The competitive advantage of Emirates Airline
Emirates Airline is considered a major airline in the Middle East. It operates approximately 2,200 flights weekly across Dubai and the United Arab Emirates (Doganis, 2002). Its headquarters are conveniently located in Dubai where most of it flights are coordinated. Emirates Airline is also known to operate one of the longest flights in the world. Emirates Airline is part of the Emirates Group. The airline is owned by the Dubai government, one of the countries within the United Arab Emirates group. The Emirates Airline was established in 1985 following the collapse of the Gulf Air.
The firm faces several hurdles in the airline market including the entry of new airlines which threaten to slice its market share into several facets. Emirates Airline has operated its airlines in the Asian region for the past 23 years, earning a good reputation and winning many flight and airline awards. The Emirates Airline commands up to 39% of the market share (Doganis, 2002).
Emirates Airline has been largely successful due to its competitive pricing strategies that it uses successfully against its competitors. The company has maintained a world class flight operation as well as introduced cheaper long haul flights that are highly profitable. The airline has experienced the largest growth in the Asian airlines market.
The company’s long haul flight services have threatened to dominate Singapore Airlines due to the adverse nature of Singapore Airlines to introduce flights into the ‘risk’ prone areas of the Middle East. Long haul flights have proven not only to be fuel efficient but also time saving for the passengers who have found more efficiency as they can be able to do other activities after their flights (Kleymann & Seristo, 2004).
Overall corporate strategy
Emirates Airline has a competitive business model that defines its corporate strategy in the market. The company has other strategies that give it a competitive advantage against its competitors.
The decline in oil deposits and unstable oil prices has made Emirates Airline to develop strategies that would effectively deal with the issue of an unstable jet fuel prices. The airline has entered into a deal with several major oil companies to supply jet fuel to them at a specific price that will remain undeterred or unchanged no matter what the future markets may present. Strategic fuel partnership has ensured that Emirates Airline maintains its profitability amidst a dynamic oil market, thus staying ahead of competition.
The huge investment in long haul that the firm has made has enabled Emirates Airline to provide long haul flight services at apparently cheaper rates. Emirates Airline intends to expand its long haul flight services into newer territories by the end of 2012.
The Emirates Airline has diversified its investment portfolio into areas of airport services as well as infrastructure development within its operational routes. The firm has also started cab services at the various airports where it operates to enable passengers reach their final destinations safely. The main goal of Emirates Airline has been to provide flight and airport services with a difference.
The Emirates Airline has adopted a strategy of free competition making the airline to be extremely competitive as its corporate image improves. Many people including the passengers view this as a positive move that will see Emirates Airline enter new markets without much requirements and hurdles to overcome.
Amidst the terrorist threats in the Middle East, the Emirates Airline has increased its security and airport surveillance as a means of curbing cases of kidnap and terrorism. This corporate strategy aims at creating a good image for the flight giant so as to become the preferred air carrier for its increasing number of passengers.
In addition, Emirates Airline ensures that its staffs are trained regularly so as to deliver exceptional service to their passengers and corporate customers. Training of staff is part of the airline’s corporate strategy. The airline giant wishes t train its staff in their specific areas of work by the end of 2011 so that the staff efficiency improves (Doganis, 2006). The airline acknowledges the fact that recruiting new staff is costly to its operations financially as well as time-wise.
Employee training is also at the core of the airline’s priority list. This has enabled Emirates Airline to be able to deliver excellent customer service to the passengers. The training programs which are regularly carried out have successfully enabled Emirates Airline to maintain a good corporate image.
The company has been aggressive in increasing the number of flights to the United States as well as expands to other regions through the adoption of a global strategy. This has enabled Emirates Airline to stay competitive within the market. With the increased security, Emirates Airline is likely to make it in a market that most passengers have been previously shaken by the September 11 terrorist attacks. The Asian Pacific region has enjoyed a relatively peaceful environment thus enabling investors, passengers and other airlines to enter the market. The resultant competition has enabled Emirates Airline to become more successful compared to other airline companies.
