Qans core strategy is to profitably grow management essay

MARKETINGStrategy Analysis: QAN’s core strategy is to profitably grow its two flying brands, Qantas and low-cost Jetstar. Qantas will seek to strengthen its leading positions in premium markets. Jetstar will expand locally and into international leisure markets. QAN also has Freight and Frequent Flyer businesses. The longer term strategy for QAN is to restructure its international business in an attempt to eliminate mounting losses. The strategy laid out by the company is to reduce the capital intensity of the business by forging partnerships with carriers in certain sectors that are uneconomical. The proposed code sharing arrangement with British Airways on the European sector is one such example. The expansion of Jetstar in Asia will continue as that has been a big success story. Plans to introduce a premium service in Asia and l a new service in Japan are intriguing. QAN is also looking to take significant cost out of this business. Qantas Airways reported NPAT of $250m for the year ended 30 June 2011. Revenues from ordinary activities were $14. 89bn, up 8% from last year. The 2011 results include the financial impact of the Rolls-Royce engine failure on QF 32 and the subsequent temporary grounding of the Airbus A380 fleet. The results also include the settlement agreed with Rolls-Royce ($95m) which offsets the direct financial losses incurred. Basic and Diluted EPS was 11. 0 cents compared to 4. 9 cents last year. Net operating cash flow was $1. 78bn compared to $1. 35bn last year. No dividend was declared. The group invested $2. 4bn in capital expenditure during the year. This includes the purchase of 15 aircraft, progress payments on future deliveries, and continued investment in customer product and infrastructure. Expanding Overseas… and at HomeBy the 1990s the Qantas network reflected a growing emphasis on Asian services to take advantage of market opportunities in Japan and elsewhere in this increasingly prosperous region. A subsidiary, Australia-Asia Airlines, inaugurated services to Taipei in October 1990. The fleet was expanding rapidly with the delivery of Boeing 747-400 and 767-300 aircraft. After changing airline policy, the Australian Government in 1992 approved a A$400 million bid by Qantas for Australian Airlines and its subsidiaries and announced that the enlarged Qantas group would be fully privatised. The purchase of Australian Airlines was completed in September 1992. The merger of the two airlines positioned Qantas as the principal Australian airline. It brought economies of scale, more efficient use of aircraft and improved management of passenger capacity and transfers between domestic and international services. Australian had a primary fleet of 36 jet aircraft with a further 37 smaller aircraft in subsidiary regional airlines. The two airlines had links going back to the formation of Trans-Australia Airlines (TAA) (as it was then known) in 1946, when a number of executives, including the first General Manager Captain Lester Brain, were recruited from Qantas ranks. TAA took over Qantas’ Queensland and Northern Territory networks along with the Flying Doctor Service in 1949 and Qantas’ internal services in New Guinea in 1960. Qantas would continue to evolve and grow. In October 2002 Qantas launched Australian Airlines as the new international carrier. In October 2003, Qantas announced it would launch a new low cost domestic airline – Jetstar. Jetstar commenced domestic operations on 25 May 2004, followed by Tasman services in December 2005. As part of the strategy to focus on two strong and complementary brands – Qantas and Jetstar – Australian Airlines ceased operations in July 2006. In November 2006 Jetstar began International services into Asia and Hawaii. Domestic New Zealand services commenced in June 2009.

Qantas Airways

Parent Company

Qantas company





Tagline/ Slogan

The Spirit of Australia


Premium Airline, Upper Middle Class, Middle Class



Passengers Preferring Comfort / reliability

Target Group

Corporates / Upper Middle Class / Middle Class


Premium international airlines showcasing the Australian hospitality



1. Strong Backing of Aus Govt2. Monopoly in Australian Market3. One of the top and largest airlines operating in Australia4. Has been one of the oldest airline operators in the world5. It has nearly 20 international as well as domestic destinations6. Good brand building exercises through advertising and sponsorship


1. Too Much Concentration around Australasia2. Issues among employees caused an issue


1. Australia Market has been so far less tapped. So it can ensure that no other airline can ever get a chance by gaining a major marketshare2. More international destinations specially in Asia3. Tie-ups with international airlines for a combined service offering to customers


