Business Consulting Project: A Study on Qantas Airlines

This report analyzes the domestic market for Qantas Airlines and provides recommendations for further business development in Australia. It focuses on the issues of industrial rivalry and substitute options for customers and suggests expanding domestic routes with affordable fares.

BUSINESS CONSULTING PROJECT: A STUDY ON QANTAS
AIRLINES
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Executive summary:
This report has an analysis of the domestic market for Qantas airline. Based on the market
analysis, the researcher has provided necessary recommendations for further business
development in Australia. During the study, it has come to know that the airlines' company
has routes mainly in Sydney, Melbourne and Brisbane. Moreover, it is clear that industrial
rivalry and substitute options to the customers are the main issues for Qantas business.
Therefore, it has recommended expanding its domestic routes in these locations with
affordable fares.
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Table of Contents
Airlines industry in Australia:....................................................................................................4
The current business scenario of Qantas airlines:......................................................................4
Areas to be developed for business development:.....................................................................6
Reference list:.............................................................................................................................8
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Airlines industry in Australia:
The Airlines business in Australia has been increased with the growth of population and
travellers. More than 15 airlines companies are serving around Australia with their renowned
services. There are different classes are provided by the airlines' companies for the
passengers. Therefore, a competitive situation has been created in Australian airlines industry
(Stephenson, Lohmann, & Spasojevic, 2018). Few Australian airlines companies are Airlines
of Tasmania, Alliance airlines, Qantas airlines, Eastern Australia airlines, Jet star airways
etcetera. Those companies have been providing different attractive offers to gain customer
loyalty and to survive in the domestic market. According to Hussain, Syed & Nadeem (2017),
due to high competition in Australian airlines industry, many airlines companies have faced
difficulties; for example, Hevilift Australia has stopped their business.
The current business scenario of Qantas airlines:
This study is mainly focused on business scenario analysis of Qantas airlines in Australia.
Towards the continuation of this study, the researcher has given an overview of the airline's
industry in Australia. Along with this, the analysis of the domestic market for Qantas airlines
has been presented throughout the study. Based on the market analysis, the researcher has
provided necessary recommendations for further business development in Australia.
Qantas airline is a leading market player in Australia and the airline's company has routes
mainly in Sydney, Melbourne and Brisbane. However, there are more airlines, which are
covering other domestic routes like Perth, Moorabbin, Hamilton, Hobart, Horn island
etcetera. That means a huge gap can be found in the domestic service of Qantas. In the words
of Lyon (2018), service gap in business is a crux issue towards business development. It is
important to more focus on business ideas rather than business investment. In this case, a
market analysis has done for Qantas to evolve the current business strength, so that plans can
be developed. Through the Porter’s five forces analysis, the researcher has presented the
possible barriers in market and industry; apart from that, based on the resulting outcome
Qantas can develop their future business plans.
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Figure 1: Porter’s five forces model
(Source: Charter, 2017)
 Bargaining power of customers or buyers: This is a serious issue for an airline
company because in Australia there are different airline companies like Airlines of
Tasmania, Alliance airlines, Eastern Australia airlines, Jet star airways etcetera.
Therefore, the customers or passengers have the option to choose the affordable fare
to fly. Availing different technological tools, the passengers can easily get the lowest
fare and can make their final assortment (Birkinshaw, 2016).
 Bargaining power of suppliers: Boeing aeroplanes and airbuses are foremost aircraft
for large airline companies like Qantas. Along with this, this Australian company has
the plan to launch new generation aircraft like Airbus A320 Neo, Airbus A380,
Boeing 787 etcetera. Moreover, those heavy aircraft are heavily fuel - efficient. That
means, dependency on oil suppliers can be seen for the company Qantas and this may
lead to having the bargaining power of suppliers also (Derudder & Witlox, 2016).
