BX3174: Management and Leadership Assessment 2: Managing Leadership Turbulence at Qantas
BX3174: Management and Leadership Assessment 2: Managing Leadership Turbulence at Qantas
BX3174: Management and Leadership Assessment 2: Managing Leadership Turbulence at Qantas
Assessment 2
Students:
Ahri Tallon 12985997
Christina Fresta 12706631
Nicole Hindle 12547883
Executive Summary………………………………………………..………pg. 3
Section 5: Recommendations…………………………………………….pg. 9
Conclusion…………..…………………………………………………….pg. 12
Reference List…………..………………………………………………….pg. 13
Executive Summary
BX3174 Assessment 2: Case Study 2
The global airline industry is in turbulent times with a complex business environment and
dynamic change facing it on many different fronts. As the Australian airline industry leader,
Qantas Airways Limited, (‘Qantas’), is in an important and unique position to take leadership to
bring stability, quality and consistency to the Australian competitive environment.
Global change is in motion forcing transformation to both Qantas and its competitors in the
areas of security and safety, oil resource limitations, environmental regulations, airport
congestion and overcapacity. These forces all call for mitigation and adaptation based change
management strategies to overcome the rapid and often disruptive impacts that these issues
and more are causing.
Qantas leadership has displayed bold conviction, determination and resilience in managing a
consistent strategy to bring the company through such an uncertain period in the last decade.
This has brought the company back to stability and put it in a position to plan for the future on a
solid foundation. This has been essential because over the coming decade these same qualities
and more will be needed to meet the challenges of the future. The types of strategies required
to overcome impending challenges will require creative, transformative, systems and holistic
thinking to bring about solutions that may not always be easily accepted by internal and external
company stakeholders.
For the Qantas leadership to be able to successfully implement these strategies they will need
to develop a comprehensive and effective leadership development and management strategy
that supports the whole company to be as adaptable, flexible and resilient as possible. The
below recommendations and the analysis within this report has been written in support of this
leadership strategy development process.
Position
Qantas is widely regarded as the world’s leading long distance airline and one of the strongest
brands in Australia (Qantas, 2015). A competitive advantage is drawn, by the combined market
share of Qantas and Jetstar’s standout performance in the aviation industry (FED, 2014). The
competitive advantage that has been gained by Qantas through the use of adding superior
value to the services in which they offer. For example, Qantas is Australia’s only full-service
airline; bags, food, drinks, and entertainment are included with every fare. By offering a unique
experience for its passengers, Qantas has created a service, which is difficult for its competitors
to imitate easily. Qantas have also gained leadership in the aviation industry, through their
ability to offer a premium service, something that its competitors are unable to offer. This allows
Qantas to hold a valuable position within the airline industry, which therefore creates an
economical advantage for the company.
Process
The rate of global change and environmental complexity has dramatically increased market
volatility and the overall level of risk and uncertainty for business leaders in today’s world
(Hendrickson, 2010). In August 2011, when faced with increasing levels of debt Joyce
announced a process to enact change within the company that would reorient its strategy and
bring it back to sustainable profitability (Qantas, 2011). Throughout the ensuring saga Joyce
used methodical decision making processes to evaluate his context, consult with his followers
and implement changes in what was often a crisis crippled industry environment. This required
a ‘helicopter view’ to deal with the complex and evolving situation and make bold decisions such
as to ground the airlines fleet in the interest that he saw was the long-term future of Qantas
(Mansell, 2011). Joyce demonstrated high levels of the essential leadership characteristic of
self-awareness in the way he approached and implemented this decision (Goleman, 1988). He
followed a process of assessing his and the company’s past, present and future to be aware of
his person, understand his task and decide on the philosophy he would take forward
(Mostovicz, 2009). It is reported that he managed the complex industrial interaction with a view
of the whole organisation which included the political and economic environment to ‘establish
cause and effect’ of his decisions (Grint, 2007). Joyce achieved this by actively consulting with
his followers in the form of his executive team and board to assess three alternative pathways
to handle the dispute from which they determined that their own industrial action was necessary
to remove ‘old fashioned work practices’ (Stribling, 2013).
