Competitive Forces Facing Qantas: Porter's Five Forces Analysis

Business Valuation
and Analysis
QANTAS AIRWAYS

Competitive forces facing Qantas, using
the Porter’s ‘five forces’ framework
 Porters’ five forces model consists of five components which will
be analyzed to understand the current state of competition in
airline industry of Australia.
 Bargaining power of Buyer: Australian airline industry is
highly competitive offering service to customers maintaining a
competitive pricing strategy. In most of the cases, they provide
service in low costs because it sells. Although, high income
earner looks for premium quality and do not feel impressed with
such strategies. Due to low cost, majorly the buying power is
high among consumers.

Competitive forces facing Qantas,
using the Porter’s ‘five forces’
framework
 Bargaining power of suppliers:
Suppliers attain power when they
identify better opportunities like
company to work with. However, the
business organization must determine
and control the power of suppliers by
switching cost and establishing healthy
relationship with substitute suppliers.
 While operating with the support of
Boeing and airbus suppliers bargaining
power is quite high as airline business is
all about provide quality and security
too.
 This is the reason suppliers have the
power to restrict airline businesses like
Qantas to generate increased
profitability by saving the operation cost.
 Threat of substitutes: Qantas
does not face much competition
serving in international field.
 The competition is severe in
case of domestic flights as
Railway, bus services and
private cars come as alternative
transportation modes.
 Pricing strategy can be altered
yet it is very low to get success
through this strategy.

Competitive forces facing Qantas,
using the Porter’s ‘five forces’
framework
 New entrants: Airline industry is highly risky due to the high
amount of involved cost into it regarding security, operation cost,
and human resource along with serving customers.
 This industry has become saturated in Australia and the usage of
internet among people have increased due to which targeted
consumers prefer to book online tickets only from reliable airlines
rather than some inexperienced new company (Amaro and
Duarte 2015).
 Therefore, threat of competitors from new entrants is low.
 The way is to increase the number of flights as frequent flights
service will attract loyal customers.