Emirates Airline Aviation Strategy
The airline industry is fast growing, and many companies are coming into the field. With that, the competition has grown to a great extent, and the existing stakeholders need to ensure that they do their best to remain at the top. The Emirates Group of airlines has been in operations for quite some time now, having grown a big reputation and image in the airline industry (Nataraja and Al-Aali, 2011). The company is fully owned by the Dubai government and entails the airlines as well as the Data (a company that offers aviation services). The organization is an employer of more than 20,000 people, with the section of the airline being accountable for about 16,400 employees. For the last two decades, the organization has grown into a very successful generator of profit. This report will detail the aviation strategy used by the company's management in ensuring that the organization stays at the top, also giving the various challenges and dangers that Emirates face (Barros and Couto, 2013).
The Factors Influencing the Airline Business
1. Environmental Analysis
1.1 PESTLE analysis of the Emirates Airlines
1.1.1 Political Factors
As a company operating on an international scale, the Emirates is exposed to so many risks and political factors that can affect its operations. Political instability is the greatest challenge that any company can face. In some countries like Iraq and Syria, the political events that took place are not good to any business. War and in-fighting of people within a country because of political reasons affect the normal operation of the business. The company has seen some of its flights stopped because of political fights and politicians trying to show their superiority. However, in some countries like UAE where there is peace, the company has been able to make remarkable progress and grow drastically, increasing the market share and also profitability. Qatar Airways have been banned from moving into countries like Egypt because of the political difference s between the countries (Nataraja and Al-Aali, 2011).
1.1.2 Economic Factors
Any company operates with the aim of making a profit, and that entirely depends on the economy of the host country. The condition of the economy in any nation impacts the availability of capital, the profit a company earns as well as the demand for the products or services that the company offers. In this regard, the success of Emirates depends on the economic performance of the different nations where it operates. For instance, if the capital cost, as well as demand buyout, tends to be low, it will be a good attraction for any investor to invest in the company. Thus, the Emirates group has seen such trends and turn of events affect the operations and profitability. However, operating in the European nations and other developed countries like the U.S.A offers a good economic environment for easy and smooth operations with profitability in the end (Barros and Couto, 2013).
1.1.3 Social Factors
People around the world have different preferences and tastes when it comes to transportation. Some people prefer to travel in first class, while others like going through the business class. All that depends on the financial muscles of the people, the culture they have developed and many other factors. The services offered during the flights also are an attraction to some people, and the Emirates Group has ventured into that (Nataraja and Al-Aali, 2011). The company knows the different services and foods preferred by people from certain regions and ensure that's they offer them to their customers. That has contributed to the development and success of the organization in the aviation and airline industry.
1.1.4 Technological factors
With the recent inventions in technology, airline companies are going to a head-to-head war on who uses the best and latest technology. With that in mind, the Emirates purchased and increased its A380 airlines to 140. That is meant to offer comfort and class in traveling through the airline. With that, the company aims at attracting more customers to use their services (CAPA, 2016).
1.1.5 Environmental factors
Protecting the environment is a great responsibility that any large company like Emirates is expected to take positively (Barros and Couto, 2013). That is the main reason why the company has a very strong corporate social responsibility and policies to ensure that the environment is protected very well. For instance, the company has a very good waste disposal program that has created a good image in the market among the customers and possible investors of the organization. Other environmental factors that affect the weather have a negative impact on the company as conditions like fog derail flights from taking off, hence creating more losses to the organization (CAPA, 2016).
1.1.6 Legal factors
Any company in the world operates under some legal bodies and rules. Despite the fact that Emirates is a government company, the set rules and regulations should be followed just like any other company. The rules include aspects like customer and employee protection, taxation and other legal frameworks that will ensure the company does not violate any rules. However, given the fact that the organization operates internationally, it has also to adhere to the other rules in the host countries for peaceful and smooth operations (Vesperman et al., 2008).
1.2 Porter's Five Forces Analysis of the Emirates Airlines
1.2.1 Threat of new Entrants
Because the company has created a great brand name, wealth and a good image, the threat of new entrants remains relatively low. The reason for that is because the company has created a great barrier to entry and fighting against it to gain customers will be very hard for a new and young company.
1.2.2 Competitive Rivalry
The company operates in a very competitive setting, and there are many companies that compete. Such competitors include the Etihad Airlines, Qatar airlines, and many others. In total, there are 37 airlines which fly from Dubai to various destinations across the globe. Thus, the threat from the competitors is very high at the moment, and the company needs to work had to remain at the top.
1.2.3 The bargaining power of buyers
The buyers, in this case, entail the customers who use Emirates flight services. The bargaining power is very high because there are many other companies that offer similar services. That calls for great and hard work from the company to keep the existing customers and attract more.
1.2.4 The Bargaining power of suppliers
At the moment, the switching cost from one supplier to another is very high given the fact that there are only two companies that supply the airline industry. That makes the bargaining power of suppliers very high as there are so many airline companies that need the products.
