The Qantas Issue Essay

The following focuses on the brand equity of Qantas, the national airline of Australia. The proposed takeover of the airline by foreign investor around 2007 created concerns amongst Australians who perceive the brand as purely Australian. Their emotional fears are of the airline losing its “Australian” identity. This position stemmed from the then worsening financial position however it worsened after several incidents which drew media attention over its doubtful safety and loss of service quality.

Introduction

The chosen organization Qantas is the national airline of Australia. It was established in 1920. It is one of the largest airlines in the world. Qantas was nationalized in 1947 and then privatized in 1993 after a merger with a domestic airline. Several other takeovers were attempted, which then added domestic routes to the airline and eventually over 90 percent domestic market share was gained.

Skytrax, a research consultancy firm conducted surveys in 2009 and ranked the airline as the sixth best in the world, down from the second rank achieved in 20052. Qantas has been predominantly perceived as an Australian airline as its logo has always shown a kangaroo which is only found in the country5.  The market issue facing Qantas is the loss of brand equity which can become serious if not taken care of.

Market Issue

The issue of brand equity which is being faced by the airline is worrisome because the airline has been continuously losing its rank among the best airlines in the world. In 2007, there were media reports and speculations of a proposed takeover by foreign investors including the Texas Pacific due to the airline’s weakening financial position. Despite legal limits for foreign investor to acquire more than 49 percent of the airline, most Australians voiced their concerns. They are emotionally attached to the airline and fear that the airline would lead to the loss of the Australian “identity” the airline has always maintained5.

What are more harmful to the airline are the recent incidents which have created the media to criticize the airline’s safety record. In an attempt to ease the financial problem, the airline attempted to cut costs by some decisions which reduced the service quality and also compromised safety. The Dustin Hoffman promotion in a 1988 movie as an airline that “never crashed” which belittled all promotions by Qantas till date, does not seems to be influencing to the consumer anymore3. If the brand continues to lose its equity, Australians might start preferring other airlines.

Relevant Text

            The issue best corresponds to the Chapter 11 which focuses on branding. Branding was discussed in Lecture 9 where several aspects of branding were discussed. The most relevant text that can be related to the issue is that of brand equity which can be found on page 413 of the book1. According to the lecture, brand equity is like an asset to a company because it creates perceptions in the minds of consumers and influences them to use the products of the company. Qantas by its nature also serves consumers who are not Australians can reveal different brand equity from different regional markets, however due to safety concerns, the airline has been losing its  brand equity in international markets as well, which is probably the reason behind the fallen rank.

Qantas actions

The issue has been there for quite a long time but the recent incidents have made it to the media. It is when the issue of safety, which is the most vital component of the brand since 1988, came into the news. It is surprising to see that the airline has done nothing substantial to improve its brand equity when it comes to safety. They have to date trying to divert media attention from the issue by doing promotional activities for things other than brand equity. It ran a promotional campaign for the induction of Airbus 380 instead4. This activity did not improve the brand equity because it was in no way related to the solutions to safety concerns.

The text states that spending on brand equity should not be treated as an expense but as an investment because it is like an asset1. However Qantas seems to consider such a spending as an expense due to several reasons. The first is the reliance on the image formed since 1988, an image which successful airlines strive to achieve because safety in this industry is more vital than anything else. The second reason might be the financial problems the airline has been facing for the last several years. In 1999, when the airline was financially strong, it successfully attempted to repair a crash landed aircraft to airworthiness at a greater expense in other to maintain the image of being an airline that “never crashed”, but however this event was reappeared in the media in the current issue however the airline did not did anything substantial to resolve this issue. What it did was to respond to questions from the media, such as its outgoing CEO Geoff Dixon reported that the airline will recover from this issue but he did not cite any strategy that would do that3. What the airline should have done was to proactively deal with the issue by press releases and promotional campaigns.

Conclusion

Managing marketing issues is in itself a separate activity. Successful management of the issue can help the organization rebound from the issue. However in the case of Qantas, there has been an avoidance of the issue itself. The theory states that there should be more investment in brand equity and that too on the area that is the most vital component, i.e. safety4. Such an investment shall not be restricted to press releases and promotional campaign but it shall be done on the actual aircrafts. After all brand equity is created by the overall organization activities as brand can be strongly associated with many aspects of the organization such as related to its employees, investors, and many other entities.1

Bibliography

1Kotler, P, Brown, L, Adam, S, Burton, S & Armstrong, G 2007, Marketing, 7th edn, Prentice Hall

2Bruce, Michael (2008) Qantas rises to third in Skytrax awards. Qantas rises to third in Skytrax awards. Available from <http://www.travelweekly.com.au/articles/9d/0c05939d.asp> [Accessed 30 May 2009]

3Murphy, Mathew (2008) ‘Quantas never crashed’: airline’s brand under threat. ‘Quantas never crashed’: airline’s brand under threat – News – Travel. Available from <http://www.smh.com.au/news/news/qantas-never-crashed-airlines-brand-under-threat/2008/08/21/1219262394617.html> [Accessed 30 May 2009]

4Canning, Simon (2008) Flying into turbulence. Flying into turbulence | The Australian. Available from <http://www.theaustralian.news.com.au/story/0,25197,24157645-28737,00.html> [Accessed 30 May 2009]

5Contributor MKR, Singapore (2007) YOU CAN TAKE THE KANGAROO OUT OF THE BUSH BUT YOU CAN’T TAKE THE BUSH OUT OF THE KANGAROO. Marketing, YOU CAN TAKE THE KANGAROO OUT OF THE BUSH BUT YOU CAN’T TAKE THE BUSH OUT OF THE KANGAROO. Available from <http://marketing-interactive.com/news/355> [Accessed 30 May 2009]