1. Increasing fuel prices affects operations2. Rising Labour Costs2. Increasing Competition in Australina Market from new start ups and SE airlines



1. Singapore Airlines

2. Air New Zealand

Custom Case Study. 1. 0 IntroductionThe case study B, Qantas Airlines, Dr. Quamrul Alam of Monash University has attempted to provide a descriptive account of the on crucial key organizational changes and development of strategies that the Qantas Airline pursued to stay competitive amidst prevailing turbulence in the Australian airline industry. Quamrul positively identifies the major changes in the Australian Airline industries as the collapse of the Ansett group, absorption of Impulse Airline into Qatans, the demise of Australian Airlines, Freedom Air and Jetconnect, and emergence of a stronger rival airline Virgin Blue, and the deregulation policy of the Australian air service that resulted into the establishment of the ” Open Skies” agreement between Australia and New Zealand. 2. 0 Industry Background” Qantas Airline was founded on 16 November 1920 as the Queensland and Northern Territorial Aerial Services Limited that specialized in the airmail services” (Goh, 2004). It enjoyed a lot of subsidy from the Australian government. According to Charles Laudon (2006), in his book ” Management Information Systems”, the Qantas Limited then entered into a partnership with the British Imperial Airways Limited to form Qantas Empire Airways Limited which was the only Australian international carrier plying the Brisbane -Singapore route. Laudon (2006) goes on to add that Qantas reached peak in 1960 when it could spread it operations across the world. Its newly acquired wide-bodied aircrafts operated from Australia to London through Asia, Middle East, and South America via Mexico and United States of America by the close of 1970. In the event of expanding its international market networks, the Airline stopped plying most of the routes following the airline slump. However, Qantas later integrated its domestic operations into the company upon its historic purchase of the Australian Airlines in 1992. ” Qantas dominated the Australian airline industry up to the time of its privatization in 1995″ (Findlay et al. 2007). Currently, the privatized Qantas Group has about 38, 000 employees in its expansive network of 142 destinations. 3. 0 Current Position in the IndustryThe Qantas Airways Group as it stands today has an outstanding commercial and ownership links with various regional carriers (Findlay et al. 2007). The company runs series of code-sharing and alliance agreements with international carriers and is the second largest alliance in the global airline industry. It is most important to note that the Qantas Group has relied on these alliances and partnerships to proclaim its largest share of the international airline market. Besides transporting passengers, the Qantas has also diversified to other business portfolios such as catering, engineering, freight, and travel wholesaler subsidiaries.” Qantas Airways holds a larger proportions of share in Orange Star (owns and operates intra-Asian airlines Jetstar Asia and Valuair) and Air Pacific (the international airline of Fiji)” (Collin, 1996). As entrenched in their 2004 Strategic plans, the Qantas Groups branded their flying businesses under the big two Qantas and Jetstar which jointly operate well over 500 and 700 domestic and international flights on a weekly basis in nearly forty countries. In spite of the recent turmoil in the aviation industry, Qantas Group continues to profitable against expectations of many. Hitherto the company has maintained its reputation, excellence and outstanding performance in the provision of premium aviation service. The Air Transport World Magazine recognized Qantas as the leading Airline of the Year 2004. After the liquidation of the Ansett, Qantas grew it market share in the Australian domestic airline industry from 55% to 70% (Quamrul, 2007). Nevertheless, the forceful entry of the newly established Virgin Blue into the Australian domestic market posed a high level competition to the Qantas. In bid to counteract the impacts of the Virgin Blue’s low air fare competition in the turbulent airline industry, the Qantas introduced a low cost operating model it inherited from the incorporated impulse Airlines. The retention of Impulse Airline made it possible to derive cost savings from utilizing Impulse’s low operating cost, all economy class and streamlined labor practices. 4. 0 Challenges of Qantas in the Australian Airline IndustryDespite Qantas’ dominion of the Australian and regional airline market shares and diversification of the business portfolio, there were a lot of challenges that faced the giant airline company. Surprisingly enough, most of these challenges were never anticipated by the top management because their preventive measures were never included in the Qantas 2004 Strategic plan. Secondly, change in the government policies also contributed to the turbulent airline business environment. Quamrul (2003) observes that many problems that the Qantas Airline faced were largely driven by external factors such terrorism, war in Iraq, and SARS outbreak. This section attempts to discuss the challenges that Qantas Airline face in the Australian airline industry. The increased turbulence of the Australian airline industry was largely propelled by the government deregulation policy of the airline industry. Since the Australian government deregulated domestic airline industry in 1990, the two initial two-airline agreement was terminated. ” The newly implemented ” Open Skies” policy allowed additional airline companies to the Australian airline market” (Ades & Graham, 2003). Air New Zealand and other small carrier companies gained easy entry into the Australian airline industry therefore increasing the level of competition between the airline service providers. Indeed the presence of smaller airline carriers into the passenger transport business dramatically reduced the air fare by larger percentages due to the prevailing pricing flexibility. In most cases, the competitors offered very lower prices far below the limits which the Qantas would afford. This increased the severity of the competition among the Australian airlines as they struggled to lure the available