Revenue Management and Strategy Analysis for Qantas Airline Report

This report provides a comprehensive analysis of revenue management strategies implemented by Qantas Airline. It begins with an introduction to revenue management and its importance in the hotel and tourism industry, followed by an examination of current trends in the airline industry, such as robotics, artificial intelligence, and their impact on revenue growth. The report then delves into a group-level analysis of Qantas's performance metrics, addressing issues related to the use of national and market average data. A detailed property and trip-level analysis is conducted, exploring revenue-generating departments within Qantas and the foundation of its revenue management strategy implementation. The report assesses pricing positions within the competitive environment and discusses product-related pricing structures. It also analyzes inventory control management strategies, distribution channel strategies, and concludes with a review of revenue management tools and their effectiveness.

Revenue
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. Discussion regarding reasons and purpose of establishing effective revenue management
system in the hotel and tourism industry.....................................................................................1
2. Identification of current trends within the wider industry which may pose opportunities and
threats to the revenue growth and management within whole industry.......................................1
3. Comment on the statement......................................................................................................2
TASK 2............................................................................................................................................2
1. Group level analysis.................................................................................................................2
2. Property and trip level analysis................................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Revenue management can be defined as the process of predicting behavior of customers
as per market segment and it also helps in controlling availability of product to each of those
segments and price to enhance the growth of profit to shareholders. For all business entities it is
very important to focus on revenue management as it can help in reaching their long-term
business goals (Abrate and Viglia, 2016). The case which is selected for this report is related to
Qantas Airline. This assignment is segregated in two different parts first one is revenue
management and another one is broader business analysis.
TASK 1
1. Discussion regarding reasons and purpose of establishing effective revenue management
system in the hotel and tourism industry
Revenue management system: It can be defined as a software which is used by business
entities to estimate customer demand for future period regarding their products and services. For
all the organizations which are operating business under hotel and tourism industry it is very
important to establish effective revenue management system. Reasons behind its usage are that it
helps in optimizing price, availability, increase revenue growth and modify inventory usage.
Main purpose of an effective revenue management system is to sale products or services in
upcoming period at a higher price. In hotel and tourism sector, leisure services are delivered to
guests and for all the companies in this industry it is vital to use effective revenue management
system so that right services to the right guests through the right channel at the right time could
be provided.
2. Identification of current trends within the wider industry which may pose opportunities
and threats to the revenue growth and management within whole industry
Current trends in airline industry:
 Robotics and autonomous vehicles: Now a days robots are becoming more and more
common sight at airports as most of the airports are adopting robotics for the purpose of
engaging with clients and optimizing efficiency. It may pose opportunity for Qantas
Airline if organization focuses on it because it will help to attract large number of
customers which will be beneficial for revenue growth and management within the
industry (Trends in airline industry, 2019).

 Artificial intelligence including chatbots and virtual assistants: Different types of
tools of artificial, intelligence are in trend which includes chatbots and assistants. All of
them

Are creating opportunities and threats for airline industry because if organizations such as
Qantas are not able to focus on them then it may create possibility of reduced profits. On
the other hand opportunity of them for the enterprise is highly satisfied clients which will
help to support revenue growth and management within the industry by making
enhancement in customer engagement (Akan, Ata and Dana Jr, 2015).
3. Comment on the statement
For all the organizations which are executing business under hotel industry it is very
important to sell room inventory through own website rather than OTAs in order to access
customers for all accommodation properties. It can help organizations to communicate directly
with their clients and provide detailed information regarding all the facilities which will be
rendered to them if they stay in hotel. In OTA's a third party sell room to clients where detailed
information about services of hotel could not be provided to customers. If own website is used
the IT will also facilitate the revenue management because there will be direct interaction with
clients and payments will be taken by hotel itself rather than a third party.
TASK 2
1. Group level analysis
Relative performance evaluation
Performance metrics could be defined as the measures which are utilized by business
entities such as Qantas for the purpose of monitoring performance, activities and behavior of
business. Main performance metrics for Qantas are passenger load factor, number of flights,
available flight time etc. which assists it to evaluate effectiveness of the established management
strategies and tactics. In order to execute all the operational activities in effective manner it is
very important for the company to focus on all of them. It will assist the organization to manage
the revenues in proper manner which could be generated by selling rooms to clients (Board and
Skrzypacz, 2016).
All of them are also used for the purpose of analyzing that the strategies and tactics which were
formed for revenue management are effective or not as with the help of them top level
executives of organization can determine that these are contributing in the generation of revenue.
Issues in using national and market average data: There are various issues in using national
and market average performance data for a valid comparison with the competitive set.

