School of Engineering: Aviation Strategy - Qantas-Emirates Analysis

This report provides a comprehensive analysis of the Qantas-Emirates alliance within the aviation industry, focusing on the external environment and strategic implications. It utilizes the PESTLE framework to assess political, economic, social, technological, legal, and environmental factors impacting the alliance. The report examines current problems faced by Qantas, including high fuel costs, competition, and security concerns. It delves into the economic contributions of Qantas, social factors, technological advancements, and legal and environmental considerations, such as carbon emissions and corporate governance. The analysis further explores Qantas' current strategies, including operating strategies, financial frameworks, and the balanced scorecard, to achieve sustainable returns. The report concludes by emphasizing the importance of network alliances and strategic adaptations in response to economic challenges, with references to the impact of the coronavirus pandemic on the airline industry and potential strategies like those employed by Southwest Airlines. The report is a response to the assignment brief from the School of Engineering, AERO2408 module.

AVIATION STRATEGY

Abstract
With increasing economic fluctuations, market analysis is a concept for business to examine
the market needs. It is important to analyse organisation’s background, which ascertain
current operations and find out current contemporary issues. PESTLE analysis include
political, economic, social, technological, legal and environment factors. In 2012, Qantas and
emirates decided to come together in a joint venture agreement for the future growth for
upcoming 10 years (Emirates, 2017). Qantas will take the passengers through Dubai and
Europe. Daily it rides Airbus A380 service from Melbourne to London. Qantas Emirates
entered into new partnership by offering accessibility to Emirates in Middle East, Africa, and
Europe, which in turn provides larger share of Australian Aviation industry (Centre for
aviation, 2016). It provides Emirates access to larger share of Australia with the help of
Qantas control, which deals to win-win strategy.

Contents
Introduction...........................................................................................................................................3
Current problems...................................................................................................................................3
External Environment............................................................................................................................4
Current strategies...................................................................................................................................8
Conclusion.............................................................................................................................................9
References...........................................................................................................................................10

Introduction
With liberalisation and globalisation, several mechanism aims to unify and consolidate
economy featured by linking of information by sharing it worldwide. Contemporary issues in
conducting business in international arena are prominent, which does not allow business to
stay competitive. Qantas is an Australian conglomerate, which operate in Airline industry at
international level. The history of Qantas is to start humble beginning where corporation
started with two passengers to recent Airbus A380 by carrying 450 aircrafts (Emirates, 2017).
With an aim to critically analyse the organisation`s external factors affecting the business
operations, PESTLE analysis is a framework, which is structured to examine the factors of
external environment that affects external factors such as political, economic, technological,
social, legal and environmental factors. It has great impact on company’s business model and
market strategy.
Current problems
Some of the current issues followed by the Qantas airlines include-
Qantas has remained struggling due to high fuel costs, direct economic conditions, and
increasing competition in Middle East and Asia. Qantas face current issue of safety and
security. Customers have started shifting to other airlines due to security through screening.
Terrorists will have to travel by giving instruction on how evil acts can be executed. It has
been seen that organisation does not have any sound plan to handle competition, which is
easy to see trouble and then close business operations (Onyusheva, and Seenalasataporn,
2018). Like other organisations either profit or non-profit making if face ethical issues failed
to adequately prevent from happening, which can have negative impact on company. Serious
issues prove to be challenge with customer issues, which lost control over the clients. It has
attributed towards the technological advancement and it does not crafted them well to