1.2.5 The Threat of substitute Products
There is a very high buyer propensity to the substitute product or service. The main reason for that is because there are mainly two types of players in the market which include the luxury and the budget. With that, there results in a great difference in price, and many people turn to cheaper services and products. Thus, the threat of substitute products is very high as customers will always turn to companies that offer cheaper services (Barros and Couto, 2013).
2. The competitive analysis for Emirates and the Business strategy
2.1 Assessing product offering and the strategies for survival among the competitors.
2.1.1 Product/Brand Equity/Marketing Channels
The company operates under the Emirates brand and offers airline and aviation products and services. The services include flights, cargo transportation, and parcel services. The Emirates has been recognized and remains to be one of the most valued brands around the world. The airlines remain to be the most valuable airline in the industry. The company's brand value grow by 17% in the year 2016, attaining a total of $7.7 billion USD (CAPA, 2016). The organization uses various channels of marketing including television social media, radio and other printed media like newspapers and magazines (Merkert and Hensher, 2011)
2.1.2 Emirates Airline's Competitors
Having grown over the past decades into a world leader in the airline industry, the company now faces a lot of competition from several low-cost airlines. Chinese airlines are flooding the market and attracting so many customers, leaving the organization I a very complicated state. The major competitors of the organization include the Delta, Etihad, Americans Airlines, Jet Airways and Air India express. Companies like American Airlines and Etihad pose a very serious threat to Emirates when it comes to attracting customers and also having a bigger and better market share than the rest. Such competition has seen some airlines lower their prices to attract more customers.
2.1.3 The Company's Unique Selling Point
The company's main unique selling point is the fact that it offers services in three classes, considering people from all backgrounds. With that, people who prefer to be on the first class flight and enjoys high-quality services have their choice while those who wish to be in the business class can also board (O'Connell, 2006). Nevertheless, the company's combination of a restricted schedule, inflexibility when it comes to the arrival and departure times have attracted many people who are time conspicuous. The company's ability to travel to many destinations across the globe is also another unique selling point as it gets to reach out to many nations and customers (Merkert and Hensher, 2011)
2.2 Assessing the success of the long/short term strategy vis-a-vie competition and Pricing structure
The company has been able to offset the challenges in the industry and grown to be the largest airline company in the world. The company's growth has been fostered by growth in various areas of the fleet, customer experience, and the network. The company's services are a great attraction to customers, and the growth is significant and an implication of the success. PAX chose the company because it has been able to grow tremendously despite various challenges and competition. The company's pricing depends on the available market trends (CAPA, 2016).
At the moment the company has reached the maturity stage as it has reached almost all its potential for growth. All that remains for the company is either maintain, grow a little or start to decline depending on the market trends and the available management.
The company has been very successful in ensuring that it markets its products across the available market in different nations. The marketing efforts have seen the company improve by over 9% customer base in the past one year (O'Connell, 2006).
2.2 Emirates Airlines Business Strategy
2.2.1 The Company's Key Success factors
Brand Loyalty and quality of products
The company has created so many loyal customers in the course of its operation. The main reason for such loyalty is the fact that the company has created a good image and the type of services and products that Emirates Airline offer. The company's image of being classy is also a great aspect that has contributed to loyalty as being associated to the company is a show of being classy.
The company's quality products and services remains to be high and a target for other airlines to attain. That makes the company unique in a way and preferred by many customers.
In as much as the company wants to offer classy services, it has also to consider the other companies that offer the services at a relatively lower cost. That is the main reason why the company created three types of flight classes to cater for all types of passengers while considering their ability to pay for the flights and services offered along. The company offers services at relatively cheaper rates compared to other companies like the American Airlines, giving customers reasons to go for their products (CAPA, 2016).
Economies of scale
When it comes to economies of scale, no company beats Emirates Airlines. With the additional 90 planes into the fleet, the company has what it takes to cover almost all regions across the globe. That gives a competitive edge to the company over other organizations, hence more competitiveness and more profitability for the organization. The company's resources and wealth means that it has the ability to add more fleet to operate in more countries (CAPA, 2016).
Using the right plan
No company has a better track record in terms of profitability that the Emirates Airlines. The company has made profit for 29 straight years without making any loss (CAPA, 2016). Such a track record needs sound management and using the right plan at all times. Proper planning has been one of the success factors for the company, and much is expected from the organization, given that the competition is increasing by day in the industry and the market.
Proper targeting and positioning
The company's positioning strategies are very good. In the course of operation, Emirates has always made the right choice of target markets and deployed its operations. Positioning their operations has also been on point as the company targets the most promising markets and then develops the market. However, the company's flexibility and ability to adapt to the existing conditions has been key to being able to operate in new regions. That has been fostered with the company's strategy of employing locals to run most operations in the company's local branches (CAPA, 2016).
3. Network and Markets Growth Plans Assessment
3.1 Assessment of the Current Business model and network
The current network involves several nations through which the company operates. However, to absorb the 90 airlines that have been created, the following destinations will need to have some changes made:
Nairobi Americas: The African city forms one of the company's largest destinations in Africa, and there is need to increase the number of flights from the destination to countries like the U.S.A and other American nations like Canada. With this, adding five more A380 will help serve the purpose.
