Strategy And The Pursuit Of Post-Pandemic Resilience (Essay Sample)

Introduction
Every organization has to continually evolve it’s strategies in order to fit in the ever-changing market ecosystem, and to face the many challenges that present, some of which may have existential consequences. The aviation industry is one of the most competitive industries in the world characterized by high entry costs, high operational costs, and an even reduced likelihood of turning positive results. While so, Qatar Airways has been one of the few airlines in the world that have maintained positive financial performance over the past couple of years, and was continuing to grow positively until the pandemic struck. The COVID19 pandemic was one of the toughest strategic challenges that the aviation industry faced as it resulted in lost revenues due to grounding of airplanes globally, total losses in economic value exceeding $168 billion, and other consequences like job losses among others (Bouwer, Bouwer, Saxon, & Tufft, 2022). This study will attempt to explore and understand the strategic challenge posed by the pandemic on Qatar Airways, and what the company has been doing to overcome and rise up again.
As highlighted above, Qatar operates in the competitive aviation industry and has its headquarters in Doha, Qatar from where it operates a hub-and-spoke network that links to more than 150 destinations across the world. It has a fleet size of more than 200 aircraft, is the 3rd largest airline in the world by scheduled freight ton-kilometers, and the 6th largest globally by the number of countries served at 78. This demonstrates that the airline is truly mammoth-sized. It is also the world’s youngest airline with planes of an average age of five years (Qatari Airways, 2022).
As suggested above, the company has enjoyed positive financial performance over the past years, except for the pandemic period. In the 2019-2020 financial year, the company recorded overall revenue and operating incomes of QAR 51.1 billion, a 6.4% increase compared to the previous year (Qatar Airways Press, 2020). Due to the pandemic, the company recorded a net loss of QAR 14.9 billion ($4.1 billion), of which an estimated $2.3 billion was due to a one-time impairment charge associated with the grounding of the company’s Airbus A380 and A330 fleets (Qatar Airways Group, 2021). In the 2021/2022 financial year, the company’s revenues sprung back to QAR 52.3 billion, a 78% growth from the previous years’ performance, and passenger revenues increased by 210% over the previous years due to the fact that the company increased its market share and realized a higher unit revenue for the second fiscal year in a row (The Peninsula, 2022). Of this amount, QAR 5.6 billion was the net profits realized during this fiscal year. This was the first net profit the company had recorded since 2019 and the previous bad performance can be attributed to the vagaries of the pandemic.
Qatar Airways is mainly involved in the aviation business—moving people across destinations across the world. In the 2021 financial year, the airline moved more than 5.8 million passengers across its flights, which was a reduction from the 32.6 million people it moved in the previous fiscal year (Saleh, 2022).
Fig: Number of people transported by Qatar Airways over the past six years (in millions). (Source: Statista)
The company is also in the cargo space and is one of the world’s largest player in the space owing to its global reach. Fueled by the increasing demands for cargo movement across during the pandemic period, the company moved more than 2.7 billion metric tons of cargo as compared to the previous year’s 2.6 billion metric tons (Saleh, 2022b).
Fig: Amounts of cargo transported by Qatar Airways over the past six years (in 1,000 metric tons). (Source: Statista)
This paper will explore the pandemic as a strategic issue that the aviation industry in general confronted with, and how Qatar Airways confronted it. As explained by Bouwer, Bouwer, Saxon, & Tufft, (2022), the pandemic cost the sector more than $168 billion in economic losses. According to OECD Policy to Coronavirus, (2020), air transport represents a small share of GDP but is closely linked to the activities of other sectors, and an impact on the business such as occasioned by the pandemic may end up having catastrophic impacts on many other sectors. As noted, Qatar Airways was one of the many airlines around the world that was forced to ground its fleet as the pandemic set in due to the many travel restrictions imposed by governments across the world. Due to these losses and the various impacts occasioned, the company had to adopt various response mechanisms, and this study will focus on some of these strategies implemented, and their impacts.
