Challenges Faced by Qantas Airlines in Global Business Environment

MANAGEMENT IN GLOBAL BUSINESS ENVIRONMENT
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QANTAS AIRLINES
MANAGEMENT IN
GLOBAL BUSINESS
ENVIRONMENT
System04121
8/9/2019

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Qantas Australia is one of the biggest and the oldest airline and it is also going
through a lot of crisis. On 23rd august the company announced a loss of a$244m. It was the
first time that the company faced losses after 17years. Qantas is successful in the market of
Australia but the problem started when it entered the international division. The company is
now in partnership with a Dubai based airline named Emirates. Qantas is worries about their
less trumpeted cause and also due to the growth of price and route competition from different
state- backed airlines which are moving from Middle East to the Australian markets. Virgin
Australia is one of the main competitors of Qantas (Chang, Park, Jeong, & Lee, 2014). China
southern airlines is one of the biggest carrier of china and it the biggest and the most
aggressive competitor of Australia. Previous year, China Southern expanded its services to
New Zealand and Australia which is a six-fold to 42 flights in a particular week and it is
planning to raise them into 55 flights a week. The following essay discusses about the
challenges faced by Qantas airlines due to strong competition in the global industry, the
essay then discusses challenges faced by airlines due to expansion in the global market and
lastly the essay discusses the recommendations for Qantas airlines and how it can improve
itself in order to be successful in the global or the international market (Belobaba, Odoni, &
Barnhart, 2015).
Qantas airlines have suffered a lot during the past few years and one of the main
problems is competition from Middle East carriers (Emirates and Etihad). Both of these
companies use their geographical locations in an excellent way as they has one stop and the
same airline service to Australia, New Zealand and Asia and some of the locations in
Europe as well. Due to all this the travelling process Ireland to America has improved and
changed (Franke, & John, 2011). Qantas airlines is also affect ted by its local competition
from the company Ryanair as it a low cost airline which provides domestic and short haul
business (Shaw, 2016). Although Qantas airlines is a traditional airline, which provides a lot
of good services as well as Qantas airline have a very high standards with a good and
skilled workforce. The Australian people are emotionally much attached to Qantas but when
it comes to buying tickets they go with the one of the cheapest options that is available in the
market. The 13 main competitors of Qantas airlines are: Lufthansa Air India Airlines, Etihad
Airways, Malaysia Airlines, Qatar Airways, Emirates, Singapore, British Airways, Turkish
Airlines, Air France, Virgin Atlantic, Air New Zealand and United Airlines. Qantas also feels
that it faces various challenges due to the increase of fuel price but to some extent they are
the reason behind it as the companies should be aware of such situation and should plan their

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strategies accordingly, however Qantas did not build any strategy to overcome this barrier
and hence this company is responsible for its own failure. The airlines nowadays are facing
issues due to wrong strategic decisions. Qantas airlines are just complaining about the long
and hard international competition which is lowering down the airfares.
One of the biggest barrier and challenge for Qantas expansion is the international
market is foreign affairs. In terms of the revenue per available seat kilometre, the measure of
the productivity of single seats for the airplane seats. The airline provides branded pyjamas
and lie flat bed like seats and they provide customers with full and good services although the
routes of Qantas do to bring in many profits (Hojeghan, & Esfangareh, 2011). As Qantas is
already facing issues regarding its market share if it expands itself into an international
market then it might go into more losses and due to more loss the company might have to
face the following challenges. The first and the most important challenge is the shortage of
cash as the airline will have to borrow money from the market and in order to meet and cost
of expansion, premises and equipment (Assaf, & Josiassen, 2011). When a company like
Qantas is already going into losses and if to also take the decision of expansion then the
company will have to compromise on the quality of the facilities and produces and increase
in production can lead to bad quality and this can eventually lead to the loss of customers and
also the loss of sales. When the business will expand it will also have to focus on a lot of
sections and hence the company will need a large team of managers who can supervise and
look after different duties and also at different locations. Due to expansion there will be an
Increase in the capital of requirements as a large business means a large workforce, more
facilities, more equipment’s and more of investment which would be difficult for Qantas
airlines as it is already going into losses.
After this the company will also face the issue of staff turnover as during the
expansion of the company the employees might have to give extra time and effort and this
thing can bring their morale down and also there will be less productivity and the employees
might even leave the company (Cooper, Vafadari, & Hieda, 2015). Another main issue is the
financial challenges that Qantas will face during expansion. As already discussed expansion
requires a lot of financial investment and it can affect the company on a bad manner if the
company will not be able to keep up with the promises. The company might also face a lot of
struggles in order to repay the loan (David, 2013).