Qantas Airline Marketing Research - Essay Example

School 5th May, 2006 Marketing Research: Qantas Airline's Domestic Sales Problems in Australia Executive Summary: This report presents the sales problem faced by the Quantas Airline. The purpose of this document is to identify the problems and find the root cause behind them. This document starts off with the background history of the quantas airline followed up with their developments, finally ending to their problem. The main idea was to identify the cause of the problem. After having detailed survey of its history, a short survey was conducted and based on the data collected problems were analyzed. Problems that were addressed was relating to the sales of Qantas and the factors that were affecting the strong market giant of Australia's business. It also included information about the competitors of Qantas and whether they were facing the same problem. It also discussed about other International affairs connected to problem. Background History: Qantas Airline established in the Queensland back in 1920, registered originally as the Queensland and Northern Territory Aerial Services Limited (QANTAS) building a reputation in safety, operational reliability, engineering and maintenance, and customer service. Qantas is widely regarded as the world's leading international airline and one of the strongest brands in Australia. It also operates subsidiary businesses including other airlines, and businesses in specialist markets such as Qantas Holidays and Qantas Flight Catering. By 1995, the year in which Qantas celebrated its 75th anniversary, the vision of the two young war pilots who founded their bush air service in 1920 had evolved into one of the world's great airlines (wekipedia.org, 2006). Some of the airline's important recent achievements include the 50th anniversary of full Qantas services on the Kangaroo route between Australia and United Kingdom and the 50th anniversary of services to Japan in 1997. Developments: The future holds many challenges for Qantas - maintaining safe operations and world-class product standards while building a viable and competitive position long term for the airline. In December 1992 the Government announced that British Airways had successfully bid AUD 665 million for 25 per cent of Qantas. In February 1993 Qantas received 1.35 billion AUD capital injections from the Government. The British Airways purchase was completed in March 1993, setting the stage for partnership arrangements in many areas to achieve economies of scale. The following month the Qantas board decided to merge Qantas and Australian under the banner Qantas - 'The Australian Airline' (www.qantas.com.au, 2006). The airline sharply increased capacity allocated to Australian domestic routes to meet market growth and win back market share. It introduced a new cabin design for the core fleet as part of a comprehensive product update that also featured more comfortable seats, new menus and uniforms and expanded airport lounges. Problem: By the end of November 2005, sales of domestic section of Qantas International Airlines started decreasing by the rate of 2% (Nine MSN News, 2006). That was a huge disaster for the big giant of Australian economy. The inflation graph for Australia just got a straight line in it after that. Economy class as well as corporate level consumers starts to shift themselves to other airlines such as virgin airlines and others. When it comes to sales, this is a huge disastrous point for the administration and what's beyond that is presented in this marketing research report and I tried my best to put everything relevant to this issue in this paper. Research Question: Why sales of Qantas started decreasing in 2006 What are the factors that are affecting the strong market giant of Australia's business Are competitors of Qantas are facing the same problem Is there any other International affair is connected to that problem Research Design: My research will revolve around a typical survey questionnaire (Appendix A) that will be given to people who opted Qantas as their first choice to travel but they are not traveling anymore by Qantas. I am going to contact them by the help of Australian Travel Agents Association of Sydney. The other part of my research includes the global village I-e The Internet. I will use Australian News websites, Qantas official website, Australian Government websites, international news websites such as BBC, CNN, fox news and search engines like Google and yahoo. Findings and Recommendations The rise in petrol prices started in the first half of 1999 is mainly the result of higher international crude oil prices. Early in 1999, the Organization of Petroleum Exporting Countries (OPEC), whose members produce about 40 per cent of world crude oil, announced that its members would reduce