Assessment item 3 — Team Case Report
Group Assignment
Due date: Thursday of Week 10 ASSESSMENT
Weighting: 35%
Length: 3500 words 3
Objectives
‘This assessment item relates to the entire course learning outcomes as stated on Page 1
Assessment Details
You are required to work with your team to produce a written ‘Team Case Report’ on Qantas: the
high flyer of the airline industry (this case from Hill CWA, Jones GR, Galvin P & Haidar A 2007,
Strategic Management: An integrated approach). Copies of the case are to be downloaded from the
‘Moodle LMS
Refer to the instalment on case method in the Moodle LMS
Requirements
Prepare a strategic analysis of the case study provided. In your report you are to undertake the
required analysis of the company, its current strategy, and identify any issues facing the company or
likely to face the company in its bid to dominate in the airline industry. In your analysis, you are
required to update this case study with recent information especially about what is happening to
Qantas’ reputation, safety, trust and loyalty. You are expected explore recent media and other relevant
sources to update this case study and discuss strategic direction and commitment for Qantas to regain
its reputation and market.
‘Teams need to consider the besis upon which this company has established its competitive advantage,
examine the nature of its value chain and corporate structure, Of particular importance to the analysis
is a consideration of details pertinent to general environment, industry structure, and matters as to the
sustainability of its competitive advantage.
‘Teams are reminded to consult the assessment criteria; in particular note that the report is graded out
of 100% and rescaled.
Assignment submission
‘On-campus students - Teams submit | (ONE) printed and signed copy of their completed Team
Case Report through their particular campus submission system and also submit | (ONE) copy on-
line in the Moodle LMS.
Off-campus students ~ ‘Teams submit | (ONE) copy of their completed Team Case Report on-line in
the Moodle LMS.
Please sce Course Profile for assessment criteria of this assignment.
Please see below for the case study.central Queensland
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Following case is from from Hill CWA, Jones GR, Galvin P & Haidar A 2007, Strategic Management:
‘An integrated approachQantas: the high
flyer of the airline
industry?
By Steptiane Tywoniak, Queensland University of Technology, and
Peter Galvin, Curtin University of Technology
On 19 August 2004, Qamtas announced record net profits
of $648.4 million for the year ended 30 June, an increase
of 89 per cent over 2003, despite a decline of 0.2 per
cent in consolidated revenues £0 $11.4 billion (exhibit 5).
Commenting on the results, the CEO of Qantas, Geof
Dixon, sad the record full-year result, achieved in dificule
conditions, was a tibute to Qantas staff and management:
‘che group responded extremely well to the myriad chal
lenges ic has faced over the past 12 months.”
Qantas’ record profits for 2003-04 were in sharp conteast
‘with the financial performance of most airlines worldwide
After losses in 2001 and 2002, airline finances were dealt
further blows in 2003 by the Iraq war, and the severe acute
respiratory syndrome (SARS) epidemic, particularly in the
Asia-Pacific region."* Estimates of consolidaved losses in
2003 for the industry ranged between USS5.5 billion (Air
Transport World) and USS6.5 billion (International Civil
Aviation Organization)
The Australian airline
industry
"The market for air transport in Australia is disproportion
ately large: with a population of just under 20 million
people, i has the world’s fourth-largest market for
domestic traffic, and the world’s seventh-largest market
overall. This situation is a reflection of the vast expanse
of the Australian continent, the long distances between
its major cities and the lack of alternative modes of trans-
portation. The domestic Australian market is concentrated
around a core network of highlensity routes between
its major cities: the ten busiest routes in 2003 accounted
for 61.5 per cent of domestic traffic (measured in revenue
passenger kilometres (RPKS).
From the 1950s to the early 1990s, the Australian ailine
industry was heavily regulated: domestic traffic was
reserved to privately held Ansett Airlines and government
‘owned Australian Aislines, while Qantas (also government
‘owned) operated internationally 28 Australia's ‘lag:carrier
airline, The domestic market was roughly equally shared
between Ansett and Australian Airlines, though observers
commented that the private operator was more efficient.”
Deregulation was introduced in two stages.
Deregulation of domestic services:
1990-92
"Yhe domestic segment of the Australian market was
defined by the Airline Agreement Act 1981 as consisting of
the trunk routes linking 18 major airports (other repional
air services, representing a small fraction of the market,
were regulated by separate legislation)." in 1990, domestic
air services were liberalised, although Qantas and foreign
ed to international flights. The
Australian government expected that increased compe
tition in the domestic market would increase customer
choice and lower air fares*
‘The first new entrant -was Compass Airlines, based in
Brisbane. It offered a‘no fills, single class service between
Adelaide, Brisbane, Cairns, Melbourne, Sydney and Perth
Focusing on the city-pairs whose traffic density was
highest allowed Compass to gain access to 2 large share
of the market with a limited offering. The entrant sought
to undercut the incumbents: its reduced infrastructure,
‘no fills’ service and focused operations gave it an oper-
ating cost advantage of around 40 per cent over Ansett and
‘Australian. Compass set its fares 20 per cent below the full
economy fare of the established operators, and quickly
gained a 12 per cent market share.* But this was not suff
cient for the new entrant to operate profitably: i registered
a loss of $16.5 million in the year to November 1991 and
ceased operations in December 1991
carriers were still rest
Deregulation of international
services and airline privatisation:
1992-95
Farther deregulation occurred in 1992 when the Australian
government privatised both Australian Airlines and Qantas,
and opened up the domestic and international markets
for competition. In 1990, the Australian government
announced plans to sell 49 per cent of Qantas and 100 per
cent of Australian Airlines. "To maximise the proceeds, the
government decided to sell Australian to Qantas, and then
privatise the combined group.’ In its bid for Australian,
(Qantas had argued that combining the two airines would
lead to savings of at Jeast $100 million a year for the
combined group? ‘The privatisation of Qantas proceeded
in three stages. First, in December 1992, the government
(ase 3. Gana: he igh fier ofthe tine industry? C28