In terms of future threats, it is suggested, the airline industry would ‘take longer to recover from
another large-scale attack like 9/11’ (Eurocontrol, 2009, p. 22). Eurocontrol (2009) states the
‘devastating effect of terrorism using an aircraft as a bomb against targets has been
demonstrated’, as it creates enhanced emotions affecting travellers’ comforts and their
willingness to travel (p. 22). Therefore, as a result of 9/11 ‘some people still avoid US airlines for
fear of attacks’ (Eurocontrol, 2009, p. 22).
Correspondingly, Eurocontrol (2009), argues although airline security and safety is key, ‘100%
secure airport transit is impossible to guarantee’ in the coming years (p. 22). Whilst this is true,
the AAI can adopt improved safety measures to better deal with this challenge.
Environmental Concerns
The environment is another major challenge facing the airline industry over the next decade, as
more people become aware of our man-made environmental damage (Eurocontrol, 2009, p.
15). Air travel already presents ‘some of the most significant environmental impacts... including
high levels of fuel consumption, noise, air pollution and waste production’ (Lynes and Dredge,
2006, p. 117). In the next five-year period, with an increase in air travel expected, (Lin, 2015a,
p. 4; Lin, 2015b, p. 4), it can only be assumed, that this growth will be met with an increase in
the abovementioned environmental impacts despite ‘UN climate talks... to curb global warming’
(Davey, 2015; Eurocontrol, n.d.). These environmental concerns may ‘bring stronger regulation
of air transport, such as a cap on fossil fuel usage or limitations on the free use of airspace’,
which will create the added issue of capacity (Eurocontrol, 2009, p. 15). As a means of tackling
these environmental concerns, Osborne (2013) recommends biofuels and renewable energy
sources be used as replacements for traditional fossil fuels (para. 11). However, ‘the sheer
quantity and expense in production... means that it is not necessarily financially viable’
(Osborne, 2013, para. 11).
The impacts of climate change are adding urgency to the need to reduce emissions. Soon
emissions reducing legislation is likely to be placed on industries including the airline industry
(Qantas, 2014). When implemented, such policy will add immediate costs to emissions intensive
carriers. Estimates of a total industry added cost of above $8billion over the next 8 years if
applied in the European Union alone (Osborne, 2013). Since 2006, fuel costs have risen above
labour costs as the highest cost category for airlines (MIT, 2015). Qantas will face price
competition from airlines that are able to utilise fuel-efficient plane designs and decrease their
emissions intensity with the use of biofuels (Qantas, 2014; Ryan, 2015). In addition, alternative
forms of transport will continue to expand that could significantly impact Qantas. High-speed rail
BX3174 Assessment 2: Case Study 8
from Brisbane to Melbourne is predicted to take a sizeable market share from the airline
industry as customers seek fast, affordable and emissions low transport (Emissions, 2014).
Section 5: Recommendations
Security and Safety
With threats to security and safety a key challenge facing the airline industry in the future,
Qantas leadership must plan for the change. Terrorist attacks similar to 9/11 are unforeseeable
and so would constitute unplanned, or revolutionary change (Nahavandi, 2012, p. 282).
However, whilst these threats are unforeseeable, conscious thought by leaders having regard to
past events, will help Qantas plan for this changing context.
Safety has always been Qantas’ first priority (Qantas, 2014, p. 17). In recent times, Qantas has
responded to global and geopolitical events, specifically, the Malaysian Airline tragedies, by
implementing new crisis response strategies, and ‘a robust threat monitoring program’ to ensure
all risks are appropriately mitigated in the future (Qantas, 2014, p. 17). This is one example, of
how the practice of Qantas leadership has been shaped by context in the past. In respect of
this, it appears Qantas have adopted the appropriate strategy when leading change. That is,
whilst these tragedies ‘have not directly affected... [Qantas]’, they have influenced the change
required to address security and safety concerns more generally (Qantas, 2014, p. 8). Hence, it
appears Qantas have also implemented an appropriate leadership point of view (‘LPOV’), as it
has defined the problem (namely, security and safety concerns), and have understood the
forces at play to plan for this growing change.
