Cost Reduction Potential of Ethiopian Airlines
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Date
2008-06
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A.A.U
Abstract
Ethiopian Airlines, just like many other Airlines around the world, is
suffering from the black footprints of the skyrocketing fuel price. The existing
fierce competition among rival airlines makes the situation aggravated.
Hence, unless otherwise it tries to keep costs as low as possible, the
situation can result in significant financial losses and going into bankruptcy.
In this study, ' it is tried to assess whether Ethiopian Airlines has the
potential to reduce its costs. Questionnaires had been distributed to selected
employees and interviews had been conducted with selected department
managers to collect the relevant data. Observations have also been ma de.
Flight delays & cancellations, denied boardings, poor baggage handling
system, operating dissimilar aircraft family, unconsolidated and
uncoordinated purchases, personal consumption of excess meal, beverages
& hygienic items, expiration of purchased chemicals, and increase in the
number of Aircraft components sent for foreign repair are found to be the
major findings of the study that take part in the increased costs of the
Airline.
The study shows that there is a potential for reduction in costs. The study
also forwards some recommendations that can be used to mitigate the
problem and prevent any negative con sequences on the present and future
performance of the company.
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Keywords
Ethiopian Airlines