The paper "Australian Airline Industry" is a brilliant example of a business case study. This report is basically divided into two parts the first part covers the strategic analysis of JETSTAR airlines. This will be done by giving a summary of the current political, economic, social, technological, legal and environmental issues facing the company. It will be closely followed by a SWOT analysis of the company and a competitive analysis of the company with any two competitors which in this case Qantas and Virgin Australia will be used. The report will also compare the financial data of the three airlines that is virgin Australia, Qantas and Jetstar.
The other part of the report will major on the development of a new mission statement, value statement, three strategic objectives as well as two key strategies for the next 3-5 years. PESTLE analysis of Jetstar airlines PESTLE analysis of a company aims at identifying vital aspects that may have an effect on the business and companies that are operating the same sector. PESTLE is an acronym for the technological, legal, political, economic, social-political and environmental factors that may affect a business.
The political factors include aspects such as tax policies, laws and regulations, and trade restrictions (Carpenter et al, 2010). The technological aspects related to the adoption of new and innovative ideas in the industry. The economic factors on the other hand are concerned with changes that may occur in terms of increasing interest rate, economic growth, inflation as well as change in exchange rates. Social factors are concerned with aspects relating to the customers, this is aspects such as health consciousness, age distribution, buying patterns and the cultural aspects.
The environmental factors deal with aspects such as a change in the weather and the effect of the organization's activities on the environment. The legal factors are factors that are related to the legal environment within which the business is operating (Carpenter et al, 2010). The pestle analysis of Jetstar airlines is clearly shown in the table below Political v Steady political environment v Open skies v Foreign ownership rules v Deregulation Economic Financial crisis unemployment The high price of fuels Social v Change in customer demographics v Increase in travel lifestyle v irregular customer preferences Technological Easier booking of trips Efficient aircrafts Legal v Legislative conformity requirements v accusation of deceptive advertisement v Anti-competitive actions Environmental Tourism saturation lack of infrastructure capacity to cater for a large number of customers SWOT Analysis of Jetstar Strengths v Jetstar have onboard purchases for food and beverages aimed at keeping fares low v The use point to point model that leads to low unit cost v multi-skilled staff member Jetstar has an efficient workforce Weaknesses v In-flight incidents which make customers not to use their airline (Rennie, 2009). v Unlimited numbers of staff who are not able o handle an irregular situation in the airline. Opportunities v Jestrar can increase the number of returns to and from Melbourne-Sydney so as to compete with tiger airways v involvement with other alliance can release outlooks for new routes as well as airport deals v the high price of fuel will ultimately squeeze out the unprofitable rivals v jestra has a leading position in various routes due to their cost Threats v Major airlines have started to cut their costs as a way of competing with low-cost airlines such as Jetstar (Jetstar, 2012). v Accident may weaken confidence in the airline v Increase in number of competitors due to low entry barriers v Release of Melbourne Sydney route by tiger airlines. v Disaster and terrorist attack. Competitive analysis Jetstar airway is termed as a low-cost airline based in Australia.
Jetstar operates a wide range of domestic networks and has also international services as well as regional services. The airline mainly operates from its own base at Melbourne airport and uses various fleets so as to enhance their business. The airline is said to have sixty destinations and operates in about 17 countries and has a fleet of 86 aircraft.
Jetstar hubs are located in Brisbane, Sydney and in Melbourne. The company have a total number of 7, 596, 000 passengers (Our Company, 2012) The major competitors of Jetstar airlines are Virgin Australia and Qantas airways. Virgin Australia which operated previously as virgin blue is termed as the second-largest airline and also the largest in terms of fleet size. The airline was established back in the year 2000. The airline's hubs are located in Sydney Airport, Brisbane Airport, Christchurch Airport, Melbourne Airport, and Auckland Airport and have a passenger capacity of around 16, 668, 000 passengers. Qantas is one of the best Australian airlines and it is rated as the largest airline as well as the oldest in terms of continuous operations in the world.
Also it is rated as the second oldest airline in the whole world. The airline's main hubs are in Melbourne as well as in Sydney and the secondary hubs are based in Brisbane and in Perth. The airline has also an international hub in Singapore. Qantas has 144 fleets with a total of 87 destinations.
When the three airline companies are compared, Qantas seems to have a larger market share, followed closely by Virgin Australia and Jetstar comes third. The number of passengers that uses Qantas 17, 105, 000. Comparison of financial data In terms of the RPK (Revenue passengers kilometers) Qantas is the leading airline with $24, 831, 000 followed closely by virgin blue with $18, 764, 000 while Jetstar is last with $8,602,000. Qantas has a total revenue of $12,717,000 and is followed by virgin blue at $ 2,351,000 while Jetstar comes last at $1,564, 000. By comparing the companies in terms of net profit after tax Qantas is the leading with $653,600,000 and virgin blue is the second at $97,700, 000 while Jetstar comes third with $80, 100,000.
Based on an analysis of the financial data Qantas seems to be performing better as compared to the other companies. The new mission statement for Jetstar airlines is “ we at Jetstar airlines; staff, management team and the customers, and the broader community joins together so as to establish a force that will bring about both local and global change, as a company were are determined to offer better standards to the community and enhance the living standards as well as the surroundings in which we live” Values statement The value statements will assist the general population in knowing the aspects that Jetstar believes in they will include: Reliability Transparency Dedication to duty Strategic Objectives The following three strategic objectives will act as a guide to Jetstar airlines in the next three to five years. Be an airline of choice: customers are vital to the profitability of the airline.
As a company Jetstar will use the information they have recently acquired in relation to the operations in the air industry, to build more networks as well as better services to meet their customer needs. Offer outstanding service to the customers: this will be done by ensuring that the staff members who are in close contact with the customers are passionate and that they deliver outstanding services to the customers.
This will be built upon by a change in the training methods and forms of rewards given to the staff. This will ensure that all customers irrespective of the route or class enjoy been at Jetstar. Presence in global cities: Jetstar will aim at offering the best connectivity for all customers within the globe.
Jetstar aims at building global connectivity either directly or through airline partnerships. Afterward, a great emphasis will be placed on the establishment of a global presence in the global cities of the next century. Key strategies The key strategies that will guide the airline in the next five years include: The attainment of low-cost leadership: this will be achieved by either underpricing or also by selling at going prices t his will ensure that Jetstar has higher profit margins as compared to their rivals.
Another strategy to be adopted so the attainment of low-cost competitive advantage. Jetstar will do this by carrying out various value chain activities. The value chain activities will be coupled with efforts to recognize cost savings chances in almost all parts of the value chain.
Carpenter, M., Sanders, W., Rice, J., Martin, N. (2010). Strategic Management: A Dynamic Perspective. Concepts and Cases. Frenchs Forest Australia: Pearson Education.
Jetstar Airways scoops the world's Best Low-Cost Airline Award for 2007, World Airline Awards, retrieved 7th April 2012, < http://www.scoop.co.nz/stories/BU0707/S00596.htm >
Our Company, Jetstar Airways, retrieved 7th April, 2012, < http://www.jetstar.com/au/en/about-us/our-company >
Rennie, R. (2009). Emergency Landing: fire on board Jetstar flight to Gold Coast, The Sydney Morning Herald, 11 June, Retrieved 7th April, < http://www.smh.com.au/travel/travel-news/emergency-landing-fire-on-board-jetstar-flight-to-gold-coast-20090611-c3vp.html >