Emirates Airline: Connecting the Unconnected Case Study

Sustainability of Emirates’ Current Strategy and Way of Operation

Emirates Airlines is one of the largest airlines in Asia. Based in Dubai, the company is a subsidiary of the Emirates Group, a government-owned corporation. The airline operates across more than 140 destinations in six continents, with over 3600 flights every week. Emirates Airlines is the fourth-largest carrier in the world regarding the revenue passenger per kilometers flown. In terms of international passengers, it is the world’s largest airline.

Therefore, Emirates Airlines is a key player in the airline industry. In addition to its vast operations, the airline is renowned for its luxury services, which set it apart from other airline competitors. This section will review the company’s vision and mission statement, as well as its business model. The evaluation aims to confirm that the company’s strategy guarantees sustainability in the end as encompassed in the Air Transport Action Group (ATAG) 2030 aviation plan.

The sources that have been used in this paper were searched from credible databases such as EBSCOhost and websites that contained substantial information about the company under study. Keywords and phrases that were used include Emirates Airline, Emirates Group, sustainability, Emirates Airline’s sustainability, competitors, and conflict in the Middle East.

ATAG is an international association that aims to promote sustainable development in the air transport sector by the year 2030. Sustainability has become a major concern for medium-sized and large corporations in the wake of the declining natural resources and a degraded environment. Thus, local governments and international bodies are engaging in restrictive legislation that is aimed at nudging corporations to shift toward sustainable practices.

Sustainability is a multifaceted concept that touches on economic, social, and environmental aspects. Sustainability in the social context implies that a business is equipped to address the current and future problems of its customers, as well as other people who are impacted by its existence. Therefore, according to Epstein and Buhovac, social sustainability encompasses the areas of societal equity, community development, health equity, and social responsibility among other key areas.¹ Economic sustainability (what most businesses focus on) refers to the ability of a business to meet its current resource needs in a manner that safeguards future supply. In other words, sustainability is concerned with preventing the depletion of key resources because of misuse.

The World Commission on Environment and Development (WCED), as Pearce reveals, defined sustainable development as “[development that] meets the needs of the present without compromising the ability of future generations to meet their own needs”.² This assertion is a common understanding of the concept of sustainability since it encompasses all key aspects, including social, environmental, and economic elements.

Therefore, sustainability promotes intergenerational equity where future generations are considered in the manner in which resources are utilized. Some organizations have viewed sustainability as limiting their freedom to focus solely on profit-making. Despite this misconception, businesses realize that sustainability is an advantage to both the current and future generations. Out of this understanding, more and more businesses are voluntarily embracing sustainability.

Emirates Airlines uses a lean workforce model. The lean model means that the wastage of resources is avoided in furtherance with sustainability goals as outlined in the ATAG plan. Additionally, the company is customer-centric, meaning that customers’ experience is prioritized. Focusing on delivering high-quality customer experience promotes sustainability because the airline is likely to retain its clients in the end. As Al Maktoum confirms, the chair of the airlines, His Highness Sheikh Ahmed bin Saeed, has outlined the company’s mission and vision statement.³

Dubai plans to bring over 20 million tourists who are expected to generate AED300 billion annually as tourism revenue to the country. In line with its mission, Emirates Airline is slotted as part of this initiative, which aims at raising revenue for future investments. Part of the mission also involves building the capacity of the Dubai National Air Transport Association (DNATA), the airline service provider that works closely with Emirates Airlines.

DNATA is another subsidiary of the Emirates Group, which deals with services such as cargo handling, ground handling, and flight catering. By building capacity for DNATA, Emirates Group hopes to make it possible to deal with the expected increase in the number of passengers to be handled by Emirates Airlines. The long-term strategy is aimed at protecting the airline from becoming overwhelmed.

Part of the sustainable development goals includes expanding infrastructure within the airline. According to Al Maktoum, Emirates Airline’s mission emphasizes offering the best level of service quality to uphold its operations in air transportation.⁴ Hence, the company is anticipated to carry over 70 million passengers each year. Currently, the airline transports about 44.5 million passengers annually. This large increase in the number of passengers can result in capacity issues if it is not matched with the expansion of infrastructure. Emirates Group plans to counter this potential challenge by increasing the number of aircraft to 300.

