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Case Study of Qantas Airlines: Business Model and Strategies

The Aviation Industry has been one of the most dynamic industries in our history. From the development of the machines to the formation of a viable business model, the trials and road to success has been filled with little success and numerous examples of failure. One of the best examples of success in this volatile industry would be Qantas Airline. For nearly one hundred years, Qantas is one of the world’s oldest , most successful air carrier operations. Invoking a business model that has proven constant transformation and change is inherent to their success, Qantas has established itself as a global provider of commercial air services. The Qantas story is of success and adaptation to the ever-changing dynamics of the aviation industry. Many airlines have come and gone throughout the history of aviation, yet Qantas has endured, this case study will explain how they achieved sustainability when so many others have failed.

Business Model and Strategies

Qantas Airlines, throughout its 100-year history has continuously changed and evolved its business model to suit current needs and have an unprecedented preparedness for future operations. The airline is continuously upgrading its fleet and has not shied away from bold fleet changes. For example, QANTAS had at one time in their history been the world’s only operator with an all Boeing 747 fleet conducting international world-wide flights. QANTAS is currently branded as QANTAS – for international and domestic services, and JetStar, for Australian domestic services and has a mixed fleet of Boeing 747’s and Airbus models including the A320, A330, and the A380.

The ability to reinvent themselves and remain a world class provider of international flights services is because of the ever-developing business model and the company’s willingness to make change . These transformation programs are inherent to the successful business model and why QANTAS has survived such a volatile aviation industry.

Leigh Clifford, Chairman for QANTAS Airlines has stated in the company’s annual performance report for FY15/16 that “The Group has increased net free cash flow, grown return on invested capital and further strengthened its balance sheet , remaining in an optimal capital position throughout 2015/16. I’m especially pleased that we have been able to return more than $1 billion U.S. dollars in cash to shareholders over the past 12 months. Over the same period, earnings per share have almost doubled to reach 49 cents.” (2016 -QANTAS Performance review)

Embracing transformation has been the mantra of QANTAS since its infancy. This mentality and ability to changes is fortified through the strong leadership of the company. CEO Alan Joyce exhibits the traits of the QANTAS pioneers. He stated in his 2016 address on performance that “Transformation is making Qantas’ cost base competitive. Just as importantly, it’s changed the way we work. We’re a far more agile company. We’ve accelerated our adoption of new technology, digital platforms and data analytics. And we’ve fostered a culture that encourages diversity, inclusion and innovation. Qantas is a very different company from just a few years ago. Together with our well-balanced Group strategy, transformation means we’re resilient enough to perform in all market conditions and outperform many of our peers.”

The Qantas “Group” is the totality of all the endeavors, including QANTAS International and Domestic, JetStar Domestic, QANTAS Loyalty, and both domestic and international cargo operations. The expenditures total enormous amount of outgoing cash. The aviation industry is basically in the business of selling seats, QANTAS sells the entire experience and profits for its efforts. Expenses for catering, fuel, and maintenance are all costs associated and take away from that seat sale. The reduction of these costs are top priorities to the financial leadership and QANTAS has succeeded. A total reduction in 3% of the total fuel costs over one years is outstanding. With newer, more fuel-efficient aircraft like the A380, seat capacity and sales exceed the fuel costs and profits are made, if seats are filled. QANTAS as increased passenger revenue steadily for the past two years along with the reduced fuel costs and prices of oil world-wide.

The QANTAS team has been able to not only turn a profit in an industry where most others attempt to “break-even”, they have made huge sums of cash. The company is thriving, the stockholders receiving a return on their investment, and employees reinvesting in the company. They seem to be doing everything right in all aspects of the business. The international division of Qantas recorded $512 million dollars in profits FY 2016 and Qantas Domestic did even better with a record $578 million. These profits are in addition to the $452 million and the $346 million recorded by JetStar and Qantas Loyalty.

As stated in the Annual Performance Report for FY 2016, “Operating cash flows of $2.8 billion saw a strong increase from the prior year, reflecting cost and revenue benefits realized through the Qantas Transformation Program, and lower Australian fuel prices. When adjusted for the principal portion of operating rental payments, Funds from Operations were $3.1 billion. Net capital expenditure of $1 billion included investment in replacement fleet such as the Boeing 787 for Jetstar International and customer experience initiatives including airport lounges and the continuation of Airbus A330 and Boeing 737 cabin reconfigurations. Qantas generated $1.7 billion of net free cash flow in the period facilitating net debt reduction and returns to shareholders of $1 billion in the financial year.” (2016 – QANTAS Performance Report)

What this all means for the financial stability, is a record underlying profit of $1.53 billion dollars for FY15/16. For QANTAS that is a 57% increase since FY 2014 and is expected to increase over the next fiscal year. In addition to record profits, a debt reduction plan has been set in motion. Expenses and operating costs continue to rise, yet the aggressive approach to reducing fuel costs has also paid its dividend for the airline. Fuel consumption costs have been reduced by 3% in just one year.

