Alan Joyce's Decision of Selling Qantas' Frequent Flyer Program
Like many airlines around the world, leading Australian airline Qantas is facing very difficult times in spite of having a 65% market share in its home market of Australia. Due to rising fuel costs and a slow world economy, Qantas has recently been losing money and their CEO Alan Joyce has some tough choices to make.
One difficult decision for Joyce is whether or not to sell Qantas’ frequent flyer program. It may seem odd for an airline to sell its frequent flyer program, but Qantas’ program is much more than just an airline reward program. Members of this program can gain points not only by flying on Qantas but also through other means such as shopping at one of Qantas’ corporate partners or using one of their credit cards. Points can be redeemed not only with free flights, but also with products from numerous retailers. Over 10 million Australians belong to this rewards program, almost half of the population.
The frequent flyer program is Qantas’ most valuable asset and a sale of this program would help Qantas get out of its current financial troubles. However, selling the program would also mean allowing another company to have access to Qantas most loyal customers including their business class and first class customers. In the long-run, there is potential the sale could backfire and would not be wise.
Do some research on CEO Joyce’s current choice of whether or not to sell their frequent flyer program, and also thoroughly review the background materials on intuitive versus rational decision-making.
Case Assignment
Once you have finished reading about Qantas and reviewing the background materials, write a 4- to 5-page paper addressing the following questions:
Is the decision whether or not to sell Qantas’ frequent flyer program a strategic or operational decision? Is it a programmed or non-programmed decision? Explain your answer.
Suppose Alan Joyce decides to take a rational approach to the decision whether or not to sell the frequent flyer program. List a step-by-step approach you would recommend, and include specifics regarding what kind of information or choices should be considered at each step. Do not just list the steps, give detail at each step and use material from your research on Qantas to come up with these steps.
Joyce has been the CEO of Qantas for six years and is an experienced airline executive. Given his experience, do you recommend Joyce use a rational or intuitive approach to this decision? If there is a new CEO who comes from another industry and does not have this airline experience, would you recommend they use a rational or intuitive approach? Explain your reasoning.
Qantas Case Study Questions
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Case Study Questions
* Is the decision whether or not to sell Qantas' frequent flyer program a strategic or operational decision? Is it a programmed or non-programmed decision? Explain your answer.
The decision of whether to sell or not to sell the Qantas frequent flyer program is a strategic decision. The rising cost of fuels and slow world economy has seen the company lose many lately, and using strategic decisions to determine an ideal solution, in this case, is essential. Operational decision-making is not ideal in this case because the occurrences are not regular in the company. According to Kourdi (2011), strategic decisions are arrived at based on understanding the interactions of decisions and their impact on the organization. Strategic decision-making often requires an out of the box thinking because future decisions on what might happen or not happen are vital. While deciding to sell or not to sell Qantas's frequent flyer program, Joyce must make strategic decisions by accessing key concepts, including threats, opportunity, countervailing factors, and risk.
Joyce realizes that while selling the flyer program offers a possible turnaround alternative to the company's financial woes, the decision brings considerable long-term costs to the company. Overall, the frequent flyer programs are of great value to Qantas, and selling them gives other organizations the ability to market to the company's best customer base, thus reducing the company's competitive edge. Joyce has to think strategically and make decisions that align with the company's mission statement: "driving better business outcomes and improving people's experiences through shared accountability."
Additionally, the company CEO's decision to sell or not to sell the flyer program is non-programmed. The decision to sell or not to sell is novel, unstructured, and based on decision criteria that are not well defined in the company. More so, the decision to sell or not to sell comes at a difficult time and calls for strong intuition, creativity, and judgment. The use of a logical approach in making a decision is highly recommended in this non-programmed decision. Qantas has never experienced the recent occurrence, and programmed decision-making is not applicable as there is no repetitive and routine decision-making framework. Joyce will have to decide without reference to existing rules, and the failure to make a well-thought decision will have a long-term impact on the company.
* Suppose Alan Joyce takes a rational approach to decide whether to sell the frequent flyer program. List a step-by-step approach you recommend and include specifics regarding what kind of information or choices should be considered at each step. Do not just list the steps; give detail at each step and use material from your research on Qantas to come up with these steps.
Kourdi (2011) proposed seven steps used in decision making. First, it is crucial to identify and define the problem. Qantas problems arise due to the unstable world economic state, and rising fuel prices cause a sharp decline in revenue. Understanding this fundamental problem sets the basis for decision-making. Secondly, the decision-maker must define the goals and have them as specific as possible. For Qantas, the goal is to get itself out of the current financial mess and prevent further losses t...