International and domestic air transportation services Essay Example for Free

International and domestic air transportation services EssayIntroductionThe Qantas group operates outside(a) and domestic air transportation services for empty and business traveling, freight and logistics services .It is as well as provides support activities including information technology, catering ground handling, engineering and maintenance. Qantas with its dual outline brand Jetstar flies now to much(prenominal)(prenominal) than 173 destinations in 42 countries and operates a fleet of 246 aircraft. The objective of this air passage is to operate a 20-strong airbus 380 fleet by 2015.The group is also a part of the origination global foodstuffing and code-sharing alliance, whichconsists of 11 leading airways. Qantas stakeholders are its shareholders, employees, customer, business partners and the community. Indirect stakeholders include the media, g e genuinelywherenments and non-government organizations. They all have a major influence on the business, its stra tegy and therefore its performance. It is to mention that Qantas group is in the unique position of having two outstanding and well established brands in both the premium and starting time fares categories with Qantas and Jetstar, which makes it a magnitude rival for Singapore Airlines. The headquarters of Qantas is located in New South Wales, Australia. It is split up into three main branches which include the Flying business, dissolute services Businesses and the Associated Services. All departments of this group have focused on one goal and thats nothing except ensuring senior spicy quality service in most efficient way. But they long term purpose is to operate the worlds best premium airline, Qantas, and the worlds best secondary fares carrier, Jetstar.BodyComprehensive Porters 5 forces analysisNowadays, Porters Five Forces model is the most important force which affects the Airline industry, especially because the mart is all told saturated. on that point are more servi ce providers than needed in both local as well as outside(a) markets (GreenBb, 2008). The airlines continuously compete against severally other in terms of customer services, technology, prices, in-flight entertainment, and many more disciplines (GreenBb, 2008). Actually, Porters Model is a business strategy tool which is used to canvas the agonisticalness and attractiveness of the airline industry of which Qantas operates. It is considered as an important part of planning tool set (Kawatra, 2013).Its analysis consists of 5 fundamental competitive forcesThe arguing among existing players Medium to HighQantas is faced with disputation within the domestic airline industry in Australia from Virgin Blue and Tiger Airways and international contender from all major airline operators including British Airways and Deutsche Lufthansa (all three airline operators are national flagship carriers). The fierce rivalry has resulted in high cost of competition, lower profits andslow market growth. Bargaining personnel of Suppliers MediumThe main factors which determine the bargaining power of suppliers include switching cost, substitute suppliers, threat of backward and before integration and supplier concentration. The airline supplier market for aircrafts is truly concentrated as there are two main suppliers, Boeing and Airbus. Their bargaining power is high in this industry (GreenBb, 2008). This restricts Qantas, along with its competitors, from exercising control over their suppliers to generate higher profit. Threat of Substitutes LowThe threat of alternative solution to international airline travel is somehow limited. However, the threat for domestic airline travel includes train, bus or car travel which is determinants of money, preference, time and convenience of the traveller. The ease of switching to a substitute increases competition (xiamichael, 2012). Hence, when switching cost is relatively low, the competition becomes higher and price becomes even m ore important. The airline industry is very competitive and as a result, profit margins are usually low. Also, the bargaining of the supplier is very high which undermines companies in the airline industry to exercise control over their supplier. With high entry cost, new competition into the international airline market is very low. Qantas can continue to dominate this market while still competing with domestic market using the Frequent Flyer programme increase loyal customer.Threat of new entry LowIn the world today, the airline industry is so saturated that there is hardly space for a newcomer even to squeeze its way in. The biggest for this is the cost of entry. The high cost of buying and leasing aircraft operational activities including pencil eraser and security measures, customer service and manpower makes the airline industry one of the most expensive industries (Q.G). Other barriers to entry which will prohibit new comers into the airline industry include Government restr ictions and the brand name of existing airlines. stigmatise name recognition and frequent fliers point also play a aim in the airline industry. An airline with a strong brand name and incentives can often attract a customer even if its prices are higher. Onthe other hand, a newcomer could just enter this saturated market easier with a completely new concept or technology (GreenBb, 2008).Bargaining power of Buyer Medium to DeclineThe bargaining power of emptors is another force that can affect the competitive position of a company. The airline industry is very competitive as they are competing for the same passengers and switching cost between airline operators is low. As a result, the buyer power is high in this industry. on that point are various choices presented to customers which usually means brand loyalty or price is the main factors when selecting an airline (Q.G). Buyers for Qantas include business travelers, leisure travelers, and travel agents. In fact, they demand val ue for every dollar spent, therefore they expect more and more from the airline. Qantas has the frequent flyer program which rewards loyal customers and increases switching costs for a passenger selecting a rival airline operator. Add to this, the technology developments help the Qantas to reduce the buyer power (xiamichael, 2012).ConclusionThe airline industry is very competitive and as a result, profit margins are usually low. Also, the bargaining of the supplier is very high which undermines companies in the airline industry to exercise control over their supplier. With high entry cost, new competition intothe international airline market is very low. Qantas can continue to dominate this market while still