Methods
This report will take a qualitative approach where a literature review will be conducted on the subject. The focus will be to generate information on the subject matter. The literature search will primarily be conducted using Google Scholar and ProQuest resources. ProQuest will particularly be critical in getting the most up-to-date resources that contribute to the issue as it has the added advantage of allowing easy filtering criteria. From the searches, the results fitting the criteria (fitting the desired goal of understanding the strategic issue and the impact on Qatar Airways). Additionally, it is critical to acknowledge that the strategic issue under research is a pretty new one and in addition to the existing literature, other sources to be reviewed will include reports from the company, the aviation sector, and other experts in the field, newspapers, and other credible websites.
The Pandemic as a Strategic Business Issue Confronted by Qatar Airways
As noted above, the pandemic was one of the biggest strategic yet unexpected issues that the aviation industry has every faced for decades. Unlike many other economic and non-economic challenges that the industry has faced over the years, there was no way for the industry to prepare for the unpredictability, the restrictions, and other consequences that were necessitated by the pandemic. Qatar Airways was forced to ground its entire fleet leading to even more losses exceeding QAR 14.9 billion in the fiscal year ending in 2021 alone. At the time, the company was staring at even more losses in form of layoffs and lost business. According to Oxford Analytica, (2020), the pandemic was the latest blow an ailing civil aviation industry in the Middle East where airlines had been grappling with issues like security risks occasioned by conflicts and tensions in Syria, Afghanistan, US-Iran tensions, and the Qatar boycott by other regional countries. The Saudi-led blockade against Qatar which also included other countries like Bahrain, the UAE, and Egypt severing diplomatic and trade relations with Qatar three years prior to the pandemic had had some impact on the country’s aviation sector but Qatar Airways had remained buoyant amidst the tumultuous times. As Oxford Analytica, (2020) explains, carriers like Qatar Airways seeking to land in Doha had to make often painful re-routing of flights that culminated in losses in profits, and delays among other consequences. Paramita & Sudhartio, (2022) noted that the fact that there was no clear end to the pandemic when it struck, the consequence was that the sector lacked the tools and structures to plan adequately to a post-pandemic world, and was left desiring that things would reset naturally. When there was hope for some recovery, the sector was also inundated by the emergence of “new Covid variants” that saw some governments across the world slam shut their borders again, suspend the recovering sector, and impose bans afresh, among other measures (Macheras, 2021). Macheras, (2021) explains that at the time, no matter how many conferences and diplomatic attempts by governments that led to pledges of more unified responses in the future, the fears of these new variants tended to lead to countries to act unliterary in imposing restrictive measures, something that made the sector unreliable as it began roaring back to life. Operating in a sector that deeply depends on reliable flow of customers and other enabling factors, Qatar Airways struggled to recover. On the new variants, Qatar Airways’ boss HE Akbar al-Baker was noted to have been positive that they would have a “limited overall impact” on the sector’s continuing “processes of unlocking.” However, the boss further stated that it would be prudent for additional steps like the relaxation of border restrictions to be conducted while adhering to the public health and safety provisions by the International Civil Aviation Organization (ICAO) and the World Health Organization (Macheras, 2021). On his part, the head of IATA, willie Walsh, had called these restrictions a “knee-jerk reaction” to the condition and was thus not sustainable in the long run (Macheras, 2021).
The pandemic occasioned a period of uncertainty across industries, and particularly the aviation sector where costs kept on rising even when the planes were grounded. Gradually, however, the various stakeholders including the government continued with the relaxation of these provisions. But the big headache going forward was how the sector would fully recover to pre-pandemic levels, and address the financial challenges occasioned by the pandemic. A study conducted by Dube, Nhamo, & Chikodzi, (2021) on the prospects of recovery for the sector revealed that a good number of airlines struggled with bankruptcies, downgrades in ratings, liquidations, and severe cash burns, and as thus, for many of these, recovery felt tough and slower than anticipated.
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