Final answer:
Fastjet, as an airline business, has to navigate various risks, including operational, financial, strategic, and compliance risks, which can arise from factors like fuel price volatility and competitive pressures. The company can employ strategies such as hedging, cost management, excellent customer service, and careful monitoring of the competitive landscape to mitigate these risks.
Step-by-step explanation:
The nature of business for an airline like Fastjet involves managing various types of risks. The airline industry faces several significant risks, including operational risks, financial risks, strategic risks, and compliance risks. Economic factors, such as fuel price volatility and exchange rate fluctuations, can impact operational costs and profitability. Strategic risks may arise from competitive price wars, as highlighted by the scenario where a large airline reduces prices to oust a new entrant, which could potentially harm the market's overall health and sustainability. To address these challenges, Fastjet could deploy a multitude of strategies. Hedging could be used to manage fuel and currency risks, maintaining operational flexibility to adjust to demand changes, and implementing cost-cutting measures to stay competitive. In addition, providing exceptional customer service and reliability can help retain customer loyalty in a competitive environment. The airline must also comply with regulatory requirements and monitor the effects of industry consolidation on competition.