Business Strategy of Qantas Airlines in Australia

Business Case Study: Qantas Airways
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Business Case Study: Qantas Airways
Companies often implement one or more strategies and leverage their core capabilities to enable them to gain a competitive advantage. This is a case study of Qantas Airways in Australia. This airline company utilizes a dual strategy that encompasses both differentiation and cost leadership competitive strategy. It also uses excellent customer service, a culture of safety, and rapid exploitation of market opportunities as its key core capabilities. Qantas has remained a market leader in Australia because of its ability to utilize its business strategic approach to drive these core capabilities. As a result of these core capabilities and its dual strategic approach, it has been able to target price-sensitive customers and those who are big spenders. However, it needs to create a better balance between these two groups of customers who are on the opposite ends of the price continuum. This can be achieved by outsourcing maintenance services to lower operational costs, providing low-cost services to customers, and utilizing business strategy differentiation and cost leadership.
Qantas Airways’ Scope and Context
Qantas Airways is Australia’s largest airline operating domestically and internationally. Qantas was established in 1920 in Queensland as Queensland and Northern Territory Aerial Services Limited (QANTAS) (Qantas, n.d.). Over the years, it has evolved through constant transformation to ensure that it is well-prepared for the future, and this has enhanced its sustainability for decades. Qantas’s core business involves customer transportation and air freight. It started as a domestic airline and went international in 1935 when it introduced its flight to Singapore (Qantas, n.d.). It has since expanded to include flights to Europe, Africa, and the Americas. The company has grown in numbers and experience over the years to become one of Australia’s strongest brands and a world-renowned long-distance airline. The strength of the brand has been attributed to, in part, Qantas’ association with the kangaroo. It has built on this association over the years because the tails of its planes have a kangaroo on them, making it its official logo (Harper & White, 2021). Qantas is now popularly known as the Flying Kangaroo.
Sector and Industry
Qantas operates in the airline industry to provide air transport for paying customers as well as for air freight. Qantas is considered one of the most profitable airlines in the Australian airline industry. Prior to the COVID-19 pandemic, Qantas was making profits while its largest competitor, Virgin, was losing money (Australian Competition and Consumer Commission (ACCC), 2021). Thus, Qantas plays an instrumental role in driving the Australian airline industry. The Australian airline industry is quite competitive. According to ACCC (2021), it is expected to be more competitive in the coming years as new airline companies expand into other routes to serve the large Australian market. However, Qantas has remained quite competitive in the industry for over 100 years, thanks to its well-established brand and its ability to adapt to changes in the competitive industry.
Business Activities
Qantas’s main business activities include air transportation of paying customers and freight (Qantas, n.d.). These activities ensure that Australians are connected to each other and to the rest of the world. It also operates subsidiary businesses such as the Qantas Frequent Flyers and Qantas Freight Enterprises. Other activities include training pilots to produce pilots who are ready to meet the needs of the industry.
Key Products and Services
Qantas provides air transportation services to paying customers. It also provides freight services to customers and businesses that are transporting cargo by air. In addition to flight services, Qantas also provides training services through its Qantas pilot academy. The goal of these training services is to train pilots who meet the needs of the industry.
Customers
Qantas’s primary customers are passengers traveling from one destination to another within and beyond Australia. It also serves businesses that are interested in transporting their cargo by air. Other customers include individuals interested in starting their careers as pilots. These individuals are provided with pilot training services by Qantas.