The Chairman, CEO, and Board of Directors statements are best summarized using the introduction published in the Company’s 2016 Annual Performance Report, it reads as “This exceptional performance reflects the strength of our Qantas Group strategy, with record results and increased margins for Qantas Domestic, Qantas International, the Jetstar Group and Qantas Loyalty, and Group-wide return on invested capital of 23 per cent. Total underlying earnings before interest and tax (EBIT) in the domestic market – across both Qantas and Jetstar – rose 30 per cent to $820 million, and total underlying EBIT from the Group’s international operations was $722 million, up 107 per cent.” (2016 Qantas-Performance Report)

The modern age aviation company template lies in the metrics and performance standards of QANTAS airline. Remarkably in an era of failing and defuncted air carriers, they have managed to not just make a few dollars, but made record profits in a world-wide recession. They have accomplished this through two Australian domestic air carriers offering the same destinations and different services. One with traditional services and the other a low cost no frills carrier. This has given name recognition and brand loyalty throughout the population. QANTAS has also established their brand as the industry leader in long haul international travel around the globe. Top tier services, impeccable safety records, and a command of the passenger experiences has made their brand world renowned and associated with aviation excellence. Industry acclaims and record setting financial performances are the benchmark for quality and profits. Every airline, both domestic and international carriers, should take a hard look at the metrics and performance standards established and follow their lead. It does go to show that a deregulated airline can make a profit and not just strive to meet the break-even mark. QANTAS and their transformation mentality that has proven time and again to work. The company will continue to thrive and be the example and standard bearer for all air carriers. The transformation process into the next iteration of aviation excellence will continue as their gold standard and operations way of being an aviation leader.

Fleet Management and Route Structure

The Qantas fleet structure is one of the most dynamic in the industry. Historically Qantas is known for frequent and dramatic changes to their fleet mix, type, and designs. At one point Qantas was the world’s only sole service provider using the Boeing 747. A bold move that met the demands of the time and the decision served them well. According to Alan Joyce, the companies continued transformation is an ongoing process and will continue to evolve as the market and demands change. On February 23, 2017 Mr. Joyce briefed the company’s first quarter performance and highlighted the importance of his commitment to transformation. “Three years ago, when we launched our $2 billion Qantas Transformation program, we wanted to make the Qantas Group a strong, sustainable business. A business that could generate returns through the cycle – in good times, but also in tougher conditions. Our first half performance shows that we continue to deliver on that promise.”

The current Qantas fleet is a diverse mix of airplane capabilities solely produced by the Boeing Corporation and the Airbus Corporation. Having limited themselves to two manufactures, repair costs, maintenance, and product support per model has a reduced overall cost. These consolidated and reduced costs allow Qantas to procure and operate the higher end qualities that come in these models. These are not bare bones transport airplanes like South West. Their fleet is a top tier luxury airline passenger experience. The overall average age of their fleet is approximately 10.8 years, which is young in aviation terms. They are also one of the first airlines to offer services in the Airbus A-380 and Boeing 747-800 which are current production models. They are the front runners at providing services with these monumental aircraft.

Their oldest models are 737-300’s with an average age of 30 years amongst that type. Qantas also does not lease their airframes, they are the owner/operators of their fleet. The constant upgrading and new purchases keep them as a world leader in international services.

Qantas has established routes from Australia to the rest of the world, including destinations like New York, Los Angles, Singapore, Japan, and China. These routine and scheduled routes meet current demands as well as do the regularly scheduled routes operated domestically by Qantas and JetStar. The future schedule is much harder to predict and Qantas is always on the watch for new routes and new service locations. Both international brands, Qantas and JetStar are being marketed to emerging markets around the world. Alan Joyce provides his insight into the international markets and the future routinely. Recently he was quoted “Where Qantas International has added capacity, it’s been directed to Asian markets where demand is strong. Asia was also a bright spot for Jetstar. Jetstar’s international operations had a strong result off the back of growing demand between Australia and places like Indonesia and Thailand. And the Jetstar airlines in Japan and Singapore improved their performance again. The Jetstar Group overall reported another record half year profit, helped by a strong domestic performance.” These emerging international destinations are being addressed and services and fleet adjustments are being made to service these destinations.

The Qantas scheduling situation is unique due to the many destinations serviced and what airframes service certain places. There are passengers that want to fly on the A380 for the novelty, not just the destination. Qantas has recognized this and promotes these flights on this special airplane. The scheduling and marketing of these flights aids in the filling these enormous airplanes.

The Qantas route structure is also unique and has been tailored to the capabilities and location of their operation. Sydney, Australia is most the HUB for all domestic and International flights. The spokes are each point A to B destination in both modes. However, with the longevity and distance of each flight to reach its destination and return almost make the route structure like a point to point operation. They are servicing their entire continent and worldly destinations from Sydney. There are very few flights that continue to other destinations after their initial transoceanic trip. Location has dictated the HUB and the spokes have become the single point destination and return. Their maintenance and overhaul facilities are also located in Sydney with some locations throughout the world for ease of maintaining a flying fleet. Having an airplane grounded in China with little to no maintenance support does not work out, but major work and services are planned for the home location.

The Qantas overall operation provides a unique set of challenges and demands from fleet choice, scheduling long haul flights, and their location and service destinations. The company has continually met these challenges head on with the ability and willingness to be fluid and prepared for change. It is the “transformation” mentality echoed from the leadership down that facilitates the success experienced year after year. Being on the of the world’s most profitable and oldest airlines providing both domestic and international services under numerous brands, Qantas has set a benchmark for success and service.

