Business risk answer for RT

Risks
Old planes
– Older planes will cost more to run due to higher repair costs
– They may fail causing disruption to business and possible injury to passengers. This could lead to fines and loss of licences.
– Customers want new planes and will not fly with RT.
 Lease airplanes rather than buy secondhand planes.
– The old planes do not comply with new environmental regulations. This could damage RT's image. The company will also incur large cost to update system and potential fines and loss of flight slots if they fail to comply. Potentially prevent RT from servicing routes.
 Lease new planes.
 Investigate alternative methods of compliance, better or new fuels to reduce pollution.
Airport locations
– Neither of the airports are in the city, reducing tourist and business travel. Not convenient for users.
– All airports are north of London. Not good for customers in the south. Very poor national coverage.
 Strategic alliance with bus/train operator.
 Offer discounted or free tickets on purchase of flight.
 Open new f m,.k,,acilities in other parts of the country to improve national coverage.
Public relations
– RT operates in the airline industry which is very competitive. Bad press would be very damaging. RT would incur large switching costs as customers move to the
competition.
– Seating policy alienates passengers. Fear they will not get a seat and use alternative carrier.
– Role of LR, she may be a fantastic business woman but she is not good at customer relations.
 Appoint PR managers to give all press releases.
 Advertising campaign to move focus away from LR.
 Change ticket policy. Only sell one ticket per seat, combine with new marketing campaign.
 Ensure L’oR takes a back seat. Use the new PR manager for all press contact.
New booking system
– The system may put off users who like to talk to sales staff. Some customers may not have Internet access.
– Failure to pay tax may be illegal. At the least could force RT to pay tax after a test case. As RT reduced price there may not be the money to pay the tax, causing going concern problems.
 Maintain a parallel phone system. Use discounts for all Internet bookings to encourage its use.
 Test system with tax authorities. Take legal advice.
 Do not pass on full discount to customers.
 Ensure liquid resources are available to pay tax in the future.

Staff
– High staff turnover very costly, recruitment cost and loss of knowledge.
– Temporary staff who don't speak English well will not provide a good face of RT to the passengers, leading to loss of customer goodwill.
– Staff may not be trained sufficiently to safeguard passengers in the event of a crash or terrorist attack.
– Terrorists may breach security and hijack planes.
– Low wages to foreign staff potentially illegal and demotivational to staff.
 Introduce staff incentive schemes. Free flights or bonuses.
 Steward and check-in staff given English classes.
 Always have an English speaking supervisor on hand.
 Use more full-time staff where possible.
 Increase staff training.
 Liaise more closely with airport operator over security arrangements.
 Ensure pay minimum wage. Review wage, ensure they are fair.
New long haul routes
– The long haul market, different business to short haul. RT has no experience of long haul market. What is the strategy? -price, differentiation etc.
– Large cost already incurred on licences. Must still find new funding for planes.
– Long haul, increased risk of terrorism.
– Very competitive market.
 Strategic link with tour operator or hotels to generate business.
 Continue using same economy strategy.
 New funding rights issue.
Military airbases
– Customers may not want to fly to remote bases with poor facilities.
– Difficult for transfers to hotels etc as mentioned above.
 Undertake market research.
 Advertising/marketing campaign.
 Provide courtesy bus.Solution