Emirates Airlines Case Study

Emirates is an airline company with a mission to provide high-quality commercial air

transportation services. The company’s global strategy aims at efficient competition,
exceeding far beyond the limits of the Arabian Gulf and Middle Eastern markets. In 1985,
the Dubai government, cognizant of the country’s limited oil resources, launched the flag
carrier as an alternative means to economic growth in the United Arab Emirates (UAE).

In the very beginning, the airline served 60 destinations in 42 countries across Europe,
Middle East, Africa, Asia, and Australia. To keep up with the aggressive competition,
Emirates emphasized product, equipment, and excellent service, and promoted a quality
image. To do so, a multinational crew was recruited and a state-of-the art fleet was
purchased. Within two decades, Emirates expanded its destinations and had remarkable
financial returns. In 2014, it served 142 destinations in 80 countries from its hub in Dubai.

It carried 44.5 million passengers, 5.1 million more than in 2012−13, and 2.3 million tons of
airfreight, up by 8 percent, which contributed to the 26th consecutive year of profitable
operations. The company has witnessed a steady growth over time since its inception it
carried 26 million passengers and served 101 destinations in 2010; these figures were
14.5 million and 83 in 2005.

Emirates operates four of the 10 longest, non-stop commercial flights in the world from
Dubai to Los Angeles, San Francisco, Dallas, and Houston. It employs over 52,000 people
from 162 different countries. Emirates has also been the world’s most valuable airline brand
for the third consecutive year, with a value of $5.5 billion. It was awarded the prestigious
Airline of the Year Award
numerous times by Air Transport World, in
addition to more than 400 other distinguished
industry sector awards.

The company has a fleet aged 72 months (as

of 2020), young in comparison to that of
the industry, which is 140 months old. Good terms with Airbus and Boeing favored huge
acquisitions of long-haul airplanes. These massive purchases have made Emirates the
largest Airbus (A380) and Boeing (777) aircraft operator in the world, reflecting the global
aspirations of the company.

Emirates is looked upon as an innovative organization in terms of technology due to its

acquisition of the groundbreaking storage infrastructure in the Middle East. Additionally, the
company is a major shareholder in luxury five-star hotels. Its performance is attributed to its
customer-oriented approach revolving around the provision of a quality product: exclusive
grade-A manufactured Boeing and Airbus aircrafts, premium flight services, and traveling at
a competitive price.

To cost-effectively carry out cargo and ground handling, catering services, information
technology, and other travel amenities, DNATA supports Emirates’ global ambitions. It is
considered one of the largest and most competitive air service providers worldwide.

In terms of corporate positioning, Emirates is not looked upon as an Arab airline operating
internationally but rather as a global company based out of the Middle East. This global
positioning of the company has spawned aversion from competitors that considered
Emirates as a serious threat in the market. These competitors are struggling to compete
with Emirates, particularly due to its significant cost advantage.

Some of these competitors unequivocally

accused the Emirates of benefiting from
obscured UAE subsidies and exemptions on
airport and aviation service charges. They
also alleged that Emirates takes advantage
of the UAE’s sovereign borrowing status to
secure loans below market rates.

Despite its many strengths, the airline company is not without faults. In its disregard for
growing regional competition, Emirates overlooks very obvious flaws in its market strategy.
For instance, Etihad Airways, an arm of the Abu Dhabi government, is offering products that
appeal to travelers seeking premium services at competitive prices. Gulf Air, which is partly
owned by the Abu Dhabi government, has also taken advantage of the open skies policy to
gain free access to the Dubai airport. Emirates has also been massively acquiring aircrafts
and inflating the size of its fleets. While this represents vast investments, the implications
are far-reaching.

