The paper "Situational Analysis of the Australian Airline Industry" is a perfect example of a marketing case study. The aviation industry of Australia is being taken through changes. The need for changes has arisen from the shift in market demand to low-cost carriers. The new aircraft have made most organizations to understand the need to capture different competitive market shares. The costs also need to be brought down for purposes of maintaining the market share. Australia has a long history of its airline industry. The most significant history occurred in 1990 with the deregulation of the domestic airline industry.
Deregulation has been the driving factor behind the entry and domination of foreign airlines such as Virgin airlines. 1.1 Industry Size and Growth Australia’ s control of the industry enabled its stability during the global economic crisis. Serving over 20 billion people, Australia’ s aviation industry has grown due to the focus on short-distance flights for corporate clients, low-cost carriers and premium cabins. The latest figures from July 2016 indicate that the potential growth in Australia has increased by 6.4% increase in seat occupation when compared to 4.7% in 2015 (Centre for Aviation 2016).
Additionally, international flights have increased from 3.3% in 2015 to 6.8% in 2016 (Centre for Aviation 2016). 1.2 Major Competitors Competition is high with operating airlines including Qantas, Eastern Australia, Maroomba Airlines, West Australian, Australian Express, Virgin Blue, Skytrans and Air Link. The recent decline in growth has helped the foreign airlines Qantas and Virgin. They are now the leading competitors in the Australian market. This is seen in the diagram below-showing growth from 2012-2015. 1.3 Consumers Showing different statistics to the predictions from 2012 shows the strengthening in mean aircraft size and load factors.
Passenger traffic holds the main economic market covering about 20% of the industry’ s traffic. Surprisingly, the load carriers when compared to the passenger carriers are experiencing better growth (Centre for Aviation 2016). 2.0 Macro-Environment Analysis: PESTLE Analysis 2.1Political Australia’ s political environment is friendly to both foreign and domestic competition. The government has been liberal in its policies to simplify the entry of new entrants in the airline market. As a result, the competition between the organizations is increasing and it is also becoming more serious.
The intense competition encourages price wars. According to research done by Vela and Garcia (2010, p. 250) on Spanish airlines operating in Australia, companies that fail to hike prices in Australia end up bankrupt. 2.2 Economic The global and domestic airline industry is suffering from the recent social and economic struggles arising from the September 11 attacks using aircraft. In addition, unstable and inflated fuel prices add to the pressure felt by airline organizations. Despite the good performance of the domestic market, the airline industry is suffering from the downturns from the western hemisphere (Vela & Garcia 2010, p.
250). 2.3 Socio-cultural Federal, corporate and academic emphasis on the principals of corporate social responsibility has led to the society becoming more aware of community projects undertaken by any immediate organization. As a result, giving back to the community has become a strategic advantage, which is equally costly to airlines. Australian industries need to develop CSR agreements that effectively cover community services, environmental concerns and business ethics.
Centre for Aviation 2012, Qantas and Virgin Australia Pursue Different, but Equally Logical, Strategies to Grow Domestically, CAPA: Aviation Analysis, viewed 10 December 2016, http://centreforaviation.com/analysis/qantas-and-virgin-australia-pursue-different-but-equally-logical-strategies-to-grow-domestically-72898
Centre for Aviation 2015, Australia Domestic Airline Market Outlook: Qantas Group Reins in Capacity as Virgin Continues Growth, CAPA: Aviation Analysis, viewed 10 December 2016, < http://centreforaviation.com/analysis/australia-domestic-airline-market-outlook-qantas-group-reins-in-capacity-as-virgin-continues-growth-218946>
Farabi, Yasir, 2012, Analysis of Marketing Environment for Virgin Australia, Grin Verlag, Munich.
Truxal, Steven 2013, Competition and Regulation in the Airline Industry: Puppets in Chaos, London: Routledge.
Vela, M, R, & Garcia, M, E, 2010, A Segmentation Analysis and Segments Profile of Budget Air Travelers, Cuadernos de Turismo, vol. 26, pp. 235-253.