Business overview and analysis of Qantas airlines

In 1920, Qantas was started in Queensland. It is consider as the second oldest airline all over the world. The name QANTAS officially comes from the Queensland And Northern Territory Aerial Services limited.

In 1931, in association with Imperial Airways, Qantas started an Australia-UK service on an experimental basis to provide mails to Darwin and the first passenger service was started in 1935 from Brisbane to Singapore. After this the Imperial airways sold all shares of Qantas to Australian Government and in 1947 Qantas started to flew from Sydney to London under the government rights.

Today Qantas is famous all over the world as a leading long distance airline. It is a true trademark of Australia. At present in 47 different countries 35,000 employers work in Qantas at 173 destinations (Qantas Airways Limited Fact File 2010).

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This case study is prepared to discuss the various parameters essential for the production of this company based on Harvard case study. It will cover the SWOT analysis for Qantas airways and also try to identify its core competency. It will also identify some of its potential and reforms for problem solving. At the end it will cover some of the suitable recommendation and strategies for the future sustainable growth of the company.

2. Company Vision:

The long term vision of the Qantas Group is to operate Qantas as the best premium airline of the world and to operate Jetstar as the best low fare airline of the world (Qantas Airways Limited Fact File 2010).

In order to accomplish this, the group has worked on the five main objectives. These are

Ensuring safety by providing and implementing the best safety practices.

Selecting proper aircraft and right routs so as to provide the world’s best and finest route network.

Providing excellent customer service.

Achieving simplicity through constant operational efficiency, thus improving productivity of the business.

Developing Qantas as the best brand for premium airlines and Jetstar as the best brand for low fare airlines.

3. Industry Structure:

The main area of interest for the Qantas Group is the passengers travelling through the air by the two airlines namely, Qantas and Jetstar. Qantas airline is considered as a commercial airline focussing strongly on its marketing policy, customer service and operation policy (Qantas Airways Limited Fact File 2010).

It is not only an airline company but is also associated to Qantas Freight Enterprise, Qantas-link and alliances.

The marketing and customer service department consists of cabin crew, service and product development group, in-flight service group and marketing group. Various Qantas Aviation Services, airports, engineering, catering, flight operations and operation planning and control group are all included in operations department (Qantas Airways Limited Fact File 2010).

Partnerships and investments are very important and essential for any industry to be successful and sustain in the market. The Qantas has also invested in the various businesses which are related to other airline businesses. In Newstar Holding Private Limited, it has a 49% interest and also holds a 27% shares in Vietnams Jetstar Pacific. Also in Air pacific and in Jetset Travel World Limited it holds an interest of 46.3% and 58% respectively (Qantas Airways Limited Fact File 2010).

It also has a partnership with Australia post. It works under the name of Australian Air Express and Star Track Express for domestic air goods and national road goods.

In March 2010, the information obtained from Operational Statistics is given below (Qantas Airways Limited Fact File 2010):

For the year 2009 the Qantas has earned a $181 million profit before tax which was 87% less as compared in 2008 but the net profit after tax was $123 million (Qantas Airways Limited Fact File 2010). On the 28th May, the expected profit before tax earned by Qantas for the year 2010 was revealed in “The Australian”. It states that for the year 2010, ending at June 30, the expected profit before tax for the Qantas is to be in between $30 million and $40 million.

The data collected by the International Airport Transport Association (IATA) for the year 2008 shows that in relation to the Revenue Passenger Kilometres Qantas was the 11th largest airline in the world (Qantas Airways Limited Fact File 2010).

Management and Location:

It consists of an executive committee. The chief executive officer is Alan Joyce and has 11 roles in it. These are shown in the flow chart below:

Chief Executive Officer of Jetstar Airways

Group Executive for Government and Corporate Affairs

Group Executive for Qantas Airlines Operations

Group Executive for Qantas Airlines Customer and Marketing

Group Executive for Qantas Airlines Commercial

Group Executive for Corporate Services and Technology

Chief Executive Officer for Qantas Loyalty

General Counsel

Chief Risk Officer

Acting Group Executive Finance officer

Group Executive People

Chief Executive Officer

The Head office of the Qantas Company is situated at the Mascot in New South Wales (Qantas Airways Limited Fact File 2010).

