This case study provides an overview of the Australian airline industry and its competitors with a focus on the question why OzJet failed.
The first chapter will give an insight on the main task and on the case study structure, concentrating on a brief outline of OzJet and the Australian airline industry.
In chapter two, the external environment OzJet had to face is examined, including the analysis of the main trends and its competitive intelligence through scanning and monitoring. Furthermore, it presents a survey of the environment using Porters five forces, completing with a brief conclusion of the threats and opportunities in the Australian airline industry.
Chapter three gives information of OzJet’s internal environment from a resource based view that examines the collection of its tangible and intangible resources, as well as its organizational capabilities shaping OzJet’s competitive position. This chapter ends with a short conclusion about OzJet’s strengths and weaknesses.
Finally, it is discussed why OzJet failed and a strategic recommendation is given, about the likelihood of a third airline being successful in the Australian airline industry.
OzJet started its business in November 2005 with the strategy to enter the Australian business traveller market on the Sydney-Melbourne trunk route. It had to compete with three other airlines: Qantas, Jetstar and Virgin Blue. OzJet’s core capability was to provide a top-notch service at a fully flexible economy price. However, the focus on customer service was not able to meet the needs of the targeted market. Business-class travellers were loyal to Qantas, offering a much higher flight frequency and loyalty program for this not so price sensitive market segment. In the end, OzJet had neither the cost structure (using old plains) nor the reputation and financial background to consist against its strong competitors.
As a result, despite the high quality of its services, the airline OzJet couldn't find its niche and made a double digit million $ loss (about 10 million $) after 4 months. It ceased all scheduled operations on 12th March 2006 and now operates as a private charter company.
Table of Contents
Executive Summary
1. Introduction and Overview
1.1 Structure Outline – Main Task and Procedure
1.2 OzJet and the Airline Industry
2. The External Environment
2.1 The General Environment
2.1.1 Demographic Changes
2.1.2 Socio-Cultural Forces
2.1.3 Political/Legal
2.1.4 Technological
2.1.5 Economic
2.1.6 Global Factors and Other Issues
2.1.7 Conclusion – General Environment
2.2 The Competitive Environment – The Airline Industry
2.2.1 Analysing the Industry’s Structure using Porter’s Five Forces
2.3 Competitor Analysis
2.3.1 Qantas
2.3.2 Jetstar
2.3.3 Virgin Blue
2.3.4 Conclusion Competitor Analysis
2.4 Conclusion – Opportunities and Threats
3. The Internal Environment
3.1 Tangible Resources
3.1.1 Physical and Technological
3.1.2 Financial
3.2 Intangible Resources
3.2.1 Reputation Assets - Brand
3.2.2 Innovation and creativity
3.2.3 Human
3.3 Capabilities
3.4 Conclusion – Strength and Weaknesses
4. Summary of SWOT Analysis
4.1 Conclusion – Why OzJet failed
4.2 Evaluation of the likelihood that a third carrier can make a successful entry
Objectives and Topics
This report provides a strategic analysis of the airline OzJet, exploring the factors that led to its rapid market exit. The primary objective is to evaluate why the company failed to establish a profitable niche in the Australian domestic market despite its premium service proposition.
- Strategic assessment of the Australian airline industry
- External environment scanning including Porter's Five Forces analysis
- Internal resource and capability evaluation
- Competitor analysis of Qantas, Jetstar, and Virgin Blue
- Strategic recommendations for new market entrants
Excerpt from the Book
3.3 Capabilities
For OzJet, service and quality had priority; the aim was to create an option to business travellers in Australia (Michael Meier, 10th April 2006).
The OzJet business plan was based on a few simple, but powerful ideas on how business travellers would want to fly:
Short check-ins, the possibility of carrying extra luggage onto the plane, the flexibility to change flights without extra fees, a shave off 30% point to point time and value for money.
OzJet offered a top-notch service at a fully flexible economy price (Simon Hoyle, March 26th 2005). However, it did not meet all of the customers needs in the business class segment, and its service focus and cost structure didn’t provide a sustained competitive advantage.
Chapter Summaries
1. Introduction and Overview: This chapter outlines the main task of the case study and provides a brief background on OzJet and its initial attempt to enter the Australian airline market.
2. The External Environment: This section examines the broader market factors, including demographic, political, and economic trends, and applies Porter's Five Forces to assess the competitiveness of the airline industry.
3. The Internal Environment: This chapter analyzes OzJet’s tangible and intangible resources and organizational capabilities to identify the specific strengths and weaknesses that contributed to its performance.
4. Summary of SWOT Analysis: This concluding chapter synthesizes the previous findings to explain the fundamental reasons for OzJet’s failure and provides an evaluation of potential future entrants in the market.
Keywords
OzJet, Strategic Management, Airline Industry, Qantas, Jetstar, Virgin Blue, SWOT Analysis, Competitive Advantage, Porter's Five Forces, Business Travelers, Market Entry, Resource-Based View, Aviation, Cost Structure, Corporate Strategy.
Frequently Asked Questions
What is the primary focus of this strategic report?
The report focuses on the strategic analysis of OzJet, an Australian airline that attempted to enter the business traveller market but ceased scheduled operations after only four months.
What are the central themes discussed in the study?
The central themes include external environmental analysis, industry competition, internal resource assessment, and the identification of strategic failures in business model positioning.
What was the main goal of OzJet's business strategy?
The goal was to capture 10% of the Australian business traveller market by providing top-notch, premium service at a fully flexible economy price.
Which analytical framework was used for the industry evaluation?
The study utilizes Porter's Five Forces model to assess the structure of the Australian airline industry and the intensity of competition.
What aspects are covered in the internal environment section?
This section investigates OzJet's physical and technological assets, financial backing, brand reputation, innovation levels, and human resource management.
Which keywords best characterize this work?
The work is characterized by terms such as strategic management, competitive rivalry, market entry barriers, and airline cost efficiency.
Why did OzJet's business model fail to resonate with its target audience?
OzJet prioritized premium services like meal quality, but failed to address the core needs of business travellers, such as high flight frequency and schedule flexibility.
What role did fuel prices play in OzJet's downfall?
Rising fuel costs, coupled with an older, less fuel-efficient aircraft fleet, placed immense pressure on OzJet’s operational costs and weakened its financial sustainability.
How did major competitors like Qantas react to OzJet's entry?
Competitors effectively defended their market share by leveraging their existing loyalty programs and, in some cases, proactively reducing business-class fares.
- Quote paper
- Marco Hierling (Author), 2007, The Australian airline industry and the case of OzJet, Munich, GRIN Verlag, https://www.grin.com/document/76304
