Topic: BusinessAccounting

Last updated: April 16, 2019

Liquidity ‘Liquidity performance measures are indispensable and basic for the general business appraisal, yet are given a little consideration in most carrier industry examinations’ (Feng and Wang, 2000:133-142). Morrell (2011:14-18) contends that ‘an evaluation of liquidity and access to fund turns out to be progressively noticeable on aircraft administration motivation in times of misery, for example, the fallout of the 9/11 fear monger assaults and the budgetary emergency’.

Seemingly, liquidity appraisal ought not be undermined as it is basic while deciding the fundamental survivability also the air ship financing capacities of an organization. Air Namibia should set up liquidity execution measures to be prepared for external risk such as terrorist attack, economic crisis and natural disasters. To survive in bad economic climate, Air Namibia should aim to improve both its short-term and long-term liquidity, in order to withstand unforeseen external shocks such as an employee strike, political stability and airport crisis.

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Strategic RecommendationsIn this chapter, we provide a recommendation and improvement to the Air Namibia current strategy and competitive advantage.Efficiency and cost structureEfficiency is often measured in relation to a company’s cost structure and could basically be characterized as the measure of information it takes to create a given yield (Hill and Jones, 2009).A high level of efficiency is crucial for an airline that wants to reduce its costs, and as conducted in the business plan analysis. ‘The original Business plan tasked Air Namibia to review its sales and distribution plans in every country, starting with the major markets of South Africa and Northern Europe’.

This include General Sales Agent (GSA) contracts as well as the performance of local Air Namibia offices where those existed. The audit expected to think about the viability of current courses of action, estimated by the spread of conveyance diverts being used and their execution as far as the piece of the overall industry accomplished for Air Namibia on key courses, and needed to center especially around General Sales Agent, Online Travel Agent and Tour Operator dependency in Germany ( Air Namibia business plan,2013:36).Having a well-established online distribution channel is beneficial for Air Namibia, as they are avoiding expensive commissions charged by travel agencies. Moreover, online sales imply that Air Namibia collects payment when the tickets is purchased which lowers working capital requirements.Air Namibia should consider in the future IT-system that makes internet purchasing tickets at home, to self-service check-in terminals at the airports.

In turn this reduces labour costs in areas such as sales, customer service and accounting.Fuel pricesAccording to IATA (2011a) stated that ‘ the global airline industry’s jet-fuel costs are forecasted to a total of 166 billion in 2011, representing 29 percent of operating costs, with a normal cost of $96 per barrel of crude oil’. Truly, these assessments demonstrate the carrier business’ second most astounding plane fuel cost ever, just beaten by the record high 2008 level where the worldwide stream fuel charge added up to $189 billion or 33 percent of working costs, with a normal cost of $99per barrel of crude oil. Aviation fuel represent the largest operating expenses for low-cost airlines such as Air Namibia. ‘The airline business is a difficult one, subject to frequent cost shocks, demand disruptions, and excess supply even in good times’. Air Namibia is currently experiencing the extreme external shocks hitting all airlines everywhere, high fuel costs, volatile exchange rates, and a weakening global economy and so on.

It is no surprise that many airlines have been struggling in the past year. In fact, many of the world’s airlines, including some with long histories of profit and success have recently stumbled and are engaging in turnaround strategies of their own. Lufthansa, Air France, American and even Singapore Airlines are all in the process of restructuring. Fuel expenses make up the largest share of the Air Namibia budget. For financial year 2012/2013 fuel was budgeted to be NAD 788,558,000. This amount is more than the total cost of the next two larger cost items, maintenance and labour, combined.Therefore Air Namibia has launched a fuel efficiency programme using an integrated approach which analyses every activity that has an impact on fuel consumptions including flight operations, flight dispatch and planning; maintenance and engineering; ground operations; and commercial.

Fuel savings initiatives have now been defined and champions appointed (Air Namibia business plan, 2013:30). ‘Air Namibia will keep a strong focus on improving fuel efficiency furthermore, guarantee that enhanced procedures and approaches are clung to thoroughly’. A maintained increment in oil costs can endanger money related projections and may require possibility bolster by the Government.

Certain measures can be taken to moderate a fuel value spike. These incorporate the present move to a more fuel-efficient fleet, completion of fuel conversation initiatives, fuel hedging, and raising fuel surcharges or fares.Customer service and Quality’Client responsiveness is essentially about recognizing and fulfilling client needs. An organization can get prevalent client responsiveness by realizing what the clients need and by offering a more elevated amount of utility contrasted with rivals.

Besides, client responsiveness is very identified with the other building pieces of competitive advantage, which implies that having a high level of productivity, quality and development could prompt unrivaled client responsiveness (Hill and Jones.2009).Air Namibia current on-time performance is poor, contributing to customer dissatisfaction and loss of market share. Reliable on-time performance is critical to improving customer satisfaction and essential to a network operation with competitive minimum connection times and higher aircraft utilisation. ‘Customer service, while on- board ‘hard’ product has improved with the introduction of new aircraft, the level of customer service offered by Air Namibia staff, both at airports


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