares booked through the website

That would be fine to judge the progress on strategy.

Capability could be whether or not replacing old aircraft is on target.