Discuss about the Qantas Airlines for Queensland and Northern Territory Aerial.
The airline industry of Australia has been doing considerably well as the given country has achieved an excellent growth rate. The number of airlines operating in the given industry has been growing considerably within the country as well as internationally. There are 49 international airlines which provide travel services in Australia. There are about 16 million visitors who visit Australia annually (Abushova, Burova and Suloeva 2016). There are various airports in Australia like Kingsford Smith International Airport in Sydney, Darwin International airport, Townsville International Airport and others. The primary airlines operating in the given country are Qantas, West Australian Airways, and Australian air express, Virgin Blue, Maroomba Airlines and Airink. For the investigation of safety and other regulations, the Australian Transport Safety Bureau (ATSB) is responsible.
The Qantas airways is the primary airline company of Australia and is one of the largest airline companies with respect to the number and size of international flights. The airline is the third oldest airline in the globe after Avianca and KLM. The original name of the airline company is “Queensland and Northern Territory Aerial Services”. The given airline is based in Sydney and has a market share of around 65% in the domestic market and 15% internationally (Qantas.com. 2018).
The given airline company has a brand called Jetstar Airways under its name which is a low cost airline operating in international as well as domestic services (Alkhafaji and Nelson 2013). The given report will be discussing the different strategies which have been used by the firm in order to establish itself in the international domain (Barney 2014). Certain recommendations for the same will also be provided.
The business environment of a given company plays a key role in the determination of the operations of the company. In the given section, the major factors existing in the business environment of Qantas airlines will be discussed using strategic management tools of Pestle Analysis and Michael Porters Five Forces Model.
The primary factors using the given tool are Political, Economic, Socio-cultural, Technological, Environmental and Legal factors.
The various political factors which have an impact on the airline company Qantas, are factors like the various policies formed by the government, entrance barriers, tax rates and other related factors (Betti et al. 2014). Terrorism has also had a major impact on the airline industry. Very often due to political problems between two nations, airplanes are often hijacked or blown up in the middle of the travel. Such issues have a huge impact on the operations.
The price of the fuels in the given industry plays a major role in the operations of the given airline company. Furthermore, the purchasing power of the different customers is also a factor that has an impact on the operations of the firm. Fuel prices have been increasing considerably and it is for this reason that the company has been increasing its costs.
The number of people who have been taking the flights have been increasing considerably due to the economic growth of the given organization. Furthermore, as the standard of living has been improving considerably, more opportunities have emerged for the airlines (Bryce 2017). The company has also adopted a low cost Jetstar airline for the ones who travel on a budget. The manner in which the consumer market perceives the airline travel plays a great role in determining the sales of the air industry.
The technological developments in the given field, provide great opportunities for the different airline companies. The development of tracking system and communication technology has made it very easy for the different clients to book flights and the open interface has made it considerably easier for the organization to communicate with the different customers.
Noise pollution and other environmental concerns need to be taken
The airline companies have to abide by various legislative rules and procedures in order to ensure that the airline is not emitting any chemicals into the environment. Furthermore, they also need to abide by the global environmental policies and regulation acts to ensure they can exist for a longer period of time (Bull et al. 2016).
The competition in the given industry is very high as there lies presence of various other airline companies who tend to provide competition to the firm in terms of price and the services being offered. To combat against the low cost competitors, Qantas took in the Jetstar Company in order to ensure that it is able to compete properly (Qantas.com. 2018).
Although the given industry is very attractive in terms of the sales, there exists high entry barriers. The investment to be made by the organization who would like to enter the given market, is very high and along with it the laws are very stringent as well (Darmawan, Putra and Wiguna 2014).
Replacements like trains, sail boats and other transportation systems are available which act as a replacement for the flights which function domestically.
The power of suppliers in the given industry is extremely high because of the increasing importance of fuel in the flights and the customer demand increase.
The consumers have a high bargaining power because they are exposed to a varied number of options and that is the reason their power is high (Eden and Ackermann 2013).
A competitive advantage can be described as the presence of a factor in the domain of the business which allows it to have an upper hand in the competitive business environment. The presence of a competitive advantage is very crucial for the success of any business enterprise.
The competitive advantage of Qantas is more than one and it has been given as follows:
According to Michael Porter, there are various strategies to be adopted by the organization who aims to grow and expand in the international market. For this reason, a given organization adopts various strategies in order to establish a competitive advantage in the environment. The strategy of Qantas is very clear. It has the primary motive to deliver sustainable returns to the different shareholders.
It wants to ensure that it is easily able to give back enough profits to the given organization. The safety of the different passengers has however been the utmost priority of the organization. The vision of the organization is to be the globe`s leading airline group by ensuring safety and health of both passengers and the employees. The Qantas group operates in the market in the form of Qantas and Jetstar. The Qantas Company has a high market share and even higher income, this ensures that the given strategy which is followed is quite precise in order to ensure the company expands. To ensure that it achieve the stated objective, Qantas sees to it that the company takes any moves whether cost rising and job cuts.
In the airline sector, in Australia the competition among the different competitors is mostly regarding the low cost tickets or the unique quality of services being provided. In this aspect the company Jetstar by Qantas follows cost leadership strategy whereby it provides cheap tickets to the customers and a no frill flight system. However, the Qantas airlines does not follow this low cost strategy and instead follows a differentiation strategy. The cost leadership strategy followed by Jetstar helps the organization to ensure that it is able to compete with the different members in the market like the Virgin airlines whereas the organization Qantas aims to gain the competitive advantage by providing safe and premium quality.
