Qantas Airlines: Management Analysis

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A general and task environmental analysis on Qantas

Political environment

To compound an already turbulent industry where volatility is ever-present through government deregulation and the difficulty of driving profits year in year out, 2001 witnessed terrorist attacks in the United States, the Iraq war in 2003, and SARS crises led to significant downturns at the Australian airline industry resulting in further change.

Economical environment

• Qantas had to build on the low-cost operating model it inherited in May 2001’s acquisition of Impulse Airlines.
• By retaining Impulse airlines, which has evolved into Jetstar, as a stand-alone unit, Qantas has been able to derive cost savings from utilizing Impulse’s low operating cost, all-economy class, and streamlined staffing/labor practice.
• The change in policy has enabled Qantas to implement some of its strategic learning’s from this low-cost model develop by Jetstar.

Social environment

• Qantas faces corporate social responsibility pressures to reduce noise pollution and other emissions even further as global warming and climate change are now very much a social and corporate issue.
• Preservation of the environment is paramount and the government may further introduce regulations that may require Qantas to refine its noise pollution and current emissions from fuel consumption.
• There will be cost involved in any policy change to comply with corporate social responsibility obligations.
• The Qantas Group has been branded under two major labels – Qantas and Jetstar, which domestically operate over 5,000 flights a week serving 62 city and regional destinations in all states and mainland routes. While internationally operating nearly 700 flights a week, offering services to 80 international destinations (including codeshare services) in nearly 40 countries.
• Despite recent turmoil in the aviation industry Qantas has remained surprisingly profitable and was recognized as ‘Airline of the Year 2004’ by Air Transport World magazine.
• Recently celebrating its 85-year anniversary Qantas has maintained its reputation for providing a premium aviation service that has grown to cater to all aspects of the market. Prior to Ansett’s liquidation, Qantas encompassed approximately 55 percent market share, however, it now has approximately 70 percent of the travel market on the domestic trunk route network

Technological environment

• Responding to the ever-changing Australian airline industry, Qantas implemented developmental policies in a proactive manner. The sudden upsurges in demand required rescheduling more flights and using smaller aircraft to cater for the increased demand at lower costs (Kain & Webb, 2003).
• When international terrorism impacted the global airline industry, Qantas diverted its international fleet to domestic routes to further capitalize on the domestic upsurge in demand.
• A key factor that further has galvanized the oligopoly in Australia is the small number of routes. While the United States is characterized by a population and geographic diversity that allows an entrant to capitalize on literally thousands of routes, Australia has only eight capital cities with a handful of other smaller centers. (Forsyth, 2003).
• To meet such competition in such a turbulent industry Qantas had to build on the low-cost operating model it inherited in May 2001’s acquisition of Impulse Airlines. By retaining Impulse airlines, which has evolved into Jetstar, as a stand-alone unit, Qantas has been able to derive cost savings from utilizing Impulse’s low operating cost, all-economy class, and streamlined staffing/labor practice.
• The policy change has enabled Qantas to implement some of its strategic learning’s from this low-cost model develop by Jetstar.

Problems significant to Qantas and their causes, and management

Competition

With the entry of Virgin Blue into the Australian domestic market, Qantas has had to respond to the growing popularity of discount air travel. Qantas had to competitively challenge Virgin Blue’s ‘low-far’ end of the market. This was in order to reduce the competition so as maximize client competition with the other competitors. In this highly competitive environment Qantas has to pursue policies and practices for organizational change and development to reposition itself as evidenced by the creation of their ‘low cost’ equivalent – Jetstar. this in return will foster more customers to use their varied.services and the low cost will attract more customers.

Since the deregulation, Qantas faced additional competition from regional carriers, especially Air New Zealand. Through the government reducing the entry barrier from a legislative point of view, it enabled smaller airline carriers to gain market share from major players like Qantas. To meet such competition in such a turbulent industry Qantas had to build on the low-cost operating model it inherited in May 2001’s acquisition of Impulse Airlines (Forsyth, 2003).

By retaining Impulse airlines, which has evolved into Jetstar, as a stand-alone unit, Qantas has been able to derive cost savings from utilizing Impulse’s low operating cost, all-economy class, and streamlined staffing/labor practice. The change in policy has enabled Qantas to implement some of its strategic learning’s from this low-cost model develop by Jetstar. As part of their strategy since 2004, the flying businesses of the Qantas Group have been branded fewer than two major labels – Qantas and Jetstar, which domestically operate over 5,000 flights a week serving 62 city and regional destinations in all states and mainland routes.

While internationally operating nearly 700 flights a week, offering services to 80 international destinations (including codeshare services) in nearly 40 countries. Despite recent turmoil in the aviation industry Qantas has remained surprisingly profitable and was recognized as ‘Airline of the Year 2004’ by Air Transport World magazine (atwonline.com). Recently celebrating its 85-year anniversary Qantas has maintained its reputation for providing a premium aviation service that has grown to cater to all aspects of the market. Before Ansett’s liquidation, Qantas encompassed approximately 55 percent market share, however, it now has approximately 70 percent of the travel market on the domestic trunk route network.