The company maintains an ‘open skies’ strategy. This strategy has enabled it to fly to virtually any country without any sanctions. However, this strategy seems to be short term as many countries seek alliances with the airlines flying through their airspace. Emirates Airline has been quite careful in the past not to enter into alliances, thus, there is a high likelihood that Emirates Airline would not be able to support the ‘open skies’ strategy.
Australia has placed a flight sanction on Emirates Airline since the firm has avoided alliances with the country owing to its initial mentioned strategy. Emirates Airline may be forced to relax its stand on forming alliances so as to be able to access certain markets and hence grow its business beyond the known market segments.
Emirates Airline supports environmental initiatives towards a sustainable future environment. The company has recently participated in tree planting initiatives as well as sponsored environmental conferences. This has given the company a front towards improving its corporate image.
Marketing operations activities
There are several marketing activities that Emirates Airline has initiated in the recent past. These are best covered in the company’s corporate strategies, although they shall be merely mentioned in this section in passing.
Firstly, Emirates Airline supports environmental initiatives which has enabled it gain a good corporate image necessary for its marketing. Moreover, Emirates Airline has developed a free competition strategy or the ‘open skies’ strategy that has enabled the airline giant to market itself competitively.
This can be best analyzed by looking at the internal as well as external competitive market advantages of Emirates Airline. This is considered in great detail in the ensuing sub sections.
Internal competitive advantages
The Emirates Airline operates a very unique business model that is characterized by flexibility. This has enabled the company to deliver innovative products that are relatively affordable and unique to the market. Emirates Airline prides itself to the leader of the world’s most innovative long haul flights. The flexibility has enabled its management to device ways of tackling the global economic crisis. The company has successfully been able to go past the global crisis without much of a hitch.
The firm’s business model supports long haul flights and the firm aims at connecting two points of the globe via its twenty four hours Dubai terminal. The business model does not support the expensive short haul which often drains most airlines’ revenues. Long haul flights are relatively cheaper due to the fewer stopovers that the aircraft makes on its destination.
Emirates Airline has an effective pricing strategy that ensures that passengers pay relatively cheap air fares while enjoying their flights. This has been the main competitive advantage that the airline company has enjoyed over the years. This has given the passengers a cost effective advantage and thus the reason why they prefer flying with Emirates Airline.
Moreover, the long haul flights have been low cost and profitable to the company. Frequency of long haul flights has made Emirates Airline to become more profitable thus the airline has not seen the need to increase its air fares. Pricing in any given firm spells the competitive advantage of that particular firm, meaning that Emirates Airline’s success is derived from its low cost long and short haul flights.
The airline also enjoys a large pool of advisors and creative managers who often act for the best interest of the airline. The highly creative managers also help to design and develop competitive products that often compete effectively with that of the competitors.
Emirates Airline has been in the market for a relatively shorter time. This therefore means that the airline is not burdened by certain costs such as the legacy fees that go towards the pensions of the long serving employees. The legacy costs are behind the reason why most of the airlines charge high air fares is because; the legacy costs are usually factored in this. Therefore, long serving airlines cannot compete effectively with Emirates Airline on price.
Emirates Airline has incorporated the latest technology in booking flights which has enabled the customers to be served better. Customer satisfaction has risen due to the incorporation of the online booking and increased communication with the customers prior to taking up their flights. Many customers have been able to move from other carriers such as Singapore Airlines to the renowned Emirates Airline.
The airlines have also been fitted with top-of-the-range flat screens to give the passengers an exotic feel whilst flying aboard the Emirates Airline. Technology has been given a head start in all the aircrafts operated by Emirates Airline. Passengers appreciate and are willing to fly with Emirates Airline since they will enjoy the exotic experience while aboard the Emirates Airline.
In addition, the Emirates Airline uses the dollar as a standard currency. The stability of the dollar against other world currencies ensures that the airline maintains high profitability. Moreover, the dollar is convenient to all passengers regardless of their countries of origin.
Emirates Airline has a wide variety of airline types that it operates. This gives its customers an advantage as they can easily choose which airline to fly with. According to Kleymann and Seristo (2004), Emirates Airline purchases new airlines every year making their airlines to be relatively new and able to meet the requirements by the Air safety bodies.
