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After a last week's grim news about cost-cutting, job losses and the ongoing fallout, Qantas today published a series of ads in both the The Daily Telegraph and The Sydney Morning Herald.
The company, which will axe 1,000 jobs in a bid to save $2bn, touts its national heritage, food, punctuality, entertainment and new uniforms. Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.
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Qantas is Australia's largest international and domestic airline, with many sub-brands to it's name including Qantas Loyalty. Focus on data and creating real-value through their communication; collecting data, segmenting and using technology, with targeted email campaigns is key.
Qantas started in 1997 as a Frequent Flyers programme for high flyers and in 2007 created their Qantas Loyalty, launching Frequent Flyer Store a year later to the mass market and not just for higher flyers - $660m rewards are redeemed annually.
By understanding their customers' needs and using data intelligence available to them, they entered the credit card market which generates 300m cash for the company with 9% growth year on year and partnered up with companies like Woolworths, to offer value added benefits which in turn has led to more flights being booked. By using Innovation available to them, they also introduced Iphone Apps, Pre-paid cards and acquired online retail businesses. They know in advance if there are any particular customers who need ' additional pampering', 'personal service if frequent flyer' or simply a new customer who flies with other competitors. Providing these tailored benefits to their customers and improving customer satisfaction, has also increased membership by 60% since 2006 and increased profit by 80% from 2008 - 2012.
One of their slides, illustrates their strategic application of using data across the entire A organisation to make decisions which affect the consumer and business goals. To drive change throughout the organisation, they had to take an unorthodox leadership approach and ensure that their Senior Managers across all areas were very ' commercially results-driven', who are skilled commercial leaders and can articulate results into actionable insight and strategy.
For instance, their CEO manages the 'Insights and Innovations department which includes analytics rather than it being integrated into 'Marketing'. Using and understanding data, and building relationships is allowing them to expand other adjacent businesses. Their knowledge and successes has enabled them to help other companies: focusing on analytics, insight and loyalty management.
PR executives at Qantas really should’ve known better than to run a competition on Twitter in the middle of an industrial dispute – a dispute which a couple of weeks ago affected around 70,000 passengers across the world when the airline grounded its entire fleet for two days. Offering a prize which included a luxury amenity kit and a pair of Qantas pajamas, Australia’s national carrier asked entrants to tweet their “dream luxury inflight experience,” using the hashtag QantasLuxury. Twitter being Twitter, word got around fast, prompting a flood of sarcastic remarks and negative comments to the hashtag’s page about the airline, some from people that had been directly affected by last month’s grounding. The fleet was grounded last month without warning by Qantas chief executive Alan Joyce after unions said they planned to step up strike action, which is centred around pay and conditions for pilots and ground staff. Karalee Evans, a senior director with public relations agency Text 100, told The Australian, “I think Qantas airways has greatly underestimated the ill will that is still out there. The incident highlights how even giant companies like Qantas, with all the resources they have to hand, still have some distance to go before they find their way with social media sites like Twitter. Oh, and if you happen to be on the hunt for a new pair of PJs, the competition is still open. There was a huge industrial union strike by the engineers and pilots against Qantas in the last 2 months. So heaps of passengers were really really angry when they discovered, without notice, that Qantas had cancelled all flights.
If you’ve ever had the desire to see your name emblazoned on the side of an Airbus A380 or a Boeing 737, this is the marketing push for you.
According to the Australian Business Traveller, Qantas is hoping to get around 1,600 names on the A380. The Australian market has recently started paying close attention to the growth strategies of the country's two largest airline groups, Qantas and Virgin Australia. In the perennial task of pleasing shareholders by increasing profits, Virgin Australia is in the fortunate minority by having a number of ways to do so.


