A report on Qantas Airlines

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 Introduction

Qantas Airways Limited

Qantas Airways limited is the largest airline in terms of aircraft size of Australia.
Founded in November 1920, it is the third largest airline in the world. It took off
as an international passenger plane in 1935. Qantas stands for Queensland and
Northern Territory Aerial Services. Headquarter of the Qantas is located at suburb
of Mascot, Sydney.

Qantas had 65% share of the Australian home market and around 14.9% of
passenger were carried in and out from Australia as of march 2014. 1Qantas has
been one of the successful airlines of Australia.

1
https://en.wikipedia.org/wiki/Qantas 
 Financial evaluation of Qantas airlines 2017- 2021

In the year 2016/17 Qantas airlines reported of underlying profit of $1,401

million, it was the second highest profit performance by the airlines in it 97 years
of history. Qantas Group’s marginal advantage upon its domestic and global
competitors is demonstrated by these results. Qantas also owns Jetstar another
airline of Australia, together they gained a record $865 million introducing them
as Australia’s two most profitable airlines. Faced with significant capacity growth
in broader market, Qantas international improved in the second half of the year.
Achieved underlying EBIT of $327 million.2
With continued success in key markets, the Jetstar group achieved the second
highest profitability in its 13 years period with an EBIT of $417 million. Qantas
loyalty achieved a record EBIT of $369 million, up 4% as the company continued
to diversify its revenue.
Similarly, in 2018/19 the underlying profit before tax was of 1.6 billion which was
the highest record in the history of Qantas airlines. The domestic EBIT was
recorded to be $768 million whereas the international EBIT was of $399 million.
The Jetstar earned $461 million underlying EBIT which was 44 million more than
the pervious year. The airlines returned around $1 billon to its investors via
dividends and on market share by buy backs. In addition, in the year 2019 the
airline faced downfall, the profit before tax was $1.3 billion, in the domestic
sector it gained $740 million before tax and by the international travel it only
achieved $285 million. 3
The year 2020/21 had been a really harsh for the Qantas group, as there was an
outbreak of COVID-19 since the start of the year. Aviation brings people together,
which was exactly what public health response was intended to avoid. The impact
that COVID-19 created resulted in travel restrictions due to which aviation had to
be stopped right away all around the globe. From march 2020, Qantas postponed
its flights until further notice. This led to $4 billion less revenue of the airlines that
the prior years.
2
www.investor.qantas.com/investors/

3
www.investor.qantas.com/investors/
 Porters Force Model

Porter’s concept of five forces is a way of analyzing business competition. Based

on the economics of industry organization, we derive five factors that determine
the attractiveness or lack of attractiveness of an industry in terms of competition
and profitability.
The five factors are as follows;

Bargaining power of customers

The trading power of customers is also called a commodity market. The ability of
customers to put pressure on a company also affects their sensitivity to price
changes. Companies can take measures to reduce purchasing power, such as
loyalty programs. Buying power is high when there are many alternatives. It is low
if they have fewer choices.
Threat of new entrants
Alternative products use different technologies to meet the same economic
needs. For example, tap water is a substitute for Mountain dew, but due to use of
same technology Fanta (a bit different ingredients) it cannot be the substitute to
contest directly with Mountain dew. If the tap water marketing is increased it
could shrink the market of Mountain dew and Fanta. Where as boost in Fanta
advertisement could increase consumption of all soft drinks while coco-cola has
huge market share and Fanta comes under coco-cola.

Bargaining power of Suppliers

The bargaining power of suppliers is also called a commodity market. When
substitutes are in short supply, the suppliers who provide business with raw
materials, parts, labor and service can be source of power for business. If only one
person sells leather for making shoe, there is no choice but to buy from them.
Inflated charge may be applied or sellers may refuse to work with the companies.
Existing industry rivalry
Competitiveness of the firm is determined by the strength of competitive enmity
for most of the industries. It is essential to understand the industrial rivals in
order to successfully marketing a service. The position of the company depends
upon how public perceives a product and can differentiate it from the rival
companies’ products. Awareness is must of the competitors’ marketing strategies
and price of their products and it is also essential to react to any changes made.