successfully use in training workers, and meeting the demand of the customers (Emirates,
2017).
Recently, the company expansion in Middle East nations, Africa, Tunisia, Libya, and Egypt
has been suffering due to expansion strategy in airline sector. Stiff competition in airline
industry is issue faced by Qantas needs to fight with other giant competitors especially British
airways, and JetBlue airways (Emirates, 2017).
External Environment
Aviation is highly monitored industry in world. PESTLE analysis is a tool to examine the
present external factors such as economic, political, social, environmental, technological, and
legal factors. The governmental policies has high impact on aviation industry deeply affected
by the legal and political factors (Achinas et al., 2019).
Political factors-
The political instability seems to hamper the infrastructure and security issue, which
negatively affect jeopardise airline plans, which expand the business. Recent case shows that
political instability and uncertainties in Middle and political turbulence in Thailand has led to
notable impact on Qantas operations affecting the revenues (Rastogi, and Trivedi, 2016).
Australia`s stability and warm relationship with countries with China has led to become and
open aviation market. Government support to Qantas is an important cyclical airline industry
(Qantas Group, 2016).
Qantas-Emirates enjoys support and relationship with Australian government due to its
assistance in airlifting soldiers from risks of advanced Japanese forces. Political stability
ensures that political rules and regulations can support Qantas to enhance performance and
profitability as it supports the performance. It promotes a strong and partnership relationship

with regimes and then comply with political legislations, which can promote strong ethical
standards (Centre for aviation, 2016).
Economic factors-
Economic factors includes economic indicators such as GDP, inflation rate, economic
growth, fluctuation in oil prices, employment rate in this sector. Qantas contributes high
economic growth in terms of indirect and direct value addition (The Qantas Group, 2017b).
Liberal aviation policy through the Australian government hurt the growth prospects of the
Australian airlines. It will lead to declining oil prices, which has increased profitability where
volatile market has always remained a major concern (The conversation, 2016).
(Source: tradingeconomies, 2020)
From the inflation rate give above in the graphical presentation, it is quite clear that fuel price
and so as the price of the services delegated by the company will increase. Qantas is pre-
eminent brand of Australia and a national carrier, which significantly contributes to economic
growth (Qantas Group, 2017a). Higher income level people or personal disposable income
can enhance tourism, which increases the profitability of the business. According to data
shared through Australian times, Qantas operations contribute to 0.7 percent in terms of total
economic activity in Australia (Qantas Group, 2017a). After combining total economic

contribution, it is seen that majority of Qantas contribute by 76 percent, Jetstar of 20 percent
and Qantas freight composed of 4 percent (The Qantas Group, 2017b). Its total activity attract
large share of labour, which contributes nearly $4.4 billion with almost 23000 jobs (Centre
for aviation, 2016).
(Source: Qantas Group, 2017)
Social factors-
As Australian national carrier, it can enjoy public trust and then support local customer base.
Domestic partnership can boost Qantas customer`s base. CSR frameworks are quite important
in creating in socio-cultural relationship between organisation and community. Emirate
airline is unique in this way through which barriers to entry can be adjusted and emerge as
global brand (Emirates, 2017). There is a direct relationship customer and employees before
the management thinks to enhance the issues for respond exemplary services to the
customers. A strong CSR addresses relationship between external and internal affairs of
organisation (Stevenson, and Marintseva, 2019). CSR policies can focus on social contract
between community and organisation. Furthermore, it can create and enhance harmony
between community and its operations. For example- high technological aircrafts often make
noise, which will affect the people`s lives living around airports. Qantas has sponsorships for
the students who wants to pursue their programmed course further (Qantas Group, 2017a).

Technological factors-
The company has integrated and extended the partnership alliance so that they can invest in
technology and innovation. Access to technology has enhanced entertainment and other fight
renewal plans, which can bring modern planes to the fleets. Qantas undoubtedly is the first
world experience Q streamlining and its passengers is the first world experience, which is
Wi-Fi enabled entertainment technology (Onyusheva, and Seenalasataporn, 2018). The main
aim to alliance the operations can be to use the advanced technology of each other and
provide maximum technology savvy to the customers. Passengers use technology
entertainment cars in airline Australia, which can practically try for flight entertainment
methods. Travellers can use their gadgets, as it is Wi-Fi enabled. This allow them to exploit
the opportunities to attain maximum services to customers. Furthermore, passengers can
download Q streaming application from available database, as passengers can own their
laptops. With this, Qantas can continue enabling customer access Q streaming through Wi-Fi
enabled devices by finalising the plans to extend the application to a wider fleet (Onyusheva,
and Seenalasataporn, 2018).
Legal factors-
The repletion of carbon tax by the government, which has helped to increase the margins of
aviation player. Furthermore, carbon tax has helped Qantas to maximise the profitability,
which can combat the climate changes. With the help of corporate governance framework,
the company is able to create transparency in the company’s operations. There are many
laws, which are directly associated with the minimum wages law, fair wages Act, and
environmental protection Act (Qantas Group, 2016). Board of directors has been given
responsibility in ensuring corporate governance, which is created, protected, and enhance the
shareholders’ value and return. The company can comply with necessary guidelines as