competing with domestic market using the Frequent Flyer program increase loyal customer.Factor Characterization (Current) next Trend Threat evaluate Key keen-sighted Threat Rating Key Rational Rivalry Among Existing Competitors Degree of seller concentration? Y-H There are m ore airline companies as compared to the customers requirement, thats why this market is saturated. Y-H Top class air lines are also now focusing on the lower price to gain maximum market share.E.g. Qantas has initiated jet star. Rate of industry growth? Y-H Yes, its growing but the substitute factors also make it very hard to maintain that growth rate. And also thereis Lack of diversification Y-H In future It would be same as it is according to todays forecasting. Significant cost differences among firms? Y-H Major costs and expenses are same but it depend on the destination airline is operating. Y-H Same trend will continue. Excess capacity? Y-H There is immense competition in airline industry that leads to excessive capacity as compared to demand. Y-H Customers growth will be overcome by the competitors competition. Degree of product differentiation among sellers? Y-M Qantas has both high cost carrier as well as low cost carrier. Y-L Innovation and technology will lead to new opportunities to the airline industry. Brand loyalty to existing sellers? Y-H There is no brand loyalty by the customer because of price competition in the industry. Y-H Same trend Will extend as it is. Buyers costs of switching from one competitor to another? Y-H Just one click for changing the airline from their computer screen.Most of customers change the airline on the bases of price factor Y-H No change in near future. Strengths of exit barriers? Y-H because of high capital cost for equipment (air planes) and other facilities there would be a gigantic waste. Y-M Some factor like technology might help to reduce the cost Can firms adjust prices quickly? Y-H Of course with considering price strategies they would adjust. Y-H Same cost strategies.Factor Characterization (Current) Future Trend Threat Rating Key Rational Threat RatingThreats of New Entrants Significant economies of scale? Y-M It would cost a lot to buy/lease an aircraft Y-H The costs of buying or leasing aircraft s are decreasing. Importance of reputation or established brand in purchase decisiveness? Y-H The competition is based on price Y-H The competition is based on price Entrants access to distribution channels? Y-H High accessibility to lots of websites and natural covering would make it much easier and also There are flight centers and travel agencies Y-H With the fast growing technology it will open even more doors done the accessibility to distribution channels Entrants access to technology/know how? Y-M professional courses which could make it possible to learn how to use the technology Y-L The number of skilled drudge would decrease Entrantsaccess to favorable location? Y-H All the firms operate from airports. Y-H All firms operating from airports. Government protection of incumbents? Y-M There should be some government linguistic rule But it still going to be attainable Y-L More regulation would be needed in order to make the environment more underwrite and safeFactor Chara cterization (Current) Future Trend Threat Rating Key Rational Threat RatingPressure From Substitutes Availability of close substitutes? Y-M Tele conference, online chats and VOIP could supervene upon the be exactly at the place Also for short distances it could be replaced with railways, buses, personal transportation.But still it could be the best choice for long distance and international traveling and also the fastest way. Y-H Their impact becomes significant when the speed advantage of aircraft becomes less important Price-value characteristics of substitutes? Y-M They are all the same, even sometimes it could cost more Y-H Substitutes costs will decrease while airline costs are relatively fixed. Availability of close complements? Y-M Frequent flyer programs, hotels, and tour packages Y-M Complements environment would be limited Price-value characteristics of complements? Y-M The prices are reasonable but there are alternatives than going after packages and loyalty programs Y-M -Factor Characterization (Current) Future Trend Threat Rating Key Rational Threat RatingPower of Suppliers Is Suppliers industry more concentrated than industry it sells to? Y-H Suppliers such aircraft and engine producers are consider as oligopoly Y-M There will be more supplier Few substitutes for suppliers input? Y-H There would not be that much substitution for the suppliers Y-M There will be more supplier Do firms in industry make relationship-specific investments to support dealings with specific suppliers? Y-H Airport services are concentrated in the small area of air ports but low changing costs. Y-H Same Trends judge. Are suppliers able to price discriminate among prospective customers accordingto ability/willingness to pay for input? Y-H With a high competitive industry and the limited suppliers and fixed regulations price discrimination threat is highly expected. Y-M More manufacturers/service providers are expected.Factor Characterization (Current) Future Trend Thre at Rating Key Rational Threat RatingPower of Buyers Is industry buyers more concentrated than the industry it purchases from? Y-H Because there is a very competitive industry price discrimination mostly happens Y-M There will be more supplier. Do buyers purchase in large volumes? Does a buyers purchase volume represent large fraction of typical sellers sales revenue? Y-H There would be a high scale of supply and low scale of demand with the buyers market Y-H There would be a high scale of supply and low scale of demand with the buyers market Can buyers find substitutes for industrys product? Y-H Separate transactions Y-H With more transactions expected but still not enough for a high volume purchases. Are prices in the market negotiated between buyers and sellers on each individual transaction or do sellers post a take-it-or-leave it price that applies to all transactions? Y-H Websites increased the price transparency Y-H Same trends expected.BibliographyGreenBb. (2008). Indust ry Analysis.Kawatra, P. (2013, january). Porters Five Forces Model. Retrieved from http//www.studymode.com/course-notes/Porters-Five-Forces-Model-1340484.html. Q.G. (n.d.). The Qantas group international and domestic air transportation services. Retrieved from http//www.ukessays.com/essays/management/the-qantas-group-international-and-domestic-air-transportation-services-management-essay.php. xiamichael. (2012, June). Qantas 5 Forces. Retrieved from http//www.studymode.com/essays/Qantas-5-Forces-1021718.html.