Benchmarking Analysis Of Qantas Airways And Virgin Airlines

Qantas Airways: A Brief Overview

Discuss about the Benchmark filter-based demand estimate for airline.

Considering the present day scenario, it is obvious that the due to the tough competition the service organization in different parts of the world are trying to offer best quality services in order to stay ahead of the other market competitors. The airline industry is no doubt also strives hard to provide the necessary services in order to retain the old customers and the gain new customers. The superior quality of the services alone is the sole criteria acts as an important determinant of an airline organization’s growth. This study involves the criteria and the justification of the for the selection of the benchmarks; recommendation for the proper action that stems from the benchmarking data.

The study involves the benchmarking and analysis of an organization which is a market leader and for this purpose Qantas airline is considered and accordingly Virgin airlines are taken as a leading competitor of Qantas airlines.

Qantas Airways is one of the biggest airline industry of Australia by its fleet size and the number of the international flights. The airline is founded in the year 1920 and the airline started its maiden flight in the year 1935. Qantas is actually an acronym which abbreviates to call Queensland and Northern Territory Aerial Services. Qantas is now regarded as one of the leading airlines in the world that has long-distance flights and is one of the strongest brands in Australia (Qantas, 2018).

Virgin Airlines is the second largest airline industry just after the Qantas airlines and is one of the largest airline industry that has the largest fleet size. In the year 2000, Virgin Airlines entered the Australian market and the and it brought competition for all the other existing rivals in the market. The founder of the airlines is the present CEO Brett Godfrey and co-founder Richard Branson (Virgin Australia, 2018).

The benchmarks are selected based on how easily the data are available and how the two major airlines organization can be compared based on the certain parameters. The selection of the benchmarks is strictly in accordance with the performance measurement of the two organizations.

• Aeronautical revenue per passenger- This is the most basic of all the benchmarks and it is measured for a period of one year along with the net discounts or the fee waivers. This is collected from a passenger in the form of ground handling charges, passenger-related charges, terminal space, gate charges, passenger-related charges, airfield landing fees. This can be used for the purpose of internal benchmarking (Airports Council International, 2018).
• Total costs which involves the staff costs and operating costs- the key indicators that can be evaluated through the calculation of the operating costs and staffs are the efficiency of the fuel and its cost, productivity of the staff, employment cost, cost of maintenance, performance within the stipulated time and the management of the mishandled bags (Airline Cost Management Group Report, 2018).
• High profits- profit earning is the main priority of any kind of business and is important for all types of organization. Especially for the airline industry, maintaining a high profit is necessary in order to sustain the huge number of the employees and the large number of the fleet (International Air Transport Association, 2018).
• Capital expenditure on the passengers and the effective employment of the capital- it is necessary that an airline organization earns the require amount of profit and reemploy the same in to the infrastructure so that the revenue is properly utilized in the smooth conduct of the airline operation as well as the proper maintenance of the large fleet of airplanes (Bartke, Kliewer & Cleophas, 2018).
• Performance of the Australian airports with respect to the overseas counterparts- the more an airport if performing with respect to the other counterparts, the more it will help the other airlines to generate the revenues. Airlines functioning from a particular airport and if the same airport facilities and caters the needs of the passengers, then there is a strong chance that a specific airline will earn more revenue. This can be effectively used a benchmark in order to assess the condition of airline organization (Parliament.nsw.gov.au, 2018).

• Revenue per passenger- Airports are generating more revenues from each of the passenger than in comparison to 10 years ago. The measure of the average airport prices can be effectively done from the collection of the aeronautical revenue from the airport. Airports are now generating more revenues due to the increase in the revenue earning per passenger which has increased by 65.5 percent. The Perth and the Melbourne airports are the ones that have shown significant growth. The airlines are paying extra for the increase in the price in the airports. The Brisbane airport is the highest collector of the additional revenues which is followed by Sydney, Melbourne and Perth. The Qantas and the Virgin airlines operate and occupy the most number of the domestic airports under the lease. The terminals of the Qantas airlines are exempted from the ACCC monitoring. This benchmark reveals that the operation of Qantas is far superior with respect to Virgin airlines (Australian Competition and Consumer Commission, 2018).
• Total costs which involve the staff costs and operating costs- the average age of the Qantas airlines is rising whereas Virgin Airlines is comparatively young. The return on the invested capital increases with the age of the fleet and this gives the Qantas airline an advantage over the Virgin airlines. The operational cost of maintaining the Qantas airlines is 578 million dollars whereas, the Qantas international is 512 million dollars. The fuel unit cost has gone down by 3 percent and the net debt is also within the limit. The operating cash flow is calculated to be around 2.8 billion dollars (Qantas.com.au, 2018).
• High profits- the profit earned before tax is 976 million dollars, 20.9 percent is the amount of the return on invested capital. The Qantas has delivered highest ever profit from the domestic operation of 652 million dollars. Similarly, from the international operation was a 5.5 percent lower which is pegged around 222 million dollars (Qantas News Room, 2018).
• Capital expenditure on the passengers and the effective employment of the capital- the net capital expenditure is expected to be around 3 billion dollars for the financial year 2018-2019. The Qantas airlines are trying taking delivery of the two 787-9s Dreamliner in the first quarter of the financial year 2018 (REUTERS, 2018).
• Performance of the Australian airports with respect to the overseas counterparts- the performance of the Qantas airlines is far more superior with more number of the terminals are given at least in comparison to the Virgin airlines. The terminals of the Qantas are also exempted from the ACCC monitoring (Australian Competition and Consumer Commission, 2018).

