Analysis of Qantas and Jetstar - Case Study Example

University: Analysis of Qantas and Jetstar. Name: Date: ANALYSIS OF QANTAS AND JETSTAR INTRODUCTION. This paper takes a detailed account of the extent to which competitive pressure affects the fundamental management and oversight of employment relations with particular regard to the Qantas airline. The paper presents intriguing insights on the appropriate approaches in strategic management and bring into our attention the various competitive strategies that competing organization can use to remain competitive while also taking into consideration of the welfare of their employees. The paper takes us through the various employment relations that airline companies, particularly Qantas and Jetstar have used in the past, their implication on the success or failure of the companies, and also seeks to vindicate these findings based on theoretical perspectives on employment relations. SUMMARY OF THE CENTRAL ARGUMENT. This central argument presented by Sarina and Lansbury in this paper embarks on bringing to light the various activities that constitute and that have contributed to the success of the Qantas Airlines. Further, the paper addresses the position of this airline, its evolution from the once big corporation that was characterized as a high cost service provider, to one that has embraced the changing times and successfully rolled out the Jetstar as a strategy to remain competitive amid the large number of customers. As this paper takes a look at the various factors, especially the external factors that have brought down the aviation industry over the years, it becomes increasingly clear that embarking on proper approaches in employment relations is a key contribution towards the success of these companies. Moreover, Sarina and Lansbury undertake to cover the scope of the changing dynamics in the employment strategies adopted by Qantas airline by taking into consideration several critical factors such as the impact played by having a setting where employees are protected by a union and where some employees are not under this arrangement. The argument presented by the two takes into consideration the relationship between the performance of an industry and the labor relations adopted by the firm. In this argument, the two decidedly conclude that the strategy used by Qantar airline, which primarily involved combining low road and high road approaches in management approaches and hence coming up with what is termed as ‘middle road’, which is a hybrid of the two. Jetstar comes in as a model introduced to combat the challenge that is faced by Qantas in trying to maintain its high profile outlook while at the same time trying to combat the rising fuel prices, the low number of passengers demanding premium travels and the uncertainty of the market (Amann, 2013, p.46). Undeniably, the issue that faces Qantas airlines here is that of sustainability and remaining competitive in a supposedly lucrative yet delicate market. As evidenced by the research work carried by the two, it becomes increasingly clear that for Qantas airline to surpass the rest in this otherwise saturated market, it requires that among other things, it should keenly keep up with the critical changes in the employment relations. As the paper progresses, we see the uncertainty that envelops the new alliance between the Emirates and Qantas. While there is much speculation, the question here is whether the two will be able to not only merge successfully but also on whether the partnership may prove to be a stumbling block to Qantas airline in its endeavor to proficiently segment and widen its international market while effectively building on a world class business model (Sundaram & Abdulrahman, 2011, p.482). While Qantas and Jetstar have ultimately adopted a similar business model, this paper seeks to address the possibility of the same strategy being incorporated in the partnership between Emirates and Qantas. METHODOLOGY. The methodology used in evaluating the viability of the partnership involves conducting in-depth interviews which primarily seek to address the issues such as recruitment of staff and their salaries, remunerations, relations between labor and management and work organization. Labor management relations provide a fundamental component of modern management practice. With this in mind, the role of the relationship between management and their employees should be broadened beyond the scope of mere compliance to evaluate critical issues such as the obligation, rights, and encouraging a higher level of mutual benefit between labor and the management (Ryans, 2013, p.26). As such, the management is left with several options in tackling the best approach in labor relations which essentially leads to two major approaches; the high road or low road. This approaches requires that the management invest in their workers and deliberately choose to engage in higher levels of consultative engagements and cooperation with the aim of achieving high productivity. On