Business and the Environment of Australian Airlines - Case Study Example

Business and the Environment Name: Course: Institution: Date: Abstract Since the 1990s, the Australia airline industry has been developing policies directed towards the liberalization of airline services. Australian airline industry can be classified into three broad categories, which include domestic trunk route airlines, regional airlines and international airlines. The objective of airlines in Australia is to ensure the provision of services to the customers, realizing profits and improved operations. The major players include Qantas Airways, Virgin Blue Virgin Australia and Impulse Airlines. Sustainability developed by Australian airlines are aimed at coping with regulatory challenges imposed by governments on the domestic, regional or international platforms. Moreover, these airlines have been able to improve on their role of environmental sustainability Key words: airlines in Australia, profits, sustainability, competition, policies Business and the Environment Introduction Australian airlines have been major contributors to the development of the airline and infrastructure industry in Australia and in different parts of the world. This is because of their ability to connect buyers and sellers, by breaking the barriers of distance and time. Despite the challenges associated with the September 11 attacks that affected the operation of Australian airlines on the international platform, the growth in travel expenditure in Australia is expected to translate into increased business and leisure trips, which will be supported by economic growth. The need to ensure that the industry is profitable it is necessary to develop sustainability policies focused on improved services and profitability. Objectives of study To assess the major sustainability facing the Australian airline industry Explain the impact of internal and external environmental factors facing airline business in Australia Elaborate sustainability initiatives that have been developed to improve the operationalization mechanisms of the Australian airline industry. Historical background and sustainability challenges facing Australian airlines The Australian airline industry has been experiencing major challenges especially those arising from sustainability of its activities. These challenges have been necessitated by changes in the environment of operation and airline policies. For the airline industry, the upheavals include the collapse of the Ansett group, the decision by Qantas Airlines to absorb Impulse Airlines, the entry and rapid development of Virgin Blue, the establishment of Jetconnect, Freedom Air and Australian Airlines. Since the 1990s, the Australia airline industry has been developing policies directed towards the liberalization of airline services (Douglas & Cunningham 1992). This trend continued with the establishment of Open Skies Agreement with New Zealand in 2000. Despite these developments, the September 11 attacks on the United States and the subsequent War on Terror against Iraq in 2003 led to significant downturns on the domestic and international aviation markets resulting to further changes to Australian airlines (Ito & Lee 2005). It is possible to classify the Australian airline industry into three broad categories, which include domestic trunk route airlines, regional airlines and international airlines. The domestic trunk airline industry includes airlines that provide regular public transport services with fleets containing high capacity aircrafts of about 38 seats or a payload of more than 4000 kilograms (Jose 2016). Part of the challenges facing the domestic line of the airline industry includes economic regulations by state and federal government. The desire to ensure the provision of services to the customers and realizing profits and improved operations affects the ability of the airlines operating in this sector to ensure high quality services. The players include Qantas Airways, Virgin Blue and Impulse Airlines (Brueckner & Pai 2007). Regional airlines include aircrafts that perform regular public transport services in regional centres. In Australia, these airlines operate intra-state services with aircrafts that vary in sizes from jets carrying ten passengers to those with the capacity of 80 passengers and up to 2 tonnes of cargo (Upham 2003). In communities, regional airlines are often regarded economic lifelines to major service centres and markets. This is because they allow for swift transport among residents, regional produce, and tourist with Australia’s vast distances (Round Table on Transport Economics et al 2009). From 2002, the Australian airline industry has recorded growth in regional airline services especially with the growth of passenger movements at both domestic and regional levels. Part of the sustainability challenges facing regional airline service in Australia includes the existence of blurring between domestic trunk and regional airline services (Starkie 2008). This is because of the existence of two airline policy regulatory frameworks, which define strict regulatory compartments for both sectors. The desire by states to introduce regulatory measure to protect vulnerable air routes have contributed to a reduction in freedom associated with maximizing the opportunities available in the regional platform. The players include QantasLink, Virgin Blue, and Regional Express (REX). Currently the environment in which regional airlines operate is unusual because of the existence of large carriers operating in a standalone fashion (Bureau of Infrastructure et al 2010). The international airline industry in Australia is inclusive of about 50 international airlines that operate scheduled services from and to Australia. The major players are Qantas Airlines and Virgin Australia which are the only international airlines based in Australia. Control of the international airline industry in Australia is the responsbility of the Commonwealth government (Teague 2008). This government controls competition with the industry because of the existing bilateral agreements and the associated landing rights provisions at designated places. Within the international airline industry, Qantas and Virgin Australia play a major role in servicing the market. The challenge of developing sustainability policies is the existence