The Queensland and Northern Territory Aerial Services (QANTAS) has a rich and storied history which started close to one hundred years ago. Throughout their history, Qantas has transformed their business model several times. They have even changed their entire fleet on several occasions. However, one thing has remained constant throughout, which has been to provide a top tier world class flying experience. Their marketing strategy has evolved over the years and kept pace with the times, but pure customer satisfaction for each passenger remains paramount to the company. In the early years, word of mouth was the only way to advertise, and satisfied customers provided the positive communications needed to expand the business. Fast forward to today and that word of mouth advertising still has its place and it works. Qantas is known as that top tier international carrier throughout the world, and the bottom line remains customer satisfaction and a positive flight experience.

Qantas’ product has remained the same since their inception, the flight experience. It boils down to the selling of seats on an airplane in most cases, as it should. Qantas has the same result in mind, selling seats, yet tackles the problems in different ways. One example would be their airplanes and the products to whom they are very specifically marketed. Instead of marketing the airline directly, Qantas has marketed the experience and considers each paying customer’s price point. They have accomplished this through a multi-carrier plan, meaning two separate airlines providing domestic services at different price points. According to CEO, Alan Joyce, “The Qantas Group’s main business is the transportation of customers using two complementary airline brands – Qantas and Jetstar. We have built a reputation for excellence in safety, operational reliability, engineering and maintenance, and customer service.” Qantas Domestic and JetStar are both airlines operating domestic services in Australia and are both owned by Qantas. JetStar offers a no-frills approach to travel and offers significantly lower prices to these locations. Qantas Domestic however, offers the traditional upscale full service flight experience that they are known for to the same destinations at a higher price. This has enable the customer to choose either cost over services or vice versa. This marketing method still addresses the product, which is selling seats, yet provides the customer with options based on their budgets and needs.

Qantas international’s product marketing is handled slightly different. The product here is still the selling of the seat, but when the Qantas method is applied, things change. Again, it is the overall experience that is the focus for this airline. Qantas’ fleet choice is number one on the marketing list, with ships like the Boeing 747-800 and the Airbus A-380. People travel and choose destinations, just to fly on these machines, according to Qantas leadership. Comfort and ease of travel are essential to Qantas. Wider seats and inflight entertainment along with more non-stop international destinations than any other airline make their product more enticing to travelers. Qantas relies heavily on the established “name and reputation” of their airline for repeat customers. Brand recognition and loyalty maintain their market share bring in additional customers over time. Convenience and ease of travel are the standards established for the international traveler by Qantas. This unmatched service and available destinations set them apart from the other carriers.

The second “P’ in this marketing discussion must be price. The cost of a ticket is the key to this business. Priced too high, customers will not fly. Priced too low, the airline cannot sustain operations. Most fares charged by Qantas are determined by the market, and the market fluctuates. Qantas additionally determines their price points based on what other airlines are charging. This pricing strategy keeps Qantas competitive and in-line with the market shares. For their domestic/international no frills airline brand, Jetstar, Qantas has employed a price penetration model which offers the lowest possible price for every flight. Qantas International and Domestic also offers a full fare prices which offers customers flexibility. This flexibility for paying full fare allows the customers to change, modify, and/or cancel their reservation at no additional costs. This incentive for the business traveler is an incentive most will not overlook. The multiple pricing methods used by Qantas offer a wide range of options for customers through both their domestic and international brands. One additional option employed by Qantas is a cost margin method, where the price set for fare is figured by the cost of the conducting the flight with a full complement and an additional add-on strictly determined as profit.

For the 3 rd “P” in this discussion, Promotion, is an essential part of any business. Word of mouth may have been sufficient 80 years ago, but in today’s day and age it is simply not enough. With technological advances, internet availability, and mass media, exposure to advertising is plentiful. Qantas currently has three major marketing campaigns underway, mostly limited to the Australian region. Their current “Welcome Home” campaign is aimed at domestic travel and bringing people closer together using the Jetstar brand. This campaign has been hugely successful and is expected to continue through the summer 2017. Additional promotions, including web advertising and search promotions are also used by Qantas. This being fees are paid to search engine facilitator ensuring the Qantas Brand is located first on searches and adds are associated in side-bar advertising on web pages. Since the advent of social media, Qantas has established accounts on all of the most popular platforms like Twitter and Facebook to keep their customers informed and feeling as they are part of the team. Along with traditional advertising such as newspapers, magazines, radio, and television, Qantas has embraced the handheld generation. They also announce changes and improvements through the social media outlets. On February 23 rd , Qantas Tweeted “Qantas has revealed its next generation Premium Economy seat, which will debut on the airline’s fleet of Boeing 787-800 Dreamliner’s from October. Wider and with more functional space overall, the new seat has a unique recline motion that provides a class-leading level of comfort.” This type of advertisement reaches each subscriber instantly and allows for real time feedback from its customers.

The final “P” in the puzzle is place. In the Qantas story, the place is arguably the most important and the roots to its success. The place can mean several things, such as the place it all started, the place where flights originate, and lastly the place where flights go. These places are equally important. Qantas is a world leader in International Travel as well as Australian first and largest Domestic provider through the Qantas and JetStar. JetStar also provides a low cost International option for customers on a budget. The Qantas brand is truly global and amongst few airlines of such scale and worldwide influence. Qantas’ international routes cover the globe and offer services to destinations including Dubai and the Middle East, Europe, South Africa, South America, Asia, and North America. Qantas conducts business all over the world and code shares a portion of the business, except in Australia.