Sydney to Hong Kong: This is another big destination that needs additional flights. Australia and Hong Kong are long time business partners, and the flights that's take place between the two countries are many. Putting an additional 10 A380's to the destination will help in serving the required purpose (CAPA, 2016).
India to China: These two countries are home to some of the largest population in the world. With their business operations and good relations seeing the countries grow, the flights between the countries have increased drastically. Thus, there is dire need to distribute about 20 A380s to the destinations in cities like Delhi and Shanghai. That will see the company's earnings from the regions increase drastically (O'Connell, 2006).
Japan: Japan forms one of the greatest business destinations in the world, and there is need to ensure that the flights to and from the country are increased. Thus, allocating 5 A380s will ensure that the company grows and increases its flights and also the profitability.
Other regions: The remaining A380s will be distributed among the other regions like Angola, Egypt, Ethiopia, Nigeria, Afghanistan, Bangladesh, Indonesia, the Korean Republic, and Maldives. New Zealand, Myanmar, Pakistan, Philippines and Sri Lanka. Other destinations like France, Denmark, Cyprus, and Italy should also be allocated at least 2 A380s.
3.2 Interpretation of financial results given the Marketing Strategy
The company has made a profit for 29 consecutive years, having made a profit of AED 1.3 billion (CAPA, 2016). The steady growth in business has been in line with an increase in capacity, with the organization being resilient and profitable despite a lot of challenges. That signifies a stable business revenue of about AED 85.1 billion (CAPA, 2016). With the new fleet injected into the company, there is likely to be a lot of profit earned by the organization in the next five years or more (CAPA, 2016).
The company's performance in the African and American performance showed a smaller percentage of profit, meaning that's there is need to concentrate more on the markets to yield more profit. Adding part of the fleet (90 planes) to the market will help boost the company's performance and improve profitability (CAPA, 2016).
4 Markets Uncertainty and Future Plans acceleration of the European Carriers
4.1 Competition in the European Market
The European market is made up of several big destinations and many other airline companies that compete for the market. With that, several companies like Etihad, American Airlines, Ryanair, Lufthansa Group, IAG, Air France-KLM and many others. Some of the airlines like KLM offer very low and affordable prices to the customers, giving a good incentive to attract more customers. That has been the main reason why the Emirates airlines have been unable to compete with the European airlines. Other companies like Ryanair also attempt to offer cheap and classic services to the customers as a way of pulling more customers to their side (Lohmann et al., 2009).
4.2 The Business models and competitive edge over the other European airlines
Being the largest and most valuable airline company in the world, Emirates has a lot of features and strengths that make it better than the other airlines in Europe. The main competitive edge is the company's financial ability and muscle. The company has a lot of resources that it can use in enhancing further growth. Despite the fact that the European airlines like Ryanair are large and have resources as well, Emirates has a lot of resources that it can use to eclipse the other airlines in the market.
The other competitive edge is the company's brand name and image. The company has the largest number of customers across the globe than any other airline. That means that it is well respected and preferred by customers than the other airline organizations. That makes it easy to sell in Europe than even the local airlines that are within Europe. The company's marketing strategies make it the best in the industry, with their appealing approach eclipsing that of its European competitors (Barros and Peypoch, 2009).
The other competitive edge that the company has is its large number of the fleet. The addition of 90 more planes into the company's operations make it almost impossible to compete with. A large number of fleet ensures that the company carries the maximum number of passengers and that it also makes enough money and profit, surpassing that of the main competitors that it has in the European market (Scheelhaase and Grimme, 2007).
5 Recommendations and Conclusions
Throughout this report, there is a lot of information that has been stated, research was done and findings made. The report's main aim is to help the company with strategies on how it will distribute its new 90 planes to various destinations to make sure that it gets enough customers and makes sufficient profit. The report started with giving a PESTLE analysis of Emirates, which helped sin determine the different external factors that affect the company in its operations. Issues like political factors and legal factors have the greatest impact on the company's operations, and they have been stated clearly in the report, showing how the company has been able to survive such conditions to succeed in the end. The organization's business strategy and competitive analysis were also done, helping determine the product, value, and competitors of the company. Recommendations were also made on how to distribute the new planes added to the flight by the company, with various markets and destinations being given priority (Sgouridis, et al., 2011)
Recommended actions by the company in the next ten years to succeed
As the company has bought the new fleet of an extra 90 planes, there is need to ensure that they are effectively distributed across the market and among the destinations properly to get more customer and profit. Concentrating on the new and growing markets like Africa and Asia will be a good chance for the company to grow its market share and ensure profitability for the next ten years and beyond. However, the company should use an effective management team to ensure that it gets to manage the resources effectively. Employing more workers will be a good idea for the company to ensure that it handles the growing number of customers and destinations across the globe. Looking out for many destinations will also be a good and profitable strategy for the company to enhance profitability and growth. The company should also change its operating strategies and rules with time to keep up with the market trends and changes (Barros and Couto, 2013).
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