Vacation

1. Given Paradise Vacation’s business practice, what are the implications from these initiatives?

a.Leasing airplanes from Air India

b.Starting its internet sale channel

c.Adding new travel destinations

Please examine these initiatives from all angles -- pros and cons, long vs. short-term goals, organizational issues, channel relationships, marketing implementations ... etc and pick one of the initiatives you believe should be the priority and elaborate those issues. (One page limited, no more than 500 words)

Since Funtours plans to extend the market, Paradise Vacation is threatened and has to take initiative to not lose revenue and market share. Doing so, it could lease airplanes from Air India, starting with three in 2008/2009 and adding one every year. This would lead to greater control and higher efficiency over its inventory. The company wouldn’t be dependent on BenoxAir anymore, and could avoid paying charter rates, leading to decreased operational costs by 25 %. Paradise Vacation still had to invest in those airplanes, so leasing airplanes from Air India also contains quite a big financial risk. If Paradise Vacation would not be able to fully sell all seats, it would make bigger loss than when buying seats at BenoixAir. Starting with 3 aircrafts also means to be limited to the most popular destinations, just like FunTours was when they incorporated an in-house airline. Paradise Vacaton has the advantage of adding one plane every year though. That means they might start with their former destinations, but expand these to new and less popular destinations. Up to now, Paradise Vacation got quite a strong relationship with Benox Air, receiving preferential seat rates by maximizing its seat purchases. Quitting this might lead to offended Ex-suppliers and losing a good reputation in the travel branch.

Another opportunity would be to focus on the internet sale channel exclusively, resigning travel agents completely. This...