This concludes the four “P’s” of marketing and how Qantas Airline applies the principles needed to be successful. The Qantas product is top tier, the prices are competitive, the promotions are realistic, relevant, and current, and the places speak for themselves. Qantas is known for transforming their fleet and business model to keep ahead of the industry pace and be that trend setter they have always been.

International Operations

Qantas is considered one of the world’s top tier international air carriers. They have perfected international operations out of necessity due to the isolated location. Qantas does provide domestic services throughout the Australian continent, however, the main source of revenue and the bulk of their operations are geared towards providing the world class flying experience their customers have become accustomed to. Qantas’ base of operations is Sydney, Australia and they have been servicing international destinations since pre-WWI.

Their current fleet for their primary international long haul flights consists of the two of the world’s premier largest aircraft. The Boeing 747-800 has been in Qantas service since its introduction, as well has the Airbus A-380. The international services provided by Qantas has been recognized and awarded in numerous forums. They were awarded the Best First Class at the 2012 Australian Business Traveler Awards. Additionally, their fleet boasts Cleaner and more efficient than ever before, “burning 17% less fuel per seat than today’s largest jets and producing around 60% less carbon dioxide than the average family car, per passenger kilometer.”

Qantas is one of the world’s most recognized airlines and a founding member of the OneWorld® alliance. It serves almost 80 destinations in 20 countries. As the only Australian airline in any global airline alliance, it offers an extensive domestic network besides serving points in Asia, the South Pacific, Europe, North and South America and Africa. As a participating member in the OneWorld alliance, Qantas customers can reach just about anywhere in the world. The code sharing and affiliations has made Qantas on of the only airline truly capable of sustaining long haul operations on a regularly scheduled basis. With destinations in the U.S., Europe, Asia, and the Middle East, Qantas’ has the global reach. Routes extend from Las Angles to London to Dubai to Sydney. “Qantas code-shares with OneWorld partners American Airlines, British Airways, Finnair, Japan Airlines and LAN, and has additional commercial agreements with Aer Lingus, Air Niugini, Air North, Air Tahiti Nui, Air Vanuatu, Alaska Airlines, Alitalia, Asiana Airlines, Bangkok Airways, China Eastern, China Southern, El Al, Emirates, Fiji Airways, Jet Airways, Jetstar, and Vietnam Airlines”. (OneWorld 2017)

The relationships developed through the OneWorld Alliance has elevated the level of service expected and greatly enhanced the capabilities of Qantas. The benefits of such an alliance has increased sales, filled seats, and ensures more return customers. The level of service for international flights is a tiered system for both models of airplanes flown. Qantas offers four cabin classes on most of its long-haul international flights, including First Class, International Business, International Premium Economy (on flights operated by Boeing 747-400s and Airbus A380s) and International Economy. Frequent flyer programs and the benefits shared amongst alliance partners streamlines the system and enhances customer satisfaction .

Qantas’ primary business is providing the pinnacle of the international flight experience. This is echoed throughout the company and reinforced from the top down. Affiliations are chosen specifically to extend the range and service of the Qantas brand. The code shares, the One World alliance, as well as the Qantas brand are closely monitored by the leadership and Qantas believes in remaining in a transition and transformation phase of their business model, according to the company CEO. They are constantly reevaluating the processes, services, routes, and destinations to remain a world leader. Their fleet is constantly being upgraded to a premier level and operations refined to provide the customer the best possible experience. Without the OneWorld Alliance and the code sharing agreements, Qantas would still provide the long-haul operation, however it would be point to point, most originating the Sydney

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Contemporary Case Study - Qantas Airways Ltd 2022

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Preview text, qantas airways ltd.

Founded in the Queensland outback in 1920, Qantas has grown to be Australia's largest domestic and international airline. Registered originally as the Queensland and Northern Territory Aerial Services Limited (QANTAS), its main business is the transportation of customers using two complementary airline brands - Qantas and Jetstar.

Qantas’ airline brands operate regional, domestic and international services and employs over 30,000 people with approximately 93 per cent of them based within Australia.

Qantas vision statement:

To be a great airline that champion’s the Spirit of Australia’ and are:

− Together;

− Inventive;

− Optimistic; and

− Experienced

Qantas mission statement:

We are Australia's leading premium airline and we are dedicated to being the best. We aim to meet your expectations every time you fly and so we continue to invest in our business and will always strive to provide you with an exceptional level of service.'

History – The Qantas Story

The Qantas story is inextricably linked with the development of civil aviation in Australia. It begins with fragile biplanes carrying one or two passengers in open cockpits and progresses to the new Airbus A380s flying some 450 people half way around the world in a day.

But, it is a story of human endeavor, not just machines. A few determined individuals overcame formidable obstacles to establish the Queensland and Northern Territory Aerial Services Ltd (QANTAS). Supported by committed staff and loyal customers, the airline persevered through war and peace to serve the nation and build an enterprise. The Qantas story is about the people who have created its exciting and productive history - its staff, its customers and the excellence of its business partners and key suppliers...

Today, Qantas is widely regarded as the world's leading long distance airline and one of the strongest brands in Australia. Qantas continues to provide outstanding service to its customers and is at the forefront of the international civil aviation industry.

