Porters 5 Forces and the Domestic Aviaition Industry in Australia

Maintain Qantas frequent flyer as a driver of loyalty across group and as a leading loyalty program.

The airlines do not focus on the combination of quality and good service at a fair price; its focus is instead only on providing ultra low cost. It also charges customers for value added features and services. Thus the pricing is value added pricing. When compared to the competitors of Spirit for operating costs per seat mile; it is lower compared to other major airlines. The important points like encouragement to demand stimulation and preference for its low-cost model makes it successful for its low-cost pricing strategy.

1) Qantas Airways Limited is the national airline of Australia, it is also the largest airline in Australia. The Qantas Group’s principal business is providing domestic and international air transport services for passengers. Additionally, Qantas owns several subsidiary companies such as Jetstar and QantasLink that also operates flights to domestic and international locations, and Q Catering, a premium full service flight caterer.

Already JetStar, Tiger, Air Asia, Virgin Blue, for example, are low-cost airlines and are established in the Australian domestic market. This creates the need to differentiate to survive.

At the moment Australian passenger airline industry is dominated by thee large domestic carriers: Quantas, Jetstar and Virgin Blue.

Virgin Australia is a rival airline to Qantas. Virgin Australia started in the aviation industry in the year 2000. The current position of the airline is better than the previous financial year of 2014. This report will focus on current financial results and position, the capacity, network and pricing, current equity structure and future direction.

Virgin Australia which was formerly called Virgin Blue is the Australia’s second largest airline. The airline was started in 2000 by British business tycoon Sir Richard Branson and former Virgin Blue CEO Brett Godfrey. The airlines started as low-cost carrier, but went on to become a “new-world carrier” (Virgin Blue media release, 2011). This low cost airline went on to become a full-service airline by 2012 with the name of Virgin Australia. Since the year 2000 the airlines grew rapidly and posed threat to Qantas airline and over the years Virgin Blue looking at the marketing trends and characteristics of the aviation industry grew into a Full Service Airline and is considered a four star airline by research consultancy firm Skytrax.

Virgin Blue Airlines Group, incorporating all four airlines, employs just 5952 people who make up our team. We believe, above all, it’s our people who set us apart among airlines. Quite simply it’s their commitment, imagination and pride that makes our business fly. The team across all four of our airlines, both on the ground and in the sky, is motivated to go the extra mile to make flying memorable for all the right reasons. Indeed outstanding service is part of our DNA. Our team’s passion and belief in offering service translates directly to our Guest’s enjoyment of

• Dependability o Although Qantas has outperformed its rivals, over the past few years, Qantas’s reliability has dropped due to mechanical failures, industrial disputes and the 2011 shutdown. o “Qantas is in a period of transformation as we make our business stronger and better” • Flexibility o Due to seasonal demands such as holidays and special events, Qantas’s performance objectives must remain flexible in order to adjust to major increases or decreases in customer demand. • Customisation o Qantas offers customisation through its membership in the Oneworld Alliance and the alternative option of Jetstar. Qantas offers economy and business class on domestic flights and economy, premium economy, business and first class on international flights.

The purpose of this report was to provide a strategic evaluation of the company Virgin Australia. The report begins by conducting a strategic analysis of Virgin, including an analysis of the external environment and an internal analysis of competitive strengths and weaknesses. The report then identifies the strategic direction and objectives of Virgin Australia, including the vision, mission, strategic objectives and stakeholders of the company. The report moves on to explore strategic choices of Virgin Australia by identifying the key broad business level and

The first part of this report provides a broad introduction into the business of Virgin Australian by examining its principal sources of revenue, its nature of operating, its competitors, the market share and the regulations affecting its operations. From this, it can be seen that Virgin Australia operates in a very competitive environment and generates revenue by the core business of passenger and cargo transport.

When analyzing the internal analysis for Qantas Airlines in Australia we come to know that profit margins here are also very tight. 0.5% growth is expected in the upcoming years. It is predicted that by 2017 the total revenues will reach to 14.9 billion Australian Dollars. The steep margins are due to increased competition. Qantas airlines hold 65% of the total market share which is high as compared to other countries. Nevertheless every other competitor is using world class crew, services, uniform, and food to attract more customers. Even though there is high competition, Qantas has competitive edge by having a strong brand, better slots at airports and well trained staff. (Bloomberg, 2011) Virgin Australia and Tiger Airlines are the two major competitors in Australia which are competing Qantas. Qantas has launched Jetstar as its sub brand to compete the low cost airlines. Competitors also have well trained staff and nice quality planes and profession crew. Virgin Airlines has an

According to  (1980), firms are under great pressure to have modern plans to be competitive and should have adequate capability to achieve their target market share. Virgin Atlantic Airways is among the most successful business ventures of the Virgin empire owned by Richard Branson. Its strategic development is rooted on the need to surpass competitors while balancing financial resources, increased revenue and maximum productivity. As stated, Virgin Atlantic Airways is a cut-price airline that based its success in serving the lucrative traveler segment of the North Atlantic market by providing outstanding and novel customer

Virgin Australia is Australia’s second largest domestic airline, commenced in operations back in 2000 as a low-cost carrier (LCC) and has successfully survived in the market. Major shareholders include Air New Zealand, Singapore Airline and Etihad Airways. The airline rebranded in 2011 as a part of their 5-year turnaround

The threat of new entrants in the airline industry is very low for Virgin Atlantic, this is because the barrier for both high entry and exit barrier is very high. These barriers can stop new airlines not to enter into the industry. The entry and exit can be difficult for Virgin because there are a number of regulatory factors. For new airlines to enter, there must be large capital investment human resources that are skilled