Introduction of Emirates Airline
The report is going to analyze the strategic position of the Dubai-based airline the Emirates and how it was able to create a success story from its short period of operational areas. The report will analyze the internal and external environment to look at the reasons behind the competitive advantages.
Emirates Airline Background
Starting with just two leased aircrafts; Boeing 737 and Airbus 300 B4, flying on its first route from Dubai to Karachi, Emirates were committed to its goal of quality and not quantity. The dream that is dreamt of while flying on this first route has been coming true and becoming only better day by day. The first small steps taken into the regional travel scenarios have led it to become a global influential tourism and travel leader. The company is renowned for its commitment to quality service. Now operating with a fleet of over 265 aircrafts, Emirates are catering to over 155 destinations in more than 80 countries. The company is constantly growing and finding new areas for exploration (Emirates, 2018).
Strategic Position of Emirates Airline
There must be something really interesting and special about the company if it is ranked consistently as the number 1 airline in the world. Emirates seem to only get admiration for its service, quality, and operational performance. The edge that Emirates enjoys having to have some background reasons lying under its operational expertise. This reason or more rightly said “competitive advantages” can be gained through various mediums in different areas, but is always unique to a company. Researchers have found Emirates as the market leader in Dubai with its competitors positioned as Challenger (Etihad Airways), and Follower (Gulf Air) (McKechnie et al., 2008).
Internal Environment of Emirates Airline
The business model used by Emirates is unique in a way that it has the characteristics of flexibility. The company has been thus able to constantly innovate and produce relevant services which are also affordable and unique. The company celebrates its success on the innovative long-haul flights. Even in global economic crisis, Emirates has been able to generate profits through innovation.
Long Haul Flights
The business model of the Emirates is totally based on long-haul aircraft. The company’s strategy is to serve the connecting market through long-haul aircraft as compared to the European and US airlines who are using the short-haul network which is expensive (Emirates, 2018).
Pricing strategy-Cost Effectiveness
The Emirates have a very effective pricing strategy which makes sure that the passengers pay cheaper fares for the enjoyment of their flights. This has evidently been the most important competitive advantage that Emirates has enjoyed.
Management
The company is managed by highly creative and trained management. It has a pool of advisors who serve the best interests of the firm. Emirates have a training center “Emirates Aviation University” which helps the company to acquire skilled employees and management. Other than this, the company also engages in in-house training activities for the development of management (Emirates, 2018).
No legacy Costs
The cost-effectiveness of the company’s competitive advantage is derived from the zero legacy costs. The company is new in the market, which means that it is not much burdened by the costs like pension costs for long-serving employees. The charging of the high fares by airlines is majorly based on coverage of these legacy costs, which is zero for Emirates. Hence this gives Emirates a greater competitive advantage (Emirates, 2018).
Technology
The commitment to innovation and constant creativity cannot be fulfilled without investment in technology. The company Emirates has been very aggressive in the adaptation of technology whether it is in the field of flight booking or cargo management (GTP Editing Team, 2017). The company has been able to beat Singapore Airlines by offering online booking and better communication to the customers. Furthermore, it has invested heavily in using the latest technology to enhance the quality of flying experience (Arabian Business, 2015).
The dollar as Standard Currency
The use of Dollar as standard currency has aided Emirates in bringing stability to its cash flows. The stability associated with the Dollar currency as compared to other currencies gives Emirates the edge in ensuring higher profitability and better customer satisfaction. It not only mitigates the exchange risk, but also is more convenient to the passengers around the world because of the universal acceptability characteristics of the Dollar currency (Emirates Aviation University, 2018).
Wide Variety of Air Fleet
Emirates also enjoy a wide variety of airplanes in its fleet. It operates different kinds of airplanes which give its customers the advantage of easily choosing the airline they prefer. As per the company, it purchases new planes every year for making its airline new and safer.
Trusted for Safety
The Emirates have been the one company which has not reported any accident in its operating period. The airline has had some minor accidents, but none with casualties or any fatal injuries. This safety record of the flights ensures the passengers for their safety and enables them to put their confidence on Emirates as compared to the other airlines (Emirates, 2016).
Environment-Friendly
The Emirates is committed to being an environment-friendly airline. Its aircrafts are installed with efficient engines which ensure that less carbon is emitted into the environment. Moreover, the company uses aircrafts which are more fuel efficient; using less fuel for longer distances. It also aids the airline in gaining the cost-effective, competitive advantage (Emirates, 2016).