Additionally, the company intends to improve its workforce, both in size and skills. By upgrading its facilities to meet the growing scale of operations, the company hopes to counter challenges associated with the increasing volume of passengers. Al Maktoum also projects that the company will need to strengthen its global operations both as a strategic marketing plan of the airlines and a move to increase the economies of scale.⁵

The company understands that to operate in the end, efforts must be made to attain economic, environmental, and social sustainability. Currently, Emirates Airlines has doubled its efforts to maintain low fuel consumption as part of ensuring sustainability. According to O’Connell, the cost of fuel has since replaced labor as the biggest expense in airline operations.⁶ This trend calls for airline companies to engage in the cost-effective utilization of oil as a way of maintaining low operating costs.

Further, O’Connell observes that Emirates has made key attempts to operate at low fuel costs⁷. In the 2007/2008 year, the airline saved $ 1billion through its effective utilization of fuel.⁸ Effective consumption of fuel has the additional advantage of protecting the environment by minimizing emissions. According to Chang, the company has recorded some of the lowest emissions among airlines since its aircraft burns only about four liters every 100-passenger kilometers.⁹ Further, the airline operates some of the youngest aircraft, a strategy that has assisted in keeping fuel costs down, as well as maintaining a low noise profile.

Another key pillar of ATAG 2030 is social development. According to Chang, aviation is an essential component of the world economy, generating over 62.7 million jobs and annual Gross Domestic Product (GDP) of about 2.7 trillion.¹⁰ Through promoting economic growth, air transport fosters the social development of communities. Emirates Airline is devoted to furthering ATAG’s goal of sustainability.

Al Maktoum explains that the airline is dedicated to promoting community development through initiatives such as offering opportunities for people to acquire education through traveling.¹¹ Traveling opportunities are also expected to promote cultural exchange, which as an essential aspect of social development. Emirates Airline is also engaged in the continued empowerment of its employees by ensuring a good working environment. ATAG’s executive director, Michael Gill, asserts that a decent working environment helps to minimize inequalities in society. In addition to a decent working environment, Emirates is also dedicated to offering training and promotional opportunities to its employees as a furtherance of the employee empowerment goal.

Environmental conservation is another critical aspect of ATAG’s sustainable development. According to Al Maktoum, Emirates Airline is devoted to promoting environmental sustainability through various efforts.¹² One key effort is the recycling of waste materials. Through the recycling of materials, the company has reduced the dumping of wastes. Additionally, these materials are reused to minimize operational expenses.

As Emirates Group reveals, recycling at Emirates Airline is concentrated on the Emirates Engineering, Alpha Flight Group, and Flight Catering areas where most of the waste materials are produced.¹³ The company is also engaged in efforts to minimize water consumption while also cutting the use of paper in its operations. The company’s policy of efficient fuel consumption has also been extended to DNATA’s vehicles. Emirates Airline also supports biodiversity. The Dubai Desert Conservation Reserve supports over 1000 species of endangered birds. The airline is actively involved in the management of this sanctuary. Other conservation initiatives by the airline include a resort in Australia’s the Blue Mountains and the Emirates Wolgan Valley Resort and Spa.

The Major Risks, Competitors, and Hurdles the Airline will Face in the Next Couple of Years

Emirates’ operations in the airline industry are not without certain challenges. The airline is poised to face various challenges in the coming years, owing to the competitive nature of the industry. As Squall observes, Emirates Airlines will need to drastically increase its capacity to a high-performing aviation system.¹⁴ This plan will require expanding its capacity to handle about four times its current passenger volume, as the demand for air transport is poised to rise sharply in the coming years.

One of the major hurdles that face Emirates Airline is the prevailing conflict in the Middle East. For several decades, the region has been facing strife. This conflict has resulted in prolonged tension. The climax of this tension was the Syrian conflict and the ISIS uprising.

Conflict in the Middle East affects the airline in some ways. First, the number of tourists and other visitors to the region has remained low, falling even lower during times of conflict. If conflict subsists in the region, the number of tourists visiting the Gulf region will decline, thus negatively affecting the company’s long-term strategy of carrying over 20 million tourists to and from Dubai by 2020. The airline heavily relies on tourism.

