Emirates and Qantas Strategic Alliance
PART A
1. With reference to the academic literature and using your analysis of relevant external environmental factors, critically discuss the reasons why Qantas and Emirates identified each other as potential partners. In which areas are the expected internal benefits and synergies for both companies involved?
(20 marks)
The partnership is expected to strengthen the two airlines in the highly contested Europe to Australia market.
Qantas has recently been struggling to compete with other airlines and has been losing money; last year losing $450 million. The partnership with Emirates, according to Analysts at Macquarie Equities, is estimated to increase annual earnings by as much as $90 million.
For Emirates, being a in a much stronger financial position the main driver was geographic expansion to markets they could not serve directly with their own aircraft.
The 10-year deal, that required no equity investment from either side, is more significant than a simple code share because it allows the two companies to:
Co-operate on scheduling of flights
Ticket pricing
To jointly sell tickets between Australia and Dubai
Other synergies from which customers benefit are:
Sharing airport lounges
Linking frequent flyer programs – a key attraction for both Qantas’s 8.6 million and Emirates 5.7 million loyalty members.
The synergies will benefit both airlines greatly and some specific examples are listed below:
Qantas has recently faced a reinvigorated competitor in Virgin Australia, many new carriers from Asia (Air Asia) and Middle East airline (Emirates, Ethiad, Qatar) all adding seats to long-haul routes out of Australia. The partnership enables more choice for their customers.
Emirates flies to 33 places in Europe but Qantas to only two. The partnership has opened up all Emirates destinations in Europe to Qantas' Australian passengers.
The partnership has given Emirates new destinations in Australia for European passengers booking via one airline rather
1. With reference to the academic literature and using your analysis of relevant external environmental factors, critically discuss the reasons why Qantas and Emirates identified each other as potential partners. In which areas are the expected internal benefits and synergies for both companies involved?
(20 marks)
The partnership is expected to strengthen the two airlines in the highly contested Europe to Australia market.
Qantas has recently been struggling to compete with other airlines and has been losing money; last year losing $450 million. The partnership with Emirates, according to Analysts at Macquarie Equities, is estimated to increase annual earnings by as much as $90 million.
For Emirates, being a in a much stronger financial position the main driver was geographic expansion to markets they could not serve directly with their own aircraft.
The 10-year deal, that required no equity investment from either side, is more significant than a simple code share because it allows the two companies to:
Co-operate on scheduling of flights
Ticket pricing
To jointly sell tickets between Australia and Dubai
Other synergies from which customers benefit are:
Sharing airport lounges
Linking frequent flyer programs – a key attraction for both Qantas’s 8.6 million and Emirates 5.7 million loyalty members.
The synergies will benefit both airlines greatly and some specific examples are listed below:
Qantas has recently faced a reinvigorated competitor in Virgin Australia, many new carriers from Asia (Air Asia) and Middle East airline (Emirates, Ethiad, Qatar) all adding seats to long-haul routes out of Australia. The partnership enables more choice for their customers.
Emirates flies to 33 places in Europe but Qantas to only two. The partnership has opened up all Emirates destinations in Europe to Qantas' Australian passengers.
The partnership has given Emirates new destinations in Australia for European passengers booking via one airline rather
References: Berry, S. T. (1992). Estimation of a model of entry in the airline industry. Econometrica: journal of the econometric society, pp. 889--917. Cleary, A. (2014). Qantas lands joint venture alliance with emirates. [online] Retrieved from: http://www.afr.com/p/business/companies/qantas_emirates_in_for_the_long_wsKp6UXOYitOkUSZcjqKRL [Accessed: 5 Jan 2014]. Das, T. K. & Teng, B. (1998). Between trust and control: developing confidence in partner cooperation in alliances. Academy of management review, 23 (3), pp. 491--512. Duronto, P. M., Nishida, T. & Nakayama, S. (2005). Uncertainty, anxiety, and avoidance in communication with strangers. International journal of intercultural relations, 29 (5), pp. 549--560. Hofstede, G. (2012). Geert hofstede. L 'inea] direcci 'on url: http://geert-hofstede. com/geerthofstede. html. Kvantaliani, M. & Klimina, O. (2011). Implications of cross-cultural communication in business: a study of swedish small enterprise “imsevimse” and its international distributors and retailers. Kvantaliani, M. & Klimina, O. (2011). Implications of cross-cultural communication in business: a study of swedish small enterprise “imsevimse” and its international distributors and retailers. Pantzalis, C., Simkins, B. J. & Laux, P. A. (2001). Operational hedges and the foreign exchange exposure of us multinational corporations. Journal of international business studies, 32 (4), pp. 793--812. Plukka, M. & Others (2010). The need for cultural coaching: a study of the state of cultural education in international business studies in tamk and other universities of applied science. Tampereen ammattikorkeakoulu. Porter, M. E. (1999). Michael porter on competition. Antitrust bull., 44 p. 841. Qantas, H. (2013). High dollar good for qantas. [online] Retrieved from: http://www.smh.com.au/business/high-dollar-good-for-qantas-20130207-2e0zd.html [Accessed: 5 Jan 2014]. VIGNALI, G. & VIGNALI, C. (2009). Porters 5 forces. Fashion marketing and theory, 4 (1), pp. 95--103. Yin, X. & Shanley, M. (2008). Industry determinants of the “merger versus alliance” decision. Academy of management review, 33 (2), pp. 473--491.