Politics

The Australian Government deregulated the domestic airline industry in 1990 with a stage termination of the two-airline agreement. The primary driving force for the deregulation initiative was to promote increased competition and pricing flexibility, aimed to lead to greater efficiency in the industry and benefits to the customer (Australia, House of Representatives, 1990, pp.650). Since the deregulation, Qantas faced additional competition from regional carriers, especially Air New Zealand. Through the government reducing the entry barrier from a legislative point of view, it enabled smaller airline carriers to gain market share from major players like Qantas.

The deregulation shifted the airline industry from guaranteeing exactly two airlines, with parallel schedules, identical planes, prices to major domestic routes to almost complete freedom of entry to the market, subject only to safety restrictions (Quiggin, 1995). The Prices Surveillance Authority (PSA) estimates that the real cost of air travel declined by 24 percent (PSA, 1994). However, further strategic analysis is required when investigating how deregulation impacted the competitive dynamics of the Australian airline industry.

A major problem identified with airline deregulation is the structure of the industry has not been modified as the government anticipated. Under the deregulation, two airlines still serve the same domestic routes without any divergence in the pricing, market share, and greater efficiency in scheduling.

Despite government deregulation attempting to lower the entry point for competitors into an industry, the entry barrier remains high as the market is mature and dominated by an oligopoly such as Qantas and Ansett in pre-2001 and Qantas and Virgin Blue in post-2001 periods.

Responding to the ever-changing Australian airline industry, Qantas implemented developmental policies in a proactive manner. The sudden upsurges in demand required rescheduling more flights and using smaller aircraft to cater for the increased demand at lower costs (Kain & Webb, 2003). When international terrorism impacted the global airline industry, Qantas diverted its international fleet to domestic routes to further capitalize on the domestic upsurge in demand. A key factor that further has galvanized the oligopoly in Australia is the small number of routes. While the United States is characterized by a population and geographic diversity that allows an entrant to capitalize on literally thousands of routes, Australia has only eight capital cities with a handful of other smaller centers.

Economic setup

Qantas adopted a market segmentation strategy. Qantas executed this broad differentiation strategy, which included “pincer-movement” tactics. Qantas’ strategic platforms have three principles. Establishment of a low-cost carrier, Jetstar, to compete with Virgin Blue, Growth in the leisure markets, through expanding Qantas Travel agent and inclusive holiday packaging with airfares and Maintenance of its quality as a full-service airline carrier.

Qantas used a market segmentation strategy, using two brands to target different markets, aimed to bridge the gap at the low-end of the domestic market, (a concept that occurred in the UK with British Airways and its low-cost carrier.

Qantas Airlines have been effective in using its core competencies to provide premium customer service across a variety of platforms to numerous customer types. Due to specialization, Qantas has the reputation to provide quality service to its customer. Additionally, their efforts on internal marketing within the organization were aimed at providing optimum levels of satisfaction to customers. The combined efforts acted as a key enabler to providing all streams of customers with a greater travel experience.

Explosion in quanta

The recent explosion of an oxygen cylinder that resulted in a gaping hole in a Qantas jet’s fuselage mid-flight might result in the management being focused upon. The accountability of the personnel responsible for ensuring that all the safety or the passengers in the plane will be at stake.this is an aspect that might be taken into serious account such that the person responsible might end up losing the job where it is most probable that the manager of that section.

This will impact quanta in two different perspectives that entail positive and negative aspects. Focusing on the positive aspect, the safety of the client and passengers will be the key issue and therefore new management will focus on ensuring that this is adhered to. On the other hand, the negative impact on this might result in a lack of understanding by the new management to the originally placed staff since they had a strong relationship with their previous manager. This in turn will impact the provision of the services that might end up to the staff downing their tools.

Secondly, this might not be a justifiable reason to relegate the manager of this issue since this was an unexplained error therefore by this act ethics will be violated. In the strategic management of quanta, they will have to focus on attracting more customers since by this time the fear of the safety of the same company brand might grip the users of the plane.

This will have to incorporate immense campaigns and the promotion of the company so as to retrieve its lost image after this incident occurred. The management has to focus on the improvement of the service delivery and therefore reshuffling of the cabin members has to be put on focus. In this case the more effective service providers will have an outstanding impact in ensuring that the safety of the passengers is adhered to.

The ability to perceive, interpret, and respond appropriately to the organisational environment is crucial for managerial success.”

Training organisational environment is an efficient method for altering an employee’s behaviour to prepare the employee for a job or upgrade the employee’s performance on the job. Development involves the preparation of a person for broader responsibilities and higher-level positions within the company. There exist variation of training of the recruits from firm to firm, as well as by type or size of service organization.The entails a significant aspect played by the management in the varied changes from one organization to the next.

Effecting organisational environment through employee motivation

The all inclusive interviews in evaluation of candidates are clearly essential to good recruitment. In a greater extent, the former entails: teaching the recruits on how to draw out the interviewee and the latter how to rate the candidates. For consistency (and as a help to checking that) rating often consists of scoring candidates for experience, knowledge, physical/mental capabilities, intellectual levels, motivation, prospective potential, leadership abilities etc. (according to the needs of the post). The judgments are always affected by the submission of the usual curve of distribution to scoring.

