Qantas Groups’ performance over the 2007 to 2011 period has been relatively poor mainly as a result of the global financial crisis adversely affecting the firm’s international operations. Strategically, Qantas is likely to continue to dominate the domestic airline industry with the success of Jetstar prompting expansion into the Asia Pacific region. The most significant threats facing Qantas include high fuel prices, the value of the Australian dollar and industrial action. A comprehensive financial analysis reveals that compared to other airlines, Qantas is showing strong signs of recovery despite there being inherent weaknesses in its liquidity. A review of the firm’s annual report revealed the presence of various…show more content… The airports in major cities around the world are also operated on a monopoly basis and therefore are able to charge airlines high fees. The above examples have showed that the bargaining power of supplies for the airline industry is considerably large and often play an important role in the operations and level of profitability amongst the airlines.
Rivalry among the Existing Players: The level of competition between the airlines is very high. One reason for this is the increase in popularity of low-cost airlines, who employ innovative business models to differentiate themselves and drive the profitability of their businesses. Another reason is attributable to the nature of operation of the airlines – the marginal cost of having extra passengers on a scheduled flight is close to zero, which implies that airlines are capable of varying the price of air tickets from time to time, or even engaging in price wars with their rivals. For instance, the recently banned operation of Tiger Airways has created opportunity for two other major domestic airlines in Australia, Jetstar and Virgin Blue, to increase prices in order to take advantage of the less competitive environment and to increase their market shares.
Overview of Qantas Airways Ltd
Qantas Airways Limited is the world second oldest airline founded in 1920 which derives its revenue from the operation of airlines and related activities. The