passengers into their services. The prevailing terrorist attacks on the inset of the 21st Century posed yet another detrimental challenge to the Australian Airline Qantas (Ades & Graham, 2003). After the terrorist attacked United States of America in September 2001, the Americans and other foreigners were deeply engulfed in great fear therefore they could not freely move to other countries. Similarly, eruption of the dreaded deadly SARS outbreak in 2003 also bore a negative impact on the airline industry. As the government tightened security in the domestic and international sectors to prevent possible terrorist attacks, the volume of passenger drastically dropped across its entire network of airline operations. The third challenge that beleaguered the Qantas Airline besides competition was a surge on the fuel prices. In bid to counteract the aftermath of high operational costs, the Qantas Airline was under an obligation to raise its fuel surcharge on both domestic and international flights. Definitely, the airline was uncertain of the impacts of their surcharges increment on the volume of passengers. As explained by the author, the extraordinary rise in the fuel prices vehemently destabilized the Qantas Airline in its incessant attempts to recover from the ongoing stiff competition caused the Australian deregulation policy that introduced many smaller airline carriers into the passenger business. The author attributes the global fuel shortage and its inflated prices to the then ongoing war in Iraq. Suffice it to say, the long term and short term aftermath of the United States led Iraqi war crippled Qantas Airlines to a greater extent (Quamrul, 2003). During the entire period of the war, the Qantas had to cancel most of its flights going across the Gulf region and the adjacent destinations. In this manner, the passenger volumes were drastically dropped thus very few airline carriers remained in business. The disrupted fuel supply and the exorbitant pricings of the few dealers could not allow the Qantas Airline to hedge fuel prices then. As a result the Qantas Airline had to rely on the unscrupulous dealer for its supplies. In separate count, the author hypothesizes that the disbandment of the Price Surveillance Authority (PSA) could have drastically accelerated the crisis of the fuel overpricing in the Australian Airline Industry. 5. 0 How the Qantas Prepared Itself for the ChallengesThere were a number of strategies developed by the Qantas Group to counteract the undesirable aftermath of the challenges posed to its operations in the Australian Airline industry. Brett Godfrey, an executive of Virgin Express, proposed the idea of establishing a Virgin-branded, low cost, low-fare carrier operating in the Australian domestic market. The proposal was formulated as a policy to compete favorably with the main rival and competitor Virgin Blue. In this approach, the Qantas employed the market segmentation strategy whereby the company adopted two brands to target different markets. The Qantas’ Jetstar model remains the most ideal low-cost carrier in the world tailored to meet the growing demands of the Australian oligopoly market. The Qantas Airline also makes good use of competent staff to provide quality services to its clients (Benette, 2009). According to the findings of the research survey, 42% of the airline customers are satisfied with the services offered by Qantas and the company enjoy an outstanding reputation for providing quality services to its clients. In order to realize this objective, the staffs are not only properly trained on how to meet high standards of customer expectation but they are also motivated to deliver quality services. The report reveals the Qantas pays its pilots 36% above what the competitors (Virgin Blue) offer. Considering that the airline company is under an obligation to scale down its operations, it downsizes its employee as a cost-reduction strategy. Thirdly, the Qantas Airline has ventured into the fallow leisure markets. By expanding its travel agencies across the targeted market, the Airline is capable of marketing its inclusive packaging with airfares. This kind of specialization in the airline industry gave the company an added advantage over its competitors because none of them explore the field at the time. Unlike the other competitors, the Qantas diversified so much in its business portfolio. This is one sure way of reducing and preventing possible risks and uncertainties in the future. In the event that the airline industry suffers a loss, the Qantas can recover can recover the loss from other industries such as engineering, catering, freight, and travel wholesaler subsidiaries6. 0 Management of the Upcoming IssuesThe Qantas Group is applauded in the manner in which it conducted restructuring in response to the ongoing changes in the Australian airline industry market. Driven by the fear to survive apparent competition in the passenger carrier business, the Qantas initiated a restructuring program in good time that articulately saw the establishment of businesses in three categories namely flying business, flying services, and associated business with the sole intentions of enhancing accountability, agility and collaborations (Bindloss, 2002). At the same time, the Australian airline maintained its core business of providing human resources, information technology and financial services. Throughout its business operations, the Airline Company perfectly managed its partnerships and alliances so as to increase its profitability. 7. 0 ConclusionChanges in the internal and external business environment are liable to occur from time to time. In the event of their occurrences, they affect the usual operations of any business unit. As evident in the case of Qantas in the Australian airline industry, the company is affected by changes in the business environment due to deregulation policy of the Australian government, emergence of terrorist attacks, Iraqi War and SARS outbreak. These factors directly reduced the passenger volumes, introduced acute competition among the airline carriers, and increased fuel prices. The Qantas survive these challenges and further ensure profitability for its product diversification, partnership and alliances, and restructuring programs. Custom Case Study. Technology

