Discuss about the Australian Airline Industry Literature Review.
Australian airlines have been doing great work in the industry of global airlines. Most of the companies in the region are flying on profitable routes. Passenger volumes are pretty high and the companies are known for the kind of service they provide. So in the period when global airlines revenue declined 5.0% in 2015 and is expected to fall another 2.6% to $709.0 billion in 2016, the revenues in Australian airline industry has rose by 18%. Overall, revenue is anticipated to grow at an annualized 12.6% over the five years to 2016. Price competition among industry operators coupled with a large decline in the price of crude oil caused revenue to fall in 2015. Additionally, greater Australian economic uncertainty and slow growth in China and other major emerging economies also had a negative impact on revenue. In 2016, even greater uncertainty in the Australian economic climate will negatively impact demand. However even with the set of problems which impact the demand to certain extent, Australian airline industry is on a serious path to growth. In this detailed literature review we will focus on the key literature that are available on the research questions which are chosen for this thesis. According to Leo Seaton, the joint venture between the Australian and Singapore airlines is being defined in the article. Both of the airlines help in generating profit for their country as well as for their airlines. For developing an overseas subsidiary, it is essential to identify the environment and economic aspects of the different country in order to identify suitable profit and loss generated in the business. In this article, the specific listing of well –defined airlines is being identified. The major types of airlines are the Qantas, Alliance, Jet star, Virgin and many other airlines and these airlines are expanding their subsidiaries in an overseas market (Seaton, 2014). The author also specifies that the merger is performed between the two countries for the specific airlines and the merger cost is about A$12 million. In this article, the positive perspectives related to the joint ventures are highlighted which may help in increasing the annual amount by nearly 14.4 percent. It is also observed that the market of Singapore will grow between A$ 2.3 Billion to A$2.8 Billion by the year 2020. This intimates the suitable growth of the Australian airlines in the coming years (Times, 2016).
According to the article defined by CAPA, it is identified that specifically the Qantas airlines is successful in developing economic perspectives by coordinating with the Emirates airlines. The Qantas airlines are considered as the most progressive airlines and assists in defining the most developed aspects. The article shows that by collaborating with the Emirates, the issues related to the quality, performance and other aspects have improved initially (CAPA, 2016). In the article, it is also recommended that the unusual rules and policies of the Qantas airlines have also been removed, by which the chances of growth may also elaborate simultaneously. The research question highlights what are the potential problems due to which Australian airlines which has been providing stupendous performance in the country, has not been able to replicate the model in other parts of the globe. The article talks about how the Australian companies have not been able to foster partnerships with local vendors in other countries and highlights that this is the main reason why companies have not been able to replicate the model. The article highlights the relationship between Australian and Singapore Airlines. The article also highlights the development of business relation between Qantas Airlines and Emirates Airlines. Both the companies did stupendous work in respective areas, but when it came to joining forces and creating a meaningful partnership both of the companies couldn’t come out of their silos. IATA in its recent report has highlighted that when companies in Airline industry gets into join ventures they discuss ideas and identify them as implementation point on the broader scale. However the ground issues which the operations team faces are not considered. Different airlines have different policies and methodology in which they operate. This is the root cause of the problem, most companies have their own way of operating and hence team integrations become difficult.
The Australian industry is known as one of the most advanced and progressive airline industry in the world. The companies in the industry offers its customers wide range of services both in Australia and the other global region where it operates. Both the companies did stupendous work in respective areas, but when it came to joining forces and creating a meaningful partnership both of the companies couldn’t come out of their silos. IATA in its recent report has highlighted that when companies in Airline industry gets into join ventures they discuss ideas and identify them as implementation point on the broader scale. However the ground issues which the operations team faces are not considered. Different airlines have different policies and methodology in which they operate. This is the root cause of the problem, most companies have their own way of operating and hence team integrations become difficult.
Research Hypothesis 3: Australian airline industry is facing some major operational concerns in international markets
The research question highlights what are the potential problems due to which Australian airlines which has been providing stupendous performance in the country, has not been able to replicate the model in other parts of the globe. The article talks about how the Australian companies have not been able to foster partnerships with local vendors in other countries and highlights that this is the main reason why companies have not been able to replicate the model. The article highlights the relationship between Australian and Singapore Airlines. The article also highlights the development of business relation between Qantas Airlines and Emirates Airlines. Both the companies did stupendous work in respective areas, but when it came to joining forces and creating a meaningful partnership both of the companies couldn’t come out of their silos.