4. SWOT Analysis:

The SWOT analysis for Qantas Airways is given below:

Strength:

It consists of 35,000 employees which are committed and dedicated towards their work.

Qantas takes care of their employees and supports them by providing various benefits such as personal care leave, parental leave and training and examination assistance leave.

The crew members are provided with flexible and good working conditions by the Human Resource management and Cabin Crew team. They also look after and manage all the operational requirements.

Qantas provides hassle free and comfortable service to their air passengers. It also manages to provide some of the specific needs of the passengers. It is noted that in the year 2009 Qantas had carried more than 131,000 people with disabilities (Sustainability Report 2009).

In association with SITA, Q Catering Cairns has managed to process organic waste with the help of local composition plant. More than 50% of waste obtained from Q Catering is organic which is then supplied to the farms to improve the crop quality. Thus manages recycling of waste (Sustainability Report 2009).

Qantas considers safety as their first priority. In Australia it employees almost 5,500 engineers and spends $1.4 billion every year for aircrafts performance and safety. Also Qantas carried out effective maintenance programme for 80 to 90 percentage of its aircrafts (Sustainability Report 2009).

Weakness:

It is very tiring and exhausting job and requires working for long hours in a small pressurised cabin at high altitude (Flexibility in the Workplace Qantas Airways Limited).

Also different climatic conditions at various stopovers, travelling in between different time zones and sometimes odd job time make this job more tiring (Flexibility in the Workplace Qantas Airways Limited).

Sometimes it requires the employees to miss family and social function because this job does not have a specific time frame.

It is hard to maintain top product standards and safe operations for a long period in such a competitive environment.

Opportunities:

Qantas has arranged some programmes for its employees in association with Family-Biz in order to give them some services and information which helps them to keep proper balance between their work and life. Also an access to the intranet facility is provided to the employees to easily contact the ground staff. Workshops are carried out for the employees returning from parental leave (Flexibility in the Workplace Qantas Airways Ltd).

Qantas has managed to achieve the various achievements. It has also come forward to provide help to various environmental, humanitarian and charitable organisations in Australia (Sustainability Report 2009).

It has also undertaken programmes such as Community Network Transition Program for the welfare of the students. It manages to provide constructive role model for the students which will help them in their future career and life.

Threats:

In 1999, Qantas had to face some difficulties like increase in fuel prices, crises in regional Asia. It has also suffered from the adverse effects caused due to the change in Government Aviation Policy.

In Melbourne, February 2006, many workers went on a strike in order to get better working conditions and good pay which resulted in many passengers left without their luggage (The Herald Sun, Posted Feb. 26, 2009).

In September 2008, Qantas noticed a decrease in 0.2% in their passengers as compared to the earlier year due to financial global crises. In the same year the company was required to sell 40% of the Frequent Flyer Unit to a private company for AUD$1.2 billion.

In January 2009 a Qantas flight travelling from Singapore to Perth accidentally falls down hundreds of meter which resulted in many injuries to the passengers. Some passengers even sued Qantas for this accident (Aviation Record 2009).

Also in Western Australia some federal investigations were carried out on Qantas because of the similar problems (C News, 2009).

In January 2009 the agreement between Qantas and British Airways come to an end because of the dispute between two companies over a main point of agreement which resulted in 1500 employees jobless (CNN, 2009).

Qantas profit got affected by 80% in May 2009 due to the outbreak of deadly SARS (Asia Pulse Private Ltd, 2009).

In April 2010, the European airspace was close for more than a week because of the explosion of volcano in Iceland. This resulted in cancelling all flights on this route. Because of this incident Qantas has to bear a loss of $1.5 million every day, out of which 50% was spend in providing accommodation to the passengers.

Also the methods applied for maintaining the old aircrafts are not proper which is considered as one of the reason for increase in accidents for Qantas (DuPont, 2005).

5. Core Competencies and Competitive Advantage:

Qantas is considered as one of the top and award winning brand in Australia. It is famous for its ability to provide excellent customer service, reliability, safety and outstanding engineering and operational services (Qantas Airways Limited Fact File 2010).

Qantas has achieved some awards for its exceptional industrial and customer service. These are:

In 2009 Qantas got award for good design for its A380 First Class Suit

In 20005, 2006 and in 2009, Qantas got award for best Australasia Airline. Also in 2006, 2008 and 2009 it got Skytrax award for the best Regional Airline of Australasia.

