Table of Contents 1
Qantas Airways vs. Virgin Australia 2
Appendix 1 8
Appendix 2 12
Appendix 3 14
Appendix 4 18
This report aims to identify two major airlines in Australia as well as discussing the business strategies that these airlines use in order to gain competitive advantages within the Australian aviation industry. The business strategies are highlighted by using a selection of theoretical models and tools including the PESTLEDI, Porter’s Five Forces, Resource Based Views (RBV) and finally a SWOT/TOWS analysis of the two airlines. The first airline is of course the Australian owned Qantas Airlines operating in Australia since 1920 making it the third oldest airline in the world. Also known as the flying kangaroo, Qantas is still currently the largest operating airline within Australia (World Civil Aviation Resource Net 2014). However, in recent years, Qantas who were the monopolists in the Australian aviation industry has been faced with strong rivalry from Virgin Australia. Starting their operations within Australia in 2000, Virgin Australia quickly found itself to be the second largest airline in Australia soon after the downfall of Ansett Australia in 2001. Virgin Australia however, began as a low cost carrier within Australia before changing its business model in 2011 to a guest oriented carrier in order to compete with Qantas more effectively (Virgin Australia 2014). Since then, the two airlines have been in fierce competition to become the number one operators of premium carriers within Australia. The essential purpose of this report is therefore to discuss the key findings from the models and tools used to analysis the business strategies between these two airlines including the significant factors affecting the these companies, concluding the discussion with which company will be more successful in the future and future recommendations.
Qantas Airways vs. Virgin Australia
There are many external factors or forces that can significantly impact any business industries both nationally and internationally. Therefore it is important for companies to conduct a thorough analysis of the forces that can affect their overall sustainability and profitability within their industries. Appendix 1 defines the PESTLEDI and uses it as a tool to analyse the different forces that affects the aviation industry within Australia. Through this analysis in Appendix 1, it can be perceived that within Australia, there are more opportunities for Qantas and Virgin Australia than there are threats of external forces for these two competing airlines. Some of the opportunities available include the stable governance in Australia with Free Trade Agreements (FTAs) and a strong economy that will encourage both business and leisure travellers as well as the international force of a growing Chinese market of travellers who are willing to spend (Department of Foreign Affairs and Trade 2014). To further investigate the external influences more specifically on the aviation industry within Australia, the theory of Porter’s Five Forces was used. Defined in Appendix 2, this theory was able to identify a single major threat to be the rivalry within the aviation industry itself. There is intense rivalry between existing airlines within this industry. This force has a high threat rate for airlines with the fact that the physical products they offer are the same e.g. aircraft and therefore need to differentiate their brand through other amenities such as the service quality they aim to provide. The power that existing firms have is therefore quite high and with the pre-existing intense rivalry in the industry, these firms are always prepared to knock out any new threats to entry in attempts to try prevent and increase in the tension of rivalry in the aviation industry (Zhang & Zhang 2006).
Though the external factors are similar and affect the two