BUSS 2081 Management and Organisation

Introduction

The 2019 Corona Virus pandemic (COVID-19) has disturbed corporate operations in many industries as the next worldwide concern. The aviation business is one of the first businesses to be affected since the sickness is easily transmitted between workers. Till date, the disease has not been officially treated, leading to immense concern globally. Many governments throughout the globe have so banned transport across countries. The aviation company's market worth has since plummeted (Dube, Nhamo and Chikodzi 2021). The COVID-19 epidemic and containment attempts have challenged the profitability of the air travel business and the rest of the aviation industry leading to severe drop in demand for transport by passengers.

Additional safety and health regulations will likely contribute to a short-term increase in Qantas' operational costs. Furthermore, methods of social distance utilised for air transport might lead to lower passenger freight (Henriques 2020). Changes in consumer behaviour might, in the long term, lead to major changes in aviation transport demand. This situation has significantly affected Qantas operations substantially. This paper will discuss about the various factors which is affecting the business operations and sustainability of Qantas. The major external environmental factor affected Qantas has been discussed along with the various decisions which are to be made for Qantas to deal with the situation has been discussed. Lastly, a strategic management plan has been developed to deal with the domestic and international market for Qantas.

Following the situation of COVID 1, there are various external environmental factors which have affected Qantas. Each of these factors has significant influences on the business operations and the sustainability of Qantas during COVID 19. One of the major factors affecting Qantas during the COVID pandemic is the government policies. Right now, the Australian Government has closed the borders for international flight travels (Iacus et al. 2020).

Only the citizens and permanent residents of Australia can travel within the country. The Australian government has mandated specific rules and guidelines for the citizens who want to travel within Australia. The passenger should provide evidence of negative COVID-19 PCR test results from a laboratory to the international airline employee on check-in, unless subject to an exception (Suau-Sanchez, Voltes-Dorta and Cugueró-Escofet 2020). This test should be conducted 72 hours or less before the traveller has scheduled flight start time. This procedure is time consuming and will discourage many citizens to avail flight travels within Australia. This will directly affect Qantas, as the number of passengers will be greatly reduced and less number of tickets will be booked.

Qantas employees and staffs, international as well as domestic, were travelling unwittingly with Qantas staffs who were afflicted with COVID 19 virus, which is a major concern for Qantas and customers (Mhalla 2020). Previously, the staff of the airline had been excluded from the 14-day isolation rule. However, Qantas now have to deal with notifications from the Transport Workers Union that claimed violations of workplace security, as the flight crewmembers have been diagnosed with the COVID 19 virus. This new problem requires decision-making on worker safety, new self-containment guidelines for Qantas workers and other management procedures to minimise the danger of infection.

A drastic fall in air passenger demand jeopardised the viability of the aviation business and the rest of the aviation sector. The UN Civil Aviation Agency (ICAO) has indicated that international travel has decreased substantially by 60% by the end of 2020 with overall air travel returning to 2003 levels with its most recent economic impact study COVID-19 now being finished (Macilree and Duval 2020). By 2020, ICAO indicated that the number of passengers fell by 60 percent with just 1.8 billion people travelling through air transport, compared with 4.5 billion in 2019 in the first year of the pandemic, and the capacity fell by 50 percent. This is drastically affecting the economic sustainability of Qantas as; the amount of passengers has decreased significantly (Roy 2020).

Additional requirements in health and safety will undoubtedly contribute to a short-term increase in Qantas operational costs. There has also been an increase in customer queries relating to flights, extent of services and refunding requests. As Qantas has to provide the refund and credit request to the customers, the pre booked flight tickets have been cancelled which is resulting in increased cost to the company. Additionally, air transport social distancing approaches might lead to decreased passenger loads. Changes in consumer behaviour in the long term may lead to major shifts in air transport demand. This situation has significantly affected Qantas operations substantially.

Qantas has also reduced the amount of staffs and employees in the industry to reduce the cost of operations and sustainability (Macilree and Duval 2020). However, this will also affect the operational efficiency, as there will be less number of staffs and employees to handle all the work load (Sarina and Wright 2015). Pressure is building up on the existing staff and employees as more customers are demanding queries relating to flight, services which are to be provided, credit and refund request which is resulting in increased waiting times. As fewer staff and employees are handling the company’s workload, it is leading to an increase of irate customers, which is directly increasing the pressures on existing call centre staffs, flight programmers and all staff members across all staff levels, from ground crews to pilots, cabin and managers (Amankwah-Amoah 2020).

It is becoming increasingly difficult for Qantas to acquire additional funds to continue its operations. Currently, Qantas is intending to raise funds of 1.9 billion dollars through share sale. Additionally, Qantas has decreased the price of tickets to encourage customer demand in this COVID 19 Pandemic situation. However, this decision will reduce the amount of revenue from the ticket sale (Henriques 2020).

From the above arguments, it can be concluded that the social and the economic factors will greatly affect the sustainability on Qantas during the COVID 19 Pandemic. Social distancing leading to reduced customers during this pandemic situation. This is affecting the sale of flight tickets, thus reducing the revenue of the company (Dube, Nhamo and Chikodzi 2021). Furthermore, from the case study, it is seen that the COVID 19 pandemic is costing Qantas an average of 40 million dollars a week extra to continue its operations. The share prices of Qantas have also decreased significantly from 6.67 dollars per share to 2.14 dollars per share and it is becoming increasingly difficult for Qantas to source additional funds for its operational sustainability.

