Qantas Airways analysis

Document Type:Thesis

Subject Area:Management

Document 1

It was originally started as Queensland and Northern Territory Aerial Services Limited. Depending on the international flight and the fleet size, it is the largest in Australia. Qantas has over 35,000 employees until recently when they made plans to lay off some of their workers because of the losses that they have incurred. Their network covers over 173 domestic flights and 42 flights internationally. The company is well positioned because of the quality of their services. Since the inception of the business, they have operated several subsidiaries from Australia Asia Airlines, Impulse Airlines, Australian Airline, Qantas Link and Jetstar Airways. By 2015 March, the company was enjoying a market share of 65% in the Australian Domestic Market. Compared to other airlines, it has made the highest number of international flights and destinations. Their flight number is over 5000 in a week. The company is also famously known as “Flying Kangaroo” and “The spirit of Australia”. They have adopted some of the latest technology that other airlines have not yet adopted. They have automated their customer’s services like booking of flights. They adopted a low cost strategy to reduce their flight chargers as the lowest in the market. Among other things is the dual strategy that they have adopted. The dual brand strategy has seen the company begin the Jetstar Airline which offers low cost flight services while Qantas offers premium flight services which has helped them to increase their profits over the years. They are able to cater for both those who want a luxurious experience and those that want the cheapest price in the market.

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However, Qantas has received a lot of competition from Virginia, an airline that just entered the market. This has led Qantas to suffer massive losses that have made them aim to cut their costs. They even started the strategy to cut a minimum of a thousand jobs. They had announced an expected tax loss of up to three hundred dollars. Since the airline is the third oldest in the world, they enjoy a strong brand image. They are well known for the quality services they offer and how they treat their customers well and place them before profits. They also provide their clients with in-flight entertainment to keep them entertained throughout their journey. Another strength that the two enjoy is strong market dominance in the Australian market. In Australia, Qantas dominates their competitors.

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Qantas is positions as a premium flight service provider while Jetstar is positioned as the low-cost flight service provider. The primary competitor for Qantas Airway is Virginia Australia which had proven to be a threat. They have however adopted a variety of initiatives to keep their brand status. To counter the competition, they have ensured that about 3000 cabin crews are equipped, pilots and their flight employees with iPads. Qantas Airways joined with AirAsia airline which helps to reduce the costs of airline ticket. They also had plans to reduce their employees by 5000 by 2017. This is huge turnoff for employees who lost their jobs and those that had their monthly salaries frozen. It can hinder competent employees from joining the company or make them leave. e) Opportunities The company has great opportunities in their loyalty program.

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Qantas has taken advantage of their twenty five year experience in ensuring customer loyalty. It affects their margins and eventually the profitability of the company. Regulatory issues in foreign countries can limit the expansion of the company. There was a time when Jetstar had subsidiary based in Hong Kong. It is Shun Tak Holdings that emerged as a potential investor for the airline in Hong Kong. The challenge is that Jetstar did not get the approval to form the alliance in Hong Kong and ended up doing away with the plans. c) Technological factors Their use of some of the latest technology is very advantageous to the company. An example is the use of online reservation system in the process of customer bookings. They are one of the first companies to use the satellite technology in landing.

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d) Legal factors Qantas faces a number of legal issues both in their country and foreign countries. They have to meet the legal requirements of safety and security. An example of this is the Thailand Crisis in 2010. Because of the violence in the country, air travel reduced by 20%. In fact, some airline operators had to give back tickets to the customers. Competitive advantage over the rivals Technology Qantas has adopted some of the latest technology which helps them to serve customers in a more efficient manner. An example is the adoption of the use of online reservations in the process of bookings. Porter’s generic strategies a) Cost leadership Cost leadership involves a company applying the lowest cost for their product and services to gain competitive advantage. Qantas is achieving the low cost through the Jetstar airline which focuses on providing the lowest cost of flight services to their customers.

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b) Differentiation Differentiation ensures that a company has offered a variety of services to achieve success (Bowman, 2007). Qantas airline is a leader in offering safety in the aviation industry. They offer differentiated services to achieve competitive advantage. Merging two businesses can be very beneficial and help in cutting of costs. This would help them achieve economies of scale and offer multichannel distributions. Partnerships A partnership takes place when two business come together and cooperate to form a business. Qantas has also formed partnerships with a number of companies like Japan Airlines and Mitsubishi Century. Jetstar, has had a partnership agreement with Japan Airlines from 2007 to form ties between Japan and Australia (Jetstar, 2013). However, this strategy seems to be failing them. They need to concentrate on one of the strategies to be able to gain competitive advantage.

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There can only be one cost leader in the market. They need to adopt the differentiation strategy which offers a wide range of opportunities. They can offer differentiated products but concentrate on one fully. Competitive and Corporate strategy. Irwin: London. Hill, Jones & Schilling. Strategic Management: An integrated approach (11th edition). Cengage. qantas. com/FormBuilder/_Resource/_module/doLLG5ufYkCyEPjF1tpg w/file/presentations/QAN-Investor-Day-2017. pdf Qantas Media Release. n. d).

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