Introduction
Quantas Airline is an Australian aviation carrier operating the market for over 95 years. Currently, Quantas operates two large subsidiaries, Jetstar and Frequent Flyer (Morton, 2012). The company is one of the few airlines that managed to go through the global economic crisis of 2008 without considerable losses. It started as a modest domestic player working only within the Australian market.
Nowadays, Quantas controls over 65% of domestic market and over 25% of the international one. The company experienced the crisis during the recent fiscal years being unable to control the expenditures and keep the profits at the satisfactory level. The rising costs of operation are another factor that has its negative impact on the company profits.
Alan Joyceâs Strategy
Alan Joyce is Quantas Airlineâs CEO since 2008. He headed the company at a quite turbulent moment in its history and managed to achieve considerable success improving its performance. Joyce is aware that the airline industry worldwide continues to be subject to multiple issues and endpoints and therefore, he continues to develop the new strategies and introduce new measures to keep the company performance at the desirable level.
In the twenty-fifteen fiscal year, the airline financial performance was relatively poor. The main cause of the profit margin decrease in the last fiscal year was the economic problems in Europe (Quantas, 2015).
At the international market, the situation was quite stable since the company operates the high-end business class and first class flights and this segment did not experience significant losses (Quantas, 2015).
In 2015, Joyce has expressed his concerns that poor company fleet management is the major company performance issue. Maintenance costs for the company in 2014 exceeded the point of $2.5 million (Quantas, 2015).
In response to this finding, the CEO resolved to reduce operational costs by $0.5 million in order to prevent the exceeding of gross gain. In addition, Joyce adopted the decision to purchase the newer models of planes to decrease the costs of maintenance because they have the new technologies enabling to optimize the repairing process. Besides, the new models allow carrying more passengers and use fuel more productively. This decision is justified from the point of view of the information learnt in class and the finding made by Heizer and Render (2011) who argue that the first step towards sustainability of business is cutting the unnecessary disbursements (Harvard Business Review Press, 2011).
Another decision adopted by Joyce after the year 2014 was to pay more attention to subsidiaries management. He focused on Jetstar performance and was able to achieve considerable results having better operational results both at the local and international levels than the main company Quantas itself. In 2015, Jetstar continued to be the leader subsidiary of Quantas because of the wise choices made by Joyce in the area of targeted customer segments and served lines.
Joyce also focused on the premium segment customers being the company loyal clients at the international market for decades. He considered that maintaining the company operations at the previous rates is crucial for the company reputation. The company had perfect reputation as the one offering the top quality services for travelers worldwide (Quantas, 2015). Joyce considered that such publicity was good, and it could support keeping the profit margin high both at the local and global markets.
Despite the fact that Quantas adopted the decision to reduce operational costs, it maintained the highest safety and quality standards as the essential component of the company business model, which is in the full accord with the findings made by Thompson and Martin (2010) and Wheelen, Hunger, Hoffman, & Bamford (2015). Moreover, the CEO resolved to increase punctuality with the purpose to ensure that all flights were adherent to the schedules, which is a good solution based on the theoretic support from Ananthram, Nankervis, and Chan (2013).
Joyceâs Vision of Current Competitive Advantages
Assessing the company strengths, Joyce has focused on the chosen business model and company structure. He concluded that having the two subsidiary airlines, the company can have a competitive advantage of providing more customer-specific services. Because the branch companies work in different customer segments and different economic environment, the probability to make gross is considerably less according to the findings made by Wheelen et al. (2015).
Next, Joyce has concluded that company size and abundant resources is another competitive advantage. The large resource capacity and bargaining power are the two characteristics enabling making considerable company structure changes without complex issues at any moment (Gurney, 2011). Considerable renovation of the air fleet is only possible for companies such as Quantas because they can make costly acquirements without unbalancing their financial position. Having a large fleet of high quality with the latest technological solutions and large carrying capacity is a yet another competitive advantage as far as Joyce believes because it allows operating in the large amount of lines and doing so with fewer disbursements on fuel.
Further, many terminals in the company flight routes worldwide and lounges in flight routes are owned by Quantas. As a result, the company can ensure higher punctuality rates and increased schedule efficacy compared with the competitors. This is the very feature that makes the company so popular and valued by the business class travelers who always suffer from the problem of time shortage and need advanced solutions to increase the effectiveness of their time usage. The decision to continue allocate funds for these operation costs in not an easy choice for the CEO. However, seeing its significance for being the leader in the VIP and business class customer segments he believes that it is justified.
Lastly, the ticket purchasing systems utilized by Quantas Airline are seen as some of the most customer-friendly, safe, and effective technological solutions for serving travelers worldwide (Gurney, 2011). Besides, the checking in procedure at the terminals features one of the highest in the world levels of convenience and promptness. This competitive advantage is central for the companies operating in the premium customer segment. Maintaining the leading position in the area of terminal technological solutions is crucial for keeping the position of the international leader in customer service, the position that the company is currently enjoying.
Joyceâs Strategy Results
By the year 2015, Quantas Airline managed to renovate its fleet to a considerable degree by purchasing the latest Boeing and Airbus models with the largest carrying capacity and the latest safety and security promotion technologies (Quantas, 2015). The outcome of this investment is the possibility to occupy the leading positions in the premium segment on international routes such as Los Angeles, China, Vancouver, and Berlin.
The quality of service offered to the premium segment customers has also improved with the introduction of flight plans commencement. This innovative approach offered the business-class clients fly from Australia to Asia during only one day. Moreover, the company managed to achieve the set goal in the area of improving customer service by establishing the new type of relations with the corporate clients. According to the new approach, customers who had the scheduled arrangements during a long period had the priority in the service provision over other customers.
Conclusion and Recommendations for the Future
Despite the fact that Quantas Airline has faced significant operational problems, timely and well-elaborated business optimization decisions will make it possible to restructure the company, decrease the gross loss rates, and increase the gross profits margin. The company CEO demonstrated excellent leadership skills and outstanding strategic thinking ability in making the right operational decisions and developing the new company policies that would lead to an improvement of the company performance (Hitt, Ireland, & Hoskisson, 2011). With the adopted decisions, Quantas is sure to step on the recovery path. Therefore, the prognosis for the company future is quite positive.
Still, being on the course for recovery is not the reason for the company leader to relax because there is still much work to do before the company improves its positions at the global market. Particularly, Quantas has to readdress its business strategy to expand to the new segments and offer the passengers the new lines and directions. The example of the Emirates Airline illustrates that the companies of Quantas size should do their best to spread to other regions in the world (Managing for competitive advantage, 2012). Geographic expansion along with the wise operational decisions, striving to continue to improve customer service, and employ the new technological solutions will help the company to increase profitability and optimize its performance.
References
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