Reference no: EM133065075

Question 1 - Flybeyond, a limited liability company was incorporated in Doobai on 1 April 2016. In May, the company exercised an exclusive right granted by the Government of Ezipia to provide twice-weekly direct flights between Lyme, the capital of Ezipia, and Darke, the capital of Doobai. The introduction of this service has been well advertised as 'efficient and timely' in national newspapers. The journey time between Doobai and Ezipia is expected to be significantly reduced, encouraging tourism and business development opportunities in Doobai. Flybeyond Operates a refurbished 35 year old aircraft which is leased from an international Airline and registered with the Ezipian Aviation Administration (the EAA).

The EAA requires that engines be overhauled every two years. Engine overhauls are expected to put the aircraft out of commission for several weeks. The aircraft is configured to carry 15 first class, 50 business class and 76 economy class passengers. The aircraft has a generous hold capacity for Doobai's numerous horticultural products (e.g cocoa, tea and fruit) in general cargo.

The six-hour journey offers in-flight movies, a meal, hot and cold drinks and tax-free shopping. All meals are prepared in Lynne under a contract with an airport catering company. Passengers are invited to complete a 'satisfaction' questionnaire which is included with the in-flight entertainment and shopping guide. Responses received show that passengers are generally least satisfied with the quality of the food - especially on the Darke to Lyme flight. Flybeyond employs ten-full time cabin crew attendants who are trained in air stewardship including passenger safety in the event of accident and illness.

Flight personnel (the captain and co-pilots) are provided under a contract with the international airline from which the aircraft is leased. At the end of each flight the captain completes a timesheet detailing the crew and actual flight time. Ticket sales are made by Flybeyond and travel agents in Doobai and Ezipia. On a number of occasions, economy seating has been overbooked. Customers who have been affected by this have been accommodated in business class as there is much less demand for this, and even less for first class.

Ticket prices for each class depend on many factors, for example, whether the tickets are refundable/nonrefundable, single or return, mid-week or weekend, and the time of booking. Flybeyond's insurance cover includes passenger liability, freight/baggage and compensation insurance. Premiums for passenger liability insurance are determined on the basis of passenger miles flown. You should assume it is 5 December 2016.

REQUIRED -

a) Identify and explain five business risks facing Flybeyond.

b) Recommend how the five risks identified in (a) could be managed and maintained at an acceptable level by Flybeyond.