Qantas Battles the Effects of the Financial Crisis

Qantas Airlines

Strategic Management of Qantas in the Light of Global Financial Crisis

The Global Economic/Financial Crisis, also known as GFC has influenced the performance of all organizations negatively in the current business environment. Besides increasing the costs of operations, GFC threatens the use of human resources in different organizations. With such a premise, this study analyzes the influence of the crisis on the performance, sustainability, and competitiveness of most of the airline companies. In specific, it analyzes the effects of the crisis on the performance of the Qantas Airlines, an Australian carrier known globally for its high quality services. As such, adopting the stated recommendations in the analysis will help reduce the threats facing the Qantas Airlines significantly because of the Global Financial Crisis.

Background

The worldwide economic crisis has influenced the performance of all sectors of the economy negatively in the current global business environment. Among the highly affected sectors is the air or travel sector. Combining factors such as technological evolution, stiff competition, increasing concerns on air safety and security, and irregular space with the Global Financial Crisis makes it almost impossible for the airline companies to realize their desired sustainability. The shrinking global performances of the airline industries make them adopt other alternatives that will allow them to maintain their market share and competitiveness. In response to the GFC, organizations have adopted approaches such as laying off some of the employees, reducing the carrying capacity, and providing different airline services to increase consumer use of their services; hence their sustainability. In addition, most of the airline companies have adopted other measures such as merging their operations with the famous airlines and expanding their routes of operations into new markets to enhance their sustainability and competitiveness.

Aspects of the research paper

This research paper discusses it analyzes the ways in which the crisis has affected the performance of the Qantas Airlines, an airline based in Australia. The analysis begins by providing a brief overview of the Qantas Airlines including its performance, competitiveness, and possible challenges it faces in the current global business environment. The research then dwells on the influence of the crisis on the performance of the Qantas Airlines. Finally, it ends by providing recommendations and implementation steps that are applicable to the airline company to ensure its productivity, competitiveness, and sustained performance. The analysis relies on the use of different research materials, including books, articles, and journals to illuminate the light into the effects of the financial crisis on the performance of the Qantas Airlines.

Discussion

Qantas is an Australian based airline carrier that specializes in the provision of passenger and courier services to clients to different destinations globally. Founded in 1920, the company has expanded to become Australia's largest airline carrier and world's second largest airline carrier. The fact that the company has a market share of 66% in Australia and 19% globally attests to the performance and the visibility of the company. In the recent past, the company has witnessed significant external and internal forces that threaten its domestic and international performance. Among the threats, include stiff competition from other airline companies, changing legislation, increasing global insecurity, and growth of new airline companies that threaten its performance locally. Global Financial Crisis witnessed in the current business environment forms the greatest challenge that weakens the productivity of the Qantas Company and other airline companies operating globally (Qantas, 2009).

It is highly recognizable that the global financial crisis has caused a decrease in the performance of the Qantas Airlines. The company witnessed a decline in its performance in the year ending 2013 by 6%. The productivity of the airline industry relies on the tourism sector. However, changes in the global financial performance have resulted in a decreased performance of the tourism sector. This has affected the performance of the airline industries including the Qantas Airlines that rely on the tourism sector (Lago, 2010). Performance analysis of the Qantas Airlines shows that the Global Financial Crisis increased costs of management of operations within the organization. The increase in the cost is highly attributable to the increasing price of oil, constantly changing legislation in the target markets, and decreasing costs of utilizing the services provided by the airline companies (Berlatsky, 2010).

In addition, it has resulted in a structural change in the management of operations within the Qantas Airlines. The changes occur due to the influence of the doubling the effect of the financial crisis that presents in the form of a decrease in demand and challenges in acquiring private and public financing. Significant evidence shows that many of the employees have lost their jobs due to the effects of the crisis on the company. The company responds to the decreasing performance, productivity, and market share by reducing the number of their employees to counter the diminishing organizational performance (Kim & Mauborgne, 2005). Moreover, it has affected the performance of the Qantas Airlines by freezing the recruitment and adoption of cost-cutting measures to reduce costs incurred by the company and laying off employees. Another way in which the Global Financial Crisis (GFC) has affected the performance of the Qantas Airlines include reduction in the global competitiveness, the shift of operations to short haul routes, and the introduction of smaller jets to replace the larger jets operating long routes (Glaesser, 2006).

Recommendations

Responding to the effects of the Global Financial Crisis requires the adoption of proactive approaches that will help prevent and minimizes its impacts on the company. The company should consider adopting strategies such as merging its performance with the other famous airline companies to improve its performance. The merging will allow the company to increase its performance alongside acquiring market share in new segments globally. The company should also adopt proactive strategies that aim at reducing the costs of operations and capacity of their flights. Reducing costs of operations entail ensuring maximization of the profits accrued from routes where the company operates while minimizing waste from the company.