Attractiveness of the Domestic Aviation Industry - Australia

Topics: Airline, Low-cost carrier, Qantas Pages: 15 (4742 words) Published: September 6, 2010

Attractiveness of domestic aviation industry in Australia

[MPM703] Business Strategy and Analysis

[800351339] Ashan De Silva Wijeyeratne
[600313359] Kevin Procter

Executive Summary3
Industry Analysis6
Industry Rivalry9
Competitor Analysis9
Environmental Analysis11
Macro Environmental Conditions11
TASK Environmental Analysis12
Comparative Market Positions of Regional Airlines18 Conclusion & Recommendations19
Appendix A – Porter’s 5 Forces Model22
Appendix B – Comparative Market Positions of Regional Airlines23 Appendix C – Aviation Industry Time Line 24


The domestic aviation industry has grown by 5.57% in 2007 in comparison with 2006 according to ABS (2008). This is a major indication of the attractiveness of this growing industry which is expected to perform better in the near future. By 2010 it is expected to grow up to 13.67% in comparison to 2006. Some of the reasons for this growth could be classified as the reduction of airfares due to increased competition, deregulation of policies concerning air travel, advancement of technology, decentralisation, expanding aviation infrastructure, less travelling time compared to other modes of transpiration, increased spending on marketing promotions by airlines. Even though domestic aviation industry is in the growth stage of the life cycle, it is extremely difficult to get in to the market due to regulations, cost associated and competition. At present there are only 4 organisations competing in this industry, out of which Qantas has 60% of the market share. The other airlines are competing for the rest of it. The environment of domestic aviation industry is very dynamic and technology plays a huge role in it. Organisations must be up-to-date at all times in order to gain a competitive advantage. Business strategy has to be aligned with the environmental conditions as an organisation with a general strategy wouldn’t be able survive in such a dynamic environment. It is recommended that any organisation entering the market should compete with the rest of the airlines rather than Qantas as it would be almost impossible for a new organisation to compete with such customer loyal airline. Thus, new entrants must compete towards the rest of the market share especially by pricing strategies. More routes than other airlines would be a great advantage as with the discounted airlines, customers have a limited choice for routes. Therefore it could be concluded that in order to get a good market share in this industry, a company should differentiate its products, have an attractive pricing strategy and more routes.

Travel has dated back since the dawn of time and has evolved now into a business with several modes of transportations taking you to different destinations over land and sea. With the advancement of technology news means of transportation have risen up which has revolutionized transportation and evolving it into a business. This is clearly evident in the airline sector but since the airline industry is so vast with number of commercial airlines providing their services over international waters to narrow the study down its best to take a regional/domestic market of a particular country and look closely on that industry within that country. Transportation between countries was done was ships back in the day and is still existent today but as it is time consuming to reach its destination it isn’t the most preferable option but it was the only mode of transportations between countries. With birth of the first...

According to QANTAS (2008) it is the national airline of Australia and is one of the 5 best airlines in the world as voted by Skytrax
Jetstar (2008) states that it is another low-cost airline based in Melbourne is a subsidiary of Qantas was launched in response to the threat posed by Virgin Blue
Tiger Airways long term goal is not only to be the leading low-fare airline in Australia but the leading low-fare airline in Asia-Pacific (Tiger Airline, 2008).
(Refer Appendix C – Aviation Industry Time Line)
The Department of Transport and Regional Services another regulatory body deals with the consumer interest of not only the operations of these airlines but also the operations in airports (BTE, 2000).
“Buyers are a strong competitive force when they are able to bargaining power over price, quality, and terms of sale or service” (Strickland, 2003)
The demand for services provided by these operators is driven by:
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