The airline industry evolves rapidly due to the universal nature of globalization. Airline companies appear in many developed countries and provide people with better opportunities to travel and explore the world. The United Arab Emirates with its overwhelming economic development also endows to the international advancement. Emirates Airlines is the company located in Dubai, which enjoys the acknowledgment due to its excellent service. The firm has overcome a long difficult path beginning with the first flights with only two aircraft to the incredible expansion of resources and cooperating countries. Moreover, the company occupies the highest positions among its competitors, has a strong competitive advantage and far-reaching plans. The ultimate task of the present paper is to analyze and evaluate the performance, sufficiency, and competitive advantage of Emirates Airlines, one of the most successful airline companies in the world; in order to provide more detailed analysis, the author will focus on the resources and organizational capabilities of the enterprise, its competitive advantage, and assessment of possible strategies.
Emirates Airlines is one of the largest airline companies located in Dubai, the United Arab Emirates. It was founded in 1985 for the development of tourism and infrastructure of the UAE. According to the International Air Transport Association, Emirates Airlines remains the biggest international aircraft catering company. On October 25th, 1985 the Emirates Company began to fly with two rented aircraft – Boeing 737 and Airbus A300B4 (Emirates n.d.). Eventually, the organization expanded, and since the 80s and the 90s Emirates Airlines had exploited 7 units Airbus A300, 11 units Airbus A310-300, 2 of Boeing 727-200A, and Boeing 737-300 (Emirates n.d.). In 2007, the aircraft company received its first Boeing 777-200LR able to overcome the distance about 17,446 km (Emirates n.d.). On March 2nd, 2016 the aircraft of Emirates made the first nonstop flight along the record distance of 14,200 km from Dubai to Auckland lasting 16 hours and 24 minutes (Emirates n.d.). Nowadays, the company provides passenger and air cargo transportations in many countries of all world continents.
As one can notice, Emirate Airlines continues to increase and develop its business. Moreover, Highness Sheikh Ahmed Bin Saeed Al Maktoum has made a great contribution to the UAE economic development through the aviation expansion during the last 30 years (Emirates n.d.). Today, recently implemented fiscal policies and investment encouragement support the overarching vision of Emirates Airlines. The business actively participates in aviation policy debates at the international level. Such a position has a key influence on the whole aviation industry (Emirates n.d.). The company’s mission is to ensure comfortable and convenient transportation for all the consumers (Emirates n.d.). Fundamentally, the high position in the world airline industry and competition along with government financial intervention strongly support Emirates’ views. The business and strategy model tends to develop the fair international competition and make flights more available. Furthermore, according to the company’s expectations, global economy is a vital factor for free trade, growing employment, and overall economic health.
Resources and Organizational Capabilities
The strategy of any company relies on its resources and capabilities. The wide accessibility of these two components allows Emirates to take the opportunities in the external environment. The company successfully identifies the profitable prospects and extends its business borders. As other industries, the airline becomes unstable; therefore, internal resources and capabilities receive more focus because the external market is unpredictable, and Emirates Airlines cannot completely rely on them (Camisón et al. 2015; Campbell, Edgar & Stonehouse 2011). Two internal factors mentioned above serve as a secure base for strategy formulation (Campbell et al. 2011). Moreover, the competitive advantage of the Company becomes increasingly apparent than the attractiveness of the industry (Camisón et al. 2015; Grundy 2015). Therefore, internal resources play a key role in the achievement of superior profitability (Campbell et al. 2011). The Emirates’ principal basis for the strategy formulation lies in the resource-based view of the organization. The company demonstrates the main goal of its business in the aspect of the market and demand (Camisón et al. 2015). The enterprise knows its customers as well as how to satisfy their needs and desires. Even in the modern conditions, in which the consumers have inconstant preferences as well as their nature, Emirates Airlines does not use different market-focused strategies, because they cannot guarantee the long-term success (Camisón et al. 2015). Therefore, the company occupies the leading positions due to the involvement of its resources and capabilities ensuring a stable basis for the excellent performance.
Emirates Airlines is at the forefront of airline industry through utilization of the latest technologies and high-class services delivery. Currently, the company owns the most modern fleet containing 261 aircrafts, including models of Airbus and Boeing. The global market consists of more than 150 destinations in most countries of six continents (Emirates n.d.). Moreover, almost 13,000 of representatives of over 100 nationalities are the highly-skilled employees of the firm (Talib n.d.). The resources of Emirates are the vital factor for success. They include well-developed infrastructure, exclusive terminal, and other supportive services. Moreover, threshold resources represent office equipment, flights, headquarter, and employees. The corporate financial resources are highly stable and constantly grow (Appendix 1). All of these resources contribute much to the company’s successful extension.