In 2009 it got award of Australian International Design for A380 Economy Seat.

In 2004 at Chicago Athenaeum Museum it got the award of good Design for the Skybed.

The Brand Qantas:

The Qantas is considered as one of the major brand in airline industry. Qantas is considered as one of the prime international and domestic airline service of Australia. Also it provides many benefits for its passengers travelling in international and domestic airlines services (Qantas Airways Limited Fact File 2010).

Qantas Freight Enterprises, Qantas-Link and the various alliances are included in sales and distribution department of Qantas mainline along with Qantas Commercial.

Customer Service and Marketing department of Qantas consists of various in-flight services, product development activities, marketing and cabin crew.

The Operational department of Qantas includes all the operational work related to engineering, catering, airport services, aviation services, control and planning operations.

The Qantas regional network gets support from its domestic airline called Qantas-Link. It is a full service airline which enables the passengers and regional businesses to get connected to the major cities. The passengers travelling through this airline enjoys following benefits;

It provides passenger with a service which helps them to get connected interstate and even internationally.

The passenger is able to access the reservation system of the Qantas airways.

The passengers which frequently flies through Qantas airways gets the frequent flying points.

At almost all domestic airports e-ticket facility is provided to the customers. This facility is also available at selected international airports.

It provides a service through which customer can check-in online.

Jetstar Brand:

Jetstar is considered as one of the Australian low fare airline. It started to operate domestically in May 2004 whereas in November 2006 it began its international operation (Qantas Airways Limited Fact File 2010).

Jetstar Asia:

In the Newstar Investment Holding Private Ltd Company, Qantas owns 49% of its share. This company, in turns, holds all the stake of Orangestar Investment Holding Private Ltd Company. Now this company manages and owns the Jetstar Asia airline, Valuair and Intra Asia airlines which are situated in Singapore (Qantas Airways Limited Fact File 2010).

Jetstar Pacific:

This airline works in Vietnam as a domestic airline. Qantas has 27% share of this airline.

Loyalty:

The Qantas airways provide its passenger a loyalty programme called Frequent Flyer Programme. In the southern hemisphere it is considered as the major and most famous loyalty programme. It consists of around 6.8 million members and has around 400 partners (Qantas Airways Limited Fact File 2010).

Corporate Groups:

Corporate groups also play an important role for Qantas airways. It provides the company with the required guidance, create the essential strategic direction and develop policies. It is also helpful to carry out the safeguarding and monitoring role for the compliance and performance of the Qantas Group (Qantas Airways Limited Fact File 2010).

Membership Rewards for Frequent Travellers:

Qantas provides four types of rewards to their frequent passengers. They are Bronze, Silver, Gold and Platinum. When the passengers travel through any of the eligible Qantas and Jetstar airways, Air Pacific and one world alliance airways, they get certain specific points or credits. The type of membership reward depends on the number of points the passenger has. Depending on the level of membership, the passenger gets specific privileges such as baggage allowance, check-in priority. It also provides Gold and Platinum members with membership of Qantas club (Qantas Airways Limited Fact File 2010).

Training:

Qantas provides training to its employees through its own program. This training program consists of providing sound technical knowledge to the engineers and also apprentices. In 1927 Qantas had undertaken its first apprentice and till now the number of trained apprentice has reached up to 7000. It also undertakes various graduates’ programmes which provide the trainees with various skills to overcome the challenges which they may require to face in the job (Qantas Airways Limited Fact File 2010).

New Services:

In many cities like Sydney, Brisbane, Melbourne, Perth, Canberra and Adelaide, the airways have provided a quick check-in facility for the customers with e-tickets for domestic airways. It provides the customer with easy and fast check-in process especially for the customers with no baggage. Recently, for domestic passengers, it has introduced mobile check-in facility through devices such as iPhones and Blackberry (Qantas Airways Limited Fact File 2010).

Competitors and Market Research:

Recently a survey is carried out over 11000 members based on the service provided in the flight, cost, seat comfort, food quality leg room, check-in process, baggage allowance and food quality. The outcome of the survey shows Qantas at the third position. Virgin Blue was at first position and Rex at second. The forth position was taken by Jetstar and fifth by Tiger Airways (www.businesscasestudy.com.au).

