Qantas Organisational Change: Drivers and Strategies (2020-2023)

Qantas Organisational Change from 2020 - 2023 MGNT 311- Management For Change Submission Day 6th of October 2023 Team members Lillian Johnson - 7479232 Nguyen Hong Lam Le - 8072772 Jialin Li-7814719 Ailana Lafta - 6518242 1

TABLE OF CONTENT 1. Executive summary 2. Background information 3. Identifying the drivers for change 4. Description of the action 5. Summary 6. Reference list 2

1. Executive summary The report will address three central aspects of identifying change drivers. First, is further details provided in identifying the drivers for change, such as internal factors, like management changes, shifts in organisational culture, and strategic adjustments, and external factors, including technological advancements, socio-economic shifts, political factors, legal changes, and health and hygiene issues. Secondly, this research includes detailed organisation responses, outlining strategies, initiatives, and adaptations to effectively address these internal and external challenges. This comprehensive exploration will provide insight into the multifaceted landscape of change drivers and the organisation's proactive responses. 3

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2. Background information Qantas Airlines faces various internal and external changes. New management brings shifts in strategy and culture, requiring alignment with leaderships vision. Technological advancements demand investments in reservation systems, in-flight services, and operational efficiency. Socio-economic shifts influence travel demand and customer expectations, necessitating flexible pricing and route adjustments. Political factors and regulatory changes require monitoring, compliance, and route diversification to manage geopolitical risks and meet evolving standards. Health crises like pandemics demand strict safety measures, schedule adjustments, and customer flexibility. Qantas Airlines, founded in 1920, has a rich history divided into several vital eras. Initially connecting Australia globally, it persevered through World War II and commenced route expansion. Despite post-war challenges, it bolstered its global footprint, famously inaugurating the Kangaroo Route to London in 1947. The jet age took flight in 1959, leading to substantial global expansion. In 1995, privatisation brought modernisation with the Airbus A330, A380, and Boeing 787 Dreamliner acquisitions. Prioritising safety and technology, Qantas adapted to fierce competition, serving every inhabited continent and connecting Australian locales. 2020 marked its centenary, yet the COVID-19 pandemic posed unprecedented industry-wide challenges. Presently, Qantas focuses on sustainability, partnering with Airbus to foster a domestic sustainable aviation fuels industry. Financial performance fluctuations, driven by global economic factors, fuel costs, and competition, prompted cost-saving measures and route optimisation. Market share estimates of 70% in collaboration with Jetstar await full domestic market reopening, contingent on resolving east- west flight suspensions. Qantas, a significant aviation employer, offers a diverse product portfolio catering to various market segments, including domestic and international flights, a frequent flyer program, Qantas Club, QantasLink, and Jetstar Airways services. 4

3. Identifying the drivers for change 3.1 Internal factor 3.1.1 Staff shortage To reduce costs amid the Covid-19 pandemic, Qantas outsourced 1,700 ground staff roles. It cut thousands of jobs, causing a severe staff shortage, triggering customer complaints and chaos at Australian airports as restrictions eased since 2022 (BBC, 2023). 3.1.2 Incidents and scandals During January 2023, Qantas suffered five incidents within a week due to technical issues such as engine and mechanical failure and smoke in a cabin (Khalil, 2023). Besides, flight delays and lost baggage, which frequently occurred in 2022, also have left numerous passengers and aviation unions dissatisfied. These incidents may jeopardise its reputation among customers, and the airline should be more alert about its safety management systems. 3.1.3 Group management team restructure Qantas announced in February 2023 that the CEO role of Qantas Domestic and International would return to be separated from July 2023 (Qantas News Room, 2023). This measure would allow the company to independently run each business based on its specific market conditions and expand its network. 3.2 External factor 3.2.1 Laws and regulations In September 2023, the High Court of Australia ruled that Qantas Airways broke industrial law by sacking 1,700 ground staff and replacing them with contractors during the COVID-19 pandemic, spurring public controversy. Moreover, Qantas is also facing antitrust proceedings, accused of putting pressure on the federal government. (Reuters, 2023). The labour and antitrust lawsuits may call on the airline to compensate the affected workers and adjust its business models in compliance with the regulations. 5

3.2.2 Technology Artificial intelligence (AI) has facilitated fully autonomous flight control systems and reduced product development time and operational costs. Such as EASA have used AI software and robots to streamline their assembly, maintenance and monitoring processes and optimise flight planning and ground operations (Weitering, 2023). Therefore, Qantas Group has been empowered to involve AI in its digital transformation strategy to enhance service delivery and lead the waves of operational optimisation (IT News, 2023). 3.2.3 Climate change As the aviation industry has highlighted climate change issues such as achieving net zero carbon emissions by 2050, sustainability has become the critical driving force behind organisational changes. Qantas joined the wave by setting carbon reduction targets and creating a climate fund dedicated to sustainable projects and technology (Airport Technology, 2023). 6

