Introduction
Emirates Airline is a constantly expanding international airline company. With a history of over 30 years of successful flights, it has become synonymous with exceptional quality of luxurious transporting services. As for now, it is the third most powerful company in the global airline industry measured by capacity. However, measured by international passengers, it is the most popular and successful one ranked first in the list of the global airline leaders (Alcacer and Clayton 1). The secret of its meteoric expansion is customer-centrism. It is associated not only with improving the quality of provided services but also the focus on upgrading aircraft so that they are more comfortable and fuel-effective, thus flights are more enjoyable and ticket prices are more moderate.
Still, it is essential to point to the fact that regardless of the current-day propelling success, the path towards the global leadership and recognition was lengthy and cumbersome. The company was founded in 1985. It is based in Dubai, United Arab Emirates. Since 1985, there were several stages of the company’s growth and expansion. The first one dates between 1986 and 1993. During this period, the company was engaged in active purchasing of aircraft and entering new markets. During the first two years of operation, it managed to serve 11 destinations. Emirates Airlines is one of the companies that avoided drops during the early years of its operation, outperforming regional competitors easily and constantly increasing its revenues.
By the beginning of the second stage of its development, the company’s revenues increased by more than $100 million annually, which made it one of the fastest expanding airline companies. During the second stage of its expansion, Emirates Airlines faces a significant challenge precluding it from further global development – the possessed aircraft could not cover distances longer than 14 hours of flight. Therefore, the third phase of development began with the overall upgrading of aircraft so that longer flights became possible. Since 2004, Emirates Airlines continued to inject funds in expanding aircraft basis and entering new markets (Alcacer and Clayton 7). As for now, the company operates a fleet of around 260 aircraft, including Boeing 777 and A380 (“Emirates Fleet Details and History”). With 152 destinations around the globe and more than 55 thousand employees, the Emirates Airlines is recognized as the Most Valuable Airline Brand, and it is unlikely that this honorary rank to one of its competitors (“History”).
Nevertheless, regardless of the successful history of the company’s operation, it is essential to be aware of the market it works in as well as the specificities of its business environment. Therefore, the paper at hand aims at investigating the issues mentioned above. A special focus will be made on conducting PEST and SWOT analysis to obtain a better understanding of the company’s environments as well as reviewing the most influential competitors of Emirates Airlines and currently deployed growth strategies.
PEST Analysis of the Company
Conducting PEST analysis is essential for obtaining a better understanding of the specificities of the market of the company’s operation. The need for carrying it out is motivated by the necessity of understanding factors that may have either a direct or indirect influence on the company’s further development and affect its performance. This analysis covers four groups of factors: political, economic, social, and technological. All of them will be reviewed below.
Political Factors (P)
This group of factors is associated with the political environment of the company’s operation, including legislation and overall political climate inside the country of origin as well as at regional and international levels. In the case of Emirates Airline, the impact of political factors is critical due to the specificities of its operation. Therefore, it is possible to state that there is a profound influence of both national and international legislation. Speaking of the national legislation, it was already mentioned that the company belongs to the Dubai government. For this reason, the impact of the national legal framework is diminished because there is always a real opportunity for creating an advantageous atmosphere for the company’s operation. Still, the company is very sensitive to any changes in the national legal frameworks (Cook and Billig).
However, the same cannot be said about the international legislation, as even the slightest changes in global legal frameworks may have a devastating influence on the company’s performance. In this case, it is essential to point to the fact that the operation of Emirates Airline is governed by numerous legal provisions. Some of them include bilateral “Open Skies” agreements and universal treaties. In this way, terminating contracts with any of the United Arab Emirates’ partners (countries that signed the “Open Skies” agreement) is potentially connected to a drop in revenues as well as an increase in operational costs. More than that, it is critical to mention that international regulations are becoming stiffer, especially after the 9/11 terrorist attacks. From this perspective, Emirates Airlines is forced to correspond with all airline legal provisions and monitor any changes in the legislation.
