DPIT,
Well, it's nice to see some objective analysis here. I agree with the broad brush of Rod's strategy-- the question of yield and cost control is clearly critical. This is especially true in central functions which are pure overhead until they leverage offsetting business benefit from their knowledge / insight / experience.
Doing a similar job to you for another "British Institution", I was wondering how much scope you think there is for an increased proportion of salary (both flight crew and ground crew) being based on profit share, given the highly cyclical nature of the sector? Please feel free to teflon that one, but I'd be interested in your views.
On another issue, the in-sourcing of added-value services sounds like a good answer: I assume (not having worked in the sector) that the major lessors will have a number of "approved" suppliers of engineering to work on their leades jets. If you can sort the contracts out, this is the begining of a source of fee-income which whilst not recession proof, is a little more recession resistant than the hauling of premium class pax.
Interesting stuff!
Cheers
Tobbes