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4. Description of the action Due to Covid in 2020, Qantas was forced to reduce its workforce by 9800 jobs, 2000 of which were baggage handlers that were illegally outsourced; over the next 18 months, they plan to hire 2,400 pilots, cabin crew and engineers as part of their recruitment and training initiative to refill roles, with at least 300 needed by the end of the year. Thus, an expected headcount of 32,000 by 2033, with its curren employment at 23,500. Over the last 12 months, Qantas has advertised more than 4700 roles and has invested in new training facilities for cabin crew and pilot training centres at Mascot, which is expected to open in early 2024. During Covid, Qantas had invested in creating more efficient aircrafts, new lounges and technology for increased customer relaxation, and most importantly, new domestic and international flight paths. From late October 2023, they will have added around one million seats to their international network. These changes will see Qantas international capacity grow to 100% pre-Covid levels by March 2024, up from 44% 12 months ago. Qantas announced its new trial for boring passengers, designed to reduce queues and wait times. It plans on using the back door more regularly and boarding in groups to seat passengers in the middle of the planes first, followed by the back and then the front seated last. On May 5th 2022, Qantas announced their plan and agreement to acquire the remaining shared in the alliance; being their most significant customer leasing 18 Embraer aircrafts, Qantas wanted options for the additional 12 E190 aircrafts to increase capacity and network in the domestic market, at this point in time the ACCC has blocked Qantas from letting this agreement go through for concerns it will turn into a monopolised market. However, negotiations are taking place to try and work through this issue as other airlines, such as Virgin and Rex, hold a large domestic market share in Australia. Furthermore, Qantas' adoption of the Six Image Framework guides its actions, ensuring that responses to internal and external challenges align with the critical dimensions of reliability, responsiveness, resilience, relationships, and reputation. By proactively managing these dimensions, Qantas aims to shape a favourable organisational image while effectively addressing the identified change drivers. 7

Overall, Qantas is a well-established airline and has navigated various aviation phases, from its early years to post-war expansion to adapting to challenges like the COVID-19 pandemic. The airline has showcased resilience by implementing innovative strategies, expanding its route network, and pursuing acquisitions while addressing changes in technology, regulations, leadership and economic conditions to maintain its position as a leading global airline. 5. Summary Overall, this report looks into Qantas Airlines' response to numerous internal and external drivers for change. Internally, employee shortages caused by the Covid-19 pandemic-related cost-cutting and events affecting safety and customer satisfaction face hurdles. Qantas is also 8

restructuring its executive staff to be more market-focused. Externally, significant factors include legal difficulties, advances in artificial intelligence, and the need to combat climate change. Qantas responds by hiring and training more employees, expanding international capacity, and developing innovative boarding procedures. Regulations may hamper acquisitions. Despite these obstacles, Qantas is a resilient global airline, adjusting to changing conditions while prioritising safety and sustainability. Furthermore, Qantas Airlines has strategically applied the Six Image Framework in response to these external change drivers. This framework encompasses the strategic dimensions of reliability, responsiveness, resilience, relationships, and reputation. It enables Qantas to shape its organisational image and enhance stakeholder perception, aligning its actions with these critical dimensions. 6. Reference list Airport Technology 2023, Qantas announces climate fund to invest in sustainable tech, viewed 15 September 2023, < https://www.airport-technology.com/news/qantas- climate-fund-invest-sustainable-tech/?cf-view>. 9

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BBC 2023, Qantas: Australian airline's profits soar back after record Covid losses, viewed 16 September 2023, < https://www.bbc.com/news/world-australia- 64740570>. IT News 2023, Qantas backs AI in transformation push, viewed 16 September 2023, <https://www.itnews.com.au/news/qantas-backs-ai-in-transformation-push-596352>. Khalil, S 2023, ‘‘No issue’: A week of incidents in for Qantas’, News.com.au , 23 January, viewed 14 September 2023, < https://www.news.com.au/travel/travel- updates/incidents/no-issue-a-week-of-incidents-in-for-qantas/news-story/ c3489df09dc2ca9e8b64dff5e2306360 >. Qantas 2022, Qantas Annual Report 2022 . https://investor.qantas.com/investors/?page=annual-reports Qantas 2022, Our History 2019 . https://www.qantas.com/au/en/about-us/our-company/our-history.html?int_cam=au %3Aabout-us%3Aarticle%3Aour-history%3Aen%3Ann Qantas News Room 2023, Qantas Group announces group management team changes, viewed 16 September 2023, < https://www.qantasnewsroom.com.au/media- releases/qantas-group-announces-group-management-team-changes/>. Reuters 2023, Australia High Court rules Qantas illegally fired workers in pandemic, viewed 16 September 2023, < https://www.reuters.com/business/aerospace-defense/australias-qantas-loses-appeal- workforce-outsourcing-case-2023-09-13/>. Weitering, H 2023, ‘Beyond automation: How AI is transforming aviation’, AIN Online , 14 June, viewed 16 September 2023, <https://www.ainonline.com/aviation-news/aerospace/2023-06-14/beyond- automation-how-ai-transforming-aviation>. 10

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