Qantas Airlines’ Key Core Capabilities
The success of a business depends highly on its core capabilities. According to Teece (2018), core capabilities are the resources and advantages that give a business a competitive edge. These capabilities stem from a company’s managerial skills, decision-making skills, and ability to leverage its internal competencies to create a sustainable competitive advantage and enhance long-term profitability. In the over 100 years that Qantas has been in business, it has developed several core capabilities that have given it a competitive advantage over new and incumbent rivals. These core capabilities include:
Excellent Customer Service
For years, Qantas has prided itself on its ability to provide excellent customer service. This has become one of its core capabilities because it has been able to retain and attract loyal customers who value a positive customer experience. According to Clegg et al. (2020), excellent customer service as a source of competitive advantage is rooted in the resources and capability view of the firm. When customer service is nurtured, it allows companies to outperform their competitors. This source of competitive advantage can only be leveraged if the firm understands the needs of its customers as well as the challenges they can encounter in the course of providing services. At Qantas, one of the key needs of its customers is getting to their destination on time. Qantas has met this need by providing customers with timely arrivals to their destination. They maintain an on-time performance that is higher than the rest of the airline companies operating in Australia. For instance, the on-time performance for February 2022, as recorded by the Australian Government Department of Infrastructure, Transport, Regional Development and Communication (2022), was 86% for on-time arrivals and 85.3% for on-time departures. Its biggest competitor, Virgin Australia, recorded a 79.3% on-time arrival and 77.1% on-time departure performance. This on-time performance has given Qantas an edge over its competitors because it is able to keep time on arrivals and departures better than its competitors. It has been able to anticipate what its customers desire most and then respond by offering them exactly what they want. It is now considered one of the most reliable airlines in Australia for its on-time performance and limited flight cancellations.
In addition, Qantas acknowledges some of the challenges that may occur, such as flight delays, cancellations, and baggage delays. To this end, Qantas has put in place measures to ensure that customers receive effective communication and assistance when any unforeseen issues occur. For instance, in case of baggage delay for over 24 hours when a customer is in a destination that is not their city of residence, Qantas pays for the purchases of the basic comfort commodities until the baggage is recovered (Qantas, n.d.). Such efficiency in problem-solving to enhance the customers’ experience even when things do not go as planned gives Qantas a competitive edge. The company encourages customer feedback to ensure it is constantly improving the quality of its customer services. This has allowed it to maintain its core capability of identifying customer needs and being efficient in solving their problems through excellent customer service. It has even been recognized by CAPA Centre for Aviation (2018) as a leader in customer satisfaction due to its continued focus on providing excellent customer service.
Culture of Safety
Qantas is widely known for its ability to focus on safety without compromise. According to Wilson (2020), Qantas has not had any fatal accidents since 1951 and has not lost a plane since 1960. It has gained a reputation as a safety-focused airline company in Australia and beyond. Qantas is leveraging this core capability to stay ahead of competitors. It is worth noting that this commitment did not occur in a day. Rather, it has been achieved through a series of past decisions that made it possible to develop and maintain safety as a core capability. This commitment to safety has become a core capability that gives it a competitive edge. According to Wilson (2020), Qantas had many safety incidents in its early stages, but it acknowledged those mistakes and learned from them, thereby creating a culture of safety that has continuously improved over the years.
It has remained compliant with safety procedures and processes, such as canceling flights to ensure passenger safety at the cost of causing scheduling chaos in the airline. According to MacKay et al. (2020), the total sum of a company’s past decisions makes up its core capabilities. Qantas’s past decisions regarding flight safety have accumulated to form this reputable safety culture that has become one of its core capabilities. Wilson (2020) indicates that the senior management at Qantas has, from the beginning, acknowledged employees who put safety before everything else and fired those who have threatened flight safety. Also, employees at Qantas are not afraid of acknowledging any mistakes that can compromise their safety, even in front of junior employees. This has created a culture of learning from past mistakes to enhance flight safety in the future. There exists a positive safety reporting culture that encourages employees to report safety incidences or concerns without fear of reprimand (Heiets et al., 2021). It has also established an effective safety management system that allows it to anticipate and manage any safety-related issues. This has allowed it to maintain flight safety for several decades, giving them a competitive advantage.
Rapid Exploitation of Market Opportunities
Qantas has a knack for identifying opportunities in the market, and this has allowed it to maintain a large share of the market and continue to be a leading airline in Australia despite the growing competition in the Australian airline industry. According to Heiets et al. (2021), Qantas can target a wider market base depending on customers’ behaviors and needs. As a result, it has been able to serve both price-conscious and premium customers. Raynes a...