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Qantas was introduced established in the year 1920. This organization was previously called Queensland and Northern Territory Aerial Service Limited. Avro 504K was the first aircraft of this organization. Qantas is considered to be the flag carrier airline of Australia. This is the largest airline in terms of fleet size, international flight and international destination. This airline has its base in Sydney suburb of Mascot the main hub of this organization is situated in Sydney. Qantas possess 65% of the share in the domestic market. The organization carries about 14.9% of the passengers, who travels inside as well as outside Australia. Qantasmanages a mixed fleet of Airbus as well as Boeing aircraft. This is the only aircraft organization in the world which possesses a fleet which is made up only by Boeing 747s during the year 1980s. However, in the year 2008, this was replaced by Airbus 380 as a part of fleet renewal.
With the passage of time, the airline has made huge developments in financial terms. It has been reported that the organization will enhance its capacity by 1.5% to 2% in June 2015. This is a significant policy of Alan Joyce and it will be viewed in terms of vital financial turnaround. The organization has been able to earn a profit of AUD367 million in the first half. The organization earned a profit of AUD 204 million after tax. In the previous year, the organization encountered a loss of AUD235 million. It was the successful strategy of the organization which has proved to be very helpful. The organization has introduced a program in which the cost has been minimized but also focused on providing the best service and fleet of the Qantas. The organization, presently has very strong base for the sustainable growth.
As is evident from the excerpt provided the $367 million underlying profit before tax achieved by the organization is primarily because of the transformation program under the leadership of CEO Alan Joyce. The organization at the time of initiation of the program had made a commitment that it would make an effort to discipline its efforts aimed at investments. The same was decided with an aim to differentiate the organization from others, in other words, to create a brand. The scheme includes the following:
- Commencement of new premium lounges across varied locations
- Launch of the new A330 product
- Revitalized beverage and food services for passengers of economy class.
- New automatic sms check-in facility for domestic passengers
- Savings of $2 billion in costs by cutting 5000 jobs
- The cost cutting program has enabled the organization to save $894 million over the past year and pay off debts to the tune of $1 billion
The crux of the affiliate program is to reduce costs on a permanent basis while delivering elite services. As a consequence of the brand loyalty the organization recorded an EBIT of $160 million, which is 10% higher than the underlying EBIT of the corresponding period. A staggering 400,000 new flyers were added as a result of the Qantas Frequent Flyer Program. According to the CEO, ongoing investment and innovation related to programs such as the online mall, Aquire etc. are responsible for the growth and diversification enjoyed by the organization (Weekly, 2015).
The CEO in an interview on Travelweekly said, “Over the next two years we will further strengthen the Qantas position. We will be a company able to withstand tough times, capitalize on the good times, and deliver sustainable and attractive long term returns to our shareholders. We will always be the airline that represents the best of the Australian way of life. And today we can see a bright future for this great Australian company.”(Read more about :Online Finance Assignment Help)
Strategies and Plans to improve the yield of Qantas airlines
Before developing and planning the strategies of Qantas Airlines, it is important to consider and analyse the basic and immediate priorities of the organization. For the management of Qantas the most significant priority is to reinforce the core of the business and address the unprecedented scope. The long-term goal of the organization is to look for a profitable as well as sustainable growth. Another significant priority of the organization is to develop strong Group Domestic Position and develop competitive advantage even in the international market of airline industry. Based on this objectives and focus of the organization, the strategies should be developed by the management of Qantas(Awad, 2011).
Cost reduction strategy
Qantas has opted for the cost reduction strategy in order to enhance their revenue. To carry out this strategy, the organization has reduced the number of flights which has helped the organization to cut down their cost. Along with this the organization has also implemented lower depreciation charges and lower fuel prices and also took steps in the removal of the carbon tax. However, there are still two ways in which the management of Qantas can implement their cost reduction strategy. Bench marking is an important tool that would help the management of Qantas to identify the problems as well as the issues associated with cost structure of the organization. Based on the identified problems, the organization will be able tominimize the cost wherever, it is necessary. Optimization is yet another process in cost reduction strategy. To minimise the cost and increase the profit of the organization, the management of the organization is required to make use of the in perfect manner(Marks, 2007).
Strategy to Improve Revenue
Considering the priorities and the objectives of the organization, the management of Qantas should frame revenue increasing strategies there are three ways in which the management of the organization will be able to enhance their revenue. The most helpful strategy for the Organizational Leadership will be to expand regionally and at the same time focusing on the destination which will be able to generate higher yield. Although Qantas serve worldwide but still I is important for the organization to look for some places where they will be able to boost their revenue. Utilizing the concept of connectivity is yet another factor which should be taken into account by the management of Qantas. Considering this concept, the management of the orgaization is required to develop some more hubs and that too in busy cities(‘Qantas expands its maintenance’, 2009). Another significant process of increasing the revenue is following the strategy of ancillary revenue. In this form of strategy, the organization generates revenue from the non-ticket sources. For instances, the management of Qantas can charge fees for baggage, on-board food and service and this will prove to be very vital component for the low-cost carriers.
