The Qantas Group Aviation Industry - Case Study Example

THE QANTAS GROUP AVIATION INDUSTRY Introduction This report will analyze the situation of Qantas Airlines and use it to give some recommendations that will help steering the company towards success. The purpose of a situational analysis is to assist the managers of a company to understand the position of their company in the market place. This report provides insight on Qantas Airline with the information provided the management crew at Qantas can determine the most and effective growth strategy that the company should employ as part of their business strategy. Additionally, Qantas Airline will benefit from this situation analysis since the company can make use of it in future plans to efficiently carry out an assessment on which domestic and international markets it can penetrate. Through the evaluation of previous trends of Qantas, the airline can determine which strategies to implement that will assist the company to gain enough incentives to provide product and services that will reach the end users. Further the report provides recommendations which will assist the company in overcoming the challenges posed by competitors in the aviation industry as well as alternative industries. Qantas Airline Vission and Business Strategy The airline is well known for its brands’ logo, ‘Red Kangaroo’ which is branded on its two brand airlines, Qantas brand and Jestar Brand. The airline’s vision statement is, according to the Qantas Annual Report (2009) “World Best Premium and Low Fare Airlines.” The airline operates in three distinct segments which include; Marketing, Operations, customer and commercial services. SWOT analysis and Porter’s generic models are applied in this report to comprehend the current situation of the brand in the aviation market. Using these two analysis models, the report will provide possible recommendations or strategies that the airline may employ in its management and operations for it to thrive in the market as well as overcome any challenges. To achieve the vision statement of the airline, Qantas Airline has chosen to first focus on its employees and satisfies their needs before embarking on using the five main strategies as outlined by Qantas in living up to its vision. These five strategies include “Safety in our first priority, Right aircrafts Right Routes, Customer Service Excellence, and Operational Efficiency on top of these there is the two complimentary brands Qantas and Jestar that operate to serve the domestic and international airline market” (Qantas Annual Report, 2009). In addressing safety, it is evident that Qantas Airline is well recognized for this aspect in the aviation. Sustainability report (2008), addresses Qantas’ “sustaining the spirit” motto. In the sustainability report, Qantas asserts that it has been consistent in sustaining its leadership style which has greatly contributed to the airline earning the trust of its customers globally. In addition to this the company has maintained a strict audit plan that ensures its activities are aligned to the current security measures. This is achieved by adapting the International Air Transport Association’s with Operational Safety Audit Certification which is renewed after every two years (Sustainability Report, 2008, pp. 11) In regards to the Right to Right Route policy by Qantas, the airline operates both international and domestic flights depending on the demands of customers. This way it ensures that each of its airline brands is able to meet and satisfy the needs of their clients. Its customer service excellence makes Qantas stand out in the aviation market. It’s diverse after sale services to its customers include; package trips, lounge facility and the airport, adapted alliance strategy all have been used to maintain customer loyalty and attract more loyal customers (Qantas Factfiles, 2010). Notably, Qantas operational efficiency is seen in its effective process as attributed in its products and supplies in addition to the Qantas Aviation and expert engineering. According to Qantas Factfile (2010) the introduction of Jestar a low fare airline by Qantas has contributed to the increased profit margin by dominating the aviation market. Situational analysis of Qantas Airline Qantas was voted as one of the most reliable customer choice airline worldwide (Skytrax world Airline Awards, 2010). Qantas’ brand image and reputation has been a source of great success which have won the airline multiple awards for the milestone that it has accomplished. Its services are extended to very wide market base through subsidiary brands like Jetstar, Qantas Link or even Qantas Holiday (Qantas Annual Report, 2009). These subsidiary brands offer stiff competition to rivals in the aviation market. For instance Jetstar has become highly effective by adjusting the normal strategies employed by the aviation market through differentiation to make value and be outstanding as compared to its competitors. In addition to this there is also the customer service by Qantas group. These include the; Qantas customer center, Qantas lounge at the airport and Qantas frequent flyers which provide additional information about the airline that customers can access. The company has also participated in partnerships and alliances with other companies in order to attract more reliable customers. Its alliance with Woolworths is a good example which assists in collecting and distributing their flyers, which is a successful program that helps reach customers easily and faster (Qantas Factfile, 2010). Training and development courses offered at Qantas. These include basic and advanced technical training for engineers. As a result employees at the airline are able to advance their skills and knowledge thus improving productivity and performance. Current times have exhibited that Qantas is faced with financial constraints as a key player in the aviation industry. The high operating cost for running an airline is one of the main weaknesses faced by Qantas. For instance according to Qantas Annual Report (2008) the airline spent had to spend up to 30% of its average cost base on labour. Qantas