Intangible resources and values
Employees or human resources are the most valuable facility of the company. The skills of the staff and high dedication play a crucial role in organizational efficiency (Stanik et al. 2007). The firm always uses different opportunities even when they do not seem to be advantageous. For example, Emirates Airlines made high revenues after the events of 9/11 (Stanik et al. 2007). That period was critical for the airline industry, and a range of experts predicted severe losses and even bankruptcy of the companies (Stanik et al. 2007). However, the Emirates business managed to survive. The company’s organizational policy was extremely cautious. This helped to avoid over-capacity and promotes launch of a new product line exactly at the right places and time (Stanik et al. 2007). Additionally, the facts show that the firm successfully expanded into New Zealand. In 2003, almost thirty international airline companies offered their services to the country but Emirates won this competition. It happened due to core competences, skill, and experience, which other companies cannot imitate (including a new lounge and wine experience offered to the passengers) (Sodoma 2017). Therefore, Emirates obtains a justified value of its positions being established throughout its existence.
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Emirates Airlines obtains benefits from the super-sufficient airport in Dubai and tax-free area. Moreover, labor costs are especially low; they take only 20% of the total amount. To compare, the rivals spend about 35% to 40% (Stanik et al. 2007). Despite low labor costs, Emirates Airlines has skillful teams to ensure a high-class performance.
Acknowledgement is one of the priorities in Emirates. The company tends to follow and improve its brand and image since the 90s (Stanik et al. 2007). A significant amount of the customers has become loyal to the enterprise. Nowadays, many travelers prefer this airline company when flying from the Middle East to Northern America, Europe, or Australia (Stanik et al. 2007). The firm has become famous due to its excellent services, products of high quality, application of the latest technologies, commodities innovation, and convenience.
Economies of Scale
One of the Emirates’ advantages is well-established alliances and networks across international destinations. In addition, generous investments in the fleet greatly contributed to high profitability (Appendix 1). The ability to increase capacity is a major distinctive characteristic. The company maintains fixed costs in further processes and reaches winning outcomes as compared to its competitors (Talib n.d.). Moreover, the organization has access to the global markets and expands its geographical coverage. Consequently, it does not allow new entrants to launch their entrepreneur campaigns due to the barrier of business scope and high costs. The VRIO analysis, which contains short but detailed information, is provided in Appendix 2.
Emirates Airlines has consummate market effectiveness. Moreover, the company obtains both internal and external competitive advantages and is one of the largest airline leaders in the world (Grundy 2015). Many factors influence the organizational performance. Therefore, it is useful to precisely regard the most important issues shown in subsections below.
Internal Competitive Advantages
Flexibility is the key characteristic of the unique business model in Emirates Airlines. It enables the firm to focus on technologies and innovations, which become more affordable for different kinds of customers and are notable for their uniqueness (Talib n.d.). One of the options offered by the company is long-haul flights (Grundy 2015). It is worth noting that they appeared in more recent times and represent the issue, which one cannot find in every airline transporter. Moreover, the flexible corporate management enables the business to surmount global economic crises. The list of events described earlier in the paper has proven that fact and ensures further success. Another benefit of the company’s business model is support of long-haul flights aimed at establishing connection among various countries in the entire world through its Dubai terminal, which is available twenty four hours a day (Grundy 2015; Talib n.d.). Moreover, Emirates are against short haul but expensive flights; it is common for most airline companies because it helps to boost revenues within shorter period (Campbell et al. 2011). Consequently, long-haul transportations are cheaper due to the decreased amount of stopovers. However, it is not the only item attracting the customers. The pricing strategy of the company is another reason for choosing the UAE airline. Thus, the passengers enjoy their flights for relatively low pay. Such step ensures a cost-effective advantage for the customers and, at the same time, winning positions over the competitors (Grundy 2015). Hence, despite low prices for long-haul flights, they provide the firm with relatively large profits. Therefore, the necessity to raise the airfare disappears because the frequency of long-haul transportations allows making decent revenues.
Furthermore, Emirates Airlines have a group of goal-oriented creative managers and advisors, who dedicate their efforts to the company’s interest. The ultimate purpose of this team is to create and design competitive and unique products for the effective but fair competition with other rivals from the airline industry (Grundy 2015). Moreover, the comparatively short existence of Emirates in the market also brings particular benefits. The company does not shoulder legacy fees burden. The financial resources do cover the pensions of the employees, who intend to retire. However, it ensures great advantage of the company over the competitors, especially long-serving airlines.
In addition, the organization’s implementation of the latest technologies has provided positive outcomes for the customers. On the one hand, almost every airline company utilizes online booking (Talib n.d.). On the other hand, Emirates were among the first who adopted this strategy and raised consumers satisfaction as well as improved communication with them (Grundy 2015). Additionally, installation of flat screens focused on providing the customers with an interesting and new experience in some aspect, while they were flying aboard (Sodoma 2017). Undoubtedly, most consumers appreciated such attention and preferred Emirates to other airline companies.
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It is worth noting that the company’s standard currency is the dollar. Moreover, it proves that the business maintains high profitability because the dollar is the convenient currency for all Emirates’ passengers notwithstanding their countries of origin (Talib n.d.). Due to the availability of different airline types, the customers enjoy the advantage to choose, which one to fly with. The company strives to renew their airlines base and meet the highest standards to ensure safe flights.