output (Parliament of Australia, 2006). These cutbacks to supply and higher demand resulting from growth of the world economy have boosted crude oil prices. They rose from a low of around US$10 per barrel in December 1998 to US$25 a year later and to around US$31 in mid-August 2000 Crude oil producing countries are thus the main beneficiaries of the rise in prices while consumers are the losers. The second determinant of petrol prices in Australia is the exchange rate between the US and Australian dollars (Yahoo! Finance, 2006). World crude oil prices are denominated in US dollars. Depreciation of the Australian dollar relative to the US dollar causes Australian dollar prices to rise. The Australian dollar has fallen from around US 63 cents in March 1999 to US 57cents on 25 August 2000, a depreciation of over nine per cent. Oil contracts are usually denominated in US dollars. The Australian price of oil used as a refinery input thus depends not only on world oil prices but also on the value of the Australian dollar against the US dollar. Tableshows the value of an Australian dollar in US cents since the beginning of 2000; by 23August the dollar had fallen to a low of 0.5705 US cents (Yahoo7, 2006). Data Analysis: The main conclusion of this report is that not only Qantas but also every Airline in this world depends upon the price of petrol. It is also affecting other main businesses of world such as motorcar business, newspaper business, imports and exports. Petrol is the main necessity which is available in Middle East but no one can afford to go to Middle East to negotiate for petrol at this crucial time. This world is a global village and America is commanding the army of that village. England and Australia are the hands of America in this army and no one can take a single step without each other so these three powers know that petrol is the main baseline of everything and keeping that motto behind they are reaching everywhere to come out of petrol crises. As the nest year is election year so America might be careful to go to Iran and his neighbor countries for petrol in the label of peace. By a general research I have seen that the problem that Qantas is facing is in every country or it is almost going to be there in every country. Climbing petrol and fuel prices are boosting the already difficult financial situation for working people in Australia and undermining small businesses, including private truck operators, small manufacturers and a range of rural producers. Last month under the impact of escalating global prices for crude oil, compounded by the devastation of refineries in the Gulf of Mexico by Hurricane Katrina, the cost of unleaded petrol across Australia leapt to around $1.40 a litre - a 30 percent increase since May. The price of diesel which is one of a cheaper source of fuel for farming, trucking and a range of passenger and commercial vehicle, shot up to $1.43 cents a litre in many areas. Economic commentators forecast that fuel costs would remain high in the future and that the price of petrol would never again fall below $1 a litre. The UN is currently bringing Iran to task over its nuclear ambition. It is the concerns that the nuclear plants being built are to produce weapons grade material. Understandably the world is nervous and is asking for an open review of Iran's nuclear assets, and quite correctly so. As a result Iran has threatened oil supplies will be contracted if the pressure continues, effectively holding the world to ransom. Australian federal Treasurer Peter Costello (Parliament of Australia, 2006) said, "Petrol price rises will increase and decrease by the passage of time. Let me make this point: let's suppose the situation deteriorates in Iran, then you would expect the petrol price to go up. It could go up very, very substantially. Now the Australian Government of course has to bear in mind assistance to families and we do." There is a non-market influence such as OPEC that oil prices will not reflect the market price. Which is fine, Australia cannot single handed break this price fixing organization. It will require a concerted effort from a group of the major oil purchasing countries. If the community knew that the government was investing in technology that will break Australian reliance on oil then it would be much better. If in 10 years Australia reliance on crude oil could be severely restricted. This would put the Australian economy in a vastly superior position than now, where we are left at the whimsy of other countries fixing the price, or threatening supply reductions in response to international pressure. As long as price of petrol is increasing there is no chance to reduce the fares of all the airlines of Australia or even anywhere in the world and that's not only airlines but there are many more industries related to that issue and they all are effecting by that. Limitations: The part of the research depends on the survey conducted through the questionnaire, which makes it a little difficult to analyze, as normal behavior of people taking the questionnaire is casual. But I have tried to convince them, as traveling is always as exciting as ever so response was not that bad as I was expecting. Secondly the sources I have used are authentic one so that confirms with the validity of the report. Appendix A Questionnaire The Questionnaire given below was given to the people to conduct the survey. 