Quantas Airlines Case Study Analysis

INTRODUCTION

Qantas Airlines faces many of the same profit-eroding issues, as does much of the airline industry. It also faces some serious issues with the TWA labor union that could have catastrophic results for the future of the company. Despite these conditions, Qantas has announced a strategic, and expensive, multi-focused initiative aimed to stabilize the company's financial health, rebuild their reputation and grow the company on global scale. Major issues of these initiatives will be introduced and discussed in this report.

QANTAS AIRLINES

Founded by former Australian flying corporal officers, W. Hudson Fysh and Paul McGinnes in Winton, Australia in 1920, Qantas Airlines is the world's second oldest airlines, and one of the largest airlines in the Asia-Pacific region. Flying to domestic and international destinations under two brands, Qantas, the full-service carrier targeting business travelers and premium economy passengers; and Jet Star, a low-cost carrier servicing low-yielding routes, Qantas has developed a successful product mix that satisfy customers' demand for high-end accommodations and low-cost fares for the more price-sensitive customers. Qantas Group reported annual revenues over $13.7 billion in 2010, $14.5 billion in 2009 and $15.6 billion in 2008. (Qantas 2008, 2009 and 2010 Annual Reports)

CHALLENGES FACING THE AIRLINE INDUSTRY

Qantas faces many of the same key issues in the airline industry as does its competitors, which includes volatility in fuel prices and foreign exchange rates, decreased demand for travel (in the business sector especially) and record job loss, resulting from the global financial crisis of 2008. Other challenges faced by the industry are increasing environmental pressure and initiatives to reduce energy and fuel consumption and reduce carbon pollution.

Also, new Governmental regulations in response to the terrorist attacks of September 11 made travel more inconvenient for passengers. And business travelers soon had a slew of new substitute products that eroded profits thanks to technological advances in videoconferencing. (Ivey Case Study # 9B11M068: Qantas: Which Route out of the Turbulence, Published by the Richard Ivey School of Business at The University of Western Ontario, October 5, 2011)

CHALLENGES FACING QANTAS

In addition to the challenges facing the industry, Qantas faced an increasingly contentious battle with its labor unions. Other events that eroded the company's profits included a series of natural disasters and major weather events; engine failures, equipment problems and safety-related flight disruptions; as well as increasing competition in the emerging Asia-Pacific travel market.

In response to the considerable