6. Strategy Recommendations and Reforms:

Qantas has developed a reform which is nothing but the response to the Morris report (December 1995). Reforms are responsible for safety issues for management of airlines. And that should always suppose to be proactive for checking deficiencies in safety to reduce chances of accidents (Mackenzie et. al. 2000).

Accordingly some changes were made. They were:

•”Safety Policies and Programs” which are more consistent with emphasis on presentations is renewed.

• They have developed very specific safety policies and for that they have employed flight safety managers for particular regions.

The officers were head of

Investigating safety related issues.

Auditing any airline facilities.

Representing the airline in flight safety issues while concerning with government organisations.

Keeping watch on aviation safety methods which makes it sure that all the reports regarding safety issues has been prepares and submitted.

• Standards of safety methods have been enhanced and those are created with greater efficiency.

• Corporate Emergency Response Plan has been provided which is a common approach to support each other during any kind of accidents.

• Industry forums provide unified representation which is responsible for strength and commitment from various regional groups.

Recommendation to overcome the current global crises:

The future of the airline company will reflect the decisions made in present. For surviving in the time of sustainability and changing climate conditions, it’s necessary to undertake few concerns about the falling economy and the environment. This industry just not provide only travelling services but it also provide work and income to many thousands. This industry will also have to learn about green technology, efficient maintenance practises and more safety measures.

Climate change is now faced by every organisation which is really risky to all people and airline industry plays its part in it. Global warming and natural disasters are some issues that must take into account even if airline companies provide comfort and better services. But we need to find solutions to fight with these issues which will cause serious problems in future.

Air traffic is another concern for Airline Company, especially in winter. Because of foggy conditions plane would have to stay in air until runway is clearly visible and this will increase usage of fuel, hence its cost and discomfort to passengers and this will reflect as a loss in business.

Increasing fuel prices is another issue with airline industry. Because of this airfare increases and company looses customers so airline companies must find any alternative to fuel which cheaper and not contribute much in climate change.

Airline companies will have to focus on long term goal and encourage people to use alternative to air travel whenever possible, mainly because of downturn of economy. Rather they can use meet their business partners online without travelling long distance. This strategy may reduce business in today’s date but it will benefit company after few years.

7. Potential fallout:

Qantas introduces few safety strategies under the DuPont People Safe Program (DuPont, the miracles of science, 2005) and those are:

A complete analysis of current safety management performance.

All Qantas staff will receive training during interactive workshops, and also get in-field coaching and mentoring services.

A safety review and management structure was launched for operate and reporting about activities to Committee of Executive.

Progress evaluations were done regularly.

Leading indicators were built up reduce risk injuries.

Managers are undertaking safety observation tours and talking to staff in person.

Every member from the Qantas Executive Committee has developed his own Personal Safety Action Plan and starts reporting according to that to the board about their section.

Improvement about safety standards were spread among staff via divisional forums, Qantas News and the intranet.

8. Analysis and Conclusion:

In current situation airline market is divided into two separate views, first is those who foresees future as only point-to-point travel, and others are those who likes a continuation of hub and spoke travel. Qantas caters to both of these markets. In the first scenario the number of flights is low in frequency because customer wants to waste less time in travelling while flying from one point to other which is not most common. This kind of market is catered by low budget Qantas airline called ‘Jetstar’.

While for those customers who prefers the other way, continued hub of travel: In these customers tries different modes of transport before heading to its genuine destination, flights are flying on regular basis and Qantas caters to a larger size of market through this way of transport.

In this economic downturn every person wants to travel with a very low cost to their pocket. In past few years, despite of their low cost, interestingly, airlines are able to achieve profits in their business, which surprises the market. These days cost of 2 hour flight destination is cheaper than that of travelling same distance with taxi, which is quote high. These are point-to-point travel and low distance and this is been catered by, as we all know, Qantas ‘Jetstar’ which offers low rates just as ‘Tiger’ airways. And most customers are unaffected by the limit of baggage and low or no food services when they travels so cheaper saving some money. And other added advantage is these companies’ uses smaller aircrafts which are so efficient that reduces overall cost to the company and thus increases profit margin.

So despite of having so many issues and difficulties in operations and competition in the market , then also Qantas is able to succeed in the market and retain its position of one of the preferred way of travel not only in Australia but also worldwide.