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Emirates Airlines was established by the government of Dubai in 1985, with just two aircraft. Emirates Airlines currently operates in fifty-five countries and serves nearly seventy-eight destinations with eighty-three aircraft archives. The team members on board include ninety-five different nationalities. Emirates increased its A380 aircraft orders to 140 in November 2013 at the Dubai Airshow, where some observers were worried about the existing fleet issues centered on global networking activities as well as general life expectancy prices. Recently, Emirates Airlines ordered planes worth twenty-six billion with forty-five Airbus A380 making Emirates Airlines the world's most significant buyers of the superjumbo Airbus. The emirates management team got challenged into planning the efficient distribution of the airplanes and the formulation of possible profitable routes (Nataraja, Sundaram, & Abdulrahman, 2011). Emirates is almost making a deployment of its a hundredth A380 in November 2017.
The short term and long-term goals for Emirates Airlines include profitability while addressing customer expectations and contributing to the success of Dubai’s aviation sector. Emirates Airline's purposes to achieve this target through valued customer service and emerging the best in all its flight routes. Emirates Airlines is innovative, and customer directed when it comes to the provision of services such as flight entertainment for all the classes, which include eighteen television channels as well as twenty-two audio channels. Emirates Airlines offers online booking provisions that allow the customers to book in advance, search for available flights and select seats (Nataraja et al., 2011). Recently, the Emirates Airlines emerged the as the fastest growing and among the most profitable airlines around the globe. For the last seventeen years, Emirates Airlines has grown at the rate of twenty percent annually with an outstanding profit of approximately six hundred and thirty-seven million between 2004 and 2005.With this said, Emirates Airlines got two hundred and eighty multinational awards such as the CAPA (Center for Asia Pacific Aviation) award of 2005.
The aviation industry establishes the external factors that influence the airline sector. The external environment enlightens us on the airline’s industrial profile. The aviation industry is among the highly competitive and fastest growing around the universe since it contributes a great deal to economic growth, international trade, global investment as well as tourism. In the past decade, the airline industry grew tremendously at the rate of seven percent annually in both business and leisure reasons (Nataraja et al., 2011). The aviation industry is among the fastest growing in the world averagely rising above the growth domestic product rates. The airline industry is thought to have increased by five percent annually between 2000 and year 2010.The airline industry gets affected by external factors such as the economy, trade or political considerations. For instance, the political environment was surrounding, the September eleventh attack led to a decrease in individuals boarding flights since they got crippled by the fear of visiting terrorism-prone countries. One economic factor that affected the aviation industry was an increase in the prices of oil that lowered profits in the airline industry worldwide. This matter led to a loss of about six billion dollars in the year 2005.
Political or economic instability drives the aviation sector into making strategic decisions that would sustain and yield success to the airline industry. The airline company could make a massive investment in the improvement of its service towards customers. This plan would include the introduction of electronic booking systems, latest entertainment styles, extra comfortable seats, reduction ibn carrier costs and other technological advancements (Nataraja et al., 2011). These strategies would attract and keep the customers resulting in added economic gains. With the competitive airline market, several airline companies get involved in agreements with each other to lower costs or share resources through an alliance. The aviation industry would get revived with the doubling of passenger numbers. An increase in the number of customers could result from tourism growth, increased trade or economic advancement. Airlines would emerge prosperous if they maintained the low prices as well as improving customer service by standing out amongst the competitors earning a secure and firm position in the airline market (Connell, 2011). The airline industry experiences strong marketing and sales competition resulting in the fast growth with gradual stability. The intense competition calls for aggressive advertisement and promotion styles. Competitors engage in further research as well as development budgets to establish the most suitable way of winning the customers' attention.
Airline companies start concentrating on making their services or products unique from that of its competitors leading to customer loyalty. An airline company could reduce its operating costs despite the drop in profit margins. Small airline companies could collapse as the permanent ones thrive. The strategies used by the airline companies could be more offensive than defensive. This action could be through product development that entails changing the market, product or marketing mix to survive (Connell, 2011). New product development takes place. For instance, Kuwait airlines modified its marketing mix through the launch of reduced cost carriers to increase its customers, loyalty plus sales, which would give the air a competitive edge amidst the competitors.
Michael Porter's five forces model explain the competitive environment for the Emirates Airline Company. The threat of new entrants could pose a challenge to the airline industry. New entrants could be a threat to an existing company since they mostly provide improved services, products or prices (Merkert, Rico, & Peter, 2012). With the aviation industry, risks decrease when the barriers to entry increase. New entrants are likely to undergo challenges such as substantial capital requirements. Valuable capital is required to establish an airline company with a single plane costing about two billion dollars. Another difficulty of the new entrants could arise based on the brand name or loyalty of the customers. Established airline companies got a firm position in the aviation industry, which poses a challenge to the new entrants. Competing firms such as the American Airlines are renowned for the service experience. Alliances involving major airline companies could make it harder for new entrants in the industry. Emirates airlines face competition from established carriers such as the British airline and the Singapore airlines including others. To survive, Emirates should create alliances with other airline companies. Emirates airline would enjoy a shared ground for customers, shared resources, advanced services as well as increasing the number of travel routes. This alliance would lead to shared experiences and decreased costs of operation. Emirates airline could get into a collaboration with the British airline that members in the Oneworld Alliance.
