-relevant to Intensive Practice Session (IPS) P1 (ACCA).
From left to right:
Pic 01: Ryan Air Proud Fleet
Pic 02: Comfortable seats at an affordable price. A potent business model!
Pic 03: Serving Asian Cuisines in Europe? [read case study]
Dear P1 (IPS) students,
From left to right:
Pic 01: Ryan Air Proud Fleet
Pic 02: Comfortable seats at an affordable price. A potent business model!
Pic 03: Serving Asian Cuisines in Europe? [read case study]
Dear P1 (IPS) students,
As you are aware that David Campbell has increased in his sophistication of examining you. Its imperative you know the underlying concepts while be sharp in deciphering the case study by offering 'real solutions'. Please attempt the question below. Answers will be given in our next class.
Happy trying,
Marcus Ong
Case Study: Ryan Airlines
Background
Ryan Airlines emulated the success of Southwest Airlines (USA) Ltd by offering major price reductions for inter-city travels within European Union €. Ryan Airlines chose secondary and often old under-utilised airports to avoid high airport levy fees and congestions common in international airports. Since Ryan Airlines uses 55 Airbus of 147-seats aircrafts, it only needs short runways. The average age is 15.5 years and management is confident that with good maintenance record, the planes useful life of 20 years could be achieved.
GE Engines Limited is the main outsourcer contractor to maintain, repair and at times overhaul Ryan Airlines jet engines. GE parent company recently face a downgrade on its bond status as one of its major subsidiary, GE Finance is caught in the financial meltdowns in USA. Though unrelated, there was widespread fear that GE Engines Limited may be affected by Group’s cash flow crisis.
Ryan Airlines emulated the success of Southwest Airlines (USA) Ltd by offering major price reductions for inter-city travels within European Union €. Ryan Airlines chose secondary and often old under-utilised airports to avoid high airport levy fees and congestions common in international airports. Since Ryan Airlines uses 55 Airbus of 147-seats aircrafts, it only needs short runways. The average age is 15.5 years and management is confident that with good maintenance record, the planes useful life of 20 years could be achieved.
GE Engines Limited is the main outsourcer contractor to maintain, repair and at times overhaul Ryan Airlines jet engines. GE parent company recently face a downgrade on its bond status as one of its major subsidiary, GE Finance is caught in the financial meltdowns in USA. Though unrelated, there was widespread fear that GE Engines Limited may be affected by Group’s cash flow crisis.
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Pre-flights matters
Customers are encouraged to book flights using the e-ticketing system which was set up by IBM (USA) Limited team of consultants [security risks] . There was no unusual activity and Ryan Airlines management are happy with the outcome.
Customers are encouraged to book flights using the e-ticketing system which was set up by IBM (USA) Limited team of consultants [security risks] . There was no unusual activity and Ryan Airlines management are happy with the outcome.
Experienced engineers normally take 15 minutes to re-fuel the planes. The best record for turnaround time compared with other no-frills rivals like Virgin Blue which takes 35 minutes. Ryan Airlines boasts this feat as attributable to its team of engineers that have industry experience of over 25 years.
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During flight matters
Passengers handle their own luggage which they can ‘tuck in’ to the upper cabinets on board . Main course food like ‘nasi lemak’, an Asian delicacy of oily high cholesterol rice, are sold with attractive pricing which Ryan Airlines enjoys brisk sales.
To cut labour costs, Ryan Airlines hires mothers who want flexibility in time management. They can choose to work 3 day week program. Take a frequent 3 flights a day work schedule. Ryan Airlines saves on workers allowances and accommodations since the stewardess need not be posted overseas.
Passengers handle their own luggage which they can ‘tuck in’ to the upper cabinets on board . Main course food like ‘nasi lemak’, an Asian delicacy of oily high cholesterol rice, are sold with attractive pricing which Ryan Airlines enjoys brisk sales.
To cut labour costs, Ryan Airlines hires mothers who want flexibility in time management. They can choose to work 3 day week program. Take a frequent 3 flights a day work schedule. Ryan Airlines saves on workers allowances and accommodations since the stewardess need not be posted overseas.
Post flight matters
Pilots are trained over 5 years and then bonded to work for Ryan Airlines over 10 year contract. Their remuneration is fixed based on pre-determined formula. As such Ryan Airlines enjoys good profit margins of 34% versus industry’s average of 19% attributable to its ability to ‘locked-in’ pilots wages. If pilots are to resign, they are punitively charged with penalties equivalent to the amount of training costs and lost services Ryan Airlines face.
Pilots are trained over 5 years and then bonded to work for Ryan Airlines over 10 year contract. Their remuneration is fixed based on pre-determined formula. As such Ryan Airlines enjoys good profit margins of 34% versus industry’s average of 19% attributable to its ability to ‘locked-in’ pilots wages. If pilots are to resign, they are punitively charged with penalties equivalent to the amount of training costs and lost services Ryan Airlines face.
Pic 04: A dream job, see the world.Passengers are given the option to purchase insurance cover inclusive of their ticketing prices. Many passengers felt, since this is only a short 3 hour flight, they opt not to buy the cover.
Recently a contract with DHL was signed to allocate 30% of Ryan Airlines’ cargo place for DHL exclusive use. Whether it was utilise, the cargo was paid in advance by 2 years valued £23 million. Ryan Airlines is naturally pleased and is actively seeking more of such deals.
Required:
a) Explain and assess the risks of Ryan Airlines. [7 marks]
b) Recommend to top management how the risks should be dealt with? [8 marks + 2 professional marks]
c) Explain briefly the relevance of control activities in risk management? [8marks]
PS: For part (c) please refer to BPP manual on page 173 as guide.
1 comment:
Dear candidates,
I hope you spend good time reading, evaluating and trying the case studies.
These take a lot of time and effort to assist in sharpening your exam techniques.
It will be a waste, if you merely skim through.
Do your best is all I ask.
Warm regards,
Marcus
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