Business Consulting Assignment: Strategies for Qantas Domestic 2019-2022

Question

Task:

Business Consulting Assignment Instructions:

Qantas is a dominant player in the Australian domestic airline industry; however we continually strive to expand our market share and indeed expand the overall market size where possible (i.e. influence customer travel decisions/opportunities generally). We are developing our own internal, confidential, comprehensive 3-year domestic strategic plan which will be implemented in 2019, but seek assistance from an external consultant with two key areas:

1. identifying 2-3 new domestic routes to focus on

2. how we might be able to identify, agree and leverage innovative strategic partnerships (not other airlines) to grow our market share, or even the broader market size

Answer

Introduction to the theme of business consulting assignment
Business expansion is a crucial part of every business which offers growth of the business in the upcoming future. Whether it is a railway or airline company, everyone is trying to expand its market by starting to offer service to new locations. However, sometimes companies prefer to start new services in new locations by suspending their existing locations where they perform relatively poorly. This helps them to expand their service without investing more in their existing infrastructures like new trains or flights. This study aims to understand the expansion strategy of Qantas Airways and the Australian railway service in new locations without investing in their fleet.

Qantas is a leading Australia based long-distance Airline company with high customer value. The company was established in 1920 in Queensland and Winton. The headquarter of this airline is in Sydney. Australian Airlines gets merged with Qantas Airways for facilitating the customer experience by 1992 to 2019 (Qantas, 2020). During 2020, the extended routes of these airlines are Asia, Europe, the USA, New Zealand, and Australia. Airbus 330 is introduced by the company for investing in Western Australia through Perth-Melbourne and Perth-Sydney weekday services. The net worth of Qantas is about AUD 19.3 billion by 2019 with 30,179 employees by 2019.

Project scope and outline about new routes (only domestic)
Qantas Airways is one of the most popular airline services all over Australia as well as outside Australia. Currently, Qantas Airways covers most of the airports in pan Australia but some places are not covered under this airline company’s services. As per the case study, the company is planning to expand its service in new locations but they are not willing to invest in new flights which means to offer new locations, the company has to turn down existing location’s services. There are other airline companies like Jetstar Airways, Australian Airlines, Virgin Australia, and others which have some service areas in which Qantas Airways does not provide their service. Focusing on those locations can be profitable for the company by turning down some of its underperforming locations. Two of those new potential service areas can be Derby and Albany (Airline Route Maps, 2020). Derby is situated in Western Australia which is near Broome. Broome is under the service areas of Qantas Airways’ routes. The distance between the Derby and Broome is around 220 Km which is very short. Offering flight service from Broome to Derby or other main cities like Melbourne, Adelaide, Canberra, Sydney, Darwin can be beneficial for Qantas Airways (Qantas, 2020). Right now, Virgin Australia offers flight service to Derby. Another potential place in which Qantas Airways can start their service in Albany. Albany is also situated in Western Australia. The closest offered route by Qantas Airways is Perth. The geographic distance between Parth and Albany is around 419 Km. Right now, only Virgin Airways is offering their flight service in Albany.

Figure 1: service route map of Virgin Australia which includes Derby and Albany

(Source: Airline Route Maps, 2020)

Both of these new locations can be beneficial for Qantas Airways to spread their service in pan Australia. Right now, due to the COVID situation, Qantas Airways is planning to reduce its flights from Sydney to Beijing (SCMP, 2019). This will help them to reduce their flight’s traffic on international routes which they can provide in these two locations. Right now, Virgin Australia is only offering service to both Derby and Albany through Perth. Providing direct flight service from major cities like Melbourne, Adelaide, Canberra, Sydney, Darwin, and others will help Qantas Airways to attract potential passengers to their flights. They can also start through flights to share the passengers on their flights. If the number of passengers is relatively low, then through flights connecting these two locations can help the company to maintain its passengers as well as maintain their flight traffic in pan Australia.

The Australian railway infrastructure is mainly centred on Eastern and southern Australia. But in the Western regions, it does not provide service except Perth (Australian Rail Maps, 2020). However, there are several places like Port Hedland, Broome, Newman, and others which are populated places with large cities, and everyday a large number of people have to visit due to different reasons. These people have to rely on either car route or flight route to reach these places. Offering railway service can greatly help these people in reaching those places easily.