External Competitive Advantages
The external competitive advantages are vital for the operational success of Emirates Airlines, because some of them are irreplaceable movers of efficiency and progress. Thus, the firm encourages the competition in the market with the help of the ‘open skies’ strategy (Campbell et al. 2011). For example, Emirates’ airport in Dubai receives numerous competing representatives from other companies (Grundy 2015). It helps to encourage competitive forces in order to ensure better control over the market share. Furthermore, the market always offers improvements and provides opportunities to establish new alliances.
Moreover, the government of the United Arab Emirates approved a desire of the company to build a liberal market with healthy and sustainable competition. The government attentively monitors the performance of the firm to realize the compliance of efficiency in relation to the market standards (Grundy 2015). It helps the organization to remain strong and not only to participate but encourage the rivalry (Sodoma 2017). Furthermore, a greater part of governments in the Asian Pacific area operated under the paternal government policies (Talib n.d.). Sometimes, such situations did not help the companies to ensure corresponding develop. However, the cancellation of this policy allowed operating freely. As a result, Emirates Airlines obtained the new opportunity to strengthen their position.
Additionally, the company keeps a positive corporate image due to participation in several environmental programs (e.g. climate change initiatives, tree planting). In addition, national pluralism among the Emirates’ staff also brings positive outcomes. For example, most of the employees from the Asian Pacific region did not require extremely high compensations, thus giving the business a possibility to receive benefits from affordable labor (Grundy 2015). Thus, Emirates’ fixed costs began to reduce but the profits rose (Talib n.d.). Such an example demonstrates how a company can grow while seeking opportunity in each situation. Moreover, such circumstances can serve as the reason for floating the competitive airfare. The Asian Pacific and other regions with fast-growing economies are potential sources of profits and increased clientele bases for Emirates Airlines (Talib n.d.). The political environment of the operational area in the company is favorable for implementing the business (Grundy 2015). Moreover, investments, evolvement, and expansion are the constant indicators of the organizational success. Additionally, the firm should pay attention to is the development of marketing strategies, which could ensure high effectiveness and attraction of more loyal passengers.
Evaluation of Possible Strategies
Emirates Airlines should emphasize the strategies that could draw the attention of more customers and keep the positive image of the sustainable business and high-quality services provider. The choice of an appropriate marketing strategy requires an attentive approach and regarding different impacting factors. Firstly, the main problem of the company is prices or airfare. They are relatively low, however, remaining not affordable for a part of potential passengers (Devasia, Ajayakumar, & Robin 2016). Thus, it is necessary to emphasize the busiest seasons of a year when major part of people go on vacations; for example, New Year holidays, Valentine’s Day, Easter holidays and other. The task of the company is to launch massive sales promotion and advertising in the countries, where it operates (Devasia et al. 2016). Besides the extension of information in mass media, the Internet, and billboards, the information provided in the advertisements should match the cultural background and image of the particular countries. In addition, the firm should offer discounts for travelers with a tight budget, premium coupons facilities, extra incentives, ‘personal selling’, etc. (Devasia et al. 2016). The given offer can vary regarding the celebrations. For example, when it is St. Valentine’s Day, the company can suggest possible destinations, where the couples can spend romantic vacations (Devasia et al. 2016). These actions will ensure increased customer loyalty and a long-term brand preference.
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Another strategic approach relates to the seasons, when people do not often travel, for example, in April. In addition, it is an advantageous opportunity to offer low airfares and allow the potential customers to travel at cheap prices (Devasia et al. 2016). In this case, the offered tourist destinations should be inexpensive but look attractive. Effective promotion requires much advertising in the areas, where most people could see it. Since most potential clients spend much time on the Internet, it provides place for the advertisement. However, it is also advisable to show a part of advertising on television, radio, in different magazines and newspapers. This strategy will help to attract more customers due to cheaper travels and endorse the brand image.
It is evident that the profitability of the company depends on seasons, and the most beneficial are summer holidays. The weather warm, and the touristic destinations are extremely popular (Devasia et al. 2016). Emirates provide a range of holiday offerings. For example, one of them is ‘Kids Go Free’, the summer holidays program allowing children under 16 to stay in Dubai absolutely for free and enjoy different attractions. However, the compulsory condition is two traveling adults able to pay if necessary. However, the company has to widely spread awareness about this option, because most travelers have not any information about this offer. If Emirates Airlines launched the “Kids Go Free” contest online combined with a marketing campaign, it could be advantageous for the company as well as the potential clients. The former could build strong public relationships, whereas the latter could win vacation packages.
Emirates Airlines is the company acknowledged by the customers in the entire world. It has many opportunities to develop and increase their business due to the fact that it began with only two aircrafts and evolved into one of the largest airlines globally. A wide range of internal resources enables the organization to be a worthy adversary in the airline industry. Moreover, skillful staff and flexibility of the corporate policies allow overcoming difficult situations, even in cases, when they seem insolvable. Additionally, one can divide Emirates’ competitive advantages into internal and external ones. They play a vital role in the successful and effective performance of the company. Cheaper long-haul flights and high attention to the customers as well as their satisfaction became the key issues, which attracted the most part of the clientele. Concerning the external advantages, one should pride Emirates, because they find strong forces to encourage the sustainable competition among different airline transporters. The company has already strengthened its position and image, brand and reputation; its strategic models are flexible enough to bring the constant profits and benefits.