Question

1. As a result of not wanting to compromise the quality service, costs, and reputation of GoGo airlines, the company strategically developed MegaSaver Airways to compete the rising budget airlines occupying 40% of shares in the air travel market. A. In starting the new airline, strategic decision includes addition of medium and long-haul flights whilst changing ticket price to economical price while achieving the lowest cost of production and reducing operational costs to improve market positioning and staying in a competitive advantage. To help reduce the operational costs in the starting phase, MegaSaver should operate flights with same air fleet type and should carry used/leased vehicles. Tactical decisions include introduction of more economy seats and removal of in-flight systems to lessen the cargo load, which can also lessen fuel costs. From my previous experience, operating on same fleet model can also reduce maintenance and technical, training, and staff costs as they are dependent on the license and training on carrier type. Operational decisions include shorter layover/transit time in different regions, a compromise of comfort involving number of luggage checked in, seat classes, service and amenities wherein these items can be purchased separately. B. In a highly volatile environment, CEO will face unforeseen events within operations leading to cost of resources, fluctuations of profitability that often affects the attractiveness in investments (Guerra et al., 2021). The suggested solution includes strategic planning and control and financial strategic decisions. C. NPV can be used for long term financial decision since it considers all the cash flows and the time value of money. Furthermore, NPV is a logical approach to valuing productive and economic asset (Atrill & McLaney, 2021), What are the possible challenges of using NPV technique in this industry?