The second model by Michael Porter is the power of suppliers. Suppliers influence the airline industry through their ability to increase prices or lower the quality of goods or services. The aviation industry has little suppliers worldwide, which are mainly the Airbus and Boeing. The limitation in the number of suppliers makes the existing ones to gain control and power over the market due to the massive demand for their finished products. Thirdly, Michael Porter's force model includes the power of the buyers (Merkert et al., 2012). Buyers have their hands on the aviation industry due to their ability to lower prices by bargaining for high quality or added services. Buyers control the airline industry due to their vast numbers and a wide variety of services to switch from with little or no transfer costs. Emirates Airline Company should maintain a good relationship with the suppliers through getting involved in contracts with the suppliers. A good relationship between the Emirates airline and the suppliers would become beneficial to the airline company. The airline company would get security from increased future prices since it got into a contract with the supplier.
Electronic ticketing offers flexibility in the search for better and cheaper airline services available. Moreover, electronic ticketing allows for easy swapping from one Airline Company to another. Several airline companies offer air mile system to earn customer attention and eventually retain them. Another of Michael Porter's model is the threat .of substitutes. Substitute threat differs from regional and multinational airline companies. Substitution in regional airlines could get higher with people driving cars and moving in trains within the same area. For instance, in Europe, one could travel from one country to another by using an electric train. On the contrary, internationally based individuals use air transport for faster and comfortable mobility. States such as Dubai lack trains were, therefore, making the airline companies to lack substitution as most passengers use air transport. The Emirates Airline Company could achieve success through the construction of modern airports with the incorporation of the newest technology that would satisfy the customer needs. The government of Dubai intends to expand its significant terminals located in Abu Dhabi and Dubai (Bamber, 2013). The massive investment in the airport development would lead to an upgraded economy, reduced dependence on revenues from oil and a shift to tourism revenue plus additional numbers of tourists that would multiply the profits in the airline firm. Global alliance contributes to airline company success since it lowers the costs of operation.
Finally yet importantly, competitive rivalry is another of Michael Porte's force models. Competition within the airline industry is high because several airline companies own the best airplanes as well as administration of excellent customer service. Airline companies attempt to widen their shares by providing friendly prices, best customer attendance, and unique promotions as well as creativity in advertisement campaigns. An example is Air Arabia, which has low costs. A strong branding would be necessary for the creation of a good ground for loyal customers. A good brand guarantees customer retention is making the customers not to get lured by the terms of the rivalry companies. The Emirates Airline could emulate the American Airline in adapting customer retention techniques such as providing a flyer mile that would enable the individual to acquire a travel ticket once the points get complete freely. Emirates Airline Company should differentiate its services through becoming advancement of its services. For instance, Emirates Airline could offer planes with the newest technology which include full seats or electronic ticketing that would lure the customers and make Emirates Airline Company stand out among its competitors (Bamber, 2013).
The aviation industry gets profoundly influenced by war and terrorist activities in various global regions. Terrorist attacks make specific areas unappealing to tourist thereby reducing the passenger numbers in those areas. Political issues distorted businesses in the Middle East and the rest of the world as there was difficulty in the establishment of alliances with multinational companies such as the American airline. Social factors could also promote the airline industry. These factors include population growth, increased tourists and literate individuals. Population growth rate in The United Arab Emirates is high due to multiculturalism. Airline profits rise with an increase in the number of scholarly individuals. A good number of educated individuals travel a lot. Moreover, killer diseases could impact on the airline industry by lowering the population numbers.
Increased technology would work for or against the airline company (Bamber, 2013). For instance, teleconferencing stops the need for interactions while at the same time affecting the statistics of the travelers. Electronic booking system in the airline industry system would save on cost at the same time reducing the printing of tickets. Emirates Airline company offers online services with a competitive advantage. Emirates airline succeeded through Alliance Corporation with the Arab Air to enhance safety standards. The Emirates Airline continues to thrive since it was the first to begin online booking services. Apart from this Emirates Airlines offers long flights such as from The United States to Dubai. The Emirates Airlines also allow for customer self-check-ins at the Dubai airport. Addressing customer needs most suitably contributes to the continued success of Emirates Airlines.
