Question

MARKETING ( NEED A 100 WORD ANSWER)

• Macroenvironment (PESTN) framework is explained in detail
• Imagine that you have been hired to advise Qantas on their future after the COVID-19 crisis
• Find evidence of macroenvironmental trends from any two of the five PESTN categories that are likely to impact Qantas in 2021 (i.e. next year). Remember that each trend should be something external to Qantas. The evidence should be from credible sources.
• How will each identified trend impact on Qantas' business? Is it an opportunity or a threat? Why?

Answer 1

Social

Fear of outbreaks of the current global pandemic have lead to a drop in passenger demand, both domestic and international. International travel has been cut off by the Australian government from Mar 19th for 2 months, and domestic travel has been severely limited

Australia has seen 23% decline in travel numbers which would add up to around $50 million revenue loss (Iata, 2020). As per a later press release, Iata estimates revenues may fall by as much 68%.

As number of cases are rising daily and the full extent or duration of the pandemic are still unknown and unpredictable, the current decline could extend beyond the current anticipated 2 months.

This is a credible and possible threat. As the global pandemic is impacting nearly 200 countries, people by and large are likely to favour none-to-minimal international travel (such as pre-Covid-19) for at least a year after the virus dissipates (end of 2020) and so international revenue for 2021 will be severely impacted when compared to any forecasts they might have. Domestic travel might resume by the end of this year, however, the currently timid mindset of most travelers will likely continue well into 2021. This could result in fewer flights being deployed, more flights being grounded where there are no takers (say australia to china route) and overall less revenue, even with cost-cutting measures such as furloughing grounded crew and staff.

Quantas will need to find creative ways to build the demand back up - airline promotions with businesses to encourage business travel again, tie ups with a disinfecting company to show how each flight is cleansed so flyers feel more confident choosing this airline/flying at all, packages, offer deals for medical staff as a gesture of goodwill (build some positive associations) or offer goods transportation to affected areas (social responsibility points).

Economic

One consequence of this pandemic is the significant drop in oil prices ($13 a barrel). This reduction could cut costs around $28 million on this year's fuel bill alone, which could provide some relief to the airlines per Iata. Assuming a similar rate for 2021, once demand picks up next year then this drop in fuel prices should mitigate some of the losses that Quantas would face due to the change/drop in demand and the drop in airline share prices due to the financial markets registering massive falls. Airlines can also use hedging practices to postpone impact to ensure 2021 is more cushioned, Iata estimates the benefit can be up to 31%. This opportunity can help the airlines offset some of its losses to ensure it stays afloat during the next few years. As fuel might take time to go back up to last year's rates, this can allow Quantas the opportunity to possibly diversify into that business, even if only as a shareholder. Quantas stock might be low, however so is oil stock and as they are both linked it could be a good time to look at alliances that will mutually benefit both parties. Forming new partnerships with firms in the oil or other industries will ensure that the organisations can weather any extreme challenges that might come up.

References :

Iata (2020) IATA Updates COVID-19 Financial Impacts -Relief Measures Needed-. Iata.org Pressroom 12

Iata (2020) Airlines Facing Rapid Cash Burn. Iata.org Pressroom 23