The future holds many challenges for Qantas - maintaining safe operations and world class product standards while building a viable and competitive position long term for the airline.

Read more here: Qantas/travel/airlines/history/global/en

Link to Key Knowledge in Unit 4: Area of Study 1 - Theory of Change

Key performance indicators as sources of data to analyse the performance of businesses, including percentage of market share, net profit figures, rate of productivity growth, number of sales, rates of staff absenteeism, level of staff turnover, level of wastage, number of customer complaints and number of workplace accidents

Key performance indicators refer to a specific set of criteria used to measure how efficiently and effectively a business is achieving key objectives. This included financial measures (e. net profit figures) and non-financial measures (e. number of customer complaints).

Below is a table summarising each of the key performance indictors listed in the Study Design. Students may refer to other key performance indicators not specifically listed (e. results of a staff satisfaction survey).

Management will use key performance indicators such as these to analyse business performance in important areas. This information can then be used to develop and implement a range of business strategies to improve performance (more on this later).

Qantas Financial Performance

Revenue and Net Profit Figures

In 2017/18 Qantas reported an underlying profit before tax of $1 (up from $1 in 2016/17) – the highest performance in its 98-year history.

Market Share by Passengers Flown (2019-22)

Source: ACCC report into Airline Competition in Australia, 2022

Rising fuel costs (2012-22)

Non-financial Performance

Customer Satisfaction Rating (November 2019)

New Roy Morgan airline satisfaction data shows national flag-carrier Qantas is the winner of both the Domestic Airline and Domestic Business Airline of the Month Award for November 2019. Qantas has won eight straight monthly awards in the domestic category, and remains unbeaten in the domestic business category for 2019. Despite its dominance in this key performance indicator for the past 7 years, Qantas has identified a ‘material business risk’ focused on the need to continue improving its service quality to deliver customer satisfaction in the face of increasing competition and due to the operational challenges presented by COVID-19 (flight delays, cancellations, etc.).

Prior to COVID-19 – Expansion, Technology and Project Sunrise

These strong financial foundations mean Qantas can continue investing in the future. The primary focus for Qantas outlined in its 2017 and 2018 Annual Reports is to improve the experience for its customers, as well as to continue to grow the return on investment for its shareholders.

Some initiatives Qantas is looking to roll out over the coming years in order to achieve these objectives include:

 Upgrading its Airbus A380 fleet

The Airbus A380 fleet will receive a major upgrade, with plans to install next generation seats from 2019 onwards. This refit will also improve the overall economics of the aircraft through smarter use of space and an overall increase in premium seating.

 Introducing Wi-Fi capabilities in its domestic aircraft

Qantas is accelerating the rollout of inflight Wi-Fi across our domestic A330 and 737 aircraft. This follows a successful trial that showed very positive customer feedback and potential productivity gains in flight planning and disruption management.

Qantas is partnering with Foxtel, Netflix and Spotify to enhance its catalogue of entertainment, with customers able to access these usually paid subscription services for free* during flight.

• Foxtel only, Netflix and Spotify require paid subscriptions beyond a 30-day free trial

 Welcoming the Dreamliner

Qantas are welcoming the game-changing Dreamliner into Qantas International — an aircraft that will open up unique routes, such as Perth–London direct, and deliver significantly lower operating costs.

 Project Sunrise

Project Sunrise is a feasibility study conducted by Qantas in conjunction with Boeing and Airbus. By 2022 Qantas hopes to have established a direct route from the East Coast of Australia to London and New York, while cutting journey times by up to four hours.

 Introducing Passport-free Technology

In November 2018, in partnership with technology provider SITA (sita/) Qantas commenced a trial of new state-of-the-art technology at Brisbane airport, which allows customers to upload their passport to their mobile phone.

“Customers have told us that they want to move seamlessly through the airport without having to present travel documents at every stage of their airport experience,” Qantas Head of Product Strategy and Development, Phil Capps said.

“WHAT’S UNIQUE ABOUT THIS TECHNOLOGY IS IT ALLOWS

Customers to securely store their passport details, on their mobile phone which is matched to their face, via cameras while moving through the airport.”.

Source: hcamag/au/news/general/qantas-announces-jobs-cuts-and-two-year-pay- freeze-after-blow-to-international-travel/

• Restructuring

Qantas has grounded up to 100 aircraft for at least three years. This includes their large A380 aircraft, which are used for international travel routes.

Prior to the pandemic, Qantas was undertaking considerable expansion plans (detailed on pg), actively recruiting new pilots, cabin crew and ground staff to operate its multi-billion dollar fleet of new aircraft. Following the COVID-19 pandemic and impact on the company’s bottom-line, senior management have put a freeze on all non-essential recruitment and are instead seeking to sell as many as 12 of its A super-jumbo aircraft.

At the end of 2020, Qantas outsourced its ground handling operations, removing 2,000 in-house baggage handlers, ramp workers and cabin cleaners (these redundancies were a part of the 8,500 redundancies). Senior management estimated the outsourcing would save the business around $100mn annually, and reduce capital expenditure costs by $80mn over the next 5 years.

Note: The Australian Federal Court ruled that Qantas acted unlawfully and was in breach of the Fair Work Act when taking this decision. Handing down his ruling, Federal Court Justice Michael Lee rejected the company’s argument that its decision to outsource resulted from financial pressures stemming from the pandemic. Lee found that Qantas deliberately took advantage of a “vanishing window of opportunity to outsource” before an upcoming enterprise bargaining round, during which workers could have legally carried out industrial action.

