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    The Australian Domestic Airline Industry Is Known For Being Highly Competitive

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    blomeley5698
    The document analyzes Qantas's decision to expand its domestic flight offerings by 10-30% despite the struggling Australian airline industry. It explains that Qantas sees signs of recovering economic and travel demand, especially in Western Australia's mining industry. While competitors like Virgin and Tiger are struggling, Qantas is well-positioned as the market leader to capitalize on expected growth through its scale and brands covering different price points. The document concludes that Qantas's environmental scanning correctly identified an opportunity for aggressive expansion to gain market share during a period of recovery.

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    The Australian Domestic Airline Industry Is Known For Being Highly Competitive

    Uploaded by

    blomeley5698
    209 views3 pages
    The document analyzes Qantas's decision to expand its domestic flight offerings by 10-30% despite the struggling Australian airline industry. It explains that Qantas sees signs of recovering economic and travel demand, especially in Western Australia's mining industry. While competitors like Virgin and Tiger are struggling, Qantas is well-positioned as the market leader to capitalize on expected growth through its scale and brands covering different price points. The document concludes that Qantas's environmental scanning correctly identified an opportunity for aggressive expansion to gain market share during a period of recovery.

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    The Australian Domestic Airline Industry is Known for Being Highly Competitive

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    The document analyzes Qantas's decision to expand its domestic flight offerings by 10-30% despite the struggling Australian airline industry. It explains that Qantas sees signs of recovering economic and travel demand, especially in Western Australia's mining industry. While competitors like Virgin and Tiger are struggling, Qantas is well-positioned as the market leader to capitalize on expected growth through its scale and brands covering different price points. The document concludes that Qantas's environmental scanning correctly identified an opportunity for aggressive expansion to gain market share during a period of recovery.

    Copyright:

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    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    209 views3 pages

    The Australian Domestic Airline Industry Is Known For Being Highly Competitive

    Uploaded by

    blomeley5698
    The document analyzes Qantas's decision to expand its domestic flight offerings by 10-30% despite the struggling Australian airline industry. It explains that Qantas sees signs of recovering economic and travel demand, especially in Western Australia's mining industry. While competitors like Virgin and Tiger are struggling, Qantas is well-positioned as the market leader to capitalize on expected growth through its scale and brands covering different price points. The document concludes that Qantas's environmental scanning correctly identified an opportunity for aggressive expansion to gain market share during a period of recovery.

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    Damien Blomeley, ID: 91026

    Assignment 1

    “Qantas taking off with more domestic flights i” – Short Analytic Response

    The Australian domestic airline industry is known for being highly competitive. With few
    opportunities for product differentiation, the three major players (Qantas/Jetstar, Virgin Blue
    and Tiger Airways) compete mainly on price, with discount airfares following a steady
    downward trend over the past five years to the tune of 30%ii. This cause of this trend is
    generally attributed to the continued deregulation of the industry, designed to increase
    competition.

    The recent global financial crisis saw airline profits take a further blow due to the accompanying
    reduction in demand. The 2008/09 financial period was deemed one of the worst ever. Even
    today, Virgin Blue is reducing its profit outlook from $80 million to between $20 and $40
    million. Tiger Airways is quitting routes from one of its operational hubs in Adelaide.

    Yet despite the seemingly poor current state of the industry, the Qantas/Jetstar group is
    currently announcing an expansion to their services of 10% and 30% respectively. How are we
    to understand this move? The current strategy’s logic can be understood through
    environmental scanning and analysis performed by the group. Strategy changes are designed in
    reaction to changes to the external environment, so it is appropriate to next examine these.

    Economically we are experiencing the GFC’s tail end and as economic confidence recovers, so is
    the demand for domestic air travel, according to Qantas CEO Alan Joyce. Socio-cultural forces
    are in play also, particularly in Western Australia where the mining boom continues unabated,
    especially now in light of the watering down of the recently proposed mining taxes. The
    continued expansion of the labour force in WA mines on their “fly-in, fly-out” work schedules
    means continued growth for the airline industry in WA.
    Damien Blomeley, ID: 91026

    So despite the gloom of recent history, an analysis of the outer environment is returns a
    promising vision of the future. But managers need to look for changes in the task environment
    too, in this instance mainly within the nature of rivalry.

    It is already established that the industry is highly competitive with mainly price based
    competition. Expansion in such industries is risky, although scale is one of the most immediate
    means of increasing revenues. But here the Qantas group can take advantage of its relative
    strength. Already controlling two thirds of the market and with separate entities targeting the
    upper and lower ends, who is better placed to capitalize on the expected growth? Virgin Blue’s
    profit outlook is down, reducing leverage essential for a fast expansion. Similarly, Tiger Airways
    is busy reallocating its current flight capacities rather than adding new ones. At the same time
    Tiger is suffering from recent media attention on safety issues and may have inadvertently
    achieved a negative product differentiation in an area where Qantas has a positive one,
    reducing their ability to collect new demand.

    Environmental scanning and analysis has led to assumptions of an expected growth in demand
    and a present superior relative ability of the Qantas group to capitalize on it. This has led
    management to respond with an appropriate aggressive strategy to capture a larger amount of
    the market share.
    i
    A. Heasley; ‘Qantas taking off with more domestic flights’; The Age; 26/8/2010; pg 15

    ii
    Bureau of infrastructure, transport and regional economics; Domestic airfare indexes; 2010; accessed 29/8/10;
    http://www.bitre.gov.au/info.aspx?ResourceId=221&NodeId=100

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