Hence, any considerable reduction in the number of people touring the region would mean reduced profits. Currently, Emirates Airlines is engaged in acquiring the huge Airbus A380 aircraft, which has a capacity of up to 600 passengers. According to Dörfler and Baumann, despite bringing forth an increased profit margin, this move will pose a completely new risk to the airline.¹⁵ Filling such a huge plane may be a challenge. Traveling with half-filled aircraft will mean operating at a loss.

Conflict in regions such as Syrian and Turkey will require Emirates Airlines to design new travel routes that skirt the conflict-ridden region. This plan may be accomplished to avoid the risk of missile strikes. In the past, traditional routes to Europe passed over Syria and Iraq. However, due to the conflict raging in these two countries, the air routes have been rechanneled to pass through Iran, which makes them much longer. According to Wood, longer routes lead to longer flight times, as well as more fuel consumption.¹⁶

In 2014, Gornalln reveals how Iran reported a rise of aircraft flying above its airspace by 32 percent since conflict resurged in Iraq.¹⁷ After the Russian KGL9268 flying over the peninsula crashed into the Sinai desert, Emirates Airlines officially announced that it would no longer be flying over the region. However, with no signs of a cease-fire in the region, the airline has cause to worry. Should another conflict erupt between Iran and Iraq in the future, the airline would be forced to adopt even longer routes.

The decline in oil prices is also anticipated to bring forth various difficulties in airline operations. Therefore, the economy of the United Arab Emirates greatly depends on oil. Oil contributes largely to the country’s GDP. A decline in world oil prices may affect the government’s ability to fund the state-owned corporation. According to Gornall, government funding is an essential part of Emirate Airlines’ budget, which enables it to compete effectively with key industry players such as British Airways and Singapore Airlines.¹⁸

Hence, a shortage of government subsidy may limit the airline’s ability to support its luxury trips, thus exposing the aviation sector to a security threat concerning its existence. In recent times, the government of the UAE has come under criticisms for continually engaging in funding its Emirates Airlines when others do not receive such funding from their home government. According to Rihanna, critics feel that such a move hurts other companies that do not receive subsidies from their governments.¹⁹

Emirate airlines’ major competitors in the Gulf region include Qatar Airlines and Etihad Airlines. With Turkish Airlines predicted to rise to international prominence in the future, Emirates Airlines will face numerous competitors in addition to rivals from other regions such as American Airlines and key European players, for instance, Air France. Additionally, there have been concerns about the Emirate Airlines being continually subsidized by its government. In the future, the stakeholders of the Open-Skies Treaty may expressly threaten the carrier and hence the entire aviation sector by demanding the government to cease funding the airline. The effect of such a move would involve reducing the security level of the sector.

Changes that Emirates can Undertake to Grow and Prosper

Emirates Airline is cited as a global trendsetter in airline luxury. The numerous awards it has received regarding its private suites demonstrate this claim. Luxury comes with its costs. Hence, to stay ahead of the pack; Emirates Airlines should consider adjusting its business model while still maintaining the luxury. In 2009, the International Air Transport Association (IATA) reported that the airline counted more than US$9 billion in losses. This loss was attributed to competition posed by low-cost carrier airlines and a reduction in the number of passengers traveling on business-class.

These challenges coupled with innovative applications and new entrants call for the airline to improve its overall services to attract customers. It needs to adopt methods that improve customer experience, loyalty, and profitability. Airlines are in business to reap profits. The recovery of global economies has made airlines reposition their strategies for an economic rebound. Emirates Airlines is known for its touch of luxury.

According to Jenner, it must focus its strategies on optimizing passenger luxury to beat its competitors in the industry.²⁰ This agenda should be executed bearing in mind that the success of an airline in this digital era is gauged according to its ability to utilize the emerging technologies while at the same time being able to maintain its status about the luxury product it provides. Etihad Airways has a similar luxury product, namely, the “Residence”.

How far are the two airlines willing to go beyond the promotion and the innovative concept of luxury? What is the next unimaginable luxury product to introduce? The higher they are willing to go in the innovation in terms of the product, the more they may limit their targeted group of people in the market, bearing in mind that the rich people will be affording the innovative concepts of travel luxury.