Regardless of the flight-related legislation, the company has to consider any changes in employment-related provisions. In this case, it is essential to state that the national (UAE) standards that have a direct impact on the company’s operation should comply with the international employment norms because the majority of cabin crew are foreigners. Therefore, any amendments to these provisions may be connected to changes – both negative and positive – in operational costs due to expanding staff base. Here, it is essential to point to the fact that, according to the current international standards, maximum in-flight duty time for any crewmember should not exceed 15 hours. It means that in case of a possible decrease in this figure, the company may face additional challenges, even if the decreases are slight and insignificant.
Besides regulation provisions, other legislative issues should be mentioned. For example, the company should pay specific attention to reaching agreements with local airports it cooperates with, especially in case of lengthy flights when the aircraft does not return to Dubai. In this instance, the issues under consideration are the availability and costs of parking slots, landing and take off technological support, and emergency recovery plans. That said, the slightest changes in destination airport provisions and agreements are of extreme significance for the successful operation of the company and may have a direct impact on its further development.
Finally, there is an extremely powerful impact of any instability in the political environment. It is true for national, regional, or international conflicts because it increases risks of unstable operation of the company. More than that, it is associated with passenger safety issues. However, it is paramount to mention that Emirates Airlines is among those companies that manage to avoid the detrimental impact of regional conflicts. For instance, during the Gulf War, the company never ceased providing its services. Nevertheless, the influence of political instability is still critical due to the psychological factor, i.e. returning tickets for refunds that may result in increased losses.
Economic Factors (E)
Economic factors make up the second group of factors that predetermine the development of Emirates Airlines. In this case, it is essential to mentions that being founded and operating in a highly developed country – the United Arab Emirates – is one of the aspects that helped the company reach its current economic condition. Still, it is imperative to mention that there are two critical determinants when it comes to identifying the role of economic factors in the company’s business environment. The first one is the economic development of Dubai. It is stated separately instead of pointing to the UAE economy as the whole because the company is based in Dubai International Airport only, not across the state. Therefore, any changes in the development of the Dubai economy are directly connected with the changes in the economic activities of Emirates Airlines. More than that, it is essential to point to global changes in the airline industry. Making a special focus on this economic factor is important because these are the overall trends in the industry that determine the operation of all airline companies, and Emirate Airlines is not an exception.
Nevertheless, regardless of laying stress on the importance of the Dubai economy, it is essential to point that the effect of the UAE economy should as well be considered. There are two perspectives to estimate it. To begin with, due to the economic stability and sustainable economic development of the UAE economy, its currency is stable. In this way, UAE Dirham-USD fluctuations are insignificant. This aspect is important because all prices are determined in Dirham, while the rest of the world purchases tickets paying in dollars. It means that due to the stable currency, ticket price in dollars is relatively unchangeable so that there are no dramatic shifts in service costs. Another aspect of the UAE economic development is connected to the specificities of the economic environment. In the UAE, GDP per capita is high, while the unemployment rate is low. It means that UAE citizens can afford to cover high ticket prices and are not forced to search for low-cost alternatives.
However, in the case of estimating economic factors, it is paramount to point to a particular duality in their influence. As stated above, both the development of the Dubai economy and the changes in the international airline industry has a direct influence on the operation of Emirates Airline. Therefore, even though the Dubai economy is constantly growing and becoming more powerful, there are some negative changes in the industry connected to the increased risks of on-board suicide attacks.
Another significant economic factor is the fluctuation of fuel prices. Even though, as for now, the company pays special attention to upgrading its fleet and purchasing fuel-efficient aircraft, this process is timely. Therefore, the impact of fuel prices on ticket prices is powerful because fuel-related transportation costs make up more than half of the ticket price (Cook and Billig). The same can be said about the changes in food and beverages. Even though these expenditures cannot be compared to fuel-related costs, it is essential to point to the fact that the company offers only high-quality and premium food and beverages to its passengers. From this perspective, any alterations in this group of expenditures can lead to ticket price changes.
Finally, it is paramount to point to economic aspects of technical support of aircraft and the operation of airports. In this way, any delays in departures or emergencies are associated with extreme loss. In this case, it is connected to both brand issues – the impact of the company’s image and the desire to travel with it – and safety-related challenges. Here, even though the role of delays in departments is essential, the influence of catastrophes or emergencies during flights is even more critical due to the risks of ruining brand image and high post-crash costs. However, it is imperative to state the Emirates Airlines is among those companies that managed to avoid victims in crashes. As for now, there were only 3 incidents of aircraft crashes over 32 years of operation that point to the professionalism and reliability of the company.