of varied and intense competition within the international market (Schulte, P., & Zhu, Y 2005). Influences of both internal and external business environments on business sustainability in the sector SWOT analysis of Australian airline industry In respect to different airlines operating in this industry at the domestic, regional and international level, the major strength point of the industry is that its airlines access profitable domestic, regional and international routes, which are positive contributors to the overall profitability of the industry. Australian airline industry also has an established reputation of providing policies that necessitate quality services in terms of the safety level of passengers hence attracting more travellers (Nuguid 2011). The industry has ensured growth of airlines accessing international routes through the establishment of alliances with major airline son the international platform. The main weakness of the industry is the existence of few airlines on the international market and the allegations that Etihad Airlines seeks to acquire Qantas. In terms of opportunity, the airline industry can still realize high growth levels on the international market through foreign direct investment to introduce more flights. The Australian airline industry faces the threat of high level of competition especially on the international platform from major airlines (Boyle 2013). External environment analysis An evaluation of the relevant external environmental factors affecting the ability of the industry to develop strategic and sustainable policies is possible through PEST analysis. Political factors are crucial because they affect the performance of the industry. The role of the Australian government has been significant since 1990s when it performed deregulations within the airline industry, which resulted in improved competition among players in the industry and affected airline performance across the world. Through government policies, the industry provides airlines with a platform of operating and developing crisis management strategies in different markets (Bureau of Transport and Communications Economics 1995) Economically, the airline industry in Australia is often affected by roundabouts and swings in the domestic and international economic systems. For instance, the recent global crisis affected the performance of the industry and this led to lower airline load factors, increased losses and the collapse of various airlines.in terms of the social factor, the performance of airlines in Australia are often affected by the prevailing societal trends. The rising levels of awareness among Australians regarding global warming and climate change poses challenges to the entire airline industry. The major concern arises from the carbon footprints from jet fuels consumed by airlines in their operations (Dixon 2006). Technology factor is significant to airlines in Australia because it allows the industry to maintain the cost of their services at affordable and competitive levels. This has been emphasized through online booking services and the introduction of fuel efficient and quieter aircrafts (Porter 2008). How focusing on sustainability has been good for the sector Focusing on the development of sustainability measures especially in technology has been beneficial for airlines in Australia because it has allowed employees and other players in the sector to engage in activities focused on pursuing innovation and existing technologies in their operations. Technology has not only improved on the efficiency of airlines within the industry but also improve on their level of competition in different markets. Through the development of sustainability measure that address societal and environmental concerns, airline in Australia have been active in developing initiatives aimed at ensuring 50% reduction of net emissions by 2050. Part of the environmental sustainability measure embraced by airlines in Australia is the use of biofuels in powering commercial airlines and collaborating with the Australian government to introduce incentives on the use of sustainable biofuels to reduce the cost of operations for the airlines. Through sustainability measures focusing on political factors, Australian airlines have developed policies aimed at coping with regulatory challenges imposed by governments on the domestic, regional or international platforms. These include the incorporation of resilience and crisis management measures into their strategic plans. This is often to ensure that airlines can respond to crises resulting from political interventions by different governments. Conclusion Airlines in Australian include Qantas Airlines, Virgin Blue, Virgin Australia, Jetconnect, Freedom Air and Australian Airlines. These airlines operate on domestic regional and international routes. Airlines in Australia access profitable domestic, regional and international routes, which are positive contributors to the overall profitability of the industry. Australian airline industry also has an established reputation of providing policies that necessitate quality services in terms of the safety level of passengers hence attracting more travellers. The desire of airlines in Australia is to ensure the provision of services to the customers, realizing profits and improved operations. Through sustainability measures focusing on political, environmental, societal, economic and technological aspects, Australian airlines have developed policies aimed at coping with regulatory challenges imposed by governments on the domestic, regional or international platforms. Furthermore, the airlines have also been able to assess their role in ensuring environmental protection through their activities as part of their corporate social responsbility. References Boyle, J 2013, 'Virgin looks to treble its profits, Australian Financial Review. Brueckner, J., & Pai, V 2007, Technological Innovation in the Airline Industry: The Impact of Regional Jets. International Journal of Industrial Organization , 27 (1), 110-120 Bureau of Infrastructure, Transport and Regional Economics 2010, Avline 2009-10. Canberra: Australian Government. Bureau of Transport and Communications Economics 1995, Deregulation of Domestic Aviation in Australia. Canberra: Australian Government. 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