1. Age: _______________________ 2. Maximum number of trips by air per week: __________________________ 3. Station at which you have to go mostly: _____________________________ 4. How long you have been using Qantas as your first choice to travel ____________________________________________________________________________ 5. Were you satisfied with airfare when you left Qantas : Yes / No 6. Were you satisfied with in-flight service when you left Qantas : Yes / No 7. Were you satisfied with flight schedule when you left Qantas : Yes / No 8. Were you satisfied with reading material of the flight when you left Qantas : Yes / No 9. Were you satisfied with catering services when you left Qantas : Yes / No 10. Were you satisfied with multimedia entertainment when you left Qantas : Yes / No 11. What is the rating of Qantas for you: (Excellent, Very Good, Good, Bad): ________________ 12. Were you satisfied with the staff of Qantas when you left : Yes / No 13. Is Qantas better than Jet star : Yes / No 14. Is Qantas better than Virgin Airlines : Yes / No 15. Did you use the online booking facility of Qantas : Yes / No 16. Were there any discount vouchers of Qantas Air Tickets : Yes / No 17. What would be added to improve service of Qantas Airline : ______________________________________________________________________________________________________________________________________________________________ 18. Have you received any questionnaire in past from Qantas Airline : Yes / No 19. How frequent do you travel : ___________________________________________________________ 20. How would you categorize the airline standard in the international world of travel (Excellent, Very Good, Good, Bad): ________________ Appendix B Data Analysis After conducting the questionnaire survey I have got the following figures Qantas Airlines (Questionnaire) Average Age 35 Average trips per month 4 Satisfied when left (No) 48 Not satisfied with air service 5 Not satisfied with flight schedule 3 Not satisfied with reading material 20 Not satisfied with multimedia entertainment 10 Not satisfied with catering service 16 Qantas (Good) 17 Qantas (Bad) 43 Qantas better than Jet star (yes) 30 Qantas better than Virgin Airlines (Yes) 34 Users of online booking 51 Discount Voucher users 23 Satisfied with Airfare 57 I have highlighted the major factor in the end because of which most of the people left Qantas Airline as their initial choice to travel. Appendix C] Table C-1: Exchange Rate of Australia affected by petrol prices End of month 2005 US Cents per Australian Dollar January 0.63686 February 0.61874 March 0.60702 April 0.58394 May 0.57307 June 0.59684 July 0.58025 References Bbc.co.uk (2006). Bbc.co.uk, Bouyant spending boosts Australia: Retrieved on April 14, 2006 http://news.bbc.co.uk/2/hi/business/4221630.stm Cnn.com (2005). Cnn.com, Australia leaves rates on hold: Retrieved on May 04, 2005 http://www.cnn.com/2005/BUSINESS/04/05/australia.rates/index.html Ministry of Transport, Australia (2006). Passengers statistics for NSW Air routes to and from Sydney Airport: Retrieved on April 22, 2006 www.transport.nsw.gov.au/atc/passenger-stats.html Parliament of Australia (2006). Parliamentary Library, Parliament of Australia: Retrieved on April 15, 2006, http://www.aph.gov.au/Library/pubs/RN/2000-01/01rn07.htm Parliament of Australia (2006). Parliamentary Library, Parliament of Australia: Retrieved on April 15, 2006 http://www.aph.gov.au/Library/pubs/RN/2000-01/01RN06.htm Qantas (2006). Qantas International Airlines, About Qantas: Retrieved on April 19, 2006 www.qantas.com.au/info/about/investors/trafficStats Qantas (2006). Qantas International Airlines, Home-Page: Retrieved on April 22, 2006 http://www.qantas.com.au/regions/dyn/home/qualifier-region-au/qualifier-custtype-qf2leisure Wkipedia (2006). Wikipedia.org, Wikipedia, The free encyclopedia: Retrieved on April 13 2006 http://en.wikipedia.org/wiki/QANTAS www.ninemsn.com.au (2006). Australian Nine msn: Retrieved on April 7, 2006 www.ninemsn.com.au Yahoo7! (2006). Yahoo Australia April 5, 2006, http://au.yahoo.com/ Yahoo! Finance. (2006). www.finance.yahoo.com, Key Statistics for Qantas Airlines: Retrieved April 15, 2006 www.finance.yahoo.com.au/q/akss=QAN.AX Read More