Social Factors (S)
One more aspect of the business environment is social factors. This one can be viewed from perspectives. To begin with, it is essential to point to the increasing population both globally and in Dubai. Speaking of Dubai, it is associated with the increased part of foreigners in its population. Still, in both cases, the increase of population is connected to the potential expansion of the customer base and attracting new clients. From this perspective, any changes in family planning policies may have a negative influence on the company’s incomes due to the potential reduction of the global population. The same is true for changing the national regulations of migration that might limit the flow of immigrants. In this case, any changes are as well extremely important because the majority of cabin crew members are foreigners, i.e. the immigrated to the United Arab Emirates for employment and will be forced to leave in case of adopting unfavorable migration policies.
Another significant economic factor is the role of the cultural and social needs of the company’s passengers (Katsioloudes and Abouhanian). Focusing on the peculiarities of cultures and ethnicities is the foundation of providing services. The specificity of the company is a special educational course aimed at teaching cabin crew members to address the culture-specific needs of passengers, thus improving customer satisfaction with the provided services. For instance, Muslim passengers should not be offered drinks and snacks during the holy month of Ramadan because it is perceived as an offense. More than that, during each flight, all culture-specific needs represented in common food and beverage preferences are addressed. It is true about both snacks and alcoholic drinks that are selected separately for each destination based on the peculiarities of the local culture.
Technological Factors (T)
Finally, another important determinant of the business environment is technological factors. As for now, the impact of the newest technologies on the operation of the company is powerful. It can be explained by the overall introduction of the newest technologies in everyday life, and this trend is as well popular in the airline industry. As for now, Emirates Airline is known as a company that is successful in incorporating technological advancement on-board, including inflight entertainment, Wi-Fi, different IT systems, and teleconferencing. Moreover, senior management pays special attention to the constant improvement of the fleet, purchasing more technologically advanced aircraft. At the same time, the company has introduced online services for purchasing tickets, selecting snacks and beverages, and airport check-in.
Still, it is paramount to point to some of the recent policy changes that may have an unpredictable impact on customer satisfaction with the provided services. For instance, around a month ago, Emirates Airlines adopted a technology ban provision. According to it, any devices larger than smartphones are banned onboard. Passengers are obliged to pack them before leaving the gate and entering the cabin. Among the prohibited devices, there are laptops, electronic books, cameras, tablets, portable DVD players, traveler scanners and printers, etc. (“Electronic Ban Services,”; “Help Centre,”). Nevertheless, this rule applies only to passengers traveling from Dubai International Airport to the United States. Also, the company offers a tablet loan service to stay connected in case of necessity. This new policy is connected to the changes in the US legislation, specifically adopting the provision limiting the use of electronic devices on-board for passengers traveling from the United States to the Middle East countries. It is the new US security directive – the so-called Trump’s travel ban – that points to the influence of politics on the business environment (“Emirates Introduces Laptop and Tablet Handling”; Zhang). Major PEST factors can be found in Table 1 provided below.
The Main Competitors: UAE, Middle East, and International
Even though Emirates Airline is a well-known and globally recognized air company, its ticket prices are high for ordinary passengers. It means that it is reasonable to review different competitors. In this way, both the luxury segment and low-cost airlines should be perceived as rivals. The reason for the inclusion of luxury segment companies is evident, as Emirates Airline is one of the companies belonging to this group of companies. As for the low-cost service providers, they should be mentioned because, in the case of common destinations, middle-class passengers are more likely to give preference to cheaper journeys if the difference in the quality of provided services is insignificant. Besides, three groups of competitors will be reviewed – UAE, Middle East, and international. A complete list of competitors is provided in Table 2 below. Still, it is essential to note that regardless of the long list of competitors, choosing one of them is a matter of individual preferences. Therefore, the most powerful ones will be addressed in the following subsections.