The company has one of the safest records around the globe and as one of the largest domestic and international airline company it distinguishes itself as the only company possessing a high safety focus record. The reliability and immaculate safety record are the unique selling point of the given organization (Williamson et al. 2013). Qantas believed that if the company practices safety, it will be able to attract a larger market.
Qantas ensures a product differentiation strategy in the following manner:
Service process- The service which Qantas provides is of very good quality. The flights always take off and arrive on time. The punctuality is taken to be one of the most important features of the organization, and the given airline company has performed quite well in the given domain which acts as a major aspect of differentiation.
Product features- Qantas aims to provide optimum quality services to its customers and for this reason, they offer exceptional services to the different customers which helps the organization to stand out different from the given competitor group (Rothaermel 2015).
Performance- The financial as well as operational performance of Qantas has been very well over the last few years, this might be the reason, why different organizations like to associate themselves with the operations of Qantas.
Design – The design of the aero planes in terms of the space provided to the different customers and the leg space are designed in a manner such that the different customers do not face any inconvenience. It is for this purpose that the customers are willing to pay a high amount to the company.
Safety- Qantas scores the highest in terms of quality and it is popularly known for its highest safety record.
A company should not remain static in the given business organization and for this purpose, it is important for any business organization to have well defined extension programs so as to ensure that it is successfully able to expand its operations in different parts of the globe (Martinsuo 2013). The Qantas airlines too has the given objective in mind and it is due to this objective that it engages in different expansion plans so as to see to it that, the company has its operations in different parts of the globe. The most commonly used growth strategies are given as follows:
The given strategy is used when the given business decides to expand its existing product line in order to expand its operations (Hahn 2013). However, the place of operations does not undergo a change. The given strategy is adopted by the different companies to ensure that the market share increases. Market share can be defined as a percentage of the dollar sales a company holds within the given market. A way to increase the market share is by lowering the prices.
A market expansion strategy of growth can be defined as a strategy whereby a company introduces its current product in a new market. From time to time Qantas has followed the given strategy and developed its operations in international countries under the name of Qantas International (Gereffi and Fernandez-Stark 2016).
The company initially offered different premium services like Qantas, however, understanding the present requirement that was prevailing in the Australian market and decided to expand its operations thereby introducing the low cost carrier named Jetstar (Grant 2016). The Jetstar Company competes with the different low budget operations which are the Virgin airlines and other similar companies. The company has expanded in the given domain by introducing the Jetstar which has a large market share now.
The diversification strategy allows the company to expand to new places by offering new products. Although the given strategy is a risky one, it often lets the company explore to an opportunities that are highly beneficial in the long run.
|
Segment |
Revenue |
% of total |
EBIT |
% of total |
|
Domestic |
5,828 |
37% |
480 |
39% |
|
International |
5,467 |
35% |
267 |
22% |
|
Qantas Freight |
1,067 |
7% |
114 |
9% |
|
Jetstar Group |
3,464 |
22% |
230 |
19% |
|
Qantas Loyalty |
1,369 |
9% |
315 |
26% |
Qantas operates on several business lines which include Q-catering, Qantas Link, inflight magazine, engineering and others.
Growth strategies also comprise of acquisition strategy whereby the company engages in the acquisition of another company thereby taking over the operations of the firm.
Qantas has very often believed in acquisition of various business enterprises in order to ensure that it is able to expand its operations. The company got into a merger with JetSet Travel Limited in order to expand vertically into the travel services market (Wheelen et al. 2017).
The company has also entered into a joint venture with Australia Post back in 2003, in order to acquire Star Track and Australian air Express. In the year 2014, Qantas created Red Planet, which was a subsidiary to Qantas Loyalty analytical consulting services.
However, engaging in such strategies, has had limited growth for Qantas.
Conclusion
Therefore, from the given analysis it could be witnessed that the Qantas airline company has been performing considerably well in the last few years and this can be attributed to its management and execution team. The motto of concentrating on quality has gone a long way in satisfying the different customers which has ultimately lead to the success of the company. The report has covered various aspects of the company operations and growth as well as generic strategies. In the next section, certain recommendations for the same have been provided.
After analyzing the various operations and strategies of Qantas in Australia and worldwide, the following has been observed and recommended for the company:
References
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Barney, J.B., 2014. Gaining and sustaining competitive advantage. Pearson higher Ed.
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Darmawan, M.A., Putra, M.P.I.F. and Wiguna, B., 2014. Value chain analysis for green productivity improvement in the natural rubber supply chain: a case study. Journal of Cleaner Production, 85, pp.201-211.
Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage.
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Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Hahn, R., 2013. ISO 26000 and the standardization of strategic management processes for sustainability and corporate social responsibility. Business Strategy and the Environment, 22(7), pp.442-455.
Martinsuo, M., 2013. Project portfolio management in practice and in context. International Journal of Project Management, 31(6), pp.794-803.
Qantas.com. ,2018. Fly with one of the world’s most experienced airlines | Qantas IN. [online] Available at: https://www.qantas.com/in/en.html [Accessed 15 May 2018].
Qantas.com. ,2018. About Qantas | News Room | Media Releases | Building a Stronger Qantas – New International Strategy. [online] Available at: https://www.qantas.com/travel/airlines/media-releases/aug-2011/5157/global/en [Accessed 15 May 2018].
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