market segment is made up of both domestic and international customers with this situation the airline needs to utilize globalization as a tool to expand and grow. With the current technology Qantas can take advantage and make its services accessible in every part of the world. It can use the internet to reach out to potential customers. Adapt the use of advance technology which helps to ease the work of staff members at the counter when checking in or checking out customers from the airport (Qantas Factfile, 2010). In order for the company to overcome the challenges posed by limited oil for their airplanes and jets, Qantas needs to adopt alternative measures. Oil crisis, which has lead to the increase of oil prices in the market, has subsequently lead to the hike of fare by the Airline which scares customers off. Use of alternative fuels such as methanol, ethanol, and bio derived fuels, liquid hydrogen and synthetic fuels. According to Daggett et al (2006) this will also empower the company with more bargaining power to fuel suppliers. Competitive analysis Qantas faces stiff competition from Virgin Airline which also runs a low airline brand, Virgin Blue Airline which competes with Jestar a subsidiary brand by Qantas. However most of the companies in this industry are focused in reducing their costs to meet customer demands which are not enough to beat Qantas as its services and products are quite outstanding and attractive to customers. Qantas has managed to focus on differentiation strategy by partnering up with Woolworths to increase their market base the Frequent Flyer Program (Qantas Factfiles, 2010). This marketing strategy has placed it in a more competitive edge and therefore setting it apart from its competitors. Currently Qantas is a leading airline in the domestic aviation market in Australia (Qantas Factfiles, 2010). However, when one evaluates the globes aviation market the potential of new entrants is quite high. For instance, Tiger airways Australia, which is owned by Singapore Airlines and was established in Australia in the year 2007. The airline has been expanding throughout Australia since then by establishing bases in Melbourne’s Tullamarine Airport and Adelaide Airport (Channel news asia.co website, 2010).Qantas needs to come up with a business strategy that will deter the entrance foreign competition by using the price deterrence strategy with subsidiary brand Jestar. It is obvious that a number of people opt for air transportation it’s convenient when it comes to saving time and comfortable nature when travelling. However, the existence of alternative means of transportation regardless of their capabilities, pose a huge threat for Qantas. The alternative means of domestic transportation such as; cars, trains, cruise ships and buses are still very minor threats compared to the low cost airlines such as Jestar. Low priced airlines coupled up with promotion trips boost up the diverse options that customers have to choose from when it comes to transportation by air. Luckily for Qantas, the threat of substitute product for Qantas is quite low. In addition to this is quite evident that there are increased numbers of low cost airlines that provide alternative options which match up to those offered by Qantas. Therefore Qantas needs to come up with quality products and cheaper prices at travel agencies and websites for them favorably compete with others and gain more customers. Conclusion and recommendations Qantas Airline has grown to be a trustworthy and reliable airline in the aviation industry with Australia. The company has become reputable and its success is attributed to the number of business partnerships and alliances it has managed to form over the past few years. Qantas can continue to be a strong brand if it is able to use its main competencies which are brand strategy, safety and security to overcome the number of threats it faces in the market segment. Notably Qantas can be a strong brand if it manages to strike a balance between its competencies and use them as an advantage to overcome the threats of, fuel cost issues, low cost airways and the rise in alternative transportation. Additionally the company can employ the use of diverse strategies such as the use of advanced technology and distribution channels to access more customers at a faster rate than others. In order for Qantas to survive in the global aviation market, it is important that the management maintains the firm’s current position of success. Additionally the firm needs to prepare for any unexpected future events that may undermine the success of Qantas. References Channel News Asia. (2010). Tiger Airways sets up third base in Australia. Singapore news. [Online]. Available from: Accessed on [15th April 2015] Daggett, D., Hadaller, O., Hendricks,R. & Walther, R. (2006). NASA: Alternative fuels for Aviation. [Online]. Available from: http://www.energybulletin.net/node/23098. Accessed on [14th April 2015]. Pope, S. & Huber, M. (2010).The Major Airplane Manufacturers at a Glance. [Online]. Available from: http://www.bjtonline.com/s/article/the-major-airplane-manufacturers-at-a-glance-2453.html. Accessed on [15th April 2015]. Porter, M.E. (1985). Competitive Advantage. First Free Press Edition. New York. (p39-40) Qantas (2008). Annual Report 2008. [Online]. Available from: http://www.qantas.com.au/infodetail/about/investors/2008AnnualReport.pdf. Accessed on [13th April 2015]. Qantas sustaining the spirit. (2008). Sustainability report. [Online]. Available from: http://www.qantas.com.au/infodetail/about/investors/sustainability2008.pdf. Accessed on [12th April 2015] Qantas. (2009). Annual Report 2009. [Online]. Available from: http://www.qantas.com.au/infodetail/about/investors/2009AnnualReport.pdf. Accessed on [14th April 2015] Qantas. (2010). Factfiles. [Online]. Available from: http://www.qantas.com.au/infodetail/about/FactFiles.pdf. Accessed on [14th April 2015]. Skytrax world Airline Awards (2010). The World's Top 10 airlines announced at the 2010 World Airline Awards. [Online]. Available from: http://www.worldairlineawards.com/main/2010Awards.htm. Accessed on [15th April 2015]. Read More