Horizontal Diversification
Emirates have diversified horizontally in areas like airport operations. DNATA airport operations look after cargo and baggage on 17 airports (DNATA, 2018). DNATA travel services provide ticket handling and booking for corporations and individuals. Sky cargo is another cargo managing under emirates group. The diversification of the Emirates in hotels is a natural combination for travel and holidaying (Emirates Grand Hotel, 2018).
Differentiation Strategy
The differentiation strategy of Emirates enabled through advanced technology, skills, and ancillary services make it drive to success. The need for continuous innovation in fleet, staff and premium services is well understood by Emirates.
Generic Strategy-Focused Leadership
Emirates Airline business model is based on being customer-centric. Its focus on being customer oriented makes it look for diversification in its customers and its management. The diversity in its stakeholders enables it to continue its approach of bringing diversity to its management and clients. The generic strategy of focused leadership is another major attribute which can be considered as one of the reasons for its competitive edge. It enables Emirates to provide full commitment and support to the operational activities (Emirates, 2018).
Leadership Style
Another unique attribute of the Emirates which gives it the competitive edge is its leadership style. The family leadership style ensures to get consensus among the members quickly to resolve business issues with timely decisions. The democratic and influential leadership style of Emirates enables it to influence the behavior of the subordinates and the market effectively.
Open Skies Strategy
Emirates maintain the strategy of “Open Skies” pushed forward by “Hello Tomorrow” marketing campaigns enables it to fly to any country without any sanctions. The growth strategy of Expansion through the addition of new aircraft in its fleet is essential for this (O’Reilly, 2012). However, countries tend to create alliances with the airlines which are not as per Emirates policy. It has been sanctioned to not enter into Australian airspace because of its non-alliance with the Australian government (Arabian Business, 2015).
Supply Chain
The travel agencies, partners, and strategic managers make up the supply chain for Emirates. Emirates have been successful in deriving benefits from its supply chain by increasing its flow passengers for flights as well as for cargo. Furthermore, it has developed strategies to overcome the political and economic challenges which can affect its performance (GTP Editing Team, 2017).
External Environment Analysis of Emirates Airline
Porter’s five forces for Emirates Airline
For the analysis of the external environment of the company Emirates, Porter’s five forces model is used.
Threats of New Entrants
The threats of entry in the airline industry have always been low as the barriers to entry are high. The new entrants face barriers in the form of patents and rights already established with the existing carriers. The rights are given to airlines as national carriers to create a barrier for the new entrants. They enjoy exclusive benefits in the form of no competition, grants, and no sanctions and taxes for a long period. Furthermore, the brand equity enjoyed by the renowned players in the history of good service creates high brand value for the existing airlines. One of the major barriers is the capital needed for such huge level of operations by new entrants. The established customer loyalty with Emirates in the form programs like skywards and frequent flyer miles makes it difficult for the entrant to enter (Arabian Business, 2015).
Bargaining Power of the Suppliers
The switching costs of suppliers as compared to the switching costs of firms are very high as only two suppliers are available to the airlines. However, on the other hand, the suppliers are available with hundreds of airlines as substitutes as many airlines are operating at the moment and are planning for expansion. It shows that the bargaining power of the suppliers is very high as compared to the Firms (Centre for Aviation, 2016).
Bargaining Power of Buyers
It is evident that the buyers have the flexibility to switch between the airlines easily. People usually get attracted to cheaper airlines and tickets offered by airlines making it lower switching cost for the buyers. However, there are certain areas in which Emirates enjoy its advantage. For instance, Emirates are the only one who offers direct route flight from Dubai to San Francisco. It is difficult to compete at this level in the competitive market. However, Emirates compensates its price with high-quality service, entertainment, food, and comfort. The differential advantage gained by world-class service, private terminals, and non-stop flights with some being the longest direct flights gives the Emirates good bargaining power (O’Reilly, 2012).
The threat of Substitute Product and Service
The propensity of buyers to substitute is very high. It is because of the reason that the price sensitivity of the budget-centric market is very high. Any cheaper flights would make the market prefer it on Emirates. In the budget-sensitive market, the huge price differential can become a threat for Emirates. However, the luxury market prefers to choose Emirates with its world-class service. In the case of Emirates, the perceived level of product differentiation is fairly good enough. It is due to its new aircrafts, skilled crew and gourmet food menu (McKechnie et al., 2008).
