NCA says that lack of consumer confidence worldwide has led to drastically cuts in spending, resulting in decreased demand for manufacturing and production and the consequent drop in demand for for airfreight.
For NCA to survive, the airline must compete profitably under the current poor market conditions and position itself to take advantage of the market recovery when it finally happens.
The current NCA Phoenix Project was designed to establish NCA's independence as an airline and to capitalise on the strong market growth to expand its network with a fleet of 24 aircraft.
Phase 1 - Independence - was successfully accomplished earlier than expected in FY2008. However, as NCA enters Phase 2, the current market situation and near-term outlook will not support the company's aggressive network growth plans.
Adding new routes and expanding its fleet when there is already an overcapacity situation in the markets would be unwise and unprofitable. Therefore NCA has revisited its strategy and defined a new plan named NCA Phoenix Project - Declaration of Evolution, focused on restructuring its business model.
Whilst not entirely painless, NCA says the new plan is essential for its long-term survival, and will allow the airline to improve revenue and reduce operating costs in order to achieve a break-even result in FY2011.
It also continues the network of eight B747 freighters under NCA's own operation.
NCA Phoenix Project - Declaration of Evolution involves the building of an adequate cost structure through drastic cost reduction and a review of business processes; rationalising and simplifying regular scheduled services, and increasing new business opportunities in different air logistics sectors (chartered and leased business).
Key structural changes include: amendments to NCA's regular scheduled services; the elimination of fixed costs, reduction of overhead costs, and the restructuring of contracts.
In order to expand the scope of NCA's business, the airline will allocate resources to other parts of the business that compliment its regular scheduled service and create a high rate of return; create flexible charter flight services; and implement aircraft leasing capabilities.