To be able to have long-term advantages, the company should become a shareholder in the
Airbus or Boeing companies. The airline endures cost pressure as fuel costs represent
leading expenditures accounting for 30.7 percent (2020) of the overall operating costs. The
company’s human resources are already lean and it is cost effective on other cost
components. For how long can Emirates hold on to its cost-cutting strategy without paying
attention to competitors?
 Questions
Q1) How has Emirates been able to build a strong brand in the competitive airline industry
worldwide?
Emirates Airline is one of the largest airline not only in the Middle East but also in the world; based in
Dubai (UAE). It was founded in 1985 by the higher leadership of Dubai Emirate with the purpose of
developing the infrastructure of the UAE. It operates over 3,000 flights per week from its hub at Dubai
International Airport, to more than 148 cities in 78 countries across six continents.1 Emirates Airline is
one of the fastest growing airlines in the world catering to growing international passenger travel
industry. Its mission is to “connect people to places and business opportunities”. In 2014- 2015
financial fiscal year, Emirates reported revenue of AED 88.8 billion ($24.2 Billion), a 7.5% increase
year-over-year with profit margin of 5.1% versus 3.9% the year prior. It also transported 49.3 million
passengers an 11% increase year-over-year, while increasing its capacity by 9%. The airline has had
over 25 consecutive years of sustained growth and positive margin in an industry that is regarded as
highly cyclical and competitive.2 One of the key dimensions of competition in the airline industry is
unit cost. Quite simply, a low unit cost is a competitive advantage as it allows airlines to be profitable
at low fares. 3 Therefore, Emirates has one of the most cost-efficient operations in the airline industry
giving it a competitive advantage. It has a lean workforce comparable to that of low-cost carriers and
has a flat organization that keeps overhead costs low.4 It also invested in program called “tailored
arrivals”. Tailored arrivals is “a comprehensive method of planning, communicating, and flying highly-
efficient arrival trajectories from cruise altitude to the runway threshold. Tailored Arrivals trajectories
are optimized for each aircraft to permit a fuelefficient with arrival sequencing requirements and other
airspace constraints.” 5 This allows air traffic control to uplink to aircraft en route. It first determines
the speed and flight profile from air onto the runway and allows the crew to accept and fly a
continuous descent profile, saving fuel and emissions. The success of emirates can be attributed
through the combination of marketing mix which emphasize on excellent customer service, product
and equipment. In addition, Emirates is known for its commitment to the highest standards of quality
in every aspect of their business, providing premium service be it in first, business or economy
class.6 They able to build a strong brand by lean business resource, getting support from the Dubai
government, high employee satisfaction, high customer loyalty, being innovative with time is the
prime factors to build itself as a brand in airline industry.
Q2) what are some of the apparent weaknesses with the company’s strategic direction? How can the
airline address them?
SWOT stands for strengths, weaknesses, opportunities, and threats; analysis is a framework used to
evaluate a company’s competitive position and develop strategic planning.7 In this case the Emirates
SWOT analysis 8 :
Strengths:
1. Strong growth and world class
infrastructure Weakness:
2. Local government support 1. Highly priced tickets compared to
3. Branding and sponsorship competitors
4. Global alliances and partnerships 2. Fall in oil prices a business paradox
Opportunities: Threats:
1. Dubai world Expo 2020 to be a major 1. Emergency of strong competitors in
business opportunity the
2. Emergency of Dubai as a business and region Etihad, Turkish Airlines and
tourism hub Qatar
3. Untapped markets like Iran and Cuba Airways
2. Accusation of subsidy benefits by
rivals
in the United States
3. Conflicts in the Middle East and
global
terror threats

Despite its many strengths, the airline company is not without faults. In its disregard for growing
regional competition, Emirates overlooks very obvious flaws in its market strategy. For instance,
Etihad Airways, an arm of the Abu Dhabi government, is offering products that appeal to travelers
seeking premium services at competitive prices. Gulf Air, which is partly owned by the Abu Dhabi
government, has also taken advantage of the open skies policy to gain free access to the Dubai
airport.9

Emirates has strongly built their brand in airlines industry and strategically positioning themselves but
they are lack in taking into considerations of their competitors in determining their future directions
Emirates has strongly built their brand in airlines industry and strategically positioning themselves but
they are lack in taking into considerations of their competitors in determining their future directions
Emirates has strongly built their brand in airlines industry and strategically positioning themselves but
they are lack in taking into considerations of their competitors in determining their future directions.
Emirates has strongly built their brand in airlines industry and strategically positioning themselves but
they are lack in taking into considerations of their competitors in determining their future directions.
1. They do not look into the advantage and disadvantage of their competitors. For example Etihad
airways and many other airways have also signed the open skies policy and are ready to compete
with emirates at a very competitive price with the same quality of service.
2. They only target the elite class people as their customer which is also a threat for them in future, as
because if people get same service at a low price, they will go for that.
3. ignoring the competitors like Gulf Air company, Air France and British Airways.
4. Overlooking to the fault of marketing strategies, and over confident about their position in aviation
industry.
5. Absence of international alliance as they are not art of any alliance.

Solution to these weakness;

1. Improving inflight service meanwhile taking cognizance of completion offerings.
2. They need to develop their products.
3. They can roll packages for non- premium class direction.
4. Incorporating in budget airlines.
5. By repositioning and aggressively evolving novel strategies as per the target market response.
Although emirates has strong brand position but they need to solve those problems in order to keep
going in the future.

Q3) with the decline of fuel prices globally, airline companies continue to reap the benefits. What
impact will this have on Emirates’ business strategy in the future?
Dubai’s Emirates Airline 2015-2016 profits jumped 56 per cent to reach a new annual record, as the
fast-growing carrier saw its fuel bill decline by 31 per cent on lower crude prices. The low oil price
helped reduce operating costs by 8 per cent, with fuel now 25 percent of operating costs, compared
to 35 per cent in 2014-2015.10 If the price of fuel decline globally it will affect Emirates business
strategy as the following; A) Emirate will attract cost conscious through declining of fuel price. B)
Reduce price-fluctuation risk on projected operating costs, many airlines hedge a proportion of their
future fuel needs six to 24 months in advance by buying jet fuel or crude oil contracts from banks or
on an oil futures market. C) Risked slower growth in the coming years as heavy investments in new
planes and premium-class services begin to erode profit margins. D) When the oil is falling, options
would be in favor of emirates as it is cheaper to hedge forwards and get protection it price goes up,
but if one pays a premium for options they also retain the potential to benefit from lower oil price more
immediately
Reference

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