Virgin's 1H2012 profit increase of 34% reflected the yield growth on flat load factors (there was also capacity increase).
Virgin's proposition – corporate competition – has been met with demand, allowing it to also grow profits the traditional way of increasing the number of flights, particularly on trunk route triangle Brisbane-Melbourne-Sydney flights. Qantas, however, is largely not afforded these dual opportunities since it is a mature carrier that already has a corporate and government grasp. Instead Qantas has to add services (as well as ancillary fees and boost its highly profitable frequent flyer division). The carrier has found, as shown in the graph above using an actual sample, its return its disproportionately highest (the peak on the s-curve) when it accounts for 65% of capacity in the market, hence its intent to add capacity when others do so it can maintain its share. This focus on maintaing a 65% share has been referred to as a line in the sand, and Qantas intends to maintain it in coming years.
While some routes will see Qantas respond to Virgin's changes, either through capacity or service level – as has occurred from Melbourne and Sydney to Perth – and that will result in greater fare competition, always of interest to the public.
As Jetstar continues to account for a higher proportion of Qantas Group traffic – in 2H2012 Qantas Group on average will grow 3% while Jetstar will grow 9% domestically – Qantas' 65% model loses relevance to the bottom line. An implication for the Qantas Group is adding capacity where it either cannot be fully absorbed or can be absorbed with only lower yields, a prospect that does not bode well as the domestic market enters a slowdown.
Capacity is upbeat and more positive in smaller markets as well as new markets: Geraldton-Perth cracked the top 55 list in Dec-2011 as the 54th largest route while Brisbane-Gladstone entered in May-2011 and in Dec-2011 was the 32nd largest. Virgin Australia is growing its newly-launched regional ATR operation, which includes Brisbane-Gladstone services, while Qantas is also growing its regional QantasLink division. Perth-Port Hedland, a resource base, is seeing growth from Qantas of 50%, although from a medium-sized base.
East Coast-West Coast flights, which are trunk routes but also serve the resource industry, are growing in limited circumstances. Meanwhile, the Melbourne-Perth market, which was relatively ignored during last year's Sydney-Perth expansion, will see significant growth, primarily from Virgin Australia as additional widebody A330s, delivered in recent weeks, are placed into service on the route. Once again the growth story is stronger in smaller markets, like Melbourne-Hobart, where Jetstar and Virgin Australia are increasing capacity by upwards of 50%.
The year's two key themes of increase supply and weakened demand are being met by the two main airline groups and their respective strategies.
They are avoiding over-competition and the fare wars that have engulfed other markets, but this is a result of demand still being positive, albeit not as high as it used to be. Air New Zealand has been on a long haul growth streak, opening five destinations since 2015. The JV follows link-ups between Air NZ and Singapore Airlines, Cathay Pacific and Air China. A top line of of the industry's smartest thinkers will debate the biggest topics in media, advertising, marketing and creativity. Futurelankan accepts no liability for the content of this post or for the consequences of any actions taken on the basis of the information provided, unless that information is subsequently confirmed in writing. In this case study, I summarise how they are using data and innovation to understand their customers, drive loyalty and ultimately increase ROI. Use Customer insight and analyticsA .Vaughan spoke about it as: 'Analytics is operations, prediction and change and not reporting'!
It also involved ensuring that their management team were using systems, embraced change and understand how to use systems and data as part of their decision-making. With all this going on, the PR department somehow decided it was the perfect time to launch a competition via Twitter.
With only a few serious entries spotted among the #QantasLuxury tweets, you may well have a decent chance of winning. It all culminated last Friday to Qantas grounding its entire domestic and international fleet indefinitely in order to stymine the industrial action. To grow, the two must each pursue their present strategy, although that does not mean that for every new flight Virgin puts into the market Qantas will replicate in a tit-for-tat move.
First is the traditional, high-capital expenditure method of adding more flights and hoping the market absorbs the capacity.
It achieved a 10% share of the corporate and government traffic through product changes and investments, such as lounges. The company's internal analysis has determined its highest proportion of revenue share is achieved when the group has a 65% market domestically.
But the two are also seeking new and growing markets, knowing fare undercutting is unsustainable and in neither airline's interest.


Missing in the equation is cost, and as a result margin, which tells a different story amongst the carriers. In Qantas' sample explaining its 65% strategy, Jetstar-only routes (red square) typically had a disproportionately lower return on revenue than routes (red circle) served by Qantas and Jetstar. Total domestic revenue passenger kilometres in Dec-2011 declined 1.8% year-on-year, attributable to depressed Tiger Australia capacity but also general reduced demand.
Such services often cater to the mining and resource industry, where additional flights are being targetted.
Sydney-Perth saw large capacity increases this year and is now showing relatively flat capacity. Virgin Australia's move up-market is allowing it to increase capacity on key trunk routes while the Qantas Group looks to maintain its 65% market share by having Qantas mainline remain relatively flat but push LCC unit Jetstar up in hopes of gaining any lower-margin traffic Virgin drops. Should demand shift south, or airlines put in too much growth in FY2013, conditions will weaken.
CAPA Membership gives you access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.Find out more and take a free trial. Manila was most recently announced and Chengdu could be next, once again giving Air NZ two destinations in mainland China after exiting Beijing.
In 2006 Qantas served 21 points outside the region and in 2016 serves 18, although this is an increase from the situations in recent years.
Yet this is not just another JV: Air NZ-United will be the largest, accounting for 25% of Auckland's long haul seat capacity. Use data intelligence to predict how to respond to customer and the marketplace and it will show you the path forward!'. Instead the two are largely pursuing low-profile but high-yield markets, stimulating new traffic and also serving regions previously neglected.
Under CEO John Borghetti, who next week marks two years at the helm, Virgin moved up-market, becoming a business carrier with the intent to double its 10% corporate and government share within three years.
Their full-service and mature counterparts have largely resorted to ancillary revenue, strongest with North American legacy carriers but also, for example, with British Airways, which charges some passengers for long-haul seat selection. There is notable decrease from Qantas in a sign its response to Virgin last year – which included the high-profile deployment of the 747-400 on the route – was over-aggressive. This changing Qantas-Jetstar traffic ratio, even if the group maintains a 65% market share, does impact the group's profit. Where Qantas has cut, Air New Zealand has grown, increasing from 10 long haul destinations in 2006 to 16 (if Chengdu is included) in 2016. The hearing lasted for 12 hours, spread over 2 days, and in the end, the Tribunal ordered Qantas to resume operations and for the industrial action to cease, with the proviso that in 21 days, Qantas and the unions come to an agreement.
Qantas resumed flying 2 days ago and things are getting back to normal, but there is quite a lot of anger towards Qantas’ (mis)management in the way they decided to ground the entire fleet without notice.
The 25 largest domestic routes shrunk 2.0%, which includes decreased demand on routes Tiger never served.
The two are also concentrating on under-served markets that have been subject to high prices, as well as resource flying that offers some of the largest yields.
Further growth projections, to be released when the carriers report annual results in Aug-2012, will indicate if Australia will continue to brave the global economic downturn or if fleet flexibility, which the carriers have routinely pointed out, will be exercised. With Air New Zealand due to receive nine 787-9s through 2019, with only some of those due to replace existing aircraft, the airline could serve more points than Qantas.
In total, 80% of Air NZ's long haul capacity from NZ will be under JVs, with the balance in monopoly markets. But note that grounding the entire fleet is an action protected by law in response to industrial action.
A sale of Air NZ's stake in Virgin Australia could pay the cost of three widebody aircraft and possibly accelerate Air NZ's growth even more. Qantas offers upwards of five daily flights to Singapore whereas Air NZ offers just one.



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