Utilizing involves arranging the employees work to make them both productive and motivated. The factors that determine the effectiveness of human resource utilization include: The structure of the work that provide an opportunity for “stretch” performance. Participation in decisions that have a direct effect on the person’s job, Open communications and equitable scheduling of assignments, Competent supervision and organizational flexibility, economic and non-economic rewards that recognize achievement and equity, Opportunity for growth and a culture that encourages caring for both customer and worker needs.

At small employee service firm’s employees may be encouraged to take initiative and be given a variety of tasks and responsibilities. The “shop” operates like a family, with workers participating in decisions and communicating freely with a manager who provides experienced support.

Non-economic rewards, such as flexibility in working hours, time off when needed, and an atmosphere of general caring about other people, are important. In the large service firms, the work may be organized so that small teams share responsibility for key tasks. Here, economic rewards and opportunity for growth are likely to be greater than in the small service firm.

The human resource manager is involved in gratifying since it helps them keep their employees, in turn keeping a small turnover and also making employees feel important and needed at the company. The management is able to develop a public image of the company such that employees have pride in carrying out the firms obligations, provide flextime working conditions so that people may fit their work to their personal needs and lifestyle, including working at their jobs, reward employees for participating in suggestions that can make their work more productive.

Responding to the political environment

The management also has to structure jobs so that employees have control over their work and responsibilities that challenge them, provide first-class facilities, such as private offices, lounges, cafeterias, and the like, reduce the cost of employment for the worker, compensate bye salary or commission and design the service so that the customer does more of the work. In a situation where there is policies amended by the government that are able to frustrate the management position, the organisation should try and react by offering employee discounts and even possible employee family discounts.

Though not being done by a human resource manager, they are kind of part of their job, because they need to make sure that the supervisors do one for each of their employees and then gets the finished form turned into them. The finished copy goes into the employee’s file as part of their portfolio. In the designing of a new dimension an apparent picture of the current appraisal is definitely required

Effecting technological changes

With the view of the technological responses, analysis in this case involves assessing the background factors current appraisal follow ups and satisfaction with them, work mean, and the goal-setting and prize organization practices that are being observed from the other competitors so as to come up with new and improved performances. The crucial purpose of an this system is to help the management accomplish better performance and attain substantial returns Managers and employees can have additional views of how this process ought to be used(Fleetwood, 2006).

The Potential purposes are capable of including the serving as a foundation for repayment, occupation planning and recital improvement or giving a performance feedback.The suitable building block of an this system can be established after all the laid down procedures are clearly followed and should be able to have options about who will be performing the appraisal, who will be involved in formative routine, how they performance is to be considered, and the frequency at which then various reaction will given. The criterion for manipulating an efficient recital system therefore include; appropriateness, exactness, recognition, indulgent, focal point on serious control points, and the economic probability

Social interpretation

Meditation to the mind of the environment around is normal in majority of organizations as ways of maintenance of high-quality staff and attracting others. This welfare can take many and varies, from loans to the deprived to counselling in value of the need of individual problem solving approach. The participation of the organisation in the community up bringing will facilitate the improvement the delivery of service and also learn of what the community perceives the company.

The human resource management has to consider motivation to employees which basically comes about when an employee has had an interesting job or project that really attracts and has control over what is to be performed and how the patterns are without worries of a fanatical boss interference or absence of the job security. The management ought to employ self-sufficiency which involves having the chance to take control over a complete project of work in which an employee is really interested.

Technology advancement

In order to counter the economic changes that night be perceived by the company strategy inflation mechanisms has to be set up with specialised and qualified personnel’s who are able to track the changes immediately. This wills greatly contribute to the management and prevent the occurrences of poor and expensive services that might result to the clients shifting to a less costly brand.

In order to finish the ineffective communication between the management and the employee, the following has to be employed. Communication will be achieved through honesty throughout interviews (Fleetwood, 2006).

When managers are serious about recital reviews the employee is highly motivated knowing that some aspects of him or her are considered employers should also engage in more career mapping and create a discussion to build up a greater force of involvement. The organization should encourage modernism and creativity amongst staff to boost each member’s morale to those who are willing to exploit the various fields at hand. The companies staff should feel a sense of personal responsibility for their work and be able to emphasis their works quality in all the specialized fields in the unit.

The organization structure should be able to encourage effective performance to instil faith to the employees. It should also be supple in the face of more and more varying hi-tech strain. The structure of the organization should not be considered complex so as to motivate the employees and in case so the areas should be addressed.

References

Fleetwood, S. (2006). Competent management- recitals research: underprovided instructive Power, International Journal of Human Resources Management, 17(12): 1979-1995.

Forsyth, P. (2003). ‘Low-cost carriers in Australia: experiences and impacts’, Journal of Air Transport Management, 9, 277-284.

Kain, J & Webb, R. (2003) Turbulent Times: Australian Airline Industry Issues.

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