Apart from focusing on cost reduction strategy, Qantas should also develop appropriate sales strategy. For the airlines industry, it is very important to establish effective sales strategy as that the revenue of the organization can be increased and at the same time a strong base can be founded for sustainability and customer retention. E-reservation and E-ticketing along with e-check in will create sense for the customers as well as for the airline company itself. At the same time, it should be considered that there is large number of people who does not have proper access to the internet. It is the duty of the sales and the marketing team of Qantas to tar4get the specific group that possess the capability to provide for corporate as well as group travel(Qantasnewsroom.com.au, 2015). It is the duty of the regional managers to target these efforts and at the same time make use of the mass-marketing and internet to attract the individual customers, who after feeling the affinity and experiencing satisfaction will become loyal to the organization. Along with sales strategy the promotional strategy should also be developed by the management of Qantas. The sales and promotional strategy are closely related with each other. To make the sales strategy known to everyone and to attract the customers, it is vital for Qantas to promote their services and product to the customers(Sutherlandglobal.com, 2015).
Impact of economic factors on the growth of Qantas Airlines
The economic factors play a very vital role in the development of an organization. It is very clear from the term economy that it mostly focus on the economy of a country that would help an organization to develop financially. In this research, the researcher has successfully implemented all the relevant points that will help the selected organization, Qantas airlines to develop themselves following the economic factors. In this case it can be stated that the economic factors are considered to be very important and that the organization must try to develop them accordingly (Cairncross, 2012).
While moving on to the discussion of the several ways in which the economic factors can affect an organization both positively as well as negatively. Hence, in this section the researcher has implemented those relevant discussions that can help in the better understanding of the impacts of the economic factors. It is very important to state that the market of airlines industries have developed a lot along with the enhancement of the competition in the market. For this very reason the company namely Qantas Airlines has developed its subsidiary so that it can pose a strong competition in the market. The subsidiary company has been successful in posing high competition in the market as it has offered its customers with products and services which are lower than that of its competitors. The subsidiary company that has been developed by Qantas airlines is Jetstar. The company has been successful in connecting the routes of Asia and Australia as well. It can be stated that till now the subsidiaries like Jetstar and Frequent Fly Program has been successful as compared to Qantas and has been able to enhance their level of profit in the market which Qantas failed to make. The two airlines especially the Jetstar and the Frequent Fly Program has been successful in covering up the deficit that has been developed by Qantas airlines (Husain, 2013).
As, Jetstar has been able to make the deficit that has been created by Qantas, the company is able to develop its financial condition. This is the very reason of the low cost flight that Jetstar is offering its customers and in the mean time successfully helps the customers to travel to the different transit cities of Australia and Asia. Nevertheless, it can be easily stated that these efforts that Qantas has undertaken has been successful in the development of the organization. In case of Qantas it is very clear that the company has developed an economically optimistic environment which has in turn developed the financial condition in a more effective way. In addition to this, it can also be stated that due to these efforts that company has experienced globalization at the same time. In addition to this, it is also very important to state that Australia attracts more than million tourists each year which in turn has enhanced the passenger volume for the Qantas Airlines (Kaldor, 2015). This has been considered as one of the explicit environment for the airline to enhance and develop their company in the market of airline where high competition prevails. In this scenario, it is very important to understand the fact that the numerous students that travel to different countries of Asia and Australia for their studies also contributes to the economic factor for the organization. Although these economic factors are only seasonal but the volume of the passengers does not vary much due to the low cost flights that Jetstar and Frequent Flying Programs offer its customers. Amongst the Australia it is very common to travel by airlines whenever they would visit other countries for either the purpose is studies or as only tourists. As the living standards of the people are getting enhanced they mostly prefer to travel by flights as it is more comfortable, luxurious as well as consumes less time to travel. Hence, it can be stated that as these highly contributes to the economic factors of the development of the Qantas airlines and the airline industry is expanding well with the development of the organizational structure. The high effort that the organization was making to pose high competition in the market along with development in efficiency that they bear to offer its customers with better customer services(Moulton, 2014).(Read more about :Financial Management Assignment Help)
Therefore from the above discussion it is very important to state that the Qantas is considered to be the flag carrier airline of Australia. This is the largest airline in terms of fleet size, international flight and international destination. The company has experienced several failures but with the passage of time the organization has managed to develop them. This airline has its base in Sydney suburb of Mascot the main hub of this organization is situated in Sydney. In addition to this it can also be stated that the long-term goals that has been successfully designed by the organization is to focus on for different strategies that can be a profitable as well as sustainable growth for them. In addition, it can be stated that the organization has been successful in offering its customers the reason to travel through their flights for more than once or twice and so on. Another significant priority of the organization is to develop strong Group Domestic Position and develop competitive advantage even in the international market of airline industry. The strategic steps that the company has undertaken have proved to be very successful for the company and now it is able to pose high competition in the market.
Cairncross, A. (2012). Factors in economic development. London: Allen & Unwin.
Husain, I. (2013). Economic factors in economic growth. Bombay: Allied Publishers.
Kaldor, N. (2015). Strategic factors in economic development. Ithaca: New York State School of Industrial and Labor Relations, Cornell University.
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