Qantas is one of the largest airlines in the world; its network has expanded to 81 destinations in 40 countries in Asia and the Pacific, the Americas, the UK, Europe and Southern Africa. More than 75% of assets are geared to the international market and Qantas aims to retain and enhance its status as Australia’s global airline.
Reasons for international expansion
Aviation as an industry is now truly global in nature. To compete effectively in a global market Qantas found that it had to service all of the worlds major markets. Deregulation of domestic aviation industry and the privatisation of Qantas also helped to trigger international expansion. Other reasons for international expansion included:
• Limited domestic demand and growth potential due to the small Australian population and market size. The most profitable route is Sydney-Melbourne and other carriers re competing on this and other trunk routes between state capitals. For example, the recent launch of jetstar Asia is designed to access more meaningfully the high growth intra Asian market.
• The domestic market is more competitive due to deregulation and the entry of competitors such as Virgin Blue which has been able to capture market share and establish its brand image in the market with the high profile and popular Virgin group CEO Richard Branson.
• Gaining economies of scale in operation and marketing through alliances and code sharing with other airlines. The long haul overseas flights generate lower average costs as larger planes are used with greater passenger capacity leading to lower average fuel and labour costs and the potential for higher profits.
Methods of expansion
Qantas has expanded internationally through foreign direct investment. Qantas uses a number of methods to do this including acquisition of other airlines; strategic alliances; and establishing new airlines.
Qantas has used a strategy of...