UAE
The most powerful competitor in the United Arab Emirates is Etihad. Even though it is small and young, the company is becoming increasingly powerful both regionally and internationally. As for now, it has around 90 destinations (Alcacer and Clayton 18). Nevertheless, because it was founded in 2003, this figure points to the increased risks of potentially outperforming Emirates Airlines in the future. It is as well government-owned and operates in the luxury segment. Therefore, it is the major UAE-based rival.
Middle East
In the Middle East, there are two main competitors – Turkish Airlines and Qatar Airways. The first company is one of the most influential regional air transportation providers. The main difference from all Middle East carriers is the fact that it has a large domestic passenger base that is the foundation of its growth. Also, Turkish Airlines has 249 destinations (more than 200 of them are international) which makes it more advantageous compared to Emirates Airlines, especially keeping in mind that it is also a premium segment carrier. As for Qatar Airways, it has 188 destinations. It is as well a government-owned company with the constantly increasing the fleet (Alcacer and Clayton 16). In this way, just like Turkish Airlines, it is powerful and its operation imposes significant risks for the Emirate Airline’s growth.
International
The major international competitors are AirFrance (more than 200 destinations in 93 countries), Lufthansa (193 international destinations in 81 countries), British Airways (around 250 destinations on six continents), and Singapore Airlines (160 destinations on six continents). Because all of these airline companies offer more destinations compared to Emirates Airlines, they are a significant threat. More than that, they belong to the group of the most luxurious airlines, as well as offer middle-class services, which makes them even more threatening.
The Market – SWOT Analysis
SWOT analysis is one of the common techniques deployed for estimating a company’s market position because it helps identify both internal and external factors that may have an impact on the company’s operation and develop long-term strategies for managing its activities. The focus is made on four aspects: strength, weaknesses, opportunities, and threats. They will be reviewed in detail in the following subsections.
Strengths (S)
Emirates Airline possesses numerous strengths. To begin with, being backed up by the Dubai government is what helps the company become even more powerful. Due to it, the company obtains the resources and support necessary for further growth. In particular, it is what was beneficial for becoming globally recognizable which is another strength. Furthermore, the quality of the provided services is exceptional that contributed to the continuous expansion of the customer base. The same is true about efficient branding and marketing strategies that are valuable for attracting new clients. More than that, the focus on technological advancement that is beneficial for outperforming competitors and constantly improving organizational performance. Finally, Emirates Airlines is the company with high operational costs that makes coping with emergencies easier due to the availability of necessary resources.
Weaknesses (W)
Regardless of significant strengths, there are as well some critical weaknesses that should be mentioned. To begin with, ticket prices are high that makes it complicated for medium-class passengers to afford to choose the company’s services. From this perspective, the customer base is smaller than it could be based on the company’s potential. What is even more critical is that Emirates Airlines is forced to take more aggressive steps to increase its market share (compared to its competitors) due to high ticket prices. Besides, the environment of operation is highly competitive. Therefore, there is always the need for implementing new techniques for outplaying rivals. Besides,
Opportunities (O)
Although there are some critical weaknesses of Emirates Airlines, the company still has some opportunities for becoming more powerful. First and foremost, it may become more influential by entering new markets and introducing new destinations. Even though nowadays, it has 152 destinations, launching new ones will be beneficial from the perspective of attracting new customers and increasing incomes. More than that, Emirates Airline may be interested in creating a medium-cost segment for the most popular destinations. The idea is to copy the business model of most regional air companies – do not offer free snacks and premium alcohol in the medium-cost segment. It will reduce some operational costs, thus helping to decrease ticket prices and attract more passengers. Finally, continuing to invest in fuel-efficient aircraft is another opportunity for further growth due to the potential reduction of fuel consumption, i.e. expenditures for satisfying fuel needs.
Threats
Still, in addition to some promising opportunities, there are some challenging threats. Due to the operation in a highly competitive market, the most critical threat is the rise of its competitors. It is especially true for Middle East companies that are actively cooperating with Dubai Airport – Emirate Airline’s hub. At the same time, there is a risk of being outperformed by the most powerful international competitors, especially in the countries of their hubs because citizens of those states are more likely to choose domestic airlines instead of foreign ones. Furthermore, there is a significant threat connected to the changes in fuel prices that may result in increased ticket prices. Finally, due to the dependence on the national government, as well as the criticality of following all international legislation norms, any changes in legislation may have unexpected consequences for the company’s operation (see Table 3).