To beat its competitors, Emirates Airlines must turn to digitization and innovation. At the third Internet of Things World Forum, the Emirates Airline Senior Vice President of IT Services talked about plans by the airline to embrace innovation. The Internet of Things (IOT) has the possibility of changing the way airlines operate. IOT is a concept that enables airlines to digitize all their operations while at the same time providing personalization of services to their passengers.

It enables an improved service in equipment monitoring and baggage handling among other services. Despite the security risks associated with the IOT, many airline bosses emphasize its benefits. In a survey conducted in 2015 by SITA, two-thirds of airlines that reported benefits after employing IOT went further to predict an increment in benefits in the next three years.²¹

The survey by SITA indicated that 37% of airlines had already subscribed to IOT while 58% were in the process of allocating funds into the concept. About 86% were positive that its application would generate more benefits within the next three years. The technology, innovation, and development manager at Virgin Atlantic, Tim Graham, foresaw a great revolution in the way airlines transact their business with the application of IOT.²²

According to Graham, passengers would find it easier to navigate the airports. Shorter queues would also be witnessed at the check-in and boarding areas. The whole flying experience would be a taste of luxury to the passengers. The built-in sensors meant to monitor hydration and temperature levels would facilitate this state. In the case of any uneasiness by the passengers, the cabin crew would be alerted to take specific measures. In essence, this advancement would be a new experience for airlines due to automation.

The technology chief at GE Aviation, Dave Bartlett, shared the same sentiments with Tim Graham.²³ According to him, the passengers will be treated with dignity while their complaints will be addressed hastily.²⁴ He gave an example of an app that tracks the location of luggage from the time the passenger’s check-in. The strategy would be a reprieve to passengers who experience tight connections throughout their journey.

Permission-based sensors would serve to enhance better decision-making by airlines. As a result, the stress factors throughout a journey would be eliminated, thus providing a new flying experience. Sensor equipment will be connected to elevators, bag-drop stations, car parks, and even in the baggage trolleys. The survey by SITA indicated that a majority of airlines had plans of using beacons by the fall of 2018. Jenner observes the move as an advantage to passengers since crucial information would be relayed to their mobile devices.²⁵ However, the use of beacons by Emirates is not a new concept. The beacon technology is employed on bag tags to improve luggage handling and management.

Emirates should adopt Mobility 3.0 in its future operations. After the success of Mobility 1.0 and 2.0, Mobility 3.0 is a combination of the two previous interphases through a range of context-aware applications. These applications serve to improve the overall customer experience by providing them with the utmost control throughout their travel. The personal travel assistant sends alert messages to passengers regarding their journey.

The messages include flight time, security, and information concerning their luggage. Mobile marketing provides special discounts to seasoned passengers. The mobile concierge service enables a personalized service that delivers information about the user. The mobile payment offers an e-wallet whereby passengers make payments through their mobile devices. Concisely, the application of Mobility 3.0 will enable passengers to make informed decisions about their travel. The application of Mobility 3.0 will reshape Emirate Airlines’ business model by the introduction of new services aimed at improving customer experience.

Mobility 3.0 is effective in countries with growth in air travel. The Middle East is an area that is experiencing booming airline business cited at 25.8% growth. This growth is attributed to the rise in tourism, Gross Domestic Product (GDP), and a sharp increase in the population.

As a result, the Middle East is experiencing a demand for air travel as airports report bustling activities. McKinsey & Company indicated that the use of mobile technology continues to increase due to its accessibility. It is for this reason that Emirates Airline should seek to re-strategize on service mobility. The architecture of Mobility 3.0 suggests a complete overhaul of an airline’s objectives, technology, and capabilities. Thus, Emirates Airlines needs to align its objectives in the light of Mobility 3.0. Besides economics, social, and environmental pillars, other major aspects of sustainability involve technology.

Conclusion

Emirates Airline is the largest air carrier regarding international passengers. The company is famous for the luxury style that gives it an edge over its competitors. The company’s strategic plan is shaped to guarantee sustainability development in the end by the ATAG 2030 aviation plan. Sustainable measures include efficient consumption of fuel, community development, and employee empowerment. Additionally, the airline supports missions that aim to promote environmental conservation in various parts of the world.

