Swanair Plc is a low cost airline operating short routes serving UK regional airports and other regional airports across Europe.

Their objective is to be established as Europe's leading low-fares airline and as a result they operate a cost leadership strategy, i.e. keeping costs low by offering a more basic level of service than established companies. This enables them to offer low air fares for their routes to their customers. Customers can pay for additional services such as increased baggage allowance, food and beverages.

Following an operational review, the directors of Swanair Plc have identified a possibility of using one of their existing planes to offer a new route to their customers. They are considering offering one of the two options given below:

(i) An additional service between Newquay and London (both cities are in the UK), Swanair Plc already operates 1 flight per day on this route. Distance for the proposed route is 270 miles and flight time is one hour and fifteen minutes. Newquay is a coastal town in Cornwall, and very busy each year as it holds various surfing championships throughout the warmer months.

(ii) A new service between London and Paris (France), Swanair Plc does not offer any flights in or out of Paris at the moment. Distance for the proposed route is 212 miles and flight time is the same as for the London to Newquay route.

o Evaluate each option, explaining how you will decide between them, weighing the pros and cons of each option. As part of your discussion on costs, you should identify the fixed and the variable costs for the business and for each option. Hint: you should consider both financial and non-financial costs and benefits for each option.

o Identify which specific management activities would constitute planning, decision making, and control in relation to each option.

o Explain how management accounting information will help you to justify the decision.

o Propose control systems to be set up to monitor the implementation of the decision.

o Recommendation on which option Swanair should choose.