Air New Zealand’s Competitors

Qantas – Australia’s largest domestic and international airline

Qantas is one of Air New Zealand’s biggest competitors, with a pre-tax profit of $1,401 million reported in 2016/17, the second highest performance in its 97-year history. Qantas has grown to become Australia’s largest domestic and international airline. As one of the world’s leading long-haul airlines and one of Australia’s most powerful brands, Qantas is very popular and has a reputation for safety, operational reliability, engineering design and maintenance, and customer service (Our company). Other major competitors which affect the profitability of the company include United Airlines, Singapore Airlines, and Delta Airlines. United Airlines is the biggest competitor of Air New Zealand because United has the most aircraft and it is the biggest airline in the United States which is the biggest market in the airline industry.

United Airlines has more than 89,800 employees, whereas, Air New Zealand has over 10,890 employees (Owler, Air New Zealand’s Competitors, Revenue, Number of Employees, Funding and Acquisitions, 2018a). The annual revenue of United is $49.4 billion, whereas, the annual revenue of Air New Zealand is $5.1 billion (Owler, United Airlines’s Competitors, Revenue, Number of Employees, Funding and Acquisitions, 2018b). Although in terms of numbers, United Airlines has the edge over Air New Zealand, however, Air New Zealand has a positive brand image in the market. Recently, United Airlines faced a scandal in which a passenger was forcefully dragged off the plane by security which adversely affected the market image of the company. Singapore Airlines and Delta Airlines are major competitors because they offer competitive pricing to their customers that reduce the market share for Air New Zealand. Following are various strengths and weaknesses of Qantas which affect Air New Zealand since it is its major competitor.

• Qantas has a stable profitable platform that strongly supports growth. Qantas and Jetstar are the two most profitable airlines operating in Australia after a successful transition over the past three years(White, 2018).
• Qantas Airlines has always been one of the oldest airlines in the world, which is trusted by consumers as a safe, stable and reliable company.
• The corporation has a positive brand image in the market because it is known for offering effective services to its customers at affordable prices. The loyalty program of the company is one of the best based on which most customers are loyal to Qantas, and they prefer its services about others.
• International presence with comfortable flying experience is a major factor which businesses class passengers needs while travelling to long distances. Qantas is their first preference because the company has a fleet size of 131 aircraft and it welcomes its guest in up to 550 lounges around the world(Qantas, 2018).

Weakness

• Fixed prices, security incidents and other issues have damaged the image of the past.
• Qantas’ international influence is limited compared to other leading global airlines
• The airline faces many challenges in operating long-haul flights by balancing profitability and demand with the right pricing strategy since deciding to start a direct flight from Australia to Europe.
• The international destinations of Qantas are comparatively lower than some of its competitors. For example, United Airlines offer 108 international destinations to its customers due to which loyal customers of Qantas also have to select an alternative option when there is not Qantas flight available(United, 2018).

• The political environment has a significant impact on the aviation sector because the government continues to make changes in the regulations which affect the operations of airlines.
• The political stability in New Zealand is beneficial for Air New Zealand; however, political instability in some of the major markets of Air New Zealand creates various challenges for the company such as the United States, European Countries, and the United Kingdom(Hager, 2014).
• The corporation has a warm relationship with major markets such as China which assist in providing it an open aviation market.
• Changes made by the governments in taxation policies in aviation industry are a major threat to the profitability of Air New Zealand.

• New Zealand has a low inflation environment, monetary policy is managed by the Reserve Bank which is the independent central bank of country, responsible for maintaining price stability(New Zealand Now, Economic overview). In other words, Air New Zealand does not need to worry about a sudden increase in costs.
• The unemployment rate falls to 3.9% in September 2018 reflecting the stability of the labour market and overall economic situation.(Statsnz, 2018) However, as the minimum wage increases, this will cause some people to lose their jobs due to the narrow market, and for Air New Zealand the labour costs will also increase.

• In New Zealand, the current minimum wage is NZ$16.50 per hour before tax(business.govt.nz, 2018). Under New Zealand’s employment law, Air New Zealand must pay each employee at least four weeks of annual leave, and if required, they can request a one-week cash leave. If they work on public holidays, they must pay extra (New Zealand Now, Employment rights).
• In New Zealand, it is illegal to discriminate against someone because of gender, sexual orientation, family status, marital status, colour, nationality or country of origin, race, moral beliefs/religion, political opinion, employment status, age or disability(New Zealand Now, Employment rights). Air New Zealand must comply with the relevant laws.

