The strategic alliance between Qantas and Emirates was a result of a careful analysis of the airline industry and its involving competitors.
Emirates CEO, Tim Clark specified that he has been closely monitoring Qantas until he saw an opportunity for both companies through a strategic alliance, mentioning that Qantas had a problem with its international segment where Emirates could help with (Joyce, 2013). The 5 year strategic alliance does not restrict to code-sharing as it includes collaboration on scheduling, pricing and sales while taking equity in each other company is out of the question, mostly because of the uneven powers between organisations (World News Australia, 2013). Since 2011, Qantas started to restructure its marketing and operations strategy in order to increase its competitive positioning through its 5 year transformation plan with its strategic goal to emerge as “one of the world’s best premium airlines, setting global standards for long haul travel while delivering attractive returns to shareholders” (Creedy, 2013). This goal is focused on 4 pillars:
1. Concentrating on customer experience
2. Emphasising strength on flight frequency to Asian destinations
3. Putting emphasis on existing alliances and extend them for global reach
4. Improving financial management
The benefits for Emirates from this strategic alliance are the access to the domestic market through Qantas by using its commercial strength in Australia. Additionally, in the preliminary meeting Clark specified that the ability to see that the alliance was relatively easy to put together (similar management style) provided a bonus for later stages (Young, 2013). Clark further stated that Qantas is performing better in CSR which could provide assistance to Emirates. Lastly, the enrichment of the consumer base through the shared frequent flier points system could be classed as a synergy for both companies (Young, 2013).
Through s Porters Five Forces analysis (Figure 1 – Appendices) the greatest threat for Qantas is the rivalry. Qantas is taking advantage of this opportunity as through the alliance it creates greater certainty for the shareholders while also being able to increase its numbers in international routes to 33 one-stop destinations in Europe in addition to 31 one-stop destinations in the Middle East and North Africa (Ryan, 2012). Additionally, as competition was putting pressure on the market while Qantas was restricted by financial reasons, this alliance came as a great opportunity. Furthermore, from 31st of March Qantas frequent flier point users were able to book Emirates flights while the customers’ high status with Qantas was recognized at Emirates as well. Lastly, on European, Asian and African destinations Qantas mirrored Emirates baggage policies (from 20kg to 30kg) (Panaus Travel, 2013).
Combined, Qantas along Emirates offer 98 weekly routes between Dubai and Australia. This deal improved Qantas’ profit before tax with an increase of 80/90 million A$...