the other hand, the other methodology that can be adopted by market players is the low road strategy. This approach embarks on minimizing cost as far as possible. The viability of this approach rests entirely on the understanding that workers work only to the extent that they fulfill their contractual duties without necessarily achieve the organization’s goals (Capling & Gollan, 1999, p.36). Moreover, this approach generally involves engaging low skilled labor who are therefore paid lower wages. Another popular methodology involves looking into the subject of segmenting the market. As competition increases, firms are faced with the eminent threat of reduced market share. This methodology is applied effectively by Qantas airlines who are able to come up with the hybrid approach guided by the idea of remaining competitive by having an airline that captures the high end affluent market and another airline that effectively caters for the domestic market at more affordable rates. This model proved to be a success for the Qantas airline as it unravels the important role played by understanding employer relations in the management/employee relation. Moreover, by the incorporation of quite a number of non-union collective agreements, the Airline was able to address many issues such as worker’s wages, conditions, and maintenance that would have been rather difficult to address were all the employees working under a union. CRITICAL ANALYSIS OF THE METHODOLOGY AND CENTRAL ARGUMENT. The issues presented in the case of Qantas Airline requires to be addressed at a very analytical level. Further, the level of engagement that occurs between their employees and the management beg serious issue on the sustainability of their business model in the oncoming partnership. Undeniably, looking at business models used by Jetstar and Qantas, it is clear that they employ a strategy that favors both the divergent and convergent approaches in dealing with the labor relations and business models respectively. It is a calculated move for Qantas to position itself as a major players in the international scene, with its major focus being on employment of highly skilled employees and providing them the high wages and superior working conditions. As can be seen, Qantas has therefore aggressively applied what is popularly referred to as the pluralistic approach. The employment relations adopted by the airline with their employees seems to lean more on the trade unions and the management. While the relationship between the management and the employees is a cordial one, it should be noted that managers under the pluralistic approach are realistic in their approach and anticipate conflict to occur (Ryans, 2013, p.65). Moreover, as evidenced from the central argument, trade unions under the pluralistic approach are taken to be legitimate bodies that do represent and champion for the rights of the employees. Until 1994, when Qantas Airlines underwent privatization, the level of institutional power conferred on the trade unions was great, whereby independent external arbitrators were engaged in the process of solving any disputes that would arise between the employees and the company. Ideally, a pluralistic approach requires that encouragement is given on recognition to the union whereby representatives of the union are given the mandate to carry out their duties as designated to them. The prospects of changing Qantar Airline since its privatization provides the bulk of the analysis on the methodology used by the company. As competition intensified, the company leaned more on the support from the trade unions, requiring that members be in the trade unions. The logic behind this insistence was rested upon the idea that trade unions played a pivotal role in creating the critical balance between reductions on costs while improving the respective productivity (Capling & Gollan, 1999, p.32). Inevitably, if the extent to which trade unions influence decision making in the day to day management of an organization is such that it becomes a barrier to structuring cooperative relationships and fostering growth within the organization, then it is prudent that serious thought be given to the benefits accrued by engaging in the unions (Gittell & Bamber, 2010, p.83). In this analysis, we draw form the case example where a $10 million investment in providing customer care, airport staff and cabin crew training is almost crippled due to failing support from the trade union. A great advantage of the pluralistic approach is the stupendous institutional power possessed by the trade unions in championing for the rights of the employees (Nicolas et al., 2011, p.47). It raises eyebrows to notice that despite the loyalty with which Qantas had in trade unions on the onset slowly fading and the company seeking to outsource services that were once easily available from their own employees. The best explanation that serves to answer this peculiar behavior is that in as much as the trade unions makes careful considerations on the