One of them is inaccuracy of the information because the data could be biased which may affect
the comparison and the results which are generated through it.
2. Property and trip level analysis
Revenue management analysis and revenue generating departments:
Full capacity seats Over 500
Ownership
Branded or independent
Branded
Service type Full-service, limited-service
Location Mascot
Name Qantas Airline
Address Mascot, Sydney, Australia
Web site https://www.qantas.com/au/en.html
There are various departments within Qantas Airline which are generating revenues for
the organization and helps to execute all the operations successfully. All of them are passenger
handling, catering, sales and marketing, technical etc. Description of them is as follows:
 Passenger handling: This department is mainly responsible to handle all the customers
who are travelling from the flights. It contributes in the revenues of Qantas because when
all the clients are handles properly then their engagement gets enhances which results in
customer engagement.
 Catering: This division of Qantas concerned with fulfilling eating and drinking needs of
customers. If all of them are fulfilled then it enhances customers experience and
satisfaction which is beneficial for revenue generation (Denizci Guillet and Mohammed,
2015).
 Sales and Marketing: Both the departments are interlinked with each other because with
the help of marketing activities organizations generate sales. In Qantas these divisions are
facilitating the entity to increase revenues by promoting all the services for clients. Technical: Maintenance and repair of aircraft related activities are performed by this
division of Qantas which helps to provide safe flights to customers. If they are getting
secure facilities from airlines then it results in increased engagement level of them. With
the help of it revenues could be increased by satisfying all the requirements of
passengers.
Identification of the foundation of revenue management strategy implementation of trip:

Currently different trends are affecting the airline industry. For example, there are various
organization in aviation industry which are offering flights on cheap price to the customers. On
the

Other hand various airlines are using robot attendants at airports. Due to changes in such trends
the supply of accommodation services is getting affected in different countries. For Qantas, it is
vital to focus on it so that if operational failure occurs, it could be dealt properly. Target segment
of the company is upper and upper middle class customers and to capture more market share
organization is planning to launch economy packages to lower middle class clients which will
help it to expand its market share (Feldman and Topaloglu, 2017).
Market segment mix: It can be defined as the mixture of segments where facilities are
provided by the company to its customers. Currently Qantas is offering its services to upper and
upper middle class clients. Seasonal changes results in changes in the market segment mix
because in the season of holidays the number of upper class customers gets increased because
they travel for the purpose of vacation. It affect the price of tickets of flights which affect the
number of upper middle class customers as they travel for the purpose of business meetings.
Pricing position in immediate competitive environment:
Basis Qantas Virgin Australia
Pricing
position
For The
route of
From
Sydney to
Melbourne
It is considered as the most expensive airline
of Australia and price of its one ticket from
Sydney to Melbourne is around $388 plus
additional fees. All the extra charges are
included in the price of ticket. In flight
entertainment is also provided by it to all the
passengers which justifies its price (Pricing
position of Qantas, 2019).
It is the second expensive airline of
Australia and its tickets for Sydney to
Melbourne costs around $355 which
do not include the extra fees. It
provides complementary snacks to the
customers but additional changes are
not included in the cost of ticket.
Assessing revenue management strategies and tools
Product related pricing structure: In Qantas top level executives believes that they
should differentiate all their services from the competitors so that high revenues could be
generated. There are various types of pricing policies which could be adopted by the
organization. Some of them are discussed below:
 Premium: In this type of pricing strategy, organizations set higher price for all their
services due to high level of quality. It could be adopted by Qantas because the facilities
which are rendered by it to clients are premium.