The employee of the Qantas airlines performs the business of the organization along with the highest level of integrity and ethics and it serves best for the Qantas group. There is also an obligation that the dealings with the stakeholders, employee, regulators, government, competitors, suppliers, customers, shareholders (Qantas.com, 2018).

 Virgin airlines also, on the other hand, maintains a high standard of ethics and moral and work in accordance with the and in compliance with the regulations, rules and laws. Due to this reason, Virgin Airlines has adopted a code of ethics that will help in providing a guide to the employees and the officers of the company (Virginaustralia.com, 2018).

• Increasing the operations in Europe, UK, New Zealand and Asia and also other parts of the world.
• Removal of some of the routes which are showing an increased amount of traffic and also decrease the number of flights from the routes which already has a high frequency of flights.
• Continuing the strategy of co-branding and continuing the same will be beneficial for Qantas.
• There is an option for improvement in certain areas like the in-flight facilities and customer service.
• Increasing the number of terminals in all the major airports will increase and help in maintaining a large flow of the passengers.
• The fleet of the Qantas airlines is ageing and this can be effectively mitigated by buying and incorporating new airlines that will match the needs of the different types of the passengers.

Conclusion

Thus, from the above study, it can be concluded that the benchmarking is the most important activity for any organization that wants to increase its market presence and market competitiveness over its rivals. Benchmarking is a vital process that incorporates a wide variety of the parameters so that the present condition of a given organization can be effectively analysed. For this study, Qantas airlines are considered which is a one of the leading airline industry in Australia and it is compared with its rival Virgin Airlines. The Qantas airlines are found to be performing outstanding due to this market presence and the experience.

Reference

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Airports Council International. (2018). aci-lac.aero. Aci-lac.aero. Retrieved 26 March 2018, from https://www.aci-lac.aero/

Australian Competition and Consumer Commission. (2018). Airport monitoring report 2015-16. Australian Competition and Consumer Commission. Retrieved 26 March 2018, from https://www.accc.gov.au/publications/airport-monitoring-reports/airport-monitoring-report-2015-16

Bartke, P., Kliewer, N., & Cleophas, C. (2018). Benchmarking filter-based demand estimates for airline revenue management. EURO Journal on Transportation and Logistics, 7(1), 57-88.

International Air Transport Association. (2018). IATA – Another Strong Year for Airline Profits in 2017. Iata.org. Retrieved 26 March 2018, from https://www.iata.org/pressroom/pr/Pages/2016-12-08-01.aspx

Parliament.nsw.gov.au. (2018). Parliament.nsw.gov.au. Retrieved 26 March 2018, from https://www.parliament.nsw.gov.au/researchpapers/Documents/sydney-airport-performance-and-potential-competi/Briefing%20Paper%20-%20Airport%20Competition%20FINAL%201.pdf

Qantas News Room. (2018). QANTAS DELIVERS RECORD FIRST HALF PROFIT, INVESTS IN AIRCRAFT AND TRAINING. Qantas News Room. Retrieved 26 March 2018, from https://www.qantasnewsroom.com.au/media-releases/qantas-delivers-record-first-half-profit-invests-in-aircraft-and-training/

Qantas. (2018). The Qantas Story | Qantas. Qantas.com. Retrieved 26 March 2018, from https://www.qantas.com/travel/airlines/history/global/en

Qantas.com. (2018). Qantas.com. Retrieved 26 March 2018, from https://www.qantas.com/infodetail/about/corporateGovernance/CodeofConductandEthics.pdf

Qantas.com.au. (2018). Qantas.com.au. Retrieved 26 March 2018, from https://www.qantas.com.au/infodetail/about/corporateGovernance/2016AnnualReport.pdf

REUTERS. (2018). BRIEF-Qantas Airways says net capital expenditure expected to be…. REUTERS. Retrieved 26 March 2018, from https://www.reuters.com/article/brief-qantas-airways-says-net-capital-ex/brief-qantas-airways-says-net-capital-expenditure-expected-to-be-3-0-billion-for-fy18-and-fy19-combined-idUSFWN1LA0SF

Virgin Australia. (2018). Enable Cookies | Virgin Australia. Virgin Australia. Retrieved 26 March 2018, from https://www.virginaustralia.com/uk/en/about-us/

Virginaustralia.com. (2018). Virginaustralia.com. Retrieved 26 March 2018, from https://www.virginaustralia.com/cs/groups/internetcontent/@wc/documents/webcontent/~edisp/vaa-policy-code-conduct.pdf