What cost reduction measures would you implement and why? Essay

1621 Words Dec 10th, 2013 7 Pages
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.
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6. Continuity & Risk Management
Periods of high employee turnover will add uncertainty and inconsistency to the operations. Outsourcing will provided a level of continuity to the company while reducing the risk that a substandard level of operation would bring to the company.

Although outsourcing has lots of benefits, it still has some disadvantages such as it is hard to control the quality of staffs. Therefore when we want to decide outsource, we must think twice in choosing the agency. Overall, if we make the right decision in outsourcing, it would be the main method to reduce the labour cost.

The second way to reduce the labour cost is to cut the extra bonuses. The extra bonuses are the bonuses not including in the contract. It just a bonus which is occurs when the company is having positive growth in profits. And now our business not just has no positive growth in profits and we are have to reduce the operating cost. Therefore cut the extra bonuses is the directly way to release the pressure in operating cost.

And the third method is to cut the Medicare. According to the labour law, the business must provide Medicare to each employee. This Medicare is about insurance. This part cannot cut. And my point in cut Medicare is talk about the staff welfare in Medicare such as dental medicare. In past years, our company provides

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