Growth Strategies
Achieving the current recognition and economic state might have been impossible without crafting efficient growth strategies and using them masterfully. Emirates Airlines is a company known for a unique strategic mix that is designed to satisfy its specific needs and bring it to the leading positions in the global airline industry (see Figure 1 below). The core of the company’s growth strategy is the focus on its planes. It can be viewed from two perspectives. First and foremost, it is the focus on the constant upgrading of the fleet that is helpful for the company’s growth. Furthermore, they are constantly replaced with more fuel-efficient aircraft that help reduce operational costs, thus increasing revenues.
As for now, Emirates Airline possesses more than 200 aircraft, and this figure is constantly increasing, as the company orders the newest crafts all the time. Comparing it with two crafts that were available in 1985, the growth is spectacular that proves that this strategy is fruitful. Also, senior management of the company limits the range of purchased aircraft that is beneficial for optimizing pilot work and customizing passenger experience (Alcacer and Clayton 7). More than that, there is only one hub – Dubai International Airport. Even though it may seem inconvenient from the perspective of international business, it is more beneficial to locate all of the airplanes in one place that is easier to reach and monitor and sign contracts for parking around the globe than create hubs that will be complicated to control due to being located far from the regulating center.
Another efficient growth strategy is the focus on expanding customer capacity. It is achieved by the creation of unique customer experience when on-board – culturally-and ethnically specific treatment as well as valuing and satisfying any culture-based needs of the passengers. More than that, special attention is paid to making journeys more comfortable by introducing new services on-board, such as entertainment and the introduction of the newest technologies, as well as increasing the number of premium and luxury amenities to make traveling experience unforgettable (Alcacer and Clayton 10). In addition to laying stress on customer experience, Emirates Airlines is constantly working on entering new markets and offering new destinations. This strategy is inseparable from the two mentioned above because the increased number of routes is potentially connected to the expanded customer base and the need for a larger quantity of aircraft (Alcacer and Clayton 9).
ConclusionFinally, the senior management of Emirates Airlines recognizes the criticality of marketing as one of the deployed growth strategies. It has been used since the foundation of the company in 1985. In marketing, the special focus is made not only on the exceptionality of the provided services but also on promoting the city of Dubai believing that the increased inflow of tourists is inseparable from the expansion of the customer base. More than that, it uses globally famous sports events (for instance, Cricket World Cup) for increasing awareness of the brand. As for the ad campaigns, they center on assuring potential customers that all of their needs will be addressed properly due to the expertise of cabin crew and numerous luxury amenities offered by the company (Alcacer and Clayton 11).
To sum up, regardless of some critical weaknesses and potential threats, Emirates Airline is a powerful and well-branded company. Being internationally recognized and deploying efficient growth strategies, it has increased chances of becoming even more popular, although it operates in a highly competitive business environment. Still, it is critical to state that the company should not give up its uniqueness and make the further focus on cultural specificities of its passengers, as well as search ways to enter new markets, to attract more clients and outperform even the most influential national, regional, and international competitors.
Works Cited
Alcacer, Juan, and John Clayton. “Emirates Airline: Connecting the Unconnected.”Harvard Business School. 2014. Web.
Cook, Gerald N, and Bruce Billig. Airline Operations and Management: A Management Textbook.Routledge, 2017. Google Books, Web.
“Electronic Ban Services.” Emirates, 2017, Web.
“Emirates Fleet Details and History.” PlaneSpotters. 2017, Web.
“Emirates Introduces Laptop and Tablet Handling Services for US Flights.”Emirates, 2017, Web.
“Help Centre.” Emirates, 2017, Web.
“History.” Emirates, 2017, Web.
Katsioloudes, Marios I, and Arpi, K. Abouhanian. The Strategic Planning Process: Understanding Strategy in Global Markets. Routledge, 2016. Google Books, Web.
Zhang, Benjamin. “Emirates Is Cutting Flights to the US Because of Trump’s Travel Policy.”Business Insider. 2017, Web.