Critical Analysis of Qantas Airlines Business Environment

This report provides a critical analysis of the business performance of Qantas Airlines and the environmental factors that have influenced it. It also suggests solutions to the environmental risks found in the previous part of the report. The report highlights the potential for Qantas to grow in the coming years by focusing more on the international flight segment and expanding its business on both the domestic and foreign soil.

Running head: BUSINESS ENVIRONMENT
Business environment
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Table of Contents
Introduction:...............................................................................................................................2
Critical analysis of business performance:.................................................................................2
Analysis of environmental factors:............................................................................................3
Solution to the environmental risks:..........................................................................................4
Conclusion and summary:..........................................................................................................5
Reference:..................................................................................................................................6

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Introduction:
Qantas is the third largest airline carrier in the world and the largest one if the
Australian air transportation service providers is considered (Teker et al., 2016). Being the
flag carrier of the Australian airline it holds the largest fleet of the planes among the
Australian airlines allowing it to enjoy 69% of market share in case of domestic passengers
and 28% market share when it comes to the international flyers (O’Connell & Williams,
2016). introduced back in 1921 it is one of the oldest airline in the world too that possess
large amount of competitive advantage in case of the domestic as well as international airline
service providing (Graham & Morrell, 2016). This report is aimed to provide a critical
analysis of the environmental factors which are potential to provide a difference in business
and additionally it will provide solution to the environmental risks found in the previous part
of the report.
Critical analysis of business performance:
As far as the business performance of Qantas is concerned, it can be seen that the
2017 is one of the best financial year in the 87 years of operational history for the firm
(Suhardjanto & Ajibroto, 2017). During the latest financial year, the firm combined with its
subsidiary Jetstar earned record 865 million dollars of profit making them two most
profitable airline within the Australian domestic profit pool with the 90% share
(qantasnewsroom.com.au, 2017). Qantas airline during the recent year has faced large
amount of capacity growth underlying Earnings Before Interest & Tax (EBIT) of 327 million
dollar, which was largely sourced by the continued strength generation from the core market
of the both the firms (news.com.au, 2017). As per the latest report 12 moth return on
investment capital of the firm is as high as 20.1%, which is highest in the industry making the
shares of the firm one of the lucrative one (Qantas.com, 2018). one of the main source of the
enhanced financial performance of the Qantas group during the recent days lied within the

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Transformation Program of the firm that has enabled the group to outperform its key
international and the domestic competitors that has made it potential to reward their
shareholders, recognise the hard work of the investors and the people attached with the firm.
A 7% dividend per share was announced by the firm towards its investors and as per the
transformation program total return of the firm was as high as 9 billion dollar that has made it
one of the top performer on the ASX100 (Shaffner et al., 2017). With net profit rise of 17.2%
the firm has gained rise in the sale of the Sydney Domestic Terminal and the underlying
profit of the firm is 1.4 billion dollar which is expected to rise at 8.6% rate in the coming year
proving Qantas one of the best performing airline in the world (Bamber, 2018). Complying
with the social changes and social responsibility has allowed the firm to expand its business
over the different zone in the world that has given sufficient amount of boost to the economic
performance of the firm during the recent days. Additionally, policy easing of the
government that allowed the firms like Qantas to gain investment from the foreign investors
allowed it to grow at a higher rate during the recent days (Pearson & Merkert, 2014).
Analysis of environmental factors:
During the recent years one of the main environmental factors that has influenced the
Qantas airline by a large extent is the government policy changes and the global
macroeconomic factors. Considering the recent governmental policy change it can be seen
that the firms like Qantas is now able to gain funds from the foreign investors that emphasis
on the growth of the firm. It has allowed the firm to strengthen its financial position and 60%
of its flight operate in debt free position (Lohman & Spasojevic, 2018). On the other hand
reluctant nature of the foreign airline service providers has allowed it to penetrate the
international market effectively. Under the backdrop of global financial crisis, passengers on
the other hand are preferring those airline service providers who are potential to provide
cheap service. Qantas takin advantage of the lower cost service has been gaining much

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amount of exposure from the different parts of the international passengers that has enhanced
the performance of the same too (Lovelock & Patterson, 2015). On the other hand, if the
microeconomic factors are concerned, then it can be seen that the Qantas itself has gone
through a transformation program that has allowed it to revamp their airline and upgradation
of the latest flights Airbus A380 has allowed it to gain much amount of passengers from both
the domestic as well international flight segment (News.com.au, 2017). Additionally, focused
service on the long distance routes has helped the firm to reduce its fuel cost effectively
allowing the firm to enjoy much amount of profit (Halpern, 2018). Qantas during recent years
has stopped providing service in the domestic trunk line that has allowed it to perform as per
the corporate responsibilities that has reduced the rigorous scrutiny of the performance of the
firm that efficiently allowed the organisation to enhance their business.
Solution to the environmental risks:
As it can be seen from the previous section of the repot, deregulation in 1990 of the
Australian airline service providers, has made sufficient instability within the operational
framework of the same. Thus, stability of the global political economy plays a crucial rule in
case of the success of the firms like Qantas. It will allow the firm to operate under a level
playing ground (Charter & Tischner, 2017). On the other hand technological superiority is
one of the main factors that can allow the firm to operate while maintain competitive
advantage over the competitive firms from both the domestic as well as international arena.
Improving economic state of the domestic economy is one of the main driver that influence
the business of the firms like Qantas. Thus, developing higher employment through better
governmental policies will allow the better standard of living of the domestic consumers
(Weimer & Vining, 2017). Though, it is not under the jurisdiction of the Qantas, yet it need
to influence the domestic government to enhance the standard of living of the Australians so
as to have better number of buyers of the airline service. On the other hand, enhancement in

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the tourism industry is another influential factor that Qantas need to consider in order to
enhance their international market. Cheap service with the value addition will allow them to
triumph over the other airline service providers from the foreign market. Social acceptance
with the better corporate social responsibility will allow the firm to bring in more number of
buyers as well as investors that the firm can utilise as their growth accelerator (Bardach &
Patashink, 2015).
Conclusion and summary:
From the above discussion it can be seen that the Qantas has potential to grow in
coming years by a large extent with their effective policies. The firm need to focus more on
the international flight segment so as to pocket more profit. With the limited access to the
foreign market the firm enjoys only one third of the market share out of total outbound
passengers that need to be enhanced for the better performance of the firm in coming years.
Though there are various obligations for the firm because it has limited number of flights and
a large section of the same are under debt, the firm need to expand its business on both the
domestic as well as the foreign soil so as to enhance their business profitability.

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Reference:
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