Whilst it is unknown, whether there are flaws in these systems, it is recommended that Qantas
leadership implement Kotter’s eight-step plan for implementing change (Clawson, 2012, p. 323-
BX3174 Assessment 2: Case Study 9
324), to strengthen the programs already in place, and help develop alternate solutions. Qantas
should consider alternative solutions in terms of minimising security risk, and dealing with a
security threat or crisis, as future attacks will take more time to recover from (Eurocontrol, 2009,
p. 22). Further, as noted, improved safety measures should be adopted to deal with future
security risks. These measures must be based on three essential principles – ‘dealing with
probable rather than all possible threats’, ‘deterring rather than detecting threats’ and ‘making
more use of “risk-based” analysis to define security measures’ (Eurocontrol, 2009, p. 22).
Moreover, whilst future threats may increase costs, Joyce’s approach to leadership in
responding to increasing levels of debt in August 2011, represents the appropriate framework
for Qantas leadership to deal with this issue (Qantas, 2011).
With the cost of fuel increasing, Qantas is required to assess the impact it has on their fare
prices, and assess the situation and plan for change to their current processes. Qantas is
required to decide whether it is feasible to increase fares to cover the cost of fuel, or whether
they are going to follow in the footsteps of other airlines to risk a loss in profits, in the effort to
keep ticket fares affordable. A Qantas spokesperson, states, ‘[w]e have some very competitive
fares in the market but the reality is that fuel remains a huge cost that we need to manage’
(SMH, 2014). In addition, Qantas is continually reviewing their business and identifying
opportunities to further improve fuel efficiency outcomes.
Environmental Concerns
With growing environmental concerns, Qantas leadership must implement futures thinking and
systems analysis to plan for this challenge. Environmental impacts may constitute evolutionary
change, as the effect of climate change has been a gradual progression (Nahavandi, 2012, p.
282).
Qantas recognises, to maintain sustainability in the long-term, it needs to address its present
environmental impact (Qantas, 2014, p. 26). Accordingly, Qantas ‘takes a proactive and far
reaching approach to dealing with the climate change impact of... [it’s] emissions’ (Qantas,
2014, p. 9). Namely, the airline has implemented a ‘four-pillar strategy for reducing emissions’
(Qantas, 2014, p. 9). This strategy includes employing ‘new technology, including aviation
BX3174 Assessment 2: Case Study 10
biofuels; improving operational efficiency; better infrastructure; and appropriate international
market-based measures’ (Qantas, 2014, p. 9). In terms of new technology, Qantas have
recently invested in new aircraft models, which ‘provide significant fuel efficiency benefits...
[and] minimised noise profiles’ (Qantas, 2014, p. 9).
Again, the writers recommend, Qantas adopt Kotter’s model to improve this strategy and further
develop alternate solutions to reduce their own environmental impact. One alternate solution
Qantas may embrace is to invest in alternative transport options, such as high-speed rail, which
is predicted to take a sizeable market share from the airline industry (Emissions, 2014).
Moreover, Qantas has implemented the appropriate leadership strategy in terms of dealing with
this growing challenge, as the airline recognises engaging it’s people and partners is
fundamental to achieving environmental objectives (Qantas, 2014, p. 27). Namely, Qantas
employs various activities to encourage employee involvement in addressing these
environmental challenges faced by airlines. These activities include, running an internal Green
Team, honouring employees for outstanding environmental action with the annual Environment
eXcel Award, and participating in the ZooX Ambassadors Program (Qantas, 2014, p. 27).
Accordingly, it appears Qantas have adopted the appropriate strategy and LPOV, as it has
defined the problem (capacity management) and have started planning for this change by
implementing this apt scheme. However, Qantas could further strengthen their approach to this
challenge by adopting Kotter’s model and by creating alternative solutions, e.g., continuous
descent landing, as explained above.
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