Figure 2: Existing railway map of Australia

(Source: Australian Rail Maps, 2020)

SWOT Analysis

Analysis
Qantas Airways strongly dominates its competitors through the high-quality business operator and competitive pricing. 59% of the domestic airline market is captured by JetStar and Qantas domestic (OAG Schedules data, 2016). Continuous innovation through strategic positioning can deliver more growth opportunities and targets to deliver $500 to 600M EBIT by 2022 (QANTAS GROUP, 2019). Non-core assets are reducing, which further increases the risk of a sudden gap in market demand and increasing capacity. So, getting Foreign Direct Investment (FDI), increasing the customer experience, and partnering up with other companies in Asia including Mitsubishi, airlines of Japan, Tokyo Century Leasing Company. Identifying more 2-3 routes in the domestic area is possible through joint ventures and strategic partnerships like the Tokyo Century Leasing Company. The strong public relations and marketing through social media, advertising, print media, and others are attracting more customers. Sponsoring different events including the Australian Tourism Exchange, G’Day USA, Australian Tourism Award are developing its chance of developing the brand value in the current market to maintain the innovations. Asian markets can act as the key competitor, which can be tackled with joint ventures and influencing customer’s travel opportunities/ decisions for further business expansion. Development of the comprehensive, confidential, and internal 3-year domestic strategic plan for analyzing new 1-3 routes at the domestic level can increase the value of the business. However, the constants can miscommunicate and make the wrong assumption that the airline's authority is going to cancel the existing routes. But the need for new aircraft is necessary as new routes are added up along with the existing routes. The dual-brand strategy and expenditure in the innovations including 3000 equipped cabin crews, freight employees, truck drivers, and pilots with iPads are used for daily business operations. Different tools such as Q-Eat are used to offer more convenience to the customers in business class. Boeing 707 is first operated by Qantas being a Non-US airway (QANTAS FOUNDERS MUSEUM, 2017). The threat of Foreign exchange and fuel volatility is increasing, which needs to be taken care of. Application of big data analytics leveraging involved in better customer experience and operational efficacy (Kasturi et al. 2016). Some legislative issues may occur, so regulatory compliance is necessary. Moreover, Digital marketing and loyalty programs are increasing the chance of success of new domestic routes with ease.

Reference list
Airline Route Maps. (2020). Qantas. Retrieved on 10 July, 2020 from: https://www.airlineroutemaps.com/maps/Qantas/domestic

Australian Rail Maps. (2020). Australian Rail Maps. Retrieved on 10 July, 2020 from: https://www.railmaps.com.au

Kasturi, E., Devi, S. P., Kiran, S. V., & Manivannan, S. (2016). Airline Route profitability analysis and Optimization using BIG DATA analyticson aviation data sets under heuristic techniques. Procedia Computer Science, 87, 86-92. business consulting assignment Retrieved on 10 July, 2020 from: https://www.sciencedirect.com/science/article/pii/S1877050916304707/pdf?md5=d9f35f24eb27b9bfabdd779041125c71&pid=1-s2.0-S1877050916304707-main.pdf

OAG Schedules data. (2016). Qantas is averaging 28% passenger share in international markets; steadily losing domestic market share despite growth; next stop Beijing. Retrieved on 10 July, 2020 from: https://www.anna.aero/2016/10/20/qantas-is-averaging-30-percent-passenger-share-in-its-top-international-markets/

QANTAS FOUNDERS MUSEUM. (2017). The significance of our BOEING 707-138 VH-EBA/XBA. Retrieved on 10 July, 2020 from: https://qfom.com.au/2017/05/18/the-signifcance-of-our-boeing-707-138-vh-ebaxba/#:~:text=The%20Boeing%20707%20was%20the,put%20the%20707%20into%20service.

QANTAS GROUP. (2019).Qantas Airways Limited FY19 Results. Retrieved on 10 July, 2020 from: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwjZ7aHeosLqAhXFmuYKHUqUA
rIQFjAAegQIBBAB&url=https%3A%2F%2Finvestor.qantas.com%2FDownloadFile.axd%3Ffile%3D%2FReport%
2FComNews%2F20190822%2F02136613.pdf&usg=AOvVaw2NHEXRIs-DsqOKRaC3RI5J

Qantas. (2020). About us. Retrieved on 10 July, 2020 from: https://www.qantas.com/in/en/about-us.html

Qantas. (2020). Route Maps. Retrieved on 10 July, 2020 from: https://www.qantas.com/travel/airlines/route-maps/global/en#au

SCMP. (2019). Australia’s Qantas to drop Sydney-Beijing route amid stiff China competition. Retrieved on 10 July, 2020 from: https://www.scmp.com/news/asia/australasia/article/3037375/australias-qantas-drop-sydney-beijing-route-amid-china