Source: wsws/en/articles/2021/08/06/qant-a06.html

As a result of these cost-cutting and restructuring programs, Qantas has not just survived the biggest crisis in aviation history, but become almost unassailable in its home market.

While losses at airlines globally from COVID-19 are set to surpass $174 billion by the end of 2021— wiping out half a decade of profits—Qantas has become one of the most financially secure carriers anywhere in the world. Its stock has surged 120% from a March 2020 low, and its market value has swollen to A$8. Senior management claim net debt has peaked and the company is on track to deliver an underlying profit for the year ending this month. The 100-year-old carrier’s market position, Joyce declared on May 20, “is stronger than it has ever been.”

A former flight scheduler himself, Alan Joyce has been busy orchestrating Qantas’s biggest network expansion in a decade, adding 45 routes during the pandemic. This significant restructuring, including the decision to begin using Dreamliner aircraft on flights between capital cities, is aimed at exploiting increased demand for domestic tourism while Australians are unable to leave the country, and while the government is subsidising domestic travel.

This will see Qantas’ domestic capacity exceed 100% of its pre-COVID levels, It is also the only airline in Australia operating widebody aircraft which offer Business Suites and inflight entertainment for all customers. Domestic revenue, as a result of this restructure, is expected to more than double in the next 2 years.

Source: qantasnewsroom.com/media-releases/qantas-adds-seven-new-routes-and- puts-dreamliner-on-domestic/

Source: fortune/2021/06/26/qantas-australia-airline-covid-success-domestic-travel/

Key principles of the Forcefield Analysis theory (Lewin)

According to Lewin’s theory, there are two types of forces which coexist in business change:

 Driving forces (which push the change to occur); and  Restraining forces (which hinder the change process and stop it from occurring successfully).

By identifying these forces, business managers can assess the situation and develop a plan of action to enable change to occur successfully.

For change to be successful, the weight of driving forces need to exceed the weight of restraining forces. If the weight of restraining forces are greater than or equal to the weight of driving forces, the change will not occur and the business will maintain its ‘status quo’.

By conducting a forcefield analysis, businesses can:

 Weigh up the pros and cons of a change to determine whether it is worthwhile;  Identify driving forces and implement strategies so strengthen them;  Identify restraining forces and plan/ implement strategies to minimise their influence (or eliminate them).

Driving forces for change in business, including managers, employees, competitors, legislation, pursuit of profit, reduction of costs, globalisation, technology, innovation and societal attitudes

Driving forces are those that initiate change in a business and support/ encourage a business to move towards its set objectives.

Driving forces can include:

 Managers  Employees  Competitors  Legislation  Pursuit of profit  Reduction of costs  Globalisation  Technology innovation  Social attitudes

Assess situation and identify the need for change

Consider aspects of the business that could drive change

Consider aspects of the business that could restrict change

Implement strategies to strengrhen DF and neutralise RF to enable change

Driving forces applied to Qantas

####### Driving forces at Qantas

Managers  Senior management are responsible for setting the strategic vision and direction of the business.  Prior to COVID-19, senior management were a driving force for business expansion, announcing plans to roll out an expanded Boeing 787 aircraft fleet by the end of 2020 and establish new long-haul routes (East Coast Australia to London and New York) to differentiate Qantas from rivals.  Management decided to invest in the Qantas Group Pilot Academy to develop its future workforce. Industry figures show that global aviation will need up to 790,000 ore pilots by 2030.  Management implemented the 3-pronged plan to right-size, restructure and re-capitalise to enable Qantas to survive the pandemic and position itself for the future by significantly cutting ongoing costs. Competitors  Increasing competition in the domestic airline industry from rivals such as Rex, and a relaunched Virgin have pressured Qantas to compete more on cost and reduce its CASK (cost per available seat kilometer).  Increasing competition from international rivals – international airlines now account for 25% of Australian ‘traffic’.  REX Airlines expanding from regional routes to service popular capital cities. Legislation  Government regulations implemented in response to COVID-19 to reduce community transmission of the virus meant Qantas had to shut down its international flight services, and for large parts of 2020 significantly reduce its domestic flight services. This acted as a strong catalyst for the decision to stand down its workforce, implement widespread redundancies, and retire many of its aircraft. Pursuit of profit  As with most companies, profit and shareholder returns is a key driver for Qantas management. Every strategic and operational decision made is done so with the pursuit of profit in mind.  Decision to implement 8,500 redundancies and expand domestic tourism routes taken to simultaneously reduce operating expenses and increase revenue. Reduction of costs  Perhaps the strongest driving force underpinning many of Qantas’ swift actions in response to the COVID-19 pandemic.  With company revenue streams completely devastated by strict government regulations on tourism and airline travel domestically and globally, senior management were forced to implement a cost-cutting blitz in order to keep the company alive. Globalisation  Globally, airlines around the world have been devastated by the COVID-19 pandemic, presenting the much leaner Qantas with an opportunity to dominate domestically and plans to expand global airline services considerably into the future. Technological innovation  Rapidly evolving technology – e. Wi-Fi, self-service check-ins, is becoming increasingly available to airlines, compelling them to adopt these technologies or risk falling behind the competition. Social attitudes  Social attitudes in relation to the environment and sustainability have driven Qantas to ‘act responsibly’ - 80% of Qantas Frequent Flyers expect the company to combat environmental issues.

