Qatar Airways SWOT Analysis | Business Teacher
While the country’s oil industry has also contributed to Qatar Airways’ growth, the airline’s location appears to be the strongest competitive advantage: from the Gulf region, the vast majority of the world’s population could be reached within a single connecting flight, making the region an excellent transfer point for long-haul international travellers (Aviationeconomics.com, 2013). Apart from Qatar Airways’ location, the airline was able to successfully establish itself as a premium airline, consistently scoring a five-star rating on Skytrax surveys (Skytrax, 2017). In addition to this, Qatar Airways operates a fleet of modern and fuel efficient aircraft that ensures low operating costs and the opportunity to serve distant, low-margin destinations as well (Qatar Airways, 2016). As of 2017 Qatar Airways maintains a mixed fleet of 197 aircraft (Qatar Airways, 2016). Although Qatar Airways denies all government subsidies, the airline is fully owned by the Qatari government that offers the airline an increased bargaining power in international markets (Nunes, 2016).
Qatar Airways does not operate any domestic flight, which is not necessarily a problem, but since the company’s earnings are dependent on the performance of international markets, the airline is greatly exposed to developments beyond the organisation’s control (this weakness is generally present for most international airlines with limited domestic operations). Despite the fact that Qatar Airways reported a profit for 2016, the political developments in the Middle East combined with the expected overcapacity in the industry could further expose Qatar Airways to volatility in international markets (Arab News, 2017).
Emirates, one of the strongest rivals of Qatar Airways, has launched flights outside its main base (currently Athens and Milan with flights to New York and Newark) (Ellis, 2017). This option has not been explored by Qatar Airways, even if the region’s escalating political conflicts should incentivise the management to discover new markets to continue the organisation’s growth (looking at a large number of aircraft orders of Qatar Airways, there are ample amount of resources to expand abroad). Another opportunity for Qatar Airways is to launch a subsidiary targeting travellers with a limited budget, but with a strong desire to explore faraway destinations (e.g. Generation Y travellers). This related diversification could partially offset the lower demand for premium travel and could enable Qatar Airways to benefit from a recent development in the global social environment (rise of middle class and generation Y travellers).
Industry analysts’ general consensus is that the phenomenal growth of middle eastern airlines may come to a sudden end, including but not limited to Qatar Airways, as long as these airlines do not adjust their strategy (Campbell, 2017). Alongside the political uncertainty in the region (US travel ban, growing terrorist threat that reduces the demand for air travel), the current outlook for airlines based on the Gulf region is highly uncertain (Campbell, 2017). Gulf airlines have never been seen in a favourable light by their European rivals, often citing such arguments that these airlines engage in unfair business practices (e.g. receiving government subsidies, which is illegal in the western world) that reduces European and American airlines’ access to the lucrative Gulf region (and as both the European and the US market has been rather profitable for Qatar Airways, the probability of legal actions that restrict Qatar Airways’ access creates a significant threat to the organisation’s success) (Topham, 2015). Finally, but not least importantly, low-cost long-haul airlines are gradually increasing their market share (Gulliver, 2017). These airlines operate mostly on Asian routes, however, visible steps have been taken by other airlines to examine the feasibility of extending the low-cost model to the long-haul market, that is likely to hurt the interest of Qatar Airways following the full-service business model.
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