QUESTION ONE a) DelMax Airlines was given an exclusive right by the Ministry of Aviation (MOA) to provide twice weekly direct flights between Accra and Johannesburg. The introduction of this service has been well advertised as 'efficient and timely' in national newspapers. The journey time between Accra and Johannesburg is expected to be significantly reduced, so as to encourage tourism and business development opportunities in Johannesburg. DelMax Airlines operates a refurbished 35-year-old aircraft which is leased from an international airline and registered with the MOA. The MOA 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 package to reserve holding capacity for Johannesburg's numerous horticultural growers (e.g. of cocoa, cashew and fruits) and general cargo. The six-hour journey offers an in-flight movie, a meal, hot and cold drinks and tax-free shopping. All meals are prepared in Accra 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 Johannesburg to Accra flight. DelMax Airlines 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. DelMax Airlines was incorporated in South Africa, whose capital town is Johannesburg on March 1, 2017 and now operates in Ghana whose capital town is Accra. Ticket sales are made by DelMax Airlines and travel agents in South Africa and Ghana. On a number of occasions, Economy seating has been over-booked. Customers who have been affected by this have been accommodated in Business Class as there is much less demand for this, and even less

3 for First Class. Ticket prices for each class depend on many factors, for example, whether the tickets are refundable/non-refundable, exchangeable/non-exchangeable, single or return, mid-week or weekend, and the time of booking. DelMax'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. Required: (i) Identify and explain FIVE business risks facing DelMax Airlines (5 marks). (ii) Describe how the risks identified in (a) could be managed and maintained at an acceptable level by DelMax Airlines. (5 marks). (Note. Assume it is 31st December 2017)