Australian Airline Service Company: Key Strategic Issues and Recommendations

This article discusses the key strategic issues and recommendations for the Australian Airline Service Company. It includes a detailed analysis using Porter's Five Forces and SWOT analysis, as well as recommendations for customer service, human resources, and cost and competition.

Running head: AUSTRALIAN AIRLINE SERVICE COMPANY 1
Airline service Company
Student’s Name
Institution

AUSTRALIAN AIRLINE SERVICE COMPANY 2
Australian Airline service Company
Executive summary
The Australian Airline Service Company will basically account for providing air travel services
to its esteemed clients. In the recent past, the region has experienced a rapid population growth
that has posed serious air travel challenges. Additionally, the demography of the population in
the neighboring Asian countries continues to indicate a high population growth rate that strains
the few numbers of airlines in the Australian market. Hence, introducing new airlines that
operates both domestically and internationally with a large market share in the Australian
industry will make the airline industry more stable and competitive. Some strategies among
others needed to be developed so as to ensure the survival of the Australian airline company in
the global market. Therefore, Australian airline needs to develop appropriate strategies to counter
the fierce competition both domestically and internationally from other airlines like Virgin
Atlantic, Cathay Pacific, British Airlines, Fly Emirates industries.
1. Key strategic issues and problems in Australian Airline service Company
After its establishment, the airline company will undergo various changes both in the internal
and external environment. Uncertainties in the external environment e.g. stiff competition,
demography of population, low pricing, vagaries of nature i.e. volcanic eruption, earthquakes
have significantly contributed in shaping the destiny of the airline (Dai& Matta, 2016).
Demography of the population in the Asian countries.
Internationally, the new airline is really struggling to dominate the vast Asian markets. This is
because of the high number of population in China, Indonesia, Thailand and other Asian

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countries (Cozzolino, 2012). Due to this factor, many international airlines are struggling to
dominate these overcrowded marketplaces. Key players like the Emirates airline, Cathay Pacific,
Malaysian and Singapore have greatly been able to adopt large airplanes with an excellent fleet,
good professionals staff, loyal customers and functional websites that have been able to ensure
that the Australian airline up its game in the market.
Fierce competition from big Middle East carriers (Emirates and Etihad Airlines)
The new Australian airline is bound to suffer stiff competition both locally and internationally.
Domestically, the airline faces tough competition from Ryan air Airline Company (Larson &
Halldorsson, 2004). This is because Ryan air is very cheap which compelled the Australian
airline to cut its fares so as to survive in the local market. Initially, the people would get attracted
to the new airline but when they wanted to get the flight tickets, they would resolve to go for
cheap tickets. This indeed was too sad for the performance of the New Australian airline. The
development of a good number of high performing airlines and cheap airlines overcrowded the
marketplace.
The high cost of petrol fuel
High fuel costs affect the profit margins of any company. An upward surge of over 50 percent in
the cost of fuel had put a financial pressure on Airline Company. In this case, the Australian
Airline Company spent huge amounts of up to $ 4329 million on fuel alone in the year 2012
(Mentzer, 2001). This was a really huge number in comparison with the total expenses that the
company incurred during that year of $1549 million. The significant and sustained increase in
the fuel prices was a very serious challenge that the company faced. The chief executive officer

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Mr. Joyce confirmed that fuel was the most serious challenge that Australian has faced since the
global financial crisis.
Natural disaster
The natural disasters in the airline trade routes due to bad weather and other factors have
negatively impacted the airline. This has greatly affected the revenue that is generated by the
company substantially. The Australian airline group has seen$ 206 million lose within the
company as a result of the effects due to bad weather. Some areas are covered by snow along the
trade routes which hampers travel to those areas (Priority Services, Call Center Design, and
Customer Scheduling, 2011). Natural calamities like earthquakes and bad weather have had
negative implications in the Australian airline company.
2. Detailed analysis and evaluation using PORTER’S FIVE FORCES and SWOT for Australian
Airline Company
Porter’s five forces analysis
The porters five force analysis affecting the performances of the Australian Airline Company.
The detailed analysis of Australian with respect to Porter's five model analysis:
Bargaining power of Buyers: with regard to Australian airline, the customer has a wide range of
option to choose from. This, therefore, means that the customers have a higher bargaining power
in this case. They can be able to choose from various service providers between Australian and
virgin Atlantic depending on the prices they offer and the quality of services offered.
Bargaining power of suppliers: In contrast, the bargaining power of suppliers is very low because
they are overcrowded in the marketplace offering the same services. In this case, Australian has

