ASSIGNMENT Airline Industry Overview The airline industry provides service to virtually every corner of the globe and has been an integral part of the creation of a global economy
Airline Industry Overview
The airline industry provides service to virtually every corner of the globe and has been an integral part of the creation of a global economy. The airline industry itself is a major economic force, both in terms of its own operations and its impacts on related industries such as aircraft manufacturing and tourism. CITATION Air18 l 18441 (Anon., ) Australian airline industry contributes a lot to GDP as there were 4.72 million passengers carried on Australian domestic commercial aviation (including charter operations) in February 2018, an increase of 3.9 % on February 2017. In February 2018, there were 1.81 million domestic passenger movements through regional airports and Sydney remained Australia’s busiest domestic airport followed by Melbourne and Brisbane. Major airlines of Australia comprise of Qantas, Virgin Australia, Tigerair etc. There is a cut throat competition among Qantas and Virgin Australia. The air transport industry supported a $34.2 billion gross value-added contribution to GDP in Australia in 2014. The air transport industry facilitates exports, foreign direct investment and tourism. Therefore, have positive impact on the economy. By technological developments, Australia airline industry is trying to minimise the cost of airline operations so that Australia can earn more from aviation sector.
VIRGIN AUSTRALIA Overview
Virgin Australia Airlines is Australia’s second-largest airline after Qantas. Based in Bowen Hills, Brisbane, the airline was co-founded by British businessman Richard Branson, the founder of Virgin Group and former CEO Brett Godfrey. It was established as Virgin Blue in November 1999 with two aircraft operating on a single route, and suddenly found itself catapulted to the position of Australia’s second airline after the collapse of Ansett Australia in September 2001. The airline has grown to directly serve 29 cities in Australia from hubs in Brisbane, Melbourne and Sydney, using a fleet of narrow-body Boeing; and Airbus and Boeing widebody jets CITATION Vir18 l 18441 (Anon., ). Virgin Australia was also ranked 13th in the World Top Airline List, the highest of any other Australian Airline. Virgin Australia network of destination is between Australia, Africa, Asia-Pacific, Europe, The Americas and The Middle East. Virgin together with its subsidiary companies serves more than twenty-four million customers in the year 2017. The Group’s workforce of more than 9,800 is predominately located within Australia, with others operating from bases in New Zealand, Asia Pacific, the United States and the United Kingdom. Virgin global airline service is quite dominant in Asia and New Zealand. However, the company services are also present in the United Kingdom and the Unites States of America.
The total revenue and income of Virgin Airline was $5,047 millions in the year 2017.
Virgin Australia Organizational Structure
Organization structure is very crucial in determining how responsibilities, power, and roles are allocated, monitored and coordinated (Al-Qatawneh, 2014). Alternatively, it provides a mechanism for the flow of the information in all levels of the management (Martinelli, 2010).
However, the organization structure majorly depends on the company strategies and objectives (Mintzberg, 2009). The commonly used forms organizational are either centralized or decentralized structures. Similarly, Virgin Australia has either adopted centralized or decentralized structure. The Virgin Australia organizational structure comprises the aspects of both centralized and decentralized organization structure. The company comprises of the various subsidiaries headed by different executives who have been bestowed with authority, roles, and responsibilities to be exercised under the area of their operations. Alternatively, the company employees have been arranged in a manner that the execution of their duties is in line with the company goals and objectives. The company management is based on two distinct businesses, Virgin Australia Domestic and Virgin Australia International with each business being managed by its chief executive officer. Additionally, the two business divisions have their commercial and operational functions. This structure has been adopted as the way of focusing on the company strategies of transforming the Virgin Australia International business as well as improving the Virgin Australia Domestic business.
From the analysis of the nature of Virgin Australia organization structure, it is clear that the company has adopted matrix type of structure. The top most company management comprises of the members of the corporate governance as well as an executive top management team. The highest level of management is responsible for establishing practices and policies to be adopted and implemented throughout the organization. Below the top leadership, there are various departments such as administrative management, commercial business administration, project management and functional management. All these departments work with the various team to ensure the organization goals and objectives are achieved.
Virgin Australia Airline Leadership Style
Organizational leadership style is paramount in determining the organization direction and success (Jaroslav, 2013). Some of the leadership styles commonly used in the organizations include authoritarian, participative and delegation styles. Authoritarian style entails the manager ordering the people to do what is expected of them without seeking their advice first. On the hand side, participative or democratic style involves the leader including the employees in the decision-making process. However, the leader has the final decision but most of the times take into consideration the opinions and views of the employees (Koech & Namusonge, 2012). Delegative leadership style permits the employees to make decisions on their own. However, it should be noted that under delegation style the leader is responsible for the decisions made by the employees.
