Qantas Airlines: Business Valuation, Analysis, and Strategy Report

This report provides a reflective summary of the business valuation and analysis conducted on Qantas Airlines. It highlights Qantas's historical significance in the Australian aviation industry and its current performance in the competitive global aviation market. The analysis employs Porter's Five Forces framework, revealing intense competition on the domestic front, particularly regarding pricing, with rivals like Virgin Airlines and alternative transportation options. A SWOT analysis underscores Qantas's strengths in cost leadership, service, and safety standards, while acknowledging weaknesses such as losing market share in the domestic market due to price wars. The report also examines Qantas's corporate strategy, focusing on direct international connectivity and strategic alliances to enhance its service bandwidth and combat pricing pressures. Furthermore, it discusses Qantas's accounting policy choices, including investments in customer loyalty programs and strategic alliances, which have contributed to its profitability and stakeholder trust.

Running Head: REFLECTIVE SUMMARY OF THE BUSINESS VALUATION AND ANALYSIS FOR QANTAS
AIRLINES
1

Running Head: REFLECTIVE SUMMARY OF THE BUSINESS VALUATION AND ANALYSIS FOR QANTAS
AIRLINES
Reflective Summary
QANTAS, the mention of this name in connection with airlines industry connects us to the
third oldest airlines in the history of the aviation. As an organization, Qantas represented the
Australian aviation industry during the early era of aviation and the jet age quite effectively.
The current business valuation and analysis report is an attempt to explain, check & balance
the performance of the Qantas under the changing environment of the aviation sector of the
world in the 21st century.
The analysis on the scale of the “Five forces Framework” clearly states that pricing is the
most important factor; Qantas is facing direct competition with the rival airlines on the
domestic front. The other means of surface transportation are also competing because they
are offering low fare options. The findings of the “Five forces analysis” states that Qantas is
facing severe competition on the domestic front with rivals like Virgin Airlines. They are also
competing with new entrants in the market (Aulenbach, 2007).
An analysis on the scale of SWOT suggests that strengths of Qantas score very high because
of its cost leadership strategy. This airline played the key role in keeping the prices of the
ticket at an optimum level since the year 2000. In order to combat the price war, it came up
with right kind of alliances with the partners like Jetstar and others. Service and safety
standards are other areas where they played the role of the benchmark setter for the industry
(Matsude,2013).
While having a look at the weaknesses, we find that it is losing its grip over the local market
because competitors have taken the price to the rock bottom levels. Qantas is now focusing
more on capturing the Asian markets; experts believe that they might lose their focus on the
domestic market which is dynamic in nature. Apart from the price war, the competition is
2

Running Head: REFLECTIVE SUMMARY OF THE BUSINESS VALUATION AND ANALYSIS FOR QANTAS
AIRLINES
stiff in this market and it has the power to change the loyalties of the customers very
effectively.
On the front of Corporate Strategy Qantas is moving ahead with some long term plans where
they are focusing on direct international connectivity from the local hubs and platforms. The
company made its first move in this direction in the year of 1992 when they announced that
they will focus more on International journeys from the national fields of Australia
(Hinterhuber and Liozu 2014). With the help of this exercise, they are carving a niche for
themselves and capitalizing on its well-rooted presence in Australia. This strategy is also
allowing them to combat against the price war by adding a new tangent of cutting down the
"slack period" between the connecting flights and bringing down the pricing (Farrer,2018).
The accounting policy choices made by Qantas consolidated their balance sheets quite
considerably; instead of purchasing direct tangible assets they focus more on strategic
alliances to increase the bandwidth of services and addition of more routes in their portfolio.
As an accounting policy choice they also diverted some of the profits in the creation of
customer loyalty programs. The annual report of the year 2017 clearly states that they not
only succeeded in winning the trust of the stakeholders but also succeeded in clocking profits.
Their strategic investment policies are yielding profitable returns because they are able to
exploit their ground presence as a valuable and performing asset in the alliances and the deals
that they are making.
3

Running Head: REFLECTIVE SUMMARY OF THE BUSINESS VALUATION AND ANALYSIS FOR QANTAS
AIRLINES
References
Amaro, S. and Duarte, P., 2015. An integrative model of consumers' intentions to purchase
travel online. Tourism Management, 46, pp.64-79.
Farrer, M. (2018). Qantas boss Alan Joyce's pay packet nearly doubles in the year to $25m.
[online] the Guardian. Available at:
https://www.theguardian.com/business/2017/sep/15/qantas-boss-alan-joyce-pay-packet-
nearly-doubles-in-year-to-25m [Accessed 31 Dec. 2018].
Hinterhuber, A. and Liozu, S.M., 2014. Is innovation in pricing your next source of
competitive advantage?. Business Horizons, 57(3), pp.413-423
Matsuda, K., 2013. The Globalization of Inter-Regional Mobility Through Low-Cost
Carriers. In Corporate Strategy for Dramatic Productivity Surge (pp. 177-181).
4