Boeing 787 Dreamliner

Flying into the Future

Under our current fleet plan, the Qantas Group has option and purchase rights for 50 Boeing 787 aircraft for delivery from 2016. The Boeing 787 offers breakthrough technology which enables longer point-to-point routes throughout the world. Employing a lighter fuselage, constructed from composite material, the B787 can fly further with a full load and faster than any other aircraft of its size. Other benefits include an increased window size and a lower cabin altitude that reduces the effects of jetlag and a unique ‘double bubble’ design that increases width at shoulder height to ensure the most spacious cabin feel for passengers. Visit the Boeing website for more information on the Boeing 787.

General Electric GEnx Engines

B787 aircraft in SydneyQantas has chosen the General Electric (GE) GEnx engines to power its Boeing 787 fleet. Combining the latest generation materials and new technology, GEnx provides superior performance, lower maintenance costs and substantial environmental benefits including: 20% better fuel efficiency, 20% reduction in carbon emissions, 40% reduction in nitrous oxide emissions, and50% smaller noise footprints around airports. The GEnx, combined with the groundbreaking technology Boeing is introducing with the B787 aircraft, will ensure that Qantas will have the most efficient and environmentally friendly aircraft available. Visit the GE Aviation website for more information on the GEnx.

Boeing 787 Technical Specifications




210 – 250*250 – 290*


Twin aisleTwin aisle


57 metres (186 feet)63 metres (206 feet)


17 metres (56 feet)17 metres (56 feet)

External Fuselage Width

574 centimetres(226 inches)574 centimetres(226 inches)

Wing Span

60 metres (197 feet)60 metres (197 feet)

