Market Situation of Australia Based Airline Company Virgin Australia Assessment Answer
The report presents a discussion on the market situation of Australia based airline company Virgin Australia. Virgin Australia has been one of the leading entities in the domestic market. However, the company has been facing financial debt issues and lack of proper strategy ideas. The internal analysis has stated that Virgin Australia has a stable position due to its brand reputation in the market. External environment states that the forces of the market have been in favour of the entity. Therefore, the application of the right form of strategies might help Virgin Australia to make instant growth in the market.
The marketing tools, techniques and tactics are used to understand and analyze the present status of a business origination in the market. It helps to define the current issues of the entity and strategic applications might require applying for mitigation of such issues. The report presents a discussion on the present market performance of Virgin Australia; it also explores the business issues of split ownership and increasing financial debt of the entity.
2.1 Company overview
Virgin Australia is the largest airline company operating in the country under the name of the Virgin brand. The company is currently known for its highest domestic travels and journey carried out within Australia and New Zealand. It has been operating around 33 cities of Australia the Melbourne, Sydney and Brisbane are the central hubs for Virgin Australia (Virgin Australia 2020). According to the mission and vision of the company, Virgin Australia has been focused on positioning itself as leading and favourable airlines for their customers for the long term. It is focused on presenting and promoting quality, comfort, secured and safe travelling experience to the customers.
2.2 SWOT analysis
2.3 Pestle analysis
Analysis of Virgin Airlines
There is a political stably found in Australia, as the governing bodies make favourable support to the airline industry about infrastructure (Westmore 2020). However, the possible risks of the economical downfall of the country might create hurdles like lack of demand, this might generate revenue for the airline industry
The GDP of Australia has made also growth in the present yea of 2019. it has estimated that GDP of e country has been increased by 1.8% in 2018, which is low in comparison to 2.7% in 2018 (Zhang et al. 2017). Thus, there is low demand in investments by the customers over the airline travel restrictions. The airline industry might face slowly in the demands of airline travels during the period.
The customers in the company have become much couscous about their safety and security while travelling through airlines due to increasing risks of accidents. Due to domestic travelling services, the airline industry has been making additional demands over ticket bookings. The customers look for low-cost airline travels, which is one of the prime points of making purchase decisions.
Increasing usage of internet and mobile applications for booking of the flights explains that there has been an increase in demands for advanced technologies to reach customer satisfaction (Brown 2020). The proposed AI system and advanced technologies have been estimated to increase expiate of the passenger during the flight
The airline industry has been increasing concerns about the usage of fossil fuels and petroleum ad its impact over the environment The industry has been making millions of investments for bringing control over the CO2 emissions. However, these investments were increasing financial pressures.
The labour laws and regulations have been imposed and applied by the airline industry in the market. However, the consecutive demands of the labours sometimes increase risks of strikes which limit operational functions of the airline industry.
2.4 Porter five force analysis
Porter five forces
Bargaining power of the buyer
The bargaining power of the buyers in the Australian airline industry has been higher duet its stiff and rigid competition (Alexander and Merkert 2017). Virgin Australia faces risks of rapid brand shifts of the customers while operating in the industry.
Bargaining power of suppliers
The availability of suppliers in the airline industry is less compared to the number of airlines firms availed in the market. This means supplies have options to gain profit from any of the airline entity. So, the bargain proper of the suppliers in the market is relatively higher.
Threat to substitutions
The threat to substitute products is the medium for Virgin Australia. The customers do have options for water, railway, roadway transportation or vehicle travelling which is considered a substitute (Buckeridge and Newman 2017). However, these substitutes might take a longer time to react to desalination than flights, which again increase the value of airline services.
The threat to nee entrances
The airline industry includes huge investments for purchasing flights, create infrastructure, a section of Airlie travels. Thus, the threat to the new entrances is relatively low in the Australian market due to the high cost of capital investments.
Virgin Australia has been operating in a highly competitive environment. Qantas Airlines has been one of the closed bidders in the airline industry, which has a huge customer base (McGrath et al. 2017). The other airline's entities like FIJI Airways, Singapore Airlines, JetBlue, and Delta are some of the competitor firs in Australia airline industry.
3. Business issues identification
3.1 Issue 1: Short term ideas, and long term solutions
Virgin Australia creates strategic applications which might be beneficial for the entity for a short term period such as keeping the cost related services for long flight journeys. Usually, in the airline industry, the long term journey reduces unnecessary service to reduce its expenditures (Cummins 2020). The strategy benefits Virgin Airline for a short run although has increased risk of loss-making. On the other hand, Virgin Airlines has been looking for profitability from short distance journeys. The company has been operating in loss-making routes, which might be profitability at some point but the percentage will be lower than the loss-making might be done by the entity by the time.
3.2 Issue 2: Financial debt:
One of the primary ad current risks faced by Virgin Australia is increasing risks of financial debt, which might also trigger the possible situation of bankruptcy. The company has stated that it is looking for options to get financial protection to get itself out from the financial debt crisis, which has been enhanced due to rising pandemic of coronavirus (The Economic Times. 2020). The company might require to make changes on the entire functions and strategic applications regard o control the downfall of the company or its business. The company has been looking for proposing bare-bone services to bring back the buyers for sustaining the pandemic crisis and save the company from being financial breakdown.
The current situation of Virgin Australia has been been in downfall direction, the application of the barebones strategy and services might help the company to boost its journeys and demand of the ticket bookings might ban boosted through the engagement of marketing strategies and promotional campaign. The changes in the operational functions of the business such as cost-cutting for unnecessary activities might help to rescue expenditures for the firm (Zhang et al. 2017). Thus, the financial debt might be relaxed to some extent for the entity. The application of low-cost for the tickets might also help the company to enhance its customer base and certainly its income. Virgin Airlines has been trying o make rapid changes in the functional and operational activities since the year of 2011(McGrath et al. 2017). The changes have been bought into existence about rephrase its service and increase benefits to the customers. The strategic applications of including digital marketing strategies have resulted in an increase in customer base and customer attention towards the offerings of the entity.
There are different issues and risks which have been found in the way of growth for Virgin Australia, some of the recommended strategies might help the entity to reduce these issues.
- Joint venture or collaboration with other airlines companies might help the company to increase its source of income within the market. The company rising debts might be covered with the engagement and introduction of new services under a brand originated from a joint venture or collaborations.
- Diversification might b another strategic option for Virgin Australia, in which the company might invest in tourism business, hospitality business, and travel and tourism services for presenting additional products for the customs. The increase of different product portfolio might help the company to generate income from different sources.
The environmental analysis presents the internal and external situation and positioning of the business. Virgin Australia has been going through a poor phase, although the analysis suggests he market has an ample of scopes which might help the entity to bounce back to growth. The company has been facing issues of bad financial debt, which might impact on the financial breakdown of the entity. Thus, diversification and joint venture might be possible options to help the entity to generate income again