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low bargaining power because of similar service providers like the Virgin Atlantic and Cathay
Pacific airlines
Threat of substitute: In this case, the threat of substitute is lower. This is because air travel offers
services that involve long distances which cannot easily be substituted. This, therefore, means
that threat of substitute it is usually very low.
Rivalry among Existing Firms: this has been clearly very evident with respect to the Australian
airline. In fact, I have out the fierce rivalry among various firms both internationally and
domestically. Both the Australian airline and the virgin have engaged in stiff competition with
some of the airlines suffering severe losses in its operation.
Threat of New Entry: In this scenario, there have been few players because of the high initial
capital required to start the business. Therefore, the threat of new entry has been lower in the
case of the performance of the Australian.
SWOT Analysis on Australian Airline Service Company
These include a strong analysis of strength, weaknesses, opportunities, and Threats. In this
connection, I will keenly look into detail with regard to the Australian airline operation in the
Middle East.
Strengths: Australian airline enjoys a good brand name across the globe. Besides that, it
dominates the Australian market with a market share of over 65%. This is attributed to the
quality services that it renders to its customers (Manage Knowledge and Information. 2018).
Weaknesses: Besides being the market leader in Australia, the company has continuously seen a
declining level of performance in the recent past. This declining performance has been a result of

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mismanagement by key stakeholders (Cooper &Vlaskovits, 2016). Mismanagement also resulted
into poor strategies of Australian Airline Company in maintaining high profits.
Opportunities: there are still vast opportunities in the market which can be tapped by Australian.
In fact, growth opportunities are still very many in the industry. The only thing needs to do is to
alter its strategies in order to tap into the opportunities that are there.
Threats: The major threats that the company is faced with is severe competition as we had
illustrated earlier both domestically and internationally. Airlines such as Etihad, Fly Emirates
and Virgin Australia in the domestic market has ensured stiff competition in the marketplace in
the region.
Strategy Recommendations
Despite Australian airways enjoying a good business in Asia in the recent past, it has also
numerous weaknesses which it needs to address. This weakness if it is not addressed has the
potential of causing problems to the company. Some strategy measures have been outlined below
which should be consequently pursued to the latter in order to protect the brand name and
reputation.
Customer service
The airline should strive to ensure that it both improves the product and services that it offers to
its consumers. In order to ensure that the customers are happy and fully satisfied, the best service
should be offered at all cost. Australian should strive to form alliances with good customer
providers especially in the catering department which include catering, entertainment, seat and
flight attendant. They should also consistently be asking for feedback from their customer on

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which area that needs to be improved. In this way, they would be serving their clients better.
They also need to survey and update on what the customer really needs in an effort to reach
customer satisfaction (Christensen et al., 2016).
Human Resources
Australian should put more focus in ensuring that it offers more training to its employees. This
would help in meeting customer satisfaction by offering the best services while at the same time
protecting the company brand. The company should also strive in hiring the best engineers and
pilots in order to meet the objective of the company by providing quality services to its potential
clients.
Cost and competition
The company can maintain low cost and maintain good quality of the customer service. This will
attract more loyal customers to the company. An airline has the freedom to set the prices while
others have also the same quality. Besides that,re- deregulation by the government can also be
very important in making sure that there is decreased the entrance by new competitors. Also, re
deregulation is also very effective in improving the financial capacity of the industry while at the
same time protect the brand of the company (Alison, 2018).

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References
Alison Painter. (2018). ‘Coopers Brewery’, SA History Hub, History Trust of South Australia,
http://sahistoryhub.com.au/organisations/coopers-brewery, accessed 24 August 2018.
Christensen, C., Hall, T., Dillon, K., & Duncan, D. (2016). Know your customers' "jobs to be
done" . Harvard Business Review, 54-62.
Cooper, B., &Vlaskovits, P. (2016). The lean entrepreneur (2nd ed.). Hoboken, New Jersey:
John Wiley & Sons Inc.
Cozzolino A (2012). Humanitarian Logistics and Supply Chain Management. In Humanitarian
Logistics, Springer Berlin Heidelberg.
Dai, X., & Matta, N. (2016). A Knowledge Engineering Perspective of Knowledge Management:
How to Manage Project Meeting Knowledge. IFIP Advances in Information and
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Kumar, S. Dieveney, E. &Dieveney, A. (2008). Reverse logistic process control measures for the
pharmaceutical industry supply chain. International Journal of Productivity and
Performance Management, 58 (2), 188-204.
Larson, P.D. & Halldorsson, A. (2004). Logistics versus supply chain management: an
International survey. International Journal of Logistics: Research & Application, 7 (1),
17-26
Manage Knowledge and Information. (2018).The Customer Service Call Centre of Jason’s Bank
Ltd.

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Mentzer, J.T. (2001): Defining Supply Chain Management, in: Journal of Business Logistics, 22
(2), 2001, 1–25
Priority Services, Call Center Design, and Customer Scheduling. (2011). Service Science, 459-
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