The purpose of this report is to analyse the current market environment of Australian airline industry in which Virgin Australia operates.
Throughout the last decade, the domestic airline industry in Australia is characterised by relatively flat growth, low profit margins and financial pressure and stiff competition. High entry barrier exists in the industry with soaring competition among the existing players. Even though the threat of substitutes is low, the overall situation is further worsened by high buyer and supplier bargaining power.
Qantas, Jetstar and Tiger Airways are the three major players of the industry with Virgin Australia being the second largest domestic airline. While Qantas focuses its strategy towards high-end business class and corporate customers, Jetstar and Virgin compete for the rest of the market segments. Except Tiger Airways all three companies have shown positive financial performance over their operating cycles.
Virgin Australia has strong brand value and image because of its innovative ideas and creative thinking. It operates a rapidly growing fleet primarily consists of Boeings and Airbuses. The low average fleet age helps the company to reduce maintenance cost of the aircrafts. Financial performance of the company was not so promising in the year 2011 because of rising fuel price, high value of Australian dollar and environmental disaster. However, the company has been successful over the past years and future outlook is promising.
However, the company has failed to attract corporate customers because of over reliance on leisure market. Moreover, because of fuel market volatility, high exchange rate of Australian dollar and environmental disaster, the company has not been financially thriving in the past years. With intensified competition in an unfavourable environment characterized by high fuel price, rising environmental concerns and high bargaining power of the suppliers, Virgin Australia will find it hard to keep their game faces on in the days to come.
With the recovery of economy the company’s financial performance is expected to improve in the years to come and with the opportunities that present itself within the operating environment, there is a sign of light at the end of the tunnel.
Table of Contents
1. Introduction and Overview
1.1 Structure outline
1.2 Limitations
1.3 Virgin Australia
2. The Macro Environment
2.1 The General Environment
2.1.1 Demographic changes
2.1.2 Socio-cultural forces
2.1.3 Political/legal trends
2.1.4 Economic trends
2.1.5 Technological trends
2.1.6 Global factors and other issues
2.2 The Competitive Environment – The Airline Industry
2.2.1 Analysing the Industry Structure Using Porter’s Five Forces
3. The Micro Environment
3.1 Competitor analysis
3.1.1 Qantas
3.1.2 Jetstar
3.1.3 Tiger Airways
3.2 Customer analysis
3.2.1 Regional segmentation
3.2.2 Income segmentation
3.3 Company analysis
3.3.1 Physical resources
3.3.2 Financial performance
3.3.3 Brand image
3.3.4 Innovation and creativity
4. SWOT Analysis
5. Conclusion
6. Reference List
Objectives and Topics
This report investigates and analyzes the current market environment of the Australian domestic airline industry, specifically focusing on Virgin Australia. It examines the internal and external factors affecting the company's performance, including market trends, competition, and strategic challenges in a volatile economic climate.
- External macro-environmental factors (PEST analysis)
- Industry structure using Porter’s Five Forces
- Internal company analysis including fleet and financial performance
- SWOT analysis of Virgin Australia
- Strategic assessment of competitive positioning
Excerpt from the Book
2.1.1 Demographic Changes
Demographic changes are very important to the airline industry because it conducts business through a relatively luxurious but moderately priced service. Presently there is not only a growing but also an aging population in Australia. Among 20 million people living in Australia, Generation Y represents about 4.5 million. This is the demographic group that is reported to be influencing the spending pattern of this country (Wyld, 2005, p. 1). With the increase of retiring baby-boomers and those living in debt, Australian consumers are likely to increase consumption.
In this environment, Virgin Australia aims at gaining business people as customers by offering its service in the major cities within Australia (Rochfort, 2006, para. 3). Its customers primarily consists of young professionals; the so-called Generation Y, as well as business people aged 35 to 54, which represent a large part of the Australian population (Hierling, 2006, p. 5).
Summary of Chapters
1. Introduction and Overview: Outlines the report’s objectives, scope, and the historical context of Virgin Australia's transformation into a "new world carrier".
2. The Macro Environment: Analyzes external trends and industry forces, applying Porter’s Five Forces to understand the competitive landscape.
3. The Micro Environment: Provides a detailed look at specific competitors, customer demographics, and internal company resources and performance.
4. SWOT Analysis: Evaluates the internal strengths and weaknesses alongside external opportunities and threats facing the airline.
5. Conclusion: Summarizes the findings and provides an outlook on the company's future performance amidst economic recovery.
6. Reference List: Compiles the sources and literature used to conduct the strategic analysis.
Keywords
Virgin Australia, Australian airline industry, Porter's Five Forces, SWOT analysis, Qantas, Jetstar, Tiger Airways, market environment, low-cost carrier, competitive strategy, demographic changes, financial performance, brand image, aviation sector, economic trends.
Frequently Asked Questions
What is the primary focus of this report?
The report focuses on analyzing the marketing environment of Virgin Australia within the context of the Australian domestic airline industry.
What are the central themes of the work?
The central themes include macro-environmental analysis, competitive industry structure, internal company performance, and strategic positioning.
What is the main research objective?
The goal is to investigate how external forces and competitive pressures impact Virgin Australia and identify its current strengths, weaknesses, opportunities, and threats.
Which scientific methods are applied?
The report utilizes environmental scanning, Porter’s Five Forces model for industry analysis, and a comprehensive SWOT framework.
What is covered in the main body?
The main body covers the macro environment, industry rivalry, competitor profiles, customer segmentation, and a detailed internal analysis of Virgin Australia.
Which keywords characterize this analysis?
The analysis is characterized by terms such as market environment, Porter's Five Forces, SWOT, airline competition, and brand strategy.
How does Virgin Australia differentiate itself from Qantas and Jetstar?
Virgin Australia differentiates itself through its "new world carrier" strategy, focusing on service innovation, fleet modernization, and target marketing toward specific segments like Generation Y.
What impact did the economic environment have on Virgin Australia in 2011?
The company faced significant financial challenges in 2011, including a loss of $68 million due to natural disasters, high fuel prices, and a reservation system failure.
How does the "open skies" policy affect the Australian airline market?
The "open skies" policy promotes competition by allowing greater freedom for airlines to set their own prices and routes, thereby intensifying rivalry among domestic players.
What is the outlook for Virgin Australia according to the report?
The report suggests a positive future outlook, anticipating that the company's financial performance will improve with economic recovery and strategic alliances.
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- Yasir Farabi (Autor:in), 2012, Analysis of Marketing Environment of Virgin Australia, München, GRIN Verlag, https://www.grin.com/document/197079
