Essay on Hing Yeung Wong 3249438 ACCT5910 Project

In recent years, the Australian Domestic market has been predominantly a duopoly style market with Qantas Group and Virgin Australia being the main competitors contributing to market share. Virgin Australia entered late after deregulation and offered the first real competition to

Customer service is a valuable influence on quality. Qantas delivers the expectations of customers by representing civil and accommodating staff members. Qantas has implemented a series of operational strategies to enhance the speed of their service. These vary from booking flights online, online check in, check in kiosks and Q Bag Tags. Dependability at Qantas is based on the consistency of on-time departures and arrivals. Flexibility is relevant to Qantas’ responses to the changes in market demand. Flexibility is demonstrated through Jetstar’s variable fare. Qantas offers customisation through its participation in the Oneworld Alliance, where it can provide its services to over 680 destinations in 134 countries. Qantas has worked on developing less costly and more efficient opportunities for its consumers by launching new discount airlines: Jetstar and Jetstar

Qantas’ financial performance has been very successful in recent years with the business recovering strongly from GFC and a large decrease in revenue to ear 377 million in 2010. The effective financial performance has been the result of effective profitability, liquidity, efficiency, return on capital, good solvency and growth including the establishment of a new airline (jet star).

Qantas capitalized on by increasing its domestic share of the market from 55% to approximately 80%. Qantas management had effectively filled the gap left by Ansett by moving planes from the depressed international routes to the company’s expanded domestic market and by leasing planes from overseas to expand its aircraft fleet by

Qantas’ main weaknesses come from the high risk nature of airlines (possibility of crashes and large scale incidents), the complexity of the aircraft they buy which could lead to costs of re-training pilots to fly that particular aircraft and may lead to higher labour and the recent string of incidents have undoubtedly hindered Qantas’ image. One of the most recent incidents occurred while a reasonably new Qantas A380 was flying from Singapore to Sydney when it experienced engine and hydraulic problems forcing it to hastily turn back and make an emergency landing in Singapore. This

Qantas has three major problems. 1.) Fuel efficiency, 2.) Lack of communication between employers and employees, 3.) Competition in the corporate customer market (Ferguson

These main business objectives help the airline to focus on deliver quality services of the customers. Qantas main business is passengers transports and it is the world’s second oldest airlines. Qantas group operates approx 5600 flights in a weak in 59 cities of regional areas. Internationally, the group operates around 970 flights (Qantas-630 and Jetstar-340) in 44 counties 182 destinations. Moreover, through operations the group focused on five key elements that are right aircraft or right

Therefore, Qantas are able to utilise the extra funds and ensure their business to achieve success in their financial objectives. This present that Qantas holds an enormous advantage, one that can be use to overcome the fact Qantas are at a considerable unit labour cost

Qantas Airways Limited is in the airline and aviation industry—both domestic (Australian) and international. Its main business is the transportation of passengers using two complementary airline brands—Qantas and Jetstar (Qantas 2011a)

When they didn’t, the airline retaliated by offering deep cuts in fares on several routes flown by its competitors. Northwest airline responded with a $198 round-trip fares with connections on routes for which American airline’s average fare was $1,600. American’s response was to offer $99 one way fairs in 10 markets flown by each of the other competitors except that of Continental Airlines which had followed and matched the leader’s (American Airline) original changes in all markets. With respect to the concept of strategic behavior exhibited by firms in an oligopolistic setting, some firms may try to achieve a dominant strategy that yields them better results and do not flip-flop, no matter what strategies other industry participant follow. This was illustrated in the case, when, in 2004, Continental Airlines raised its fares to mitigate rising cost of aviation fuel. Firms in an oligopoly may differ in terms of their cost structure and the airline industry is no exception and participants do exhibit strategies that enable them not to follow price increases driven by aviation fuel cost.

A drop in fares has been the best result of the Airline Deregulation Act of 1978. It has been the impetus for the increase in the number of flights, which in turn has spurred a drive for greater safety in airlines. But with the current airline market, this development has given us one negative. Since ticket prices have dropped to new lows, the realities of an industry which operates on such economies of scale dictates that only a few competitors have the capacity to operate within the market. This is not the desired effect of either political side on this issue, but it is an economic necessity with the environment that has been created, very similar to that of public utilities and phone companies.

The airline industry has always been a fiercely competitive sector. Since the invention of low-cost carriers, also known as no-frills or

Furthermore, the contestability of the airline market is also determined by the extent to which incumbent firms benefit from the natural cost advantages of Economies of Scale. Established firms within the market can operate at/beyond the Minimum Efficient Scale (Besanko et al) thus giving them a substantial cost advantage over small entrants. These incumbents benefit from their reputable status within the

Considering, the above conditions, the need to analyse the concept of ‘Predatory Pricing’ being played by the two competing airlines as a strategy to deter or even drive away Schnell Air from the market is essential. ‘Predatory Pricing’ is a key strategy that can be employed by an incumbent firm either to protect or to extend its market share against competitive attacks by smaller scale competitors and potential entrants or is used to drive out smaller rivals. These strategies have in common the intention of reducing the expected level of profits that actual and potential rivals can expect to earn in the present and future. After rivals exit, the predator firm presumably will raise prices to levels consistent with its market power. The predatory firm loses substantially more than its rival does; the incumbent must accommodate all demand, while its rival is free

The air service is used to be a luxury choice however, the air service had become a necessity now. Thus, the demand for air travel service have become relatively inelastic. In Southeast Asia, the aviation players carry on to post several of the highest growth rates in global aviation industry which is mainly driven by expansion in the Southeast Asia low-cost sector (CAPA, 2013). This shows that the market have high demand in air service. Hence, this forms an oligopoly market as a few of major airlines compete to have bigger share of market.