IATA in its recent report has highlighted that when companies in Airline industry gets into join ventures they discuss ideas and identify them as implementation point on the broader scale. However the ground issues which the operations team faces are not considered. Different airlines have different policies and methodology in which they operate. This is the root cause of the problem, most companies have their own way of operating and hence team integrations become difficult.
IATA estimates the average industry profit margin will reach 8.8% in 2016, largely due to a drastic decline in oil prices. In order to maintain margins in a competitive Australian industry, airlines have resorted to increased automation such as self-check-in, online check-in and online seat selection. Such measures have been fruitful in restricting employment growth in this industry to a mere 0.6% annualized rate over the past five years. The industry is expected to employ 2.1 million workers in 2016.
As the industry entered a mature phase in its life cycle in the United States, merger and acquisition activity increased substantially. Other than the important deals mentioned above, Southwest Airlines also merged with AirTran. As the Australian Airlines industry starts to transition to a mature phase, it is expected to go through a similar transition phase, signs of which became apparent over the past five years with a large decline in the number of companies operating in this industry.
IATA expects the trend in industry consolidation to continue over the five years to 2021. To that end, the number of industry enterprises is expected to decline an annualized 5.0% to 1,251 companies. Airlines are expected to continue their cost-cutting initiatives and pursue greater automation; however, increasing coverage will require the industry to employ more people, which is expected to increase the industry’s demand for labor at an annualized 4.7% to 2.7 million people in 2021. However, the industry is expected to hire more technically skilled workers while eliminating many low-paying jobs. Consequently, average wage in this industry is expected to increase over the five years to 2021. The research question highlights what are the potential problems due to which Australian airlines which has been providing stupendous performance in the country, has not been able to replicate the model in other parts of the globe. The article talks about how the Australian companies have not been able to foster partnerships with local vendors in other countries and highlights that this is the main reason why companies have not been able to replicate the model. The article highlights the relationship between Australian and Singapore Airlines. The article also highlights the development of business relation between Qantas Airlines and Emirates Airlines. Both the companies did stupendous work in respective areas, but when it came to joining forces and creating a meaningful partnership both of the companies couldn’t come out of their silos. IATA in its recent report has highlighted that when companies in Airline industry gets into join ventures they discuss ideas and identify them as implementation point on the broader scale. However the ground issues which the operations team faces are not considered. Different airlines have different policies and methodology in which they operate. This is the root cause of the problem, most companies have their own way of operating and hence team integrations become difficult.
|
Summary of annual RPT activity |
|||
|
YE Sep 2015 |
YE Sep 2016 |
Growth |
|
|
Total passengers carried |
57.33 million |
58.69 million |
2.4 % |
|
Revenue passenger kilometres |
67.62 billion |
69.09 billion |
2.2 % |
|
Available seats |
76.62 million |
77.23 million |
0.8 % |
|
Available seat kilometres |
88.45 billion |
88.93 billion |
0.5 % |
|
Load factor |
76.5 % |
77.7 % |
1.2 * |
|
Aircraft trips |
633.8 (000s) |
638.1 (000s) |
0.7 % |
The price of oil is expected to remain low compared to its levels in 2013 and 2014, which is expected to sustain the high level of profit margins enjoyed by industry operators in 2015 and 2016. IATA expects profit to account for 8.5% of revenue in 2021 as greater consolidation eases some price competition while cost-cutting improves efficiency. Both the companies did stupendous work in respective areas, but when it came to joining forces and creating a meaningful partnership both of the companies couldn’t come out of their silos. IATA in its recent report has highlighted that when companies in Airline industry gets into join ventures they discuss ideas and identify them as implementation point on the broader scale. However the ground issues which the operations team faces are not considered. Different airlines have different policies and methodology in which they operate. This is the root cause of the problem, most companies have their own way of operating and hence team integrations become difficult.