Despite the robust growth and domination of the airline industry, Emirates Airlines faces various challenges, which may become more pronounced in the future. They include the Middle East conflict and declining oil prices. Also, the company competes for the market with key players such as American Airlines and British Airways. To compete effectively, Emirates Airlines will need to make strategic changes, including adopting IoT and Mobility 3.0 technologies. The airline will continue to maintain its innovative luxury product. Besides acknowledging that other sustainability pillars such as technology can offer more services to its customers, the airline will need to go a step ahead of the other competitors.

Bibliography

Al Maktoum, S., ‘Chairman’s Message’, Emirates. 2016. Web.

Chang, Y., ‘Evaluating economic and environmental efficiency of global airlines: A SBM-DEA approach’, Transportation Research Part D: Transport and Environment, vol. 27, no. 1, 2014, pp. 46-50.

Dörfler, I. & Baumann, O., ‘Learning from a Drastic Failure: The Case of the Airbus A380 Programme’, Industry and Innovation, vol. 21, no. 3, 2014, pp. 197-214.

Emirates Group, ‘Recycling and Waste Management | Sustainability and Recycling’, Emirates. 2015. Web.

Epstein, M & Buhovac, A., Making sustainability work: best practices in managing and measuring corporate social, environmental, and economic impacts, 3^rd edn, Berrett-Koehler Publishers, San Francisco, CA, 2014.

Gornall, J., ‘Flight Paths: Safety is at the Heart of it All’, The National. 2015. Web.

Jenner, G., ‘How airlines are tapping into the internet of things’, GE Digital. 2016. Web.

O’Connell, J., ‘The rise of the Arabian Gulf carriers: An insight into the business model of Emirates Airline’, Journal of Air Transport Management, vol. 17, no. 6, 2011, pp. 339-346.

Pearce, D., Blueprint 2: greening the world economy, 4^th edn, Routledge, London, 2013.

Rishana, M., ‘Airline Subsidies in the Gulf. The Economist. 2015. Web.

Squalli, J., ‘Airline passenger traffic openness and the performance of Emirates Airline’, The Quarterly Review of Economics and Finance, vol. 54, no. 1, 2014, pp. 138-145.

Wood, J., ‘Middle East airlines learn lessons about dangerous skies after MH17’, The National. 2015. Web.

Footnotes

1. M. Epstein & A. Buhovac, Making sustainability work: best practices in managing and measuring corporate social, environmental, and economic impacts, 3^rd and, Berrett-Koehler Publishers, San Francisco, CA, 2014, p. 148.
2. Pearce, D., Blueprint 2: greening the world economy, 4^th and, Routledge, London, 2013, p. 210.
3. S. Al Maktoum, ‘Chairman’s Message’, Emirates. Web.
4. Ibid.
5. Al Maktoum, para. 5
6. J. O’Connell, ‘The rise of the Arabian Gulf carriers: An insight into the business model of Emirates Airline’, Journal of Air Transport Management, vol. 17, no. 6, 2011, p. 343.
7. Ibid.
8. Ibid, p. 344.
9. Y. Chang, ‘Evaluating economic and environmental efficiency of global airlines: A SBM-DEA approach’, Transportation Research Part D: Transport and Environment, vol. 27, no. 1, 2014, p. 47.
10. Ibid, p. 49.
11. Al Maktoum, para. 4.
12. Al Maktoum, para. 6.
13. Emirates Group, ‘Recycling and Waste Management | Sustainability and Recycling’, Emirates. Web.
14. J. Squalli, ‘Airline passenger traffic openness and the performance of Emirates Airline’, The Quarterly Review of Economics and Finance, vol. 54, no. 1, 2014, p. 140.
15. I. Dörfler & O. Baumann, ‘Learning from a Drastic Failure: The Case of the Airbus A380 Programme’, Industry and Innovation, vol. 21, no. 3, 2014, p. 199.
16. J. Wood, ‘Middle East airlines learn lessons about dangerous skies after MH17’, The National. Web.
17. J. Gornall, ‘Flight Paths: Safety is at the Heart of it All’, The National. Web.
18. Gornall, para. 5.
19. M. Rishana, Airline Subsidies in the Gulf. The Economist. Web.
20. G. Jenner, ‘How airlines are tapping into the internet of things’, GE Digital. Web.
21. Ibid.
22. Ibid, para. 4.
23. Jenner, para. 6.
24. Ibid, para. 13.
25. Ibid, para. 15.