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AERO3018 Aviation Strategic Management

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AERO3018 Aviation Strategic Management

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Course Code: AERO3018
University: University Of South Australia

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Country: Australia


Choose a case study, and conduct an internal and external analysis of the industry and business from the chosen case study.


Concepts of strategic alliances have drawn a lot of attention from various scholars for quite a long time now. The importance of strategic partnerships cannot be underscored for the sake of businesses survival. In any industry, strategic alliances are a common phenomenon. In their airline industry, their presence is significantly felt. This paper looks into the strategic partnerships in the airline industry in Australia and attempts to understand it by analysing the external and internal environment. Alliances among airlines have become a standard feature recently. Some of the critical strategic alliances range from simple arrangements of code sharing to terminal facilities, and marketing integration (Lin, 2013).
In this assignment, an analysis of Qantas Airways would be done and its strategic alliances. The airline is among the leading Australian airlines that offer domestic and international transportation services and freight services. Besides, Qantas Airways is associated with the other brands such as Jetstar Asia, QantasLink and Jetstar Pacific (Passport, 2013). The airline has a market share of 17.7% in Australia alone. Moreover, the company has taken strides to achieve a competitive advantage by entering into a strong strategic alliance with Emirates Airline. However, despite allying, management must take specific measures es, Qantas is faced with numerous forces to deal with competitive markets in Australia. 
Qantas Transformation plan
Qantas airline is experiencing a significant transformation as it prepares to change the face of its ever growing and a dynamic global market. In Asia alone, there is an increased growth of passengers, and this can be attributed to the emerging middle class and growth in the number of competitors. The global forces are a significant threat to Qantas. Hence, the management of the airline sought to counter this competitive situation by rethinking its marketing and operations strategies (Qantas Annual Report, 2016). The approach adopted by Qantas would ensure the airline remains relevant in the aviation industry. In 2011, Qantas announced the transformation plan that would make it one of the world’s best airlines. This includes restructuring of its business operations, job cuts, global outsourcing, and cost reduction measures and entering into strategic alliances (qantas.com).
Strategic alliances
Strategic alliances involve entering into an agreement by two independently owned businesses with the aim of joining forces to achieve a particular goal. The process consists in aligning specified services to take advantage of the economies of scale to mutually benefit each business. In 2012, Qantas entered into a strategic alliance with Emirates airline for a 10-year partnership. This alliance aimed to provide the best airline services such as coordinated sales, scheduling, benefit sharing, pricing, increased flight frequency, excellent customer service, loyalty programs and access to airport lounges. There are many reasons as to why Qantas settled on Emirates as its alliance partner (Business Traveler, 2013)
Emirates are regarded as one of the best airlines in the world today. Therefore, it has a good reputation as an airline that provides quality aviation services.
Macroeconomic Analysis of the external environment
The external environment of Qantas Airline can be analyzed by applying the PESTLE management tool. The tool is crucial in identifying major strategic issues that may affect the company’s future profitability (Marmol, 2015). The performances of PESTLE as an analysis tool are as follows;
The political factors influencing the company are the government influence that affects the company’s performance. Qantas is faced with actions of various governments where it operates. For example, the political instability in the Middle East has changed the operations of two airlines; thus generating insufficient revenue.
The economic factors also have some influence on the performance of the two airlines. For instance, the Australian economy is faced with the threat of recession, and this may significantly reduce the per capita income of people, thus leading to low demand for the airline services.
The social trends prevalent in the aviation industry have influenced the performance of both Qantas and Emirates airlines by a more significant margin. In particular, an analysis indicates customers accept low-cost travelling services. The two airlines offer premium-travelling services (Freed, 2014).
The technological aspect of the airline industry involves booking of airline tickets through online reservation systems.
The legal factors affecting the airline industry in Australia include the carbon tax law which requires the airlines to fulfil the legal formalities necessary to perform their operations successfully.
The airline regulatory board and authority that impose regulations to ensure there is environmental effectiveness regulate the airline industry in Australia.
Microeconomic analysis
Qantas’ SWOT analysis is crucial in identifying the internal and external factors affecting the airline.
a. Customer Loyalty
Qantas has attained customer loyalty from its superior services and uniqueness of their products. These unique products include meal customization, flight entertainment; improve airport lounge ambience and food and beverages revitalization options for the economy class.
b. Large market dominance
Qantas has dominated the Australian market and improved the company’s presence in international markets.
c. Efficiency in reducing operation cost
Qantas has been able to reduce its operating cost by reducing 2 billion from its annual operating cost for the last three years.
a. Reduced profits in international flights
The company faces increased running cost in global markets, which reduces the profits of international flights.
b. Unionization problems
The company is not able to effectively negotiate with unions, which affects the effective running of the business.
a. More markets to conduct business
Qantas has the chance to venture in other international demands that it has not yet ventured in for instance Asia.
Qantas faced stiff competition from other airline industries, for instance, British Airways and American Airlines among others.
b. The increased cost of management
Given the fluctuating fuel costs and costs incurred in fleet maintenance and upkeep, the company faces the increased cost of management.
The critical analysis of Australia’s strategic alliance in the airline industry has looked into both the external and internal environment. From the review, it is clear that the operational activities including the strategic alliance of the airline with Emirates airline would significantly affect its operating environment. The PESTLE analysis reveals the key external factors affecting the airline operations while the internal analysis reveals the internal factors affecting the airline
Lin, B., 2013. The effects of joining a strategic alliance group on airline efficiency, productivity and profitability: a thesis presented in partial fulfilment of the requirements for the degree of Doctorate of Philosophy in Aviation at Massey University, Palmerston North, New Zealand (Doctoral dissertation, Massey University).
Qantas Airways is associated with the other brands such as Jetstar Asia, QantasLink and Jetstar Pacific (Passport, 2013).
Qantas Annual Report 2016. (n.d.). Retrieved from https://www.qantas.com.au/infodetail/about/corporateGovernance/2016AnnualReport.pdf
QANTAS Airways Limited 2011 Strategy Day Presentation, 12 December 2011, www.qantas.com.au
Flynn, David, ‘London via anywhere: the changing shape of the Kangaroo Route’, Australian
Business Traveller, accessed 24/9/2018, www.austbt.com.au
MARMOL, T. D., FEYS, B., & PROBERT, C. (2015). PESTLE analysis. [Place of publication not identified], 50Minutes. https://public.eblib.com/choice/publicfullrecord.aspx?p=4005664.
Freed, J. (2014, September 24). Virgin, Qantas step up the battle for business travellers. Retrieved from https://www.smh.com.au/business/companies/virgin-qantas-step-up-battle-for-business-travellers-20140924-10lesy.html

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