Cruise Speed

Mach 0. 85Mach 0. 85

Maximum Take-off Weight

228 tonnes247 tonnes*Typical Boeing 2 class seating arrangementsANTAS has signalled it will tighten its excess baggage policy as it introduces futuristic new domestic check-in facilities. The new facilities are designed to slash the time spent in airport queues. The airline is also preparing to offer upper-tier frequent flyers a unique personal electronic bag tag that can automatically store details of up to four flights and will replace the traditional paper bar code. A trial of some of the new technologies begins in Perth next week when the flying kangaroo issues new frequent flyer smart cards to a select group of its premium flyers. The new technology includes electronic baggage scales and automated excess baggage payment. Its introduction comes as airlines worldwide are discovering baggage charges as a revenue stream. Qantas officials say the airline will remain flexible on excess baggage during trials but revealed yesterday a new baggage policy was due out towards the end of the year. Asked whether this meant a crackdown on excess baggage, Qantas customer experience executive manager Alison Webster said: ” We’ll be making sure we’re offering a fair system and our customers are clear on what that system of charges is.” Ms Webster said Qantas had an online capability that allowed people to pre-purchase excess baggage at a significant discount to airport charges and would be publicising this with the baggage policy changes. Officials said duty managers would also retain the discretion to waive excess baggage charges. The new smart cards contain chip technology that will allow flyers who have not already checked in online or by mobile phone to tap an airport card reader and complete the process within five seconds. A 2D barcode would be sent to passengers’ handsets to confirm their mobile check-in. Passengers will eventually be able to combine the smart card, which can also be used as a boarding pass, with RFID bag tags to check their bags at an automated bag drop in seconds. The tag will be distributed free to chairman’s lounge members, platinum, gold and silver level frequent flyers and is expected to be launched when the new system is unveiled in Sydney at the end of November. The airline hopes that about 600, 000 upper-tier frequent flyers will no longer need a paper bag tag on the Qantas network by the end of 2011. The multi-million dollar project took two years to develop in conjunction with 15-odd partners including IBM, Fujitsu, Telstra, Optus and Amadeus, said David Hall, Qantas group executive, corporate services and technology. IBM spearheaded program management and produced new check-in kiosks and card readers. Fujitsu provided handheld scanners and other peripherals while Telstra and Unisys worked on the baggage reconciliation system. For the mobile check-in service, Optus built the SMS gateway, New Media Innovation was responsible for the application and SecureDoc built the 2D barcode system. Indian companies Tata Consultancy Services and Mahindra Satyam were also involved in the project. TCS worked on enterprise integration and aspects of mobile check-in while Satyam covered off reporting and data warehouse integration. Sky Assist will help Qantas staff quickly identify misallocated baggage and Amadeus continues to provide departure control smarts. Tagsys and STMicroelectronics worked on the RFID tags, while the automatic bag drop offering was made possible by hardware provider ICM and software vendor SCL. Additional reporting: Fran FooQantas tech operations flying alongDateSeptember 4, 2012Value added: Qantas CIO Paul Jones. Qantas’ decision to split its international and domestic operations sent shockwaves around the airline in July, but one team was already preparing for the job of splitting IT systems. The restructure complicated an already nuanced technology operation whose tentacles touch every part of the airline – from freight to frequent flyers. It was also a catalyst for improvement as it exposed weaknesses in outsourcing, enabled the relocation of IT people to where they were needed most and, ultimately, saved $30 million. It all began when the airline looked to outsource parts of the project, exposing gaps and weaknesses in the technology operations.”We had many sources of truth and this old state created complexities,” said Qantas IT financial controller Larry Morrissey. Advertisement”We had multiple sources of data, which led to lots of reconciliation, and also lack of consistency in what we were reporting to the business.”So the airline made an early decision to install a project management application in October 2011 that would provide visibility of all legacy systems as well as help with the difficult task of prioritising projects along domestic and international lines, explained Qantas chief information officer Paul Jones. The CA Clarity PPM system would also ”liberate” the knowledge locked away in spreadsheets and silos.”By having this single source of truth it allowed us to have a look at the entire portfolio and relating that to which projects make sense in an international and domestic sense,” Jones said. Qantas now more accurately aligns IT spending with commercial goals, according to Jones, because the project management application centrally stores technology project information such as where it is installed, phases of implementation, and upcoming projects.”That means it’s easier to take a portfolio view across the entire airline rather than everyone having their own pots of technology,” he said. The new system also gives visibility to the distributed technology operations where seven outsourcers – IBM, Fujitsu, Telstra, Optus, TCS, Satyam and Amadeus – manage 80 per cent of the carrier’s technology systems and support. The remaining 20 per cent is provided in-house where, from August 1, IT staff were relocated inside the various divisions – from catering, freight, engineering, international, domestic and loyalty – assembled into mini businesses, each with its own chief executive.”The airline is very complicated so you need IT people with the customers,” Jones said. ”Every sub-part of the airline [needs] tech people working day-by-day.”He said five technology strategies added value to the airline: IT staff located within divisions, technology modernisation programs, single project view, employee engagement and IT cost reduction. Read more: http://www. smh. com. au/it-pro/business-it/qantas-tech-operations-flying-along-20120903-25aeg. html#ixzz2JfuAqUAq