Q. lo what extent do you think it is essential for an airline to undertake contingency
planning? (16 marks).
Global Airways (GA)
Cabin crew are staff on an airplane who look after the passengers. The managers
of Global Aiways (GA) have recently proposed new pay levels for cabin crew who
join the company from January 2019. Their pay would be lower than the cabin crew
already employed by the company. This is part of an effort by GA to cut costs to
enable the business to be more price competitive in response to aggressive price
cuts by rivals. GA managers believe that cutting the price of its tickets can help to
increase the airline's operating profit margins on its flights.
Atrade union, called UAS, represents many of the cabin crew staff. UAS has
complained about the proposed pay levels. There has been one meeting so far
between the UAS and senior management about the proposal. Managers want the
pay dealto go ahead, UAS does not.
Since the meeting:
" UAS 0s considering whether to advise GA's cabin crew that they take strike action
the managers of GA have arranged to lease planes and use crew from another
airline if needed. Managers believe that with these contingency plans GA could
operate over 99% of its normal flight schedule
" the managers have undertaken new research (Appendix G).
Appendix G New research for GA'S management
Income elasticity of demand for GA flights: +1.5
Estimated annual income changes of GAs target market 2018-2020:-2%
" Cabin crew membership of UAS union has increased this year to 65%
planning? (16 marks).
Global Airways (GA)
Cabin crew are staff on an airplane who look after the passengers. The managers
of Global Aiways (GA) have recently proposed new pay levels for cabin crew who
join the company from January 2019. Their pay would be lower than the cabin crew
already employed by the company. This is part of an effort by GA to cut costs to
enable the business to be more price competitive in response to aggressive price
cuts by rivals. GA managers believe that cutting the price of its tickets can help to
increase the airline's operating profit margins on its flights.
Atrade union, called UAS, represents many of the cabin crew staff. UAS has
complained about the proposed pay levels. There has been one meeting so far
between the UAS and senior management about the proposal. Managers want the
pay dealto go ahead, UAS does not.
Since the meeting:
" UAS 0s considering whether to advise GA's cabin crew that they take strike action
the managers of GA have arranged to lease planes and use crew from another
airline if needed. Managers believe that with these contingency plans GA could
operate over 99% of its normal flight schedule
" the managers have undertaken new research (Appendix G).
Appendix G New research for GA'S management
Income elasticity of demand for GA flights: +1.5
Estimated annual income changes of GAs target market 2018-2020:-2%
" Cabin crew membership of UAS union has increased this year to 65%