• Air New Zealand needs to constantly adapt and implement innovative technologies to achieve market competitive advantage. This can be proven by the fact that airlines offer the most spacious seating space and more advanced on-board entertainment to achieve customer satisfaction and stay ahead of the competition in the marketplace.
• Due to technological advancement, the corporation is able to offer services such as Wi-Fi and streaming services to its customers which are very popular. These facilities assist in enriching the customer experience which increases the number of loyalty program members of Air New Zealand(Bradley, 2018).
• The flight safety has also improved due to technological advancement which means that the number of customers who choose flying as an option to travel has increased.
• Air New Zealandis one of the first corporations which received certification by the IATA’s New Distribution Capability (NDC) in 2013 which highlights the safety of its aircraft (Futuretravelexperience, 2014).

• Due to recent terrorist attacks and aviation accidents, airline safety precautions have undergone tremendous changes, increasing investment in safety measures. Although the increase in safety may somewhat alleviate the mentality of pilots, passengers and their families, it also increases the anxiety and consideration of choosing a transport or choosing an airline.
• As people’s awareness of technology continues to increase, people are beginning to make extensive use of air travel. The number of frequent travels has also increased. There are a lot of social changes that are good for Air New Zealand. Air New Zealand has won the Airline of the Year award for the fifth consecutive year and is regarded as the preferred airline by consumers due to its excellent service and safety.
• The number of customers who chose airlines while travelling is increasing in New Zealand which provides various domestic opportunities for customers. In major cities, customers prefer to select an airline which offers high-quality services based on which Air New Zealand has the opportunity to expand its customer base in the country(Tsui, 2017).

• For Air New Zealand, the change of climate and weather is a very important and uncontrollable factor. The severe weather such as long-term rainstorms and lightning will directly affect the official operation of airlines, which will have a serious impact on airline profits and costs. At the same time, the number of tourists coming to New Zealand will also fluctuate accordingly.
• The importance of compliance with environment procedures has increased in New Zealand based on which Air New Zealand also have to change its policies. The corporation has adopted a sustainability approach in the business which is focused on reducing its carbon footprint and improving its responsibility towards the environment. In its sustainability strategy, Air New Zealand has incorporated the United Nations Sustainable Development Goals (SDGs) which enable the company in creating a better and more sustainable future for everyone(Airnewzealand, 2018).

• Air New Zealand has a dedicated customer relationship management department that delivers high levels of customer satisfaction among existing customers and achieves good brand equity among potential customers.Air New Zealand’s “exceptional” customer (Australian) satisfaction rating is 88.8%, and the airline ranks first among Roy Morgan’s top five international airline customer satisfaction rankings (Air New Zealand, Aussies turn to Air New Zealand for satisfaction, 2017), even surpassing many international and Australian local airlines.
• Air New Zealand is investing a lot of resources in the training and development of its employees, so that employees are not only highly skilled but also have the motivation to achieve more goals.
• Air New Zealand announced in August that its pre-tax income for FY 2018 was $540 million, up from $527 million in the same period last year, which is the second highest profit in the airline’s history and that funds will be used to reinvest in customer experience and employee bonus(Air New Zealand, Second highest profit in Air New Zealand’s history enables reinvestment in customer experience and staff bonuses, 2018).

• Global reach is one of the main weaknesses that Air New Zealand has, although the airline has a high market share in the domestic market, its global influence is limited. Similarly, its brand awareness is limited compared to its competitors.
• Even if the product is conceptually successful, its positioning and unique sales proposition are not clearly defined in the marketing segment. This may lead to this part of the attack from competitors.

• The introduction of new technologies and new aircrafts provides Air New Zealand with an opportunity to maintain its loyal customers with quality service and attract new customers through other value-oriented propositions.
• The introduction of new routes to their networks is worth exploring due to the limited global reach of Air New Zealand. This will increase the competitiveness of airlines compared to the rivals. Similarly, strategic alliances with other airlines to share flights, on-board products, lounge access and frequent flyer programs should provide airlines with further growth opportunities.