 Rapid pace of change in global airline industry and technological advancements – constant pressure to evolve means the airline cannot take on every opportunity or advancement.  Research and development of new technology and aircraft, and long-haul routes is a long-term strategy for Qantas. The benefits of this research and investment might not be realised for a number of years, if not a decade. This can restrain the business from pushing ahead with these innovations due to constant pressure from shareholders for financial returns. Financial considerations  Increasing fuel costs (up to $4bn annually) make it difficult to cut operational costs and compete with lower-cost competitors.  The cost of replacing ageing planes in its 285 aircraft fleet (average age of 10 years, which is high for the industry compared to competitors such as Singapore Airlines) is very expensive.  The cost of a Dreamliner is $281 million. Qantas had placed an order of four Dreamliners to fly from Melbourne and Sydney to Los Angeles, at a cost of AU$2. This has been postponed.  The upfront costs of right-sizing and restructuring expected to be approx. $2. Employees  Qantas will need to amend its enterprise bargaining agreement with pilots before Project Sunrise can be realised. Pilots may restrain against long-haul flights upwards of 20 hours due to concerns over fatigue, safety and work-life balance.  In response to the 8,500 redundancies implemented in 2020 (in particular 2,000 baggage handler jobs), the Transport Workers’ Union lodged a case with The Federal Court of Australia for breaches of the Fair Work Act. The Federal Court of Australia found the outsourcing of these roles was unlawful and in breach of the Fair Work Act. Legislation  Long-haul flights (i. from Sydney or Melbourne to London) are a key focus for Qantas, however if these routes are to become a reality (the technology is predicted to be ready by 2022), aviation safety regulators will need to adjust current rules and regulations around fatigue management.  Government decisions to close domestic and international borders throughout 2020 and 2021 has severely restrained Qantas’ expansion plans, with revenue down $16bn since the beginning of the pandemic.

The two key approaches, lower cost and differentiation, to strategic management by Porter’s Generic Strategies (1985).

Competitive advantage refers a business acquiring or developing an attribute or combination of attributes that allow it to outperform its competitors in the same market/industry, by providing superior value from its goods and/or services than its rivals based on cost, quality, or speed of delivery.

Lower cost strategy:

For a business using the generic strategy of ‘lower cost’ to develop a competitive advantage, the aim is to become the lowest-cost producer in the market and gain a competitive advantage through the reduction in operating (i. production or delivery) costs.

Costs can be lowered through:

 Achieving economies of scale (e. bulk buying supplies)  Offering high-volume, standardised goods (e. IKEA)  Introducing automation and other technologies  Implementing waste minimisation strategies

 Purchasing lower-cost materials  Globally sourcing materials, or using overseas manufacture  Downsizing

In the lower cost approach, a competitive advantage comes from being able to maximise profits by:

 Being the most efficient producer, where the business can reduce costs and at the same time charge similar prices to competitors; or  Being the most efficient producer, where the business can increase market share through charging lower prices.

Differentiation strategy: For a business using the generic strategy of ‘differentiation’, the aim is to make its goods/services unique to those offered by competitors by developing attributes that consumers finds valuable/appealing.

Differentiation can be achieved through:  Investing in Research & Development, allowing the business to create new, unique, innovative good/service offerings  Being a ‘good corporate citizen’ (i. CSR)  Specialising in a specific area which is expert and unique  Enhancing quality of the good/service (e. quality of output, enhanced customer experience)  Effective marketing (i. branding and advertising).

In the differentiation approach, a competitive advantage comes from maximising profits by:

 Increasing market share by selling a good/service of value to customers and unique in the market; or  Being able to charge a higher price (i. increase profit margins) for goods/services which are unique (i. very difficult to substitute your good/service).

Porter’s Generic Strategies Applied to Qantas

####### Evidence of lower cost

 Targeting estimated $1bn in annual savings from 2023 from right-sizing and restructuring programs.  Replacing older aircraft (Boeing 747) with new, more advanced Boeing 787 which is more fuel efficient – 20% saving in fuel consumption compared to the 747.  Increasing its aircraft utilisation so that its planes are less ‘inactive’.  5,067 reduction in staff in 2014-15 and a further 1500 jobs cut from its Head Office in 2017, and 1000 jobs in 2018 via voluntary redundancy programs.  8,500 redundancies in 2020 and “several hundred more” in 2021 as part of ‘right-sizing’ and restructuring strategy to make the business more lean and efficient into the future.  Introducing ‘next gen check-ins’ to reduce need for staff and ongoing labour costs.  Negotiating better contracts with suppliers.  Assessing and mapping aircraft engineering processes to make them more lean/efficient.  Reduce cost per available seat kilometer (CASK) – was 18% higher than Virgin in 2015 and in 2018 was only 3% higher.  Utilising smaller aircraft which are more flexible – less seats to fill, therefore can add additional

Link to Key Knowledge in Unit 4: Area of Study 2 - Implementing Change

The importance of leadership in change management

Leadership is a management skill which involves guiding and motivating people towards a common, unified vision or objective for the future.