With reference to the case study, it can be argued that the reduction in the staffs and employees of the company has been the most rational decision that Qantas had implemented to deal with the COVID 19 pandemic situation. The reason for the decision is simple, as a part of long term strategy to survive the COVID 19 pandemic, a reduction in staff members and employees will directly reduce the operational costs to the company although the work load for the existing employees will increase. The COVID 19 pandemic situations was costing Qantas an addition of 40 million dollars every week, hence it was becoming increasingly difficult for Qantas to maintain its sustainability, given the fact that Qantas has an extensive network of workforce overseeing its operations.

However Qantas plans to reinstate the laid off employees once the COVID 19 pandemic is over. Qantas CEO Alan Joyce had decided in advance on the necessity to reduce a minimum of 6000 positions in all areas of Qantas business operations, in conjunction with senior management. Additionally, Qantas intends to remove another 15,000 staffs and employees, while foreign travel prohibitions persist, in the expectation that the end of the COVID 19 pandemic would allow the staff to be re-established.

Another important decision of Qantas is reducing the number of aircrafts in the company. Qantas has grounded 100 aircrafts for twelve months or more, and six of Boeing 747 aircraft were grounded six months before this decision was implemented. The delivery of new airbus A321 neo and another Boeing 787-9 aircraft has been postponed as these aircrafts would not be needed for operations during the COVID 19 pandemic situation. Due to substantial decreases in foreign travels, the greatly anticipated ‘Project Sunrise’, which was supposed to be a nonstop flight from New York to London, has been put on hold. An impact of reduced foreign tourism has also led Qantas to cancel 12 Airbus A350s as a result of the hasty implementation of this ambitious project. A reduction of active operational aircrafts will reduce the cost of jet fuels and maintenance costs of the aircraft, thereby reducing the cost to the company.

All these decisions for reducing the number of active aircrafts will greatly reduce the operational costs of Qantas and improve its sustainability for the duration of the COVID 19 pandemic.

Assuming, the author is the CEO of Qantas, it is possible to apply six phases of strategic management processes to prepare a method for the Qantas survival on local and foreign markets during COVID 19 limitations and for one year following removal of COVID 19 limitations. However, before implementing the six-step strategic management process, the CEO must identify the vision and the mission of the Qantas (Ansoff et al. 2018).

Qantas' mission statement is the safe and non-discriminatory transport of customers with unique requirements while ensuring the health and safety of Qantas workers and employees.

Qantas vision statement is to be the airline of choice for consumers with specialised demands, delivering a comfortable and trouble-free travelling experience while guaranteeing security and the business purpose of the firm.

After the vision and mission statement has been developed, the CEO must consider the internal and the external drivers which are impacting the operational sustainability of Qantas during the COVID 19 pandemic.Considering all of the above factors, the CEO of Qantas can implement the following six steps strategic management of the Qantas system to survive both local and international markets during Covid-19 and one year after the lifting of Covid-19 travel limitations:

• Identify the Strategic Position: The first phase of strategic management is to determine the company's immediate short-term and long-term objectives (Schilling and Shankar 2019). The short-term objective of Qantas during this situation would be to increase the value of the market share prices so that more funds can be acquired to sustain the operations of the company. Fromm the case study, it can be seen that Qantas wants to raise 1.9 billion dollars from the investors. One way to increase the market value of Qantas shares is to buy back open market shares of the company. When the share stock is reduced, the value of business per share grows, making the stock more precious. This way, Qantas can acquire more funds from the investors.
• Gather people and information: Once the company has secured a strategic position in the market, the CEO must consult with the top level managers and the board of directors who will be involved with the strategic management process (Wheelen et al. 2017). It is seen in the case study that Jester who is overseeing the budget of Qantas wants to decrease the air fares from Sydney to Melbourne to 19 dollars. Similarly, the CEO of Qantas can discuss with his managers and the board of directors to introduce new safety features for the passengers in the airplane. This will encourage the customers to buy more flight tickets as they will have an assurance the flights will be safe. Information needs to be collected for identifying any constraints which might be preventing to achieve the vision and mission of Qantas.
• Perform SWOT Analysis: A SWOT analysis of Qantas would be needed to identify the strengths, weakness, opportunities and the threats of Qantas. By identifying all the factors in the swot analysis, the CEO of Qantas can leverage the information for implementing various strategies for Qantas.
• Formulate the strategic plan: Once the CEO of Qantas has identified the strategic position of the company and has developed a set of goals and objectives which aligns with the company’s mission and vision statement, he can start to formulate the strategic plan (Engert, Rauter and Baumgartner 2016). The CEO must take into account activities that have the biggest influence on the firm and which serve to strengthen the position of the market. The CEO must guarantee that the Strategic Plan works and that the best methodology of measuring success is determined.
• Execute Strategic plan: Once the strategic plan has been developed, the CEO needs to make everyone involved in the company to execute the plan. Various tasks should be distributed among the various departments to carry out the plan. At the same time, the CEO needs to ensure that every department is following the plan correctly.
• Monitor performance: The strategic planning will not be effective unless the CEO of the company constantly monitor and manage the performance of the plan. Based on the information gathered from the review, the CEO can adjust the plan to achieve the goals and objectives of the company.

Conclusion

On a concluding note, the impact of COVID 19 on Qantas airlines has been discussed in the paper. The various external factors affecting Qantas during the COVID 19 pandemic has been discussed. With reference to the case study, the most rational decisions taken by the CEO of the company to deal with the COVID 19 pandemic situation has also been discussed. Lastly, the six steps of strategic management for Qantas to survive on both local and foreign markets during the period of the Covid-19 limitation and for the year following lifting Covid-19 limitations have been advised.

Reference

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