Rising fuel costs during 1999 and 2000 created a pressure on the airline industry. The fuel price increase came quickly and was unanticipated. For Qantas Airways, Australia’s largest airline, this was just the beginning of difficulties. The airline also had to deal with two new domestic competitors, Impulse and Virgin Blue, and with higher user fees at Sydney Airport. On top of this the airline faced the need to upgrade its fleet, replacing aging aircraft and buying new 500-seated planes. Also, the economy in Australia slowed down in 2000, and the Australian dollar was sinking. Finally corporate clients managed to find or negotiate low ticket prices by using computerized planning models and the Internet. The problem was this: Could Qantas the world’s second oldest airline, survive?

Qantas decided its salvation lay partially in IT. Qantas Information Technology supports the information systems used throughout the Qantas Group and is involved in the acquisition, development and application of new systems. Major projects include the migration of the Qantas reservations and ticketing systems to Amadeus in November 2002, the implementation of the Integrated Revenue Information System (IRIS) in April 2002, and ongoing joint investments in the evolution of yield management systems with British Airways.

In addition to traditional responses such as buying fuel contracts for future dates, Qantas took major steps to get into e-commerce. Qantas has introduced a range of E-Commerce initiatives aimed at consumer and corporate customers, and travel and purchasing partners. The Qantas internet site - qantas.com - allows customers to make domestic and international bookings and provides a facility for Frequent Flyers to redeem their points for travel. It also provides product information, online schedules, arrival and departure information, company history, general information about Qantas and major media releases. The capacity of the site was demonstrated in September 2001 when more than three million hits were recorded in 24 hours. Qantas is a founding member of Zuji - the Asia-Pacific travel website which was launched in July 2002. Qantas also operates a special web site for Australian travel agents offering access to Qantas news, information and special offers.

Business-To-Business Initiatives
• Joined a purchasing business-to-business e-marketplace (called Airnew Co.). which links a dozen major airlines with suppliers of direct supplies: fuel, fuel services (general maintenance services, catering and so on. The marketplace operates with electronic catalogs and conducts different types of auctions.
• Joined another marketplace, called corprocure.com, together with thirteen other large corporations in Australia for the. purpose of buying indirect goods and services such as office supplies, light bulbs, and airline, maintenance services.
• Formed a Pan Pacific e-selling marketplace that includes a full spectrum of travel services (air, hotels, cars. etc). It provides a chance for Qantas’s business partners, such as travel agencies, to provide special and personalized services to their customers, at competitive prices. This e-marketplace will also sell direct 10 individual customers.

Business-To-Consumer Initiatives
• Sent an e-mail lo 2.4 million Qantas frequent flyers, inviting them to book direct online and rewarding them with bonuses and an opportunity to win $10,000 (Australian).
• Began providing information, including personalized information such as flight delays, to travelers via mobile phones and other wireless devices.

Other Initiatives
• Set up a portal for Qantas travel agents that provides information and online training (gdstraining.qantas.com.au).
• Established Qantas College Online, which offers dozens of courses online to help train 30,000 Qantas employees in 32 countries (qfcollege.edu.au). This is part of the airline's business-to-employees (B2E) initiative.
• Another B2E project is online banking services. The company operates a credit union with 50,000 members worldwide, and members make over 100,000 transactions a month at qantrascu.com.au. Services are comparable with those of other commercial online banks.

Strategic Alliances
• Initiated several nontravel projects with Telstra (Australia's largest telecommunications company). Co-branding of credit cards and mobile phones are two examples of joint ventures undertaken.

Leading an old-economy company into the digital economy is not easy. It means interfering with power structures and fitting new-economy strategy with old-economy ways. But Qantas knew that this must be done, and did not expect results overnight. To implement all EC initiatives will take years and hundreds of millions of dollars. Yet, as early as 2003, Qantas expects to reap an estimated savings of $85 million (Australian) per year in reduced communications and advertising costs. Also, it expects to increase revenue by $700 million (Australian) annually from nontravel sales. Many airlines, including United Airlines (united.com) and CathayPacific (cathaypacific.com), are involved in similar projects.