 The threat of substitute product or services: There is a different substitute of aircraft
to travel in distances like Volvo buses, train, ship, boat and cruise. Therefore, the
passengers will have many options to save their money by choosing those substitute
transports. Therefore, these substitute products can create a threat to Qantas.
 Industrial rivalry: Industrial rivalry is a big threat to the company. Different airlines
companies like Airlines of Tasmania, Alliance airlines, Eastern Australia airlines, Jet
star airways etcetera are also focusing on their business expansion and they might be
creating attractive pricing schemes for passengers. Therefore, the industrial rivalry is
one of the foremost issues for Qantas Airline Company. As per the statement of
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Thompson, Strickland & Gamble (2015), the industrial rivalry is an ongoing business
competition that makes the market fully competitive. Therefore, it is essential for the
companies to have updated information about their competitors, so that necessary
decisions can be taken.
 The threat of new entrants: Threat of new entrants can be a big issue for Qantas.
New airlines companies must want to have a market space for their business and they
will surely apply market penetration strategy to attract the customers. This scheme
will effect on existing market players (Madsen & Walker, 2015). In this case, Qantas
might have a threat of new entrants as because of the free market. Moreover, many
international airlines companies like Virgin, Qatar Airways, Malaysian airlines
etcetera are providing services and flying to Australia. All the airlines might be
present in specific airports, but it is not necessary that they will always be there; they
might expand their routes in different locations within Australia.
Areas to be developed for business development:
From the above market analysis, it has found that Qantas Airline has several threats in the
domestic market. However, the company is planning to have more opportunities in the
domestic market. Recently, Qantas has planned to expand its business international business
collaborating with Jet Star. Nevertheless, there are more gaps in business, which are needed
to cover by the company. For example, Qantas has routes mainly in Sydney, Melbourne and
Brisbane. However, there are more airlines, which are covering other domestic routes like
Perth, Moorabbin, Hamilton, Hobart, Horn island etcetera.
Therefore, it is necessary for the company to expand its domestic routes in these locations
with affordable fares. On the other hand, Qantas has planned to reduce its cost of capital by
focusing on a dent range of AU$ 5 billion to AU$ 6 billion. However, it is necessary for the
company to focus on controlling operating expenses to have better-operating profit. On the
other hand, compound basis EBIT growth is necessary to boost the net profit of the company.
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Figure 2: Porter’s generic strategy
(Source: Madsen & Walker, 2015)
In this case, the company would need to focus on differentiation as competitive scope is on
broad target and competitive advantage is on differentiation. Covering the market scenario,
Porter's five forces model has been implemented to have a glimpse of market threats.
Through the analysis, it is clear that industrial rivalry and substitute options to the customers
are the main issues for Qantas business. Therefore, necessary recommendation and strategic
plans have been provided at the end of this study; through which the company would be able
to develop their business.
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Reference list:
Birkinshaw, J. (2016). Multinational corporate evolution and subsidiary development.
Springer.
Charter, M. (2017). Greener marketing: A responsible approach to business. Routledge.
Derudder, B., & Witlox, F. (2016). A People Set Apart: The Spatial Development of Airline
Business Class Services. In International Business Travel in the Global Economy (pp.
37-56).
Hussain, S. R., Syed, S. S., & Nadeem, S. (2017, October). " Role of Digital Media in Airport
Brand Management": Conceptual Model Based on Integrated Literature Review.
In Global Conference on Services Management (GLOSERV 2017) (p. 125-157).
Lyon, D. (2018). Airport automation in Australasia: A possible way forward. Journal of
Airport Management, 12(3), 303-313.
Madsen, T. L., & Walker, G. (2015). Modern competitive strategy. McGraw Hill.
Stephenson, C., Lohmann, G., & Spasojevic, B. (2018). Stakeholder engagement in the
development of international air services: A case study on Adelaide Airport. Journal of
Air Transport Management, 71, 45-54.
Thompson, A., Strickland, A. J., & Gamble, J. (2015). Crafting and executing strategy:
Concepts and readings. McGraw-Hill Education.
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