Virgin Australia Airline: Management Report

Topics: Qantas, Airline, Management Pages: 13 (4262 words) Published: September 15, 2013
Virgin Australia Airline Report
Report on external environment and management functions
Taffy Ghozali, Hafizhah Chandra

Executive Summary

The purpose of this report is to examine Virgin Blue’s external environment followed by its impacts to the organization as well as how management functions could help overcome the external environment for the organization to compete properly in the domestic airline market. Virgin Australia is Australia’s second largest domestic airline, commenced in operations back in 2000 as a low-cost carrier (LCC) and has successfully survived in the market. Major shareholders include Air New Zealand, Singapore Airline and Etihad Airways. The airline rebranded in 2011 as a part of their 5-year turnaround plan, and since then target a full-service structure in addition to its LCC. Upon the release as a full-service carrier, Virgin Australia enjoyed a successful performance in 2011, gaining profit of $AUD23M. However, the following period, the airline is expected to face a loss of $AUD110M presumably due to the acquisition, raw materials price, government regulations and new online ticket-booking system. Sources for this report is retrieved from management textbooks, management journals, company website, online newspapers, official Australian government report database and magazines. Most online newspapers originate in Australia while some global online newspapers are as well included. Applying Fayol’s management functions, Daft’s environmental domains and Duncan’s environmental uncertainty frameworks, it is noticed that Virgin Australia’s environmental domain may be categorized as being in high uncertainty. Some of the required management functions have not been in place, as required by firms in high uncertainty situation, and it may be the basis of their inability to compete effectively in the current year. Out of 4 (four) management functions outlined by Fayol, Virgin Australia presents a strong accomplishment in leading, while organizing may require additional improvements especially in IT department. On the other hand, two remaining functions may lack of appropriate level of fulfillment, specifically cost controlling which leads to huge profit loss, while unavailability of satisfactory planning has triggered limited external information flowing into the company and imperfect IT system design resulting in a number of severe IT outages. Strategic recommendations include executing corporate actions step by step, balancing short and long run costs, revising 5-year turnaround plan to mitigate environmental changes, outsourcing IT system and controlling carbon tax.

Introduction
Virgin Australia (formerly Virgin Blue) is Australia’s second largest domestic airline, which just recently acquired Tiger Airways and Skywest Airline Ltd in 2013 (Schwarten, 2013). Commenced in operations back in 2000 as a low-cost carrier (LCC) and has successfully survived in the market. Major shareholders include Air New Zealand, Singapore Airline and Etihad Airways (O’Sullivan, 2013). Under the leadership of new CEO, John Borghetti, the airline rebranded in 2011 as a part of their 5-year turnaround plan, and since then target a full-service structure in addition to its LCC (Fairfax Media Publications, 2013). Upon the release as a full-service carrier, Virgin Australia enjoyed a successful performance in 2011, gaining profit of $AUD23M. However, the following period, the airline is expected to face a loss of $AUD110M presumably due to the acquisition, raw materials price, government regulations and new online ticket-booking system (Flicking, 2013). Objective The objective of this report is to examine Virgin Blue’s external environment followed by its impacts to the organization as well as how management functions could help overcome the external environment for the organization to compete properly in the domestic airline market. | ScopeThe discussions presented here are aimed at data from within Australian...

Bibliography: Aspire Aviation. (2013). The best is yet to come for Virgin Australia. Aspire Aviation. Retrieved from www.aspireaviation.com
At-Twaijri, M.I.A
CAPA Centre for Aviation. (2013). Virgin Australia. Retrieved from www.centreforaviation.com
Courtright, J.A., Fairhurst, G.T., & Rogers, L.E
Daft, R.L. (1993). Introduction to Management (7th ed.). United States: South Western Educational Publishing
Daft, R.L
Department of Infrastructure and Transport. (2013). Domestic Air Fares Indexes. Retrieved from http://www.bitre.gov.au/statistics/aviation/air_fares.aspx
Duncan, R
Duncan, R.B. (1972). Characteristics of Perceived Environments and Perceived Environmental Uncertainty. Administrative Science Quarterly, 13(1), 313-327
Emery, F.E
Fairfax Media Publications. (2013, August 30). Virgin pays the price for turnaround plan. Financial Review. Retrieved from www.afr.com
Flicking, D
Gans, J., King, S., & Mankiw, G. (2012). Principles of Microeconomics. Australia: Cengage Learning Australia Pty Limited
Herald Sun
Hume, N. (3013, May 16). Virgin Australia shares hit by profit warning. Financial Times. Retrieved from www.ft.com
Jacob, P
Javidan, M. (1984). The Impact of Environmental Uncertainty in Long-Range Planning Practices of the U.S. Savings and Loan Industry. Strategic Management Journal, 5, 381-392. Retrieved from www.onlinelibrary.wiley.com
Jemison, D.B
Kwek, G. (2013, August, 6). RBA Cuts Rates to Record Low. The Sydney Morning Herald. Retrieved from www.smh.com.au
Lawrence, P.R
Levy, M. (2013, January 15). Booking system delays anger Virgin Australia customers. The Sydney Morning Herald. Retrieved from www.smh.com.au
Lunenburg, F.C
Majumdar, A. (2013). We won’t chase market share, Virgin vows. Travel Weekly. Retrieved from www.travelweekly.com.au
McCan, J.E
O’Sullivan, M. (2012, January 27). Rising Jet Fuel Prices Weigh Heavily on Qantas, Virgin. The Sydney Morning Herald. Retrieved from www.smh.com.au
O’Sullivan, M
O’Sullivan, M. (2013, August 6). Virgin Australia flight delays after check-in system crashes worldwide. The Sydney Morning Herald. Retrieved from www.smh.com.au
Pennington,S
Powell, T.C. (1992). Organizational Alignment as Competitive Advantage. Strategic Management Journal, 32, 119-134. Retrieved from www.onlinelibrary.wiley.com
Robbins, S., Bergman, R., Stagg, I., & Coulter, M
Roberts, G. (2013, August 30). Virgin Australia records $98.1m loss. The Wall Street Journal. Retrieved from www.theaustralia.com.au
Rosenthal, E
Schwarten, E. (2013, July 8). Tiger Air Becomes Part of Virgin. News Corp. Retrieved from www.news.com.au
Teaupa, A
Thompson, J.D. (1967). Organizations in Action. New York: McGraw-Hill
Trading Economics
Virgin Australia Airlines Pty Ltd. (2013). Company Overview. Retrieved September 1, 2013, from www.virginaustralia.com
Webber, T
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Strategic Management and Virgin Australia Essay
  • Virgin Australia Essay
  • Management Report Essay
  • Virgin Australia Case Study Essay
  • Virgin Australia Marketing Plan Essay
  • Airline and Virgin Atlantic Essay
  • The Competitive Environment of Virgin Airlines Essay
  • Essay about A Case Study of Virgin Airlines

Become a StudyMode Member

Sign Up - It's Free