At the airshow in Dubai, Emirates Airline made an impression on the world by becoming the most significant global purchaser of the Airbus super flight. Emirates airline also focuses on the people. By making its employees happy they, in turn, serve customers with delightfulness ensuring that the customers are so glad therefore promoting the growth of the company. Emirates airlines train its employees, offers them rewards or performance programs that lower the cost of labor and increases the loyalty of the employees to the company. Amidst the many successes, Emirates Airline Company has several setbacks. Emirates Airline incurs substantial capital on the purchase of new aircraft and introduction of new technology. The company gets commonly identified with expensive ticket costs in comparison to other airline companies. Another weakness of the Emirates airline company is that it has not succeeded in joining several global alliances. The Emirates faces competition since it got founded in 1985v and had not yet fully established itself. However, there are opportunities for growth and improvement. This potential is due to the increase of the Economy in Dubai. The government is also playing a significant role by investing in the development of airports in Dubai as well as Abu Dhabi. The global growth in population is also working positively for the airline industry. There has also been an increase in the number of tourists frequenting Dubai leading to the growth of the company. Aviation events promote airlines in the Middle East with the Dubai airshow being the example (Bamber, 2013). Dubai could take advantage of these opportunities to increase its supplier value amidst the competition and threats from European or American airlines.
The Emirates airline company experiences some threats in its operation. One of the dangers is that Emirates got located in a politically unstable area faced with terrorism (Neufville, 2016). Terrorism activities seem rampant recently in the Middle East region. Increased security and insurance costs result in high operating costs for the airline, and this is an economic threat to the company. Increased fuel costs also raise the prices of operation and this could affect the profitability of the airline company. Passengers could be a significant threat to the firm due to their buying power. The exposure of internet database to the customers could subject it to hackers leading to high costs in restoring the internet database. Natural disasters such as earthquakes or hurricanes in Dubai could discourage tourists from visiting Dubai, which could be a threat to the market of the airline company. There are also chances of deadly diseases such as the bird flu or SARS that could hinder terrorism and affect profitability in the airline companies.
European struggling airlines such as Lufthansa could lose their market to super airline companies like the Emirates. In order to beat this threat, the European carriers need to work on the long haul flights just like Emirates, which is a super connector. Apart from working on the most profitable routes, they need to look into pocket friendliness. Lufthansa Airline has been losing its customers along Asia and Europe starting 2005 with people making a preference to other airlines (Neufville, 2016). American airlines are advocating for treaties between America and other carriers to ease the competition in the airline industry. Globalization in the air industry would call for agreements that would control travel among participant states, therefore, subjecting specific market regions to competition. America has currently engaged sixty nations around the globe. This strategy would enable European airlines threatened by Emirates to keep up the pressure from Emirates that is becoming a superglobal airline company. International laws and policies would keep the Emirates Airline Company in check.
An increase in the number of low-cost carriers led to change in the competition within the airline company. Low travel costs increase competition among airline companies making them lower their prices. This pressure goes down to the whole aviation industry forcing rivaling businesses to cut down on costs and reduce their fares to remain competitive. Emirates Airline Company could work on its competitive success despite the hindrance from North America and Canada that are working against its progress. Emirates could work on potential routes that get frequently used and desired by the customers. Emirates Airline Company could also work on the cost structure of operation. There should be a limit on the extent of low fares (Neufville, 2016). The airline should be able to offer friendly prices to customers while improving the general profitability of the company. Emirates Airline Company should maintain a pleasant staff that would encourage repeat business. Unhappy personnel would keep customers at bay. Emirates Airline could also support excellent customer service. Issues such as mishandled luggage, delayed flights or frequent complaints by the customers should get discouraged through all means.
Reputable airlines have growth strategies for the future. This plan involves offering customers with cheap, fast and reliable air services within the industry. There should be low competitive fares as well as popular customer service. The prices should be flexible with a peak and off-peak structure. There could be plans to introduce travel without tickets through the use of technology. The company should also meet employee needs since the happiness of the employees would mean satisfaction to the customers. Finally yet importantly, airline corporations could experience growth through offering attractive flyer programs.
Bamber, Greg J., et al. Up in the air: How airlines can improve performance by engaging their employees. Cornell University Press, 2013.
De Neufville, Richard. "Airport systems planning and design." Air Transport Management: An International Perspective (2016): 61.
Merkert, Rico, and Peter S. Morrell. "Mergers and acquisitions in aviation–Management and economic perspectives on the size of airlines." Transportation Research Part E: Logistics and Transportation Review 48.4 (2012): 853-862.
Nataraja, Sundaram, and Abdulrahman Al-Aali. "The exceptional performance strategies of Emirate Airlines." Competitiveness Review: An International Business Journal 21.5 (2011): 471-486.
O’Connell, John F. "The rise of the Arabian Gulf carriers: An insight into the business model of Emirates Airline." Journal of Air Transport Management 17.6 (2011): 339-346.
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