Virgin Australia Airline seems to largely accommodate democratic leadership styles in the management of the company operations and activities as CEO of Virgin Australia believes in democratic philosophy as he wants to run company as a small family. According to Stribling (2013) Virgin Australia leadership style is also found on the following elements:
Vision: The management of the company understood that for the team to be effective, it must have vision. To enable this, the Virgin Australia top management leadership is based on providing direction, strategy, and vision to support the company employees in execution of the tasks.
Diverse Management Team: Virgin Australia management comprises of individuals from different fields. The company diverse team offers a variety of skills, education, and views are essential for enhancing the Virgin Australia management. Again, given the fact that the management team is from different disciplines they provide various leadership traits needed to make the management of the company effective.
Seeking opinion from Employees: Employees in the organization can be the source of very crucial information during the decision-making process within the organization (Bhatti, Maitlo, Shaikh, Hashmi, & Shaikh, 2012). This is because they are involved in the company activities daily basis and thus they can learn and observe the organization progress. Virgin Australia Airline has recognized the importance of employee information and hence top management always consults them when making decisions. Agbim (2013) argued that this does not only help by involving the employees in the decision-making process but also helps in encouraging and motivating them.
Collaborative: Virgin Australia management believes that the leaders should be open, honest and collaborative.
But in some situations, Virgin Australia Airline also follows authoritarian and delegation leadership style. Therefore, it uses combination of leadership styles.
Virgin Australia Airline Marketing Strategies
An effective business strategy should conform to the company vision and mission (Lynn, 2011). Similarly, it acts as the roadmap of aiding the company to achieve its objectives. Some of the companies apply different strategies both in at domestic business entities as well in the international operations. Similarly, Virgin Australia Airline has had strategies both for the Australian market and foreign markets.
Virgin Australian Airline Australian and Oversee Marketing Strategies
Virgin Airline Australia has continued to maintain its competitive marketing strategies even though it is facing stiff competition from airline operators such as Qantas Airline. Despite the stiff competition, the company has consistently continued to apply its price war marketing strategy. Virgin Australia targets the Australian low-cost customers whereby it has effectively and successfully performed well. Other strategies that the company has applied to its marketing activities are as briefly discussed below:
Cost Efficiencies: The main goal of each company is to reduce the cost to the lowest level as possible and at the same time improve the organization profit margins (Karakaya, Badur, & Aytekin, 2011). This strategy has been majorly adopted by the companies as the marketing technique (Kotler, Bowen, & Makens, 2006). Likewise, Virgin Australia has realized the importance of cost efficiency and its lower operating costs gives it a competitive advantage over other airlines.
Unification of the Brands: Virgin Australia Airline earlier divided the company flying business into various brands. But later provided the same brand to domestic and international airplanes to enhance the identity of the airline globally and to become choice of Australia airlines. This helped company in raising its Profit. (Radiac 2011)
Expansion to new Regions: The expansion of the company into international markets has helped the company to establish strong market position in the industry. In 2011, it began to look for Asian partners in order to extend its operations.
Comments on Company Structure and Strategies
An effective organization structure should aid the organization to establish suitable strategies in its roadmap to achieve the mission, vision, and objectives of the company. Virgin Airlines has had strong organization structure which seems to cater for the interests of each stakeholder. This has been effectively achieved by the management adopting a combination of leadership styles. Through the integration of the aspects of the various leadership styles, the leaders have been able to act situationally to address the problem at hand.
From the analysis of the company marketing strategies it has come out clearly that different natures of business should adopt different marketing strategies. Virgin Australia Airline seems to have applied the right and suitable strategies. This can be attributable to the company success both in the domestic and international market. By the adoption of these strategies, Virgin Airline has been able to claim a significant percentage of market share. Therefore, we can conclude that the company has applied effective marketing strategies.
Organization structure, leadership style and the marketing strategies are fundamental aspects in the success of the organization. The companies that adopt these concepts effectively are deemed to have smooth running both in their industries and markets. Virgin Australia Airline has been able to realize success by putting these aspects into consideration. The structure helps the organization to allocate resources and delegate duties effectively for effective decision making. On the other side, leadership style provides the direction of the organization. Finally, the marketing strategies determine the profitability of the business as well as the competitive advantage of the company.
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