Marketing Mix Selection Project - Aviation Industry In Australia

Introduction

The Aviation industry in Australia has significant importance in the Australian economy as in 2017 it contributed $15.91 billion to the economy and also employed 88,000 Australians across different subsectors (Australian Industry Standards, 2018).  Over the next few years, the industry is expected to demonstrate continuous growth, which could be attributed to the economic growth in Asia. The underlying reason is that by 2030, Asia is expected to be the home to 2/3rd of the global middle class, which will have disposable income as well. However, it is expected that this market segment will be preferring low-cost airlines and therefore the entire industry is focussing on this market segment (Australian Industry Standards, 2018). However, in comparison to the global market, the Australian domestic market is not expected to demonstrate a continuous growth as evident from a 2.3% decrease in ASK (Available Seat Kilometres) and 0.3% increase in RPK (Revenue Passenger Kilometres) in 2017. Australian airlines are responding to the lack of growth by reducing their capacity (Australian Aviation, 2017).

The not-so-attractive prospective for Australian airlines require that the Australian airlines understand what is not working in their favour and what changes they must undertake. The above problems are faced by Qantas Airlines as well. With a revenue of $15,566m in 2017, Qantas is the third oldest airlines in the world. The company is the flag carrier of Australia and is the largest airline in Australia in terms of fleet size (309 aircrafts in 2017) (Qantas, 2019).

Goi (2009) argued that an effective way for an organisation to adapt as per the changing environment is through its marketing mix. This report aims to develop a marketing mix for Qantas. However, a precursor to developing a marketing mix is to analyse the environment in which the organisation is operating, which is done next. 

Environmental analysis

Gupta (2013) argued that the management of several organisations have realised the significant role which environmental factors play in planning and decision-making so that long-term business goals can be achieved. This can be attributed to the fact that there needs to be a fit between the strategy of the organisation and the external environment. Gupta (2013) recommended that the environment can be understood by using PESTEL tool as done below. 

Political- In the aviation sector, political factors play a significant role as it determines if an airline from a country will get permission to use airspace of other country or not. In the case of Qantas airlines, by virtue of it being the national carrier of Australia, it gets support from the government. In addition, the Australian government has cordial relations with other countries, especially in the emerging aviation markets of Asia (Alglas, 2019).

Economic- The Australian economy is not doing well enough to be considered ‘attractive’ for the aviation sector, therefore the domestic aviation industry is expected to have lacklustre performance. However, the international aviation market (especially in Asia) can grow due to increased economic activity and availability of disposable income with people in these countries. Another economic concern for the airline industry is the rising fuel cost which is dependent on several economic factors (Alglas, 2019).

Social- In the emerging markets, there is a rise of a new middle class (Alglas, 2019). In its domestic market, Qantas has built a cultural and emotional bond with the Australians by offering ‘Australian Hospitality’ (Qantas, 2019).