In the recent past, there has been no accident reported involving the Emirates Airline. This safety flight records restore the passenger confidence thus enabling the passengers to prefer to fly with Emirates Airline at all times.
Furthermore, the efficiency engines installed in every aircraft operated by Emirates Airline ensures that less carbon is emitted to the environment, making its flights environmental friendly. Shaw (2007) reveals that the aircrafts operated by Emirates Airline can fly for 100 kilometers on 4 liters, making it an incredible fuel saver.
External competitive advantages
Emirates Airline copes and encourages competition with other market player. This strategy is known as the ‘open skies’ strategy. For instance, Emirates Airline shared Dubai airport with hundreds of other airlines thus encouraging competitive forces of the market to control their market share effectively. The market is instead responding with improvements and alliance proposals which for the time being have been shelved by the Emirates Airline.
The United Arab Emirates government has enabled the Emirates Airline to create a liberal market in which it operates to encourage and sustain competition. As a major stakeholder in Emirates Airline, the United Arab Emirates government has successfully monitored the operations of the Emirates Airline to ensure that its consistently complies with the market standards thus ensuring that the airline successfully stays competitive.
In the past, most government within the Asian Pacific front used to operate under the guise of paternal government policies. This meant that the entry and exit from the market was dictated by the paternal government policy. Recently, this paternal government policy has been discarded making the companies within the Asian Pacific region to operate freely and competitively. Emirates Airline has been able to grow as a result of this opening up of the restrictive policies.
Emirates Airline participates in several environmental programs such as tree planting and supporting the global climate change initiatives. This indeed has helped to give the firm a good corporate image. This indeed gives Emirates Airline an external competitive advantage.
The Asian Pacific, where Emirates Airline operates is characterized by numerous employees and workers. According to a research done by Doganis (2002), most of the employees do not demand high compensation, making Emirates Airline to benefit from relatively affordable labor. As a result of this, the company has been able to reduce its overall fixed expenses and increase its profits. This kind of social environment gives Emirates Airline a competitive advantage thus the airline is able to float more competitive air fares in the market.
The fast growth of economies around the Asian Pacific region is indeed an opportunity for Emirates Airline to explore and realize a growth in the number of passengers. The firm should therefore develop competitive marketing strategies to be able to tap into the growing passenger base.
The political environment in the region where Emirates Airline operates has been extremely favorable making it easy for the airline to carry out business. This has attracted much investment as well as passengers who have contributed to the growth of the airline giant.
Strength of their competitors
The competitors of Emirates Airline within the airline industry have been able to effectively reduce their air fares, thus attracting a large number of passengers in the Asian Pacific region (Palmer et al., 2006). The price wars concerning air fares have ended up benefiting passengers as airline companies become more and more formidable towards reducing airfares.
Standards of service provision among the competitors have improved due to the increase in players within the flight industry. The healthy competition that Emirates Airline has encouraged has given rise to better service provision.
Most of the competitors have been in the market for long. This means that they have mastered the art of profitability and reduced expenses within the airline markets. Although the competitors have not been able to merge above Emirates Airline, they have commanded a sizeable proportion of the airline market share in the Asian Pacific.
Benefits derived from the supply chain
Emirates Airline’s supply chain is made up of travel agencies, partners and business strategic managers. The airline has been able to derive great benefits from its supply chain namely;
Increased flow of passengers booking for flights as well as cargo making Emirates Airline to be more profitable in the process
Developing strategies that are necessary for the Emirates Airline to overcome certain economic and political challenges that are prone to affect its operations.
Increased awareness of the benefits of the long haul flights
Emirates Airline was started in 1985 from the Gulf Airlines. The airline has grown to become a renowned and preferred airline in long haul flights flying approximately 2,200 flights daily from its hub in Dubai. The Emirates Airline is owned by the Dubai government and is part of the Emirate Group. The United Arab Emirates owns the Emirates Group and dictates the policies that are to govern the operations of their companies.
Cheap pricing strategies has enabled Emirates Airline to remain profitable while maintain long haul flights. Lack of legacy costs has also contributed to the competitive advