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Airline Group Strategy: Emirates Airlines

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Question:

Discuss about the Airline Group Strategy for Emirates Airlines.

 

Answer:

Introduction

Emirates Airline is one of the major airlines in the aviation industry that is based in Dubai and fully owned by the Government of Dubai. The business operations of this airline are growing at a better rate, as it is going through business expansion all over the world. Emirates Airline is expanding its business throughout all the continentals. In the year 1985, Emirates Airline was founded in Dubai and by the year 2013, this has attained a considerable growth and currently it has become third largest commercial airline in the world. The given case study, i.e. named as “Emirates Airline: Connecting the Unconnected” includes the technology, business strategy, how this airline selects its new routes, tools and equipment and manages its marketing, branding and human resources. In addition, it is effectively managing the relationships with country’s government. The airline forms an internal strategy as it increases the opportunities in geographical markets. Now, the company has become one of the top and leading airlines in the world, with highest number of domestic and international passengers. This report answers the questions given along with the case study. It includes the factors behind the success of Emirates in Dubai. Furthermore, it describes the role of Dubai and location in the success of airline. Moreover, it includes the SWOT analysis of Dubai-based hub-and-spoke model of Emirates airline.

Factors behind Emirates’ Success   

There are various factors behind the success of Emirates Airlines. There are some reasons why this airline has grown as a biggest commercial name under the civil aviation sector. While it can be recognized to various factors, below are some of the most important factors, which contribute to the success of Emirates Airlines.

 

Branding

The most important factor among airline investors can allow an organization to some of better choice selections for developing its global image and reputation. The company has a better brand image in the aviation industry. It is increasing its customer base by enhancing its services. To improve in-flight experience, airline has transformed a number of seats into premium classes and enhanced its luxury facilities and included new flights, which provided modern facilities. Emirates Airlines had won the World Travel Award in the travel industry for best service three times (Armstrong, Kotler, Harker and Brennan, 2015).

Finances

Emirates Airline is owned by the Investment Corporation of Dubai, so it has no shortage of support, whether it is about the logistics or complete amount of cash, which is needed to eliminate the barrier behind entering in more extensive marketplace.  The airline is having a strong financial support from government of Dubai. Furthermore, dependence of Dubai on tourism makes sure Investment Corporation of Dubai considers this brand seriously (Abeyratne, 2013). As an outcome of this, a huge amount of money was forced in before when the Emirates airline turned its profit.

Operations

Operations of Emirates Airlines are very effective and major contributor to its success. Having selected to run outside the purview of alliances between different airlines Emirates organization selects to attain growth of its own accord without being restricted by the market limitations, which are posed by these strategic alliances. It not only give all the revenues and incomes for the company alone but also offers it considerable power in the market that is defined by the airlines if strategic alliances (Belobaba, Odoni and Barnhart, 2015). In addition, Emirates Airline is implementing hub and spoke model. This model is the major contributor to the success of this airline. The company has operated this model all over the world that consists of a single hub, which is based on several arrival banks, which are followed by departures that enables the travellers to connect through this hub among different points. This model assists this airline to make its operations smoother. The operations of Emirates Airline are the major factors, which drive the organization towards gaining competitive advantage against its competitors, like; Qatar Airways, British Airways, Turkish Airlines etc.

 

Customer Service

Customer service is also one of the major factors for success of this airline company. The organization is providing creative and customer focused services and has reliability in airline services. Meanwhile, the services to customers are as significant as fuel in flights. So, the constant growth and innovation in products is very important for the organization. Moreover, other critical success factors competitiveness and sustainable growth (Bamber, et al, 2009). It can be ensured that Emirates Airlines is excellent in offering customer services and expanding its business operations in international market. The company has been endeavoring to maintain its growth with staying competitive in aviation market by implementing cost effective and differentiation strategy in the market. It assists the organization in increasing its customer base and gaining more competitive advantage over its competitors in the industry (Dudley, 2016).

Moreover, the success of Emirates airline can be entitled to the government of Dubai.

Role of Dubai in Success of Emirates

Selecting an appropriate location for business is one of the major decisions for an organization. It is a key component to the success of an organization. If a firm chooses wrong location, then it can have sufficient access to workers, customers, materials and other transportation services. So, location generally plays a vital role in the revenues and overall success of the company. Location strategy framework is a plan for finding an optimal location for the business by recognizing its objectives and needs and looking for the location with products and services, which are well-suited with these objectives and goals (Grimme, 2011). The company uses different criteria to find out an appropriate location for its business and company establishment.

In the given case, Dubai is playing an important role in the success of Emirates Airline. The organization is having various strategic advantages from this location. There are so many components of location strategy framework, which are supporting the growth and success of Emirates in Dubai (Hazledine, 2011). The company has established its business in the country by considering some specific factors. The location strategy framework is stated below;

Government Support

When an organization establishes its business in a location, it may confront various barriers and restrictions from government. So, there will be need of examining the governmental and cultural issues in the area when creating its location strategy. In Dubai, this airline is owned by government of Dubai and government is supporting Emirates in every way.  When the company has developed its hub-and-spoke model, it required both access to new destinations and a powerful hub airport (Homsombat, Lei and Fu, 2014). The government of country has supported Emirates by providing funds. It has maintained its strong financial relationships with Emirates Airline via its holding company, i.e. Investment Corporation of Dubai. The government of is the major reason behind strong growth and success of Emirates Airline in country.

 

Location capability and capacity

Emirates Airline is practicing a hub type model in this country, which is not new in the aviation sector. By looking at the capacity and capability, Emirates has effectively capitalized on its chosen location, i.e. Dubai, a small state that is located to approach 75% of the population of the world in a flight in eight hours to develop a profitable and growing hub based operational model. This model has proven beneficial on longer routes needing refueling, like; by grounding itself in different locations that is central to West and Sub Saharan Africa and Asia (Jarach, 2017). By this, the organization does not have fear to lose out to its leading competitors by holding in Dubai. Thus, the choice of Dubai is a major contribution to the success of Emirates Airlines.

Environmental and climate factors

For the organizations in airline industry, it is very important to consider climate and environmental factors while making decision regarding location. The climate and environmental factors of Dubai are beneficial for Emirates Airlines. The airline was benefitted from comparatively good weather condition, aside from heat and occasional fog, the operations of airline stayed free of rain and snow falls, which delay in American and European airspaces (Kapferer, 2008).

Increased Tourism

The percentage of tourism in Dubai is increasing continuously with a significant growth rate. The government of Dubai enabled the incoming tourist flows by removing major requirements of visa and introducing marketing and promotional campaigns. In the year 2012, receipts from tourism is totaled approximately $10.4 billion that is more than other countries in Middle East. So, the selection of Dubai is beneficial for Emirates to get success in aviation industry (Kleymann and Seristö, 2017). In the country, most of the tourists are travelling and departing via the flights of Emirates Airlines. This is one of the significant components under the location strategy framework for Emirates while making decision regarding Dubai. Thus, Dubai is playing an important role in the success of Emirates Airlines.

SWOT Analysis

In order to attain growth in Dubai, Emirates Airline has adopted and implemented a hub and spoke model, which is proven very beneficial for the organization and its operations in the country. The SWOT analysis of this hub and spoke model is stated below by considering different factors, i.e. strengths, weaknesses, opportunities and threats (Lawton, 2017).

Strengths

Most of the passengers of Emirates are simply connecting through DXB and organizational model of the company at its home airport is geared to serving to these flows of passengers of linking traffic. The company runs its hub and spoke model, under which it has established a single hub that is grounded on different arrival banks, i.e. followed by departures. It allows travelers to connect through a single hub among different points. This is enhancing the operations of airline, as all the operations are managed from one point. When it is about the success of Emirates Airlines, its business and operational model is always considered. This model at Emirates has resulted in the significant growth of airline over past few years (O'Connell, 2006). It is very beneficial for longer routes flights, which are managed from a single hub, i.e. Dubai. There are two major operational factors, which play an important role in this model, are hub of Emirates and its aircraft fleet. Hub and spoke model of Emirates Airlines is supporting the organization in attaining higher competitive advantages over its competitors.

 

Weaknesses

The hub and spoke model is used by Emirates airlines all over the world, but this includes various weaknesses and issues, like; uneven utilization of human resources at Dubai hub and airport overcrowding during peak and seasonal times. These are the major weaknesses, which may impact the growth of Emirates in Dubai (O’Connell, 2011).

Opportunities

This business model of the company has been offering several opportunities to Emirates Airlines in this competitive business environment. This model will assist in the development of Dubai as an airline and tourism hub. It is assisting the organization in connecting to all over the world.  In addition, it will aid the organization in managing their operations in better way and enhancing its capacity and capability. The company may get various economic advantages by adopting this model. It assists the nation where the hub is situated and since the transit duration is generally some hours, so travelers will do shopping there at duty free thus enhancing its domestic revenues. In this way, it has positive impact and opportunities on economy of nation (Pearson and Merkert, 2014).

Threats

There are some threats, which impact the growth and operations of the Emirates Airlines. If there will be disruption in the flights, it may delay the entire hub. It can take many days in smoothening of these delays. So, effective operational management is an important process for managing the hub. There may be the issues related to connectivity, so that the people may feel disgruntled. It can challenge the brand image and reputation of Emirates Airlines in Dubai and around the world.

Is Emirates Airlines still a Success Story   

Yes, Emirates Airlines is still a success story. The continuous growth and success of Emirates Airlines is making competitive pressure on its competitors all over the globe, like; Quantas, Qatar Airways etc. There are various factors at Emirates Airline, which are the reasons behind its continuous growth and success. These factors are like; location, culture, operations, leadership, internal strategic decision making etc. Emirates Airline recorded 2016 as another year of success and considerable growth around all the scales of networks in sense of development of route, growth of fleet and increased number of travelers (Riva, 2013). In this year, the president of company was very much satisfied with its growth. The below-given graph indicates the fleet growth of Emirates Airlines between the duration of 2000-2015. It is continuously its fleets and introducing new flights to increase its business operations to all over the world.

The organization is implementing an organic growth strategy and it will continuously use this strategy and make development in commerce and tourism in Dubai. The major focus of the company is on offering excellent services and experiences to its customers and passengers. The company also had a significant year in customer operations. In the year 2016, it was awarded as World’s best airlines by Skytrax. Now, it is adding to the online and digital business (Shaw, 2016). By this, it was able to connect with more than 8.8 million travelers and send 1.7 million messages. The facts and figures of current year indicate that company is experiencing a significant growth in the number of passengers and in terms of revenues.

It is flying biggest fleets in the world, i.e. Boeing 777 and Airbus A380, which offer its customers comforts of the modern and very efficient aircraft in the skies. Now, the company has the command on up to 39% of the market share in the aviation industry (Riva, 2016). In the Asian airlines market, the company has seen most significant growth over other airlines. Emirates Airlines is principally successful due to its pricing strategies, which are very competitive and it utilizes them against its competitors. Thus, it can be analyzed that Emirates Airlines is experiencing a considerable growth and success in aviation industry in Dubai. Dubai is the best place for Emirates to operate its business in aviation sector. The facts and figures show that company is still a success story and will continue to remain in the future.

Conclusion

Thus, the above report concludes that Emirates Airline is a well-established and well-known airline in Dubai. There are various effective factors, which are driving the growth and success to the organization. These factors are such as; branding, finances, operations and customer services. It is adopting a hub and spoke model as its operational business model. This model is beneficial for the growth and success of Emirates. From the above case report, it can be analyzed that Emirates is the airline organization, which is experiencing continuous growth and success in competitive business environment.

 

References

Armstrong, G., Kotler, P., Harker, M. and Brennan, R. (2015). Marketing: an introduction. Pearson Education.

Abeyratne R. (2013). Regulation of Air Transport: The Slumbering Sentinels. Montreal: Springer

Belobaba, P., Odoni, A. and Barnhart, C. eds. (2015). The global airline industry. John Wiley & Sons.

Bamber, G.J., Gittell, J.H., Kochan, T.A. & von Nordenflytch, A. (2009).  Up in the Air: How Airlines Can Improve Performance by Engaging their Employees. Cornell University Press.

Dudley, D. (2016). Is the Emirates Airlines Growth Story at the End? Retrieved from https://www.forbes.com/sites/dominicdudley/2016/11/11/is-the-emirates-airline-growth-story-at-an-end/#64b8d11e66d6.

Grimme, W. (2011). The growth of Arabian airlines from a German perspective–A study of the impacts of new air services to Asia. Journal of Air Transport Management, 17(6), 333-338.

Hazledine, T. (2011). Legacy carriers fight back: Pricing and product differentiation in modern airline marketing. Journal of Air Transport Management, 17(2), 130-135.

Homsombat, W., Lei, Z. and Fu, X. (2014). Competitive effects of the airlines-within-airlines strategy–Pricing and route entry patterns. Transportation Research Part E: Logistics and Transportation Review, 63, pp.1-16.

Jarach, D. (2017). Airport marketing: Strategies to cope with the new millennium environment. Routledge.

Kapferer J. (2008). The New Strategic Brand Management: Creating and Sustaining Brand Equity Long Term. London: Kogan Page

Kleymann, B. and Seristö, H. (2017). Managing strategic airline alliances. Routledge.

Lawton, T.C. (2017). Cleared for take-off: structure and strategy in the low fare airline business. Routledge.

O'Connell, J. F. (2006). The changing dynamics of the Arab Gulf based airlines and an investigation into the strategies that are making Emirates into a global challenger. World Review of Intermodal Transportation Research, 1(1), 94-114.

O’Connell, J. F. (2011). The rise of the Arabian Gulf carriers: An insight into the business model of Emirates Airline. Journal of Air Transport Management, 17(6), 339-346.

Pearson, J. and Merkert, R. (2014). Airlines-within-airlines: A business model moving East. Journal of Air Transport Management, 38, pp.21-26.

Riva A. (2013). Emirates Airline is eating all other airlines’ lunch but is it here to stay? Available from: https://www.ibtimes.com/emirates-airline-eating-all-other-airlineslunch-it-here-stay-1472912.

Shaw, S. (2016). Airline marketing and management. Routledge.

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