A Case Study (Qantas Airways)

Qantas Airways (Company Overview)

Qantas was established by pioneer aviators Paul McGinness and Wilmot Hudson Fysh and grazier,
Fergus McMaster, and registered in Brisbane on 16 November 1920. The company takes its name
from the initial letters in the words in the original registered title - Queensland and Northern
Territory Aerial Services Limited. After the first Board meeting in Winton on 10 February 1921,
the company relocated to Long reach later the same year, Brisbane in 1930 and to Sydney in 1938.

Today, Qantas is the world's second oldest airline and Australia’s largest domestic and
international airline. Qantas is also recognized as one of the world's leading long distance airlines,
having pioneered services from Australia to North America and Europe. Qantas employs
approximately 34,000 staff across a network which spans 135 destinations in Australia, Africa, the
Americas, Asia, UK/Europe, and the Pacific.

At 1 October 2003, Qantas operated a fleet of 193 aircraft, comprising Boeing 747s, 767s, 737s
and 717s, Airbus A330s, British Aerospace 146s and De Havilland Dash 8s. Qantas is Australia's
leading domestic airline, operating more than 5,000 domestic flights a week and serving 58
destinations in all states and mainland territories. Qantas operates nearly 540 international flights
every week, offering services to 77 destinations in 32 countries. The airline serves major cities in
the Asia/Pacific region, the UK, Europe, North America, South America and southern Africa

Qantas Airways (Whole Story)

Rising fuel costs during 1999 and 2000 created a pressure on the airline industry. The fuel price
increase came quickly and was unanticipated. For Qantas Airways, Australia’s largest airline,
this was just the beginning of difficulties. The airline also had to deal with two new domestic
competitors, Impulse and Virgin Blue, and with higher user fees at Sydney Airport. On top of
this the airline faced the need to upgrade its fleet, replacing aging aircraft and buying new 500-
seated planes. Also, the economy in Australia slowed down in 2000, and the Australian dollar
was sinking. Finally corporate clients managed to find or negotiate low ticket prices by using
computerized planning models and the Internet. The problem was this: Could Qantas the world’s
second oldest airline, survive?
Qantas decided its salvation lay partially in IT. Qantas Information Technology supports the
information systems used throughout the Qantas Group and is involved in the acquisition,
development and application of new systems. Major projects include the migration of the Qantas
reservations and ticketing systems to Amadeus in November 2002, the implementation of the
Integrated Revenue Information System (IRIS) in April 2002, and ongoing joint investments in
the evolution of yield management systems with British Airways.

In addition to traditional responses such as buying fuel contracts for future dates, Qantas took
major steps to get into e-commerce. Qantas has introduced a range of E-Commerce initiatives
aimed at consumer and corporate customers, and travel and purchasing partners. The Qantas
internet site - qantas.com - allows customers to make domestic and international bookings and
provides a facility for Frequent Flyers to redeem their points for travel. It also provides product
information, online schedules, arrival and departure information, company history, general
information about Qantas and major media releases. The capacity of the site was demonstrated in
September 2001 when more than three million hits were recorded in 24 hours. Qantas is a founding
member of Zuji - the Asia-Pacific travel website which was launched in July 2002. Qantas also
operates a special web site for Australian travel agents offering access to Qantas news, information
and special offers.

Business-To-Business Initiatives

Joined a purchasing business-to-business e-marketplace (called Airnew Com.) which links a

dozen major airlines with suppliers of direct supplies: fuel, fuel services (general maintenance
services, catering and so on. The marketplace operates with electronic catalogs and conducts
different types of auctions.
• Joined another marketplace, called corprocure.com, together with thirteen other large
corporations in Australia for the. Purpose of buying indirect goods and services such as office
supplies, light bulbs, and airline, maintenance services
• Formed a Pan Pacific e-selling marketplace that includes a full spectrum of travel services (air,
hotels, cars. etc). It provides a chance for Qantas’s business partners, such as travel agencies, to
provide special and personalized services to their customers, at competitive prices. This e-
marketplace will also sell direct 10 individual customers.

Business-To-Consumer Initiatives

• Sent an e-mail to 2.4 million Qantas frequent flyers, inviting them to book direct online and
rewarding them with bonuses and an opportunity to win $10,000 (Australian).
• Began providing information, including personalized information such as flight delays, to
travelers via mobile phones and other wireless devices.
Other Initiatives

• Set up a portal for Qantas travel agents that provides information and online training
(gdstraining.qantas.com.au).
• Established Qantas College Online, which offers dozens of courses online to help train 30,000
Qantas employees in 32 countries (qfcollege.edu.au). This is part of the airline's business-to-
employees (B2E) initiative.
• Another B2E project is online banking services. The company operates a credit union with
50,000 members worldwide, and members make over 100,000 transactions a month at
qantrascu.com.au. Services are comparable with those of other commercial online banks.

Strategic Alliances

• Initiated several non-travel projects with Telstra (Australia's largest telecommunications

company). Co-branding of credit cards and mobile phones are two examples of joint ventures
undertaken.

Leading an old-economy company into the digital economy is not easy. It means interfering with
power structures and fitting new-economy strategy with old-economy ways. But Qantas knew
that this must be done, and did not expect results overnight. To implement all EC initiatives will
take years and hundreds of millions of dollars. Yet, as early as 2003, Qantas expects to reap an
estimated savings of $85 million (Australian) per year in reduced communications and
advertising costs. Also, it expects to increase revenue by $700 million (Australian) annually from
non-travel sales. Many airlines, including United Airlines (united.com) and CathayPacific
(cathaypacific.com), are involved in similar projects.
Question.1
Which of the following business pressures is LESS applied in the case of Qantas Airways?
A. Market Pressures
B. Society Pressures
C. Technology Pressures

Question.2
Which of the Initiatives that Qantas took to counter the business pressures are NOT related
to the critical response activities suggested in the case?
A. E-Marketplace Formation
B. Business-to-Consumer Initiatives
C. Fuel contracts buying for future dates

Question.3
Which of the following Information Technologies are NOT utilized in the Qantas’s efforts to
cop with the business pressures?
A. Internet and M-Commerce
B. Optical Networks
C. Corporate Portals

Question.4
Qantas has E-Commerce Buying and selling projects. Which of the following is a perceived
benefit of E-Commerce selling activities?
A. Possibility to reach a large number of suppliers
B. Intermediaries Elimination
C. Enhancement of Customer relationship