Rivalry amongst the Existing Firms
There are roughly 37 airlines which fly from and to Dubai. In the last decade, the Middle East market has shown its strongest growth. There is a huge diversity of the competitors. Some are only domestic-based flyers while others are global flyers. The companies are only able to remain relevant and competitive by introducing innovative services like fully reclining seats, TVs, on-board Spas and other recreational and comfort-oriented offers (Giansiracusa, 2016).
Summarizing the Porter’s Five Forces Model
| Forces | Impact |
| Threats of New Entrants | Low |
| Bargaining Power of Suppliers | High |
| Bargaining Power of Buyers | Moderate |
| Threat of Substitutes | Moderate |
| Competition | Moderate |
Future of Emirates | Recommendation
The non-partnership stance of the Emirates is well understood for its reasons. However, for expansion of Emirates into new markets, this stance has to be changed. It is also represented in the welcoming of partnerships by Emirates in the recent years. After getting sanctioned by Australia, a rich potential market for air travelers, in 2013, Emirates had collaborated with Qantas on providing 98 weekly flights between Dubai and Australia (Emirates, 2018). The most recent is its new partnership with fly Dubai, which includes expansion of code share agreement, schedule alignment and network optimizations (Centre for Aviation, 2016). For its need to keep growing, the company needs to bring advanced data and analytics capabilities. The launching of Data Science Lab at the Oxford University is one of these steps (Giansiracusa, 2016). The growth strategy of Emirates speaks loudly about the increase in capacity and the sustainable network (Emirates, 2016). Continuing on this track, Emirates can expand and continue to give quality service to the world.
Conclusion
In the end, it has been proved that through constant innovation derived by cost-effectiveness, trained staff, the adaptation of latest technology, and quality service Emirates has been able to enjoy its competitive advantage and is considered as the Market Leader. The investment of the company in its human resource and technology for constant innovation is impertinent to the success of Emirates for future growth. Furthermore, the company is exploring new markets by creating partnerships with other airlines and companies.
References
Arabian Business, 2015. Dubai’s Emirates eyes new technologies to ‘transform’ business. [Online] Available at: http://www.arabianbusiness.com/dubai-s-emirates-eyes-new-technologies–transform-business-609444.html [Accessed 3 February 2018].
Centre for Aviation, 2016. Emirates Airline: The strategy reshapes in 2016 – partnerships, China growth, smaller widebodies. [Online] Available at: https://centreforaviation.com/insights/analysis/emirates-airline-the-strategy-reshapes-in-2016-partnerships-china-growth-smaller-widebodies-260221 [Accessed 3 February 2018].
DNATA, 2018. DNATA. [Online] Available at: https://www.dnata.com/en [Accessed 3 February 2018].
Emirates Aviation University, 2018. Emirates Aviation University. [Online] Available at: https://www.eau.ac.ae/en [Accessed 3 February 2018].
Emirates Grand Hotel, 2018. Emirates Grand Hotel. [Online] Available at: https://emiratesgrandhotel.com/ [Accessed 3 February 2018].
Emirates, 2016. Emirates growth strategy on track. [Online] Available at: https://www.emirates.com/media-centre/emirates-growth-strategy-on-track [Accessed 3 February 2018].
Emirates, 2018. SkyCargo. [Online] Available at: http://www.skycargo.com/english/ [Accessed 3 Fenruary 2018].
Emirates, 2018. Sustainability in operations. [Online] Available at: https://www.emirates.com/ch/english/about-us/environment/sustainability-operations.aspx [Accessed 3 Fenruary 2018].
Emirates, 2018. The milestones in Emirates’ incredible journey. [Online] Available at: https://www.emirates.com/english/about/history.aspx [Accessed 3 February 2018].
Giansiracusa, A., 2016. Emirates: Data and the Future of Air Travel. [Online] Available at: https://rctom.hbs.org/submission/emirates-data-and-the-future-of-air-travel/ [Accessed 3 February 2018].
GTP Editing Team, 2017. Emirates Launches New Technology Projects to Improve Traveler Experience. [Online] Available at: https://news.gtp.gr/2017/07/07/emirates-new-technology-projects-improve-traveler-experience/ [Accessed 3 February 2018].
McKechnie, D.S., Grant, J. & Katsioloudes, M., 2008. Positions and positioning: strategy simply stated. Business strategy series, 9(5), pp.224-30.
O’Reilly, L., 2012. Emirates introduces new brand positioning. [Online] Available at: https://www.marketingweek.com/2012/03/27/emirates-introduces-new-brand-positioning/ [Accessed 3 February 2018].
+447462439809