CASE STUDY ASSESSMENT 2: QANTAS INTERNATIONAL
All over the nation, news of Qantas’ restructuring of Qantas International (QI) has reached ears of many Australians and many have voiced out their concerns on the matter. Qantas International has been the weak link in the operations of Qantas group compared to its domestic, freight, low-cost carrier Jetstar and frequent flyer businesses. Qantas’ new strategy involves expanding its base of operations into the Asian region to capture the market share of a boom in airline activity. With this new strategy, it plans to introduce job- cuts of 1000 employees mainly pilots and engineers. According to the two articles given, the Australian and International Pilots Association (APIA) and the Australian Licensed Aircraft Engineers Association (ALAEA) are pressuring Qantas’ Chief Executive Officer (CEO) Alan Joyce to abolish his downsizing policy. The unions and also the general public wants to keep jobs in Australia instead of having it outsourced to other countries which according to the CEO, will significantly reduce QI’s labour costs and increase their profitability.
2.0 STRATEGIC CONTINGENCIES AFFECTING STRATEGIC CHOICES & HUMAN RESOURCE PLANNING 3.1 Environmental factors affecting strategy
The fast changing environment of the aviation industry plays a major role in QI’s restructuring. A number of events have caused QI to re-evaluate its strategies in order to adapt to its environment. The main factor in this case would be due to the economic instability experienced due to the recent Global Financial Crisis (GFC). Various costs have risen over the past few years, significantly fuel and labour costs. As the price of fuel is not of QI’s control, labour costs will need to be reduced significantly to accommodate fuel costs. With the Asian economy growing extensively which results in more air travel within the region, QI has seen Asia as a region where they can expand their business into and gain a share of the growing market. New market opportunities will open up due to the growth trends of national/ international economies (Connor and Carson, 1982). Another factor would be the technological advancements of aircraft design where the CEO claims that the new planes would need less transit checks/ maintenance done, therefore reducing the need for engineers. According to Connor and Carson (1983), technological change within an organization puts it ahead in innovation which has an impact on its product/ services and market development. 3.2 The Asian Hub Strategy
QI has unveiled its plan to penetrate the Asian aviation industry by relocating its hub to South- East Asia, either in Singapore or Malaysia. This move is said to bolster Qantas’ reach for more destinations within Asia and also as a base for connecting Qantas flights from Australia to Europe. Along with this is a plan to form alliances with British Airways (BA) and Malaysia Airlines (MAS) so that they can share routes which will increase choices of destinations for Qantas’ customers. Nueno (1990) explained that alliances are agreements by different organizations with the same goal(s) and ambition(s) to share their common resources in order to achieve their goal(s), it occurs when an organization has very high ambitions but not enough resources. With these alliances, Qantas will reduce the number of its pilots as the routes which are already operated by the respective airlines will be flown by their own pilots, not Qantas pilots. Due to this announcement, Qantas pilots are insecure about their jobs and that is what the APIA is fighting for. 3.3 Strategic Alignment
Currently, QI has a surplus of pilots and to avoid redundancy, pilots have been told take annual leaves to reduce their annual leave balances, therefore reducing the costs of pilot wages. However, with the new alliances to be forged, the issue of downsizing pilots look imminent as it will reduce costs significantly which is part...
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