Effective leadership is especially important during a period of change. This is because employees – one of the biggest restraining forces – have both rational and irrational fears of change, and depend on the support and guidance of a leader to see them through any change process.

So, what makes an effective leader?

Source: online.hbs/blog/post/characteristics-of-an-effective-leader

####### Qualities of an

####### Effective Leader

####### Ability to

####### influence

####### others to gain

####### support

####### Builds trust

####### and

####### demonstrates

####### empathy

####### Encourages

####### risk-taking and

####### innovation

####### Acts decisively

####### strategically

####### Communicates

####### openly,

####### honestly and

####### regularly

####### Visionary -

####### sees

####### opportunities/

####### challenges

Activity 1: Importance of Leadership During Change

In the table below, provide a description of each of the qualities of an effective leader from the diagram on the previous page. For each, justify its importance to supporting a successful change process and apply to Qantas. The first one is done for you as an example. You might like to visit the following website for more information:

online.hbs/blog/post/characteristics-of-an-effective-leader

Quality of an Effective Leader Importance During Change Application to Qantas

Ability to influence others to gain support

Effective leaders positively influence others to support a change process. Effective leaders articulate the direction the business should head in and build trust in the process.

 Employees may fear the ‘unknown’ of change. Leaders who can positively influence others to support a change can help to promote employees as a driving force.  Articulating the direction the business is heading in helps employees see where the business is heading, and why. This helps reduce restraint.

 CE0 Alan Joyce took the decision to ‘lead the way’ on safety leadership by making it mandatory for its 22, staff to be fully vaccinated against COVID-19.  This decision is widely supported by the government, and has influenced other business leaders to do the same

Builds trust and demonstrates empathy

Encourages risk-taking and innovation

Acts decisively and strategically

Commun- icates openly, honestly, regularly

Visionary – sees opportunities and challenges

Activity 2: Management Strategies to Respond to KPIs

In the table below, provide a description of each management strategy to respond to key performance indicators and identify areas of business performance that can be supported through its use. The first one is done for you as an example.

Management Strategy Impact on Business Performance

Staff Training

Training is a human resource management strategy which involves investing in on-the- job (e. coaching and mentoring) or off-the-job (e. seminars or courses) programs which advance the knowledge, skills and abilities of employees. This enable them to carry out current or future job tasks more efficiently and effectively, and improves job performance.

Training can support improvements in:  Number of customer complaints – e. customer relations training.  Rate of productivity growth – e. competency-based training improves employee skills - can perform job more efficiently.  Rate of staff turnover – e. investing in of staff development, may feel valued - less likely to leave.  Level of wastage  Number of workplace accidents – e. by teaching staff skills in completing job more efficiently and safely (i. OH&S) can reduce wastage and work-related accidents.

Staff Motivation

Change in Management Style or Management Skills

Increased Investment in Technology

Improving Quality in Production

Cost cutting

Initiating Lean Production Techniques

Redeployment of Resources (Natural, Labour, Capital)

• Multiple Choice

Subject : Business Management

• Discover more from: Business Management VCE (Victorian Certificate Of Education) Grade: 12 558   Documents Go to course
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Qantas 2022: A Business Case Study Book

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'Qantas 2022: A Business Case Study Book' - your ultimate Business Studies resource!

Are you in search of an engaging and educationally rewarding resource to enhance your Business Studies curriculum? Look no further than 'Qantas 2022: A Business Case Study Book '. This exceptional case study is meticulously designed to align perfectly with the NSW Syllabus, making it an ideal choice for both teachers and students.

Why 'Qantas 2022: A Business Case Study Book ' ?

Syllabus Excellence: When it comes to matching the NSW Syllabus seamlessly, no other Australian business case study can compare to Qantas. It thoroughly covers all the essential aspects mandated by the syllabus, ensuring your students receive the most relevant and up-to-date information.

Student Appeal: Qantas is a well-known and iconic brand among students, making it highly relatable. This familiarity can significantly enhance their engagement and comprehension of the case study, leading to a more effective and enjoyable learning experience.

Integrated Learning: The 'Qantas 2022: A Business Case Study Book ' adopts an integrated 'across topic' approach. It applies a wide range of business concepts and methodologies to a real-world business with both domestic and international operations. This comprehensive approach not only enriches students' understanding but also equips them to apply theoretical knowledge to practical business scenarios.

Enhance Your Business Studies Program with 'Qantas 2022: A Business Case Study Book '

Introduce your students to a case study that not only aligns perfectly with the NSW Syllabus but also captures their interest and imagination. 'Qantas 2022: A Business Case Study Book '  offers a wholistic view of business operations, making it an invaluable resource for teachers and students alike.

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FOR HSC BUSINESS STUDIES STUDENTS & TEACHERS

Qantas business case study by david broadbridge 2025, look who loves us.

I really liked the way the Qantas case study followed the syllabus. It was very comprehensive and enabled me to handle any combination of question the examiners may have asked. It certainly gave me a competitive advantage.

David recently ran a workshop for our Year 12 Business Studies class on the Qantas Case Study. This was a very valuable experience for our students as David has an extensive knowledge of Qantas, which coupled with his in-depth knowledge of the HSC syllabus, proved very useful. The workshop was extremely interactive and David is adept at engaging students through different questioning strategies. David also provided some very helpful tips on the best way to approach questions in the HSC. I would highly recommend this workshop to other schools.