The average industry operating profit margin, measured as earnings before interest and taxes, has recovered over the past five years after being severely diminished during the Australian recession when a worldwide contraction in flying activity and high fuel costs put extreme pressure on margins. During this time, a number of airlines operated at a loss and were forced out of business or had to merge with other airlines. Typically, airlines in developed markets, such as the United States and the United Kingdom, are exposed to slimmer profit margins, as their markets are mature and competition is strong. Profit in regions with less competition and growing demand for flying, such as Asia, have higher average margins. Airlines are expected to continue their cost-cutting initiatives and pursue greater automation; however, increasing coverage will require the industry to employ more people, which is expected to increase the industry’s demand for labor at an annualized 4.7% to 2.7 million people in 2021. However, the industry is expected to hire more technically skilled workers while eliminating many low-paying jobs. Consequently, average wage in this industry is expected to increase over the five years to 2021. The research question highlights what are the potential problems due to which Australian airlines which has been providing stupendous performance in the country, has not been able to replicate the model in other parts of the globe. The article talks about how the Australian companies have not been able to foster partnerships with local vendors in other countries and highlights that this is the main reason why companies have not been able to replicate the model. The article highlights the relationship between Australian and Singapore Airlines. The article also highlights the development of business relation between Qantas Airlines and Emirates Airlines. Both the companies did stupendous work in respective areas, but when it came to joining forces and creating a meaningful partnership both of the companies couldn’t come out of their silos. IATA in its recent report has highlighted that when companies in Airline industry gets into join ventures they discuss ideas and identify them as implementation point on the broader scale. However the ground issues which the operations team faces are not considered. Different airlines have different policies and methodology in which they operate. This is the root cause of the problem, most companies have their own way of operating and hence team integrations become difficult.
The research question focusses on how it can be imperative for companies globally to merge together and serve as major entity. Both the companies did stupendous work in respective areas, but when it came to joining forces and creating a meaningful partnership both of the companies couldn’t come out of their silos. IATA in its recent report has highlighted that when companies in Airline industry gets into join ventures they discuss ideas and identify them as implementation point on the broader scale. However the ground issues which the operations team faces are not considered. Different airlines have different policies and methodology in which they operate. This is the root cause of the problem, most companies have their own way of operating and hence team integrations become difficult.
Conclusion
We have seen how companies need to combine globally to achieve the same efficiency as they have achieved in their local markets. It has been recently that organizations are increasingly focusing on cleaning up operations so that all major hurdles can be avoided. Both the companies did stupendous work in respective areas, but when it came to joining forces and creating a meaningful partnership both of the companies couldn’t come out of their silos. Price competition among industry operators coupled with a large decline in the price of crude oil caused revenue to fall in 2015. Additionally, greater Australian economic uncertainty and slow growth in China and other major emerging economies also had a negative impact on revenue. In 2016, even greater uncertainty in the Australian economic climate will negatively impact demand. However even with the set of problems which impact the demand to certain extent, Australian airline industry is on a serious path to growth. In this detailed literature review we have focus on the key literature that are available on the research questions which are chosen for this thesis. IATA in its recent report has highlighted that when companies in Airline industry gets into join ventures they discuss ideas and identify them as implementation point on the broader scale. However the ground issues which the operations team faces are not considered. Different airlines have different policies and methodology in which they operate. This is the root cause of the problem, most companies have their own way of operating and hence team integrations become difficult.
References:
Bricki, N. & Green, J., 2016. A Guide to Using Qualitative Research Methodology, Available at: https://fieldresearch.msf.org//msf/bitstream/10144/84230/1/Qualitative%20research%20methodology.pdf
CAPA, 2016. Is Qantas and Australia’s aviation system in meltdown? No, but challenges are all around, Available at: https://centreforaviation.com/analysis/is-qantas-and-australias-aviation-system-in-meltdown-no-but-challenges-are-all-around-142638
IATA, 2012. The economic benefits generated by alliances and joint ventures, Available at: https://www.iata.org/whatwedo/Documents/economics/Economics%20of%20JVs_Jan2012L.pdf
Kain, J. & Webb, R., 2003. Turbulent Times:Australian Airline Industry Issues, Available at: https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp0203/03RP10
Peersman, G., 2010. Overview: Data Collection and Analysis Methods in Impact Evaluation: UNICEF, Available at: https://www.unicef-irc.org/publications/pdf/brief_10_data_collection_analysis_eng.pdf
Seaton, L., 2014. Tourism Australia deepens tourism ties with Singapore Airlines, Available at: https://www.tourism.australia.com/news/media-releases/Media-releases-Tourism-Australia-Singapore-Airlines.aspx
Stylianou, A., 2016. Content Analysis: Qualitative or Quantitative research approach?, Available at: https://www.researchgate.net/post/Content_Analysis_Qualitative_or_Quantitative_research_approach
Times, L. A., 2016. Australian Airlines News, Available at: https://articles.latimes.com/keyword/australian-airlines
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