availed by ASX principle council (corporate governance council principles). Qantas-emirates
ensures that it achieves highest level of transparency in its operations for all the nations it
operates in. Qantas maintains high level of corporate governance ethical practises, which are
constantly reviewed with the latest issues and complied according to them. Board has its own
frameworks; which can direct the ethical issues and government structure (Taneja, 2016).
Environmental factors-
It has been seen that jet Fuel contributes to nearly 95 percent of overall emissions of Qantas.
The company has committed to environmental sustainability other than social and economic
commitments. The main objectives is to top the environmental sustainability rather than
achieving social and economic commitments (Qantas Group, 2017b). The main aim is to
bring environment performance at the top with the help of implementation of environmental
policies towards the protection of current and future generation. Qantas brings development
of programmes, which can cut down the emission addressing the climate issues and
challenges (Qantas Group, 2017a). As its core operations includes airline transport where 95
percent of Qantas carbon emissions are because of reducing emission, it is able to make
efficient use of machines. By the end of 2020, the company aims to level off emission growth
by 2020. Furthermore, for the long-term goal, it aims to 50 percent reduction in emissions by
using 2005 as its base year (Qantas Group, 2016).
Current strategies
For the strategic plan, current strategies have operating strategies, financial frameworks, and
balance scorecard. The list of current strategies of Qantas aims to achieve quartile total
shareholder`s return in relation to ASX 100 at global airline peers (The conversation, 2016).
In order to meet operating strategy, it revolves around six strategic pillars-

Maximising domestic position with the help of dual brand strategy, and creating resilient
Qantas international by growing efficiently with effective partnerships (Holloway, 2018).
Furthermore, it can align with Qantas and Jetstar with the help of Asian growth and investing
in brand, customer, digital, and data, focusing on leadership and culture, and diversifying
growth at Qantas loyalty (Taneja, 2016). As to deliver sustainable framework, it is important
to make strategies to deliver maximum returns to the shareholders, which complement
prudent approach to the capital management (Raynes, and Tsui, 2019). Firstly, it aims to
maintain optimal capital structure, deliver highest return on invested capital, and disciplined
allocation of capital by growing invested capital (The conversation, 2016). One can measure
performance against delivery of the operating strategy by using the balanced scorecard in
delivering operating strategy by considering return on invested capital at segment level, EBIT
compounding annual growth rate and Gross benefits from the transformation (Bose, 2018).
(Source: Qantas Group, 2016)
Conclusion
From the above discussion, it is seen that airline industry is huge investment funded venture
by the national government. This is an expansion rigidity bought up by the national
government. Political stability can increase the freedom of operations in different nations,
which lead to increase the profitability of organisations. Positive economic situation can lead
to increase in demand, which can further improve the profitability of the company. Network

alliance include bilateral agreements between partners. Due to economic crisis caused by
coronavirus, Qantas would opt to take strategies from southwest. Airlines to rejuvenate
economic hitches. Southwest airlines pay for workforce remuneration but remain profit-
making organisation, which has never retrenched workers in Victoria base. To come up from
external forces, there is a greater need to enhance the profitability and its market position
because network alliances imperfections majorly affect the airline operations.

References
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