 Penetration: While implementing this pricing strategy business entities set low price for
all their services at initial level. When customers starts to buy them then price is being
increased due to enhanced demand. While launching a new flight plan Qantas can
implement this strategy so that large number of customers could be attracted.
 Economy: In this pricing strategy very low price is set by companies for their products
and services in order to sustain in the competitive market place. Qantas can use this
strategy to deal with increasing competition in the market (Ivanov, 2014).
From all the above described strategies, currently Qantas is using premium pricing
strategy because all the services which are delivered by it to clients are of good quality. The
additional facilities which are provided by the organization to its customers are proper dining,
seat maps, duty free and proper communication. In order to differentiate all its services from
competitors the organization is using discounting techniques. It provides good discount on some
specific flights which helps it to deal with high competition level in marketplace.
Inventory control management strategy: There are various types of inventory
management strategies which are used by companies which are executing business under airline
industry. All of them are as follows:
 LIFO: In this method seats are allocated to those clients firstly who have recently
booked the flight.
 FIFO: In this technique of inventory management seats are allocated to this clients first
who have booked flight earlier.
From both the methods currently FIFO is used by Qantas to manage its inventory (seats).
It helps to fulfil requirements of clients who have booked the flight earlier and want specific seat
to sit.
Distribution channel strategies: There are various options under this head which could
be adopted by Qantas according to its business operations. All of them are as follows:
 Global distribution systems: It is a computerized network system which is used by
travel and tourism sector companies such as Qantas for the purpose of reserving seats in
flight (Jasin, 2014).
 Proprietary website or direct channel: Large companies such as Qantas which are
operating business under airline industry use this mode to book seats for clients with the

Help of their own website. It helps them to directly interact with passengers and provide
them best possible deals.
 Third party channel: It is a type of distribution system in which a third party perform
tasks for companies such as Qantas to book tickets for the flights.
From the above described options Qantas is using proprietary website as a distribution
channel for all its services. It helps the organization to fulfil requirements of all the clients by
interacting with them personally and ignore third party commission.
Non-room related services and packages: There are various organizations which are
operating business under airline industry. Different types of non-room related services and
packages are provided by the entities such as Qantas. These are free refreshments, changes in
meals such as veg and non veg, magazines etc. Main purpose of offering all these facilities is to
make the clients to feel comfortable (Shaw, 2016).
CONCLUSION
From the above project report it has been concluded that revenue management is the
process of predicting future demand of the products which may incline or decline in future.
Current revenue management strategy is very effective for the organization because it helps it to
execute all the operations in systematic manner and perform all the business activities
appropriately.

REFERENCES
Books and Journals:
Abrate, G. and Viglia, G., 2016. Strategic and tactical price decisions in hotel revenue
management. Tourism Management. 55. pp.123-132.
Akan, M., Ata, B. and Dana Jr, J. D., 2015. Revenue management by sequential screening.
Journal of Economic Theory. 159. pp.728-774.
Board, S. and Skrzypacz, A., 2016. Revenue management with forward-looking buyers. Journal
of Political Economy. 124(4). pp.1046-1087.
Denizci Guillet, B. and Mohammed, I., 2015. Revenue management research in hospitality and
tourism: A critical review of current literature and suggestions for future
research. International Journal of Contemporary Hospitality Management. 27(4).
pp.526-560.
Feldman, J. B. and Topaloglu, H., 2017. Revenue management under the markov chain choice
model. Operations Research. 65(5). pp.1322-1342.
Ivanov, S., 2014. Hotel revenue management: From theory to practice. Zangador.
Jasin, S., 2014. Reoptimization and self-adjusting price control for network revenue
management. Operations Research. 62(5). pp.1168-1178.
Shaw, S., 2016. Airline marketing and management. Routledge.
Online
Trends in airline industry. 2019. [Online]. Available through:
<https://www.futuretravelexperience.com/2019/01/10-technology-trends-airlines-
airports-2019/>
Pricing position of Qantas. 2019. [Online]. Available through:
<https://www.familytravel.com.au/stories/australian-airlines-compared/>