AIRLINE INDUSTRY ENVIRONMENT
Qantas was dealing with a large change from the period of 1978 to 1994. This was brought by the Deregulation Act in the United States where other foreign airline industries were affected. Before 1992, Qantas was limited to flying international routes only while Australian Airlines was in charge of the domestic flights. During this regulated environment, Qantas and Australian Airlines were government owned and decided to separate the international and domestic airlines.
Similarly, the airlines in other countries were considered small carriers. These airlines were focused on specific routes that were in their capacities, and targeting domestic based routes more. International routes for these airlines would have been difficult because a point-to-point route structure was followed where flight arrangements for the passenger was only done for just one location.
Since the Deregulation act in the US began in 1978, a global trend for other airlines was to privatize and there was a liberalization of airline routes.
Airline prices were no longer controlled by the government so this meant that there would be lower ticket prices and those airlines would have to compete in other areas. Aside from lowering ticket prices, there was also a move to retain customers by way of the hub and spoke structure. Through this strategy, airlines were able to offer continuous service to passengers with multiple travel locations.
There was also a need for different airlines to create global alliances due to changes that were occurring from the deregulation trend. Mergers and tie-ups of airlines were needed to create a new network and competitive advantage over other airlines in terms of cost of implementing emerging strategies like the increase service to customers and the alliances established. This gave rise to the mega airline carriers that are able to compete in the international and...