• With more airlines such as Sichuan Airlines operating international routes and offering cheap fares, this has put a lot of pressure on Air New Zealand.
• The continued growth of Jet fuel prices affects the profitability of Air New Zealand.
• Some airlines have begun to use the new aircraft model Airbus a350 to provide customers with more space and more comfortable flight experience.

• Strong customer relationship is a major strength of Air New Zealand which can be used by the company to generate a competitive advantage in the industry. This advantage will enable the corporation to address the key threat faced by the company due to the lower prices offered by other airlines such as Sichuan Airlines. The corporation provides air points to its customers that they can later redeem to purchase more tickets or get a discount(Voorhees, White, McCall, & Randhawa, 2015). Therefore, the customers are more likely to choose Air New Zealand over other airlines to because of effective customer services of the company.
• The major weakness of the company is limited international route options for its customers because it did not fly to many international destinations. However, this weakness can be addressed by the company by introducing new routes which will assist it in expanding its market. In order to achieve this target, the company can enter into a strategic alliance with other airlines to use their resources to expand its market share.
• A major threat faced by the corporation is that many new airlines are using the new aircraft model Airbus a350 to provide more comfortable services to their customers(Baxter & Srisaeng, 2018). Air New Zealand can address this threat based on its strength which is highly trained and talented staff members. The corporation can improve the flying experience of its customers through its staff members by allowing them to use their skills to provide a more comfortable environment for customers. A highly motivated workforce will assist the company in improving its services which will enable it to achieve its corporate objectives.
• Air New Zealand can leverage its loyal program to ensure that its customers remain loyal and select only Air New Zealand while travelling anywhere. The corporation can add new features in its loyalty program which will enable it in retaining customers and attracting new ones. The loyalty program of Air New Zealand should be better than other competitors in which the company can offer heavy discounts and options to loyal customers to shift their seats to higher classes. The effective loyalty program along with high-quality customer services will enable the organisation in retaining and sustaining its future growth.

Based on this perception map, it can be seen that the company offers its services at relatively lower prices. The company receive direct competition from companies that offer high-quality services at cheaper prices. The corporation should reposition itself to reduce its prices while improving the quality of its services. Cheaper price options will attract more customers, and they will become loyal to the airline based on its effective services (Starkie, 2016). The corporation can reduce its prices by collaboration with other airlines which can enable the company to utilise the resources of other enterprises to reduce its prices. The highly motivated employees of the company will assist in ensuring that the corporation is able to deliver high-quality services to its customers. The company should shift its focus from getting business customers to getting those customers who are looking for getting cheaper flight options by joining loyalty program of the company.

United Airlines – the biggest competitor of Air New Zealand

Air New Zealand isn’t just a favourite airline in New Zealand – it’s pretty popular worldwide. Air New Zealand has won the Best Airline Award from AirlineRatings.com for the last three years for their value, safety and service on board (not to mention the brilliant in-flight videos). Therefore, the corporation should leverage its positive brand reputation while developing marketing goals and objectives. The first goal of the company should focus on increasing its sales by expanding its customer base. The corporation can achieve this objective by increasing its international locations by collaborating with other airlines. Increasing the number of destinations will assist the company in ensuring that it is able to increase its sales in the industry. The corporation should also improve its customer loyalty program to ensure that more customers choose this option while travelling. Building a strong customer base through customer loyalty program will ensure that the company is able to retain its customers in the company which will result in increasing its share.

The second objective of the company should be to increase the awareness regarding its services through effective market. The corporation should choose different digital mediums in order to target a wider audience while advertising its services. The company should leverage its positive brand image to improve social media awareness (Sasmita & Mohd Suki, 2015). It should also interact with employees on these sources to ensure that they have a positive experience while using its services. Lastly, the company should set an objective to target new customers. This can be achieved by flying to new international destinations which will allow the organisation in targeting new customers. The company can offer lower prices and other facilities to its customers through its loyalty program which will enable it in targeting a new customer base who are looking for flying at cheaper costs without compromising with most facilities. Based on these goals and objectives, Air New Zealand will be able to increase its profits and expand its market in the aviation industry. 

References 

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