best employee terms of service when they are engaged on duty, it provided somewhat oppressive and unsustainable labor costs that would eventually slash the company profit margins significantly. Trade unions serve the general welfare of the employer and employee and should do so without employer or employee bias, but rather, by fostering a cordial working relationship between the two (Darby, 2012, p.10). As Qantas airlines diversified, it introduced a new airline, the Jetstar. As is observed in the explanation of the evolution of this brand, it is clear that this new innovation was launched to compliment the Qantas. As such, the Jetstar Airline came in as a blend of the Qantas brand with the innovation of trying to make it better. The merging of the union and nonunion arrangements presents an interesting case study that incorporates a model that the Qantas brand took years to adapt to and is now the major source of competitive advantage that is now enjoyed by the Jetstar and Qantas Airlines throughout the world. However, even if the most dramatic employment relations changes have occurred in the Qantas Airline, it is important to note that the Jetstar Airlines adopted a different theoretical perspective of employment relations. In essence, as can be observed from the working practices, proper relationships and the relatively reasonable terms and conditions for their skill level, it can be deduced that Jetstar approach was more of a unitary perspective in its employment relations (Nicolas et al., 2011, p.45). Moreover, this is further augmented by the fact that that the organization essentially lays no much emphasis on trade unions in the decision making process and if any emphasis are deemed necessary, it is for the purpose of communication between the company and the staff. Under the unitary perspective, it is seen that workers and the management work hand in hand towards achievement of a common goal and, therefore, this approach demand the existence of total cooperation and loyalty between employees and management (Postorino, 2010, p.62). Moreover, employee participation in the decisions in the workplace is encouraged and this encourages motivation in the organization while at the same time emphasizing on the need for teamwork and problem solving skills and capability. The freedom that came with minimum interferences from trade unions resulted in the freedom that Jetstar enjoyed in the ability to easily engage outsourced services in the organization. However, with the changes in market competition, Jetstar, like Qantas, began adoption of a model that allowed a role for the trade unions and gradually shifted upwards from an entirely low road to a hybrid model, similar to that adopted by Qantas hence the convergence. CONCLUSION. The adoption of union or nonunion collective agreements poses critical question on the model that should effectively define the future of Qantas and Jetstar Airlines. Essentially, the paradigm shift evidenced by Qantas in shifting from a wholly high road to the hybrid approach is prove of the changing dynamics in the extremely competitive airlines business. Similarly, the upward shift of the Jetstar from a low road to a hybrid approach in the employer relations ultimately vindicates the eventual uniformity in strategies adopted by both Airlines in saving costs, combating the fluctuation in prices of fuel. And the high level competition. Finally, determining an effective approach that shall propel the proposed alliance between the Emirates and Qantas Airline requires that Qantas makes a critical evaluation on the likely impact of this alliance on the future prospects of strengthening the hybrid approach and expanding to newer markets. REFERENCES. AMANN, W. 2013. Integrity in organizations building the foundations for humanistic management. Houndmills, Basingstoke, Hampshire, Palgrave MacMillan.  Campling J and P Gollan.1999, Bargained out: Negotiating without unions in Australia. Federation Press, Leichardt, NSW Gittell J.H and Bamber G.J 2010, ‘High- and low-road strategies for competing on costs and their implications for employment relations: international studies in the airline industry.’ International Journal of Human Resource Management Vol. 21(2), pp. 165–179.  Nicolas K., Zhena L., David M, 2011, ‘Innovating low‐cost business models’, Strategy & Leadership, Vol. 39 Iss: 2, pp.43 – 48. POSTORINO, M. N. 2010. Development of regional airports: theoretical analyses and case studies. Ashurst, Southampton, UK, WIT Press. RYANS, A. 2013. Beating low cost competition how premium brands can respond to cut-price rivals. Hoboken, N.J., Wiley. http://rbdigital.oneclickdigital.com. Sundaram N., Abdulrahman A, 2011, ‘The exceptional performance strategies of Emirate Airlines’, Competitiveness Review: An International Business Journal, Vol. 21 Iss: 5, pp.471 – 486 Darby, S. 2012, ‘The remarkable record of Emirate Airlines: Product differentiation and cost control deliver exceptional performance’, Strategic Direction, Vol. 28 Iss: 3, pp.10 – 12 Read More