What cost reduction measures would you implement and why

Under tough business environment, your low cost carrier (LCC) is in financial difficulty. As the CEO of this LCC, you however believe that if the airline manages to control the cost, your airline can survive. You therefore decide to reduce the operating expanse including the labour cost but you would avoid lay-offs. What cost reduction measures would you implement and why? In airline industry, the cost can break to two parts: fixed cost and variable cost. And there is very hard to cutting off of the fixed cost which is including the cost of fuel, landing fees, insurance, etc. because these costs are necessary. If we have to control the operating cost, I suggest that we should control the labour cost first.†¦show more content†¦Therefore we decide to cut the dental medicare for reduce the cost. The next method also about allowance, reduce the long haul allowance. Now, our airline’s long tip allowance is 2500 Hong Kong dollars per day and we provide the single bed hotel room to each worker. And we had some feedback in reduce the allowance that workers are not anti to this policy. Therefore, we decide to reduce the allowance to 1000-1200 HK$ per day and to booking double or triple bed hotel room for the long haul crew. The staff, we believed, understood the rough patch our company was experiencing. We have the confidence that they would support the second to the fourth method. Because in one of the feedback, there is a summed it up very well: ‘We are all in the same boat.’ What we’re trying to do now is to keep the boat afloat while sailing through the storm.† Then is to slow down the promotion. In our airline, we expense around $500000-600000 in promotion each year. When we promoted a staff, we should pay more about $20000 to him per year. If we slow down the promotion, it would save about $350000-400000 pre year. For coordinate this method, we also can provide the early retire and the long term no payment holiday. The last but not least is the voluntary administration. We can reference to the British Airways (BA). In June 2009, BA management asked employees to volunteer for a range of cost-cutting working arrangements with the aim of helping the company to weather theShow MoreRelatedAssessment Of A Performance Evaluation1235 Words   |  5 Pagesefforts, it would be hard to make objective decisions regarding continuance, variation, or cancellation of CRM programs. (Parvatiyar Sheth, 2001). Most businesses are defining their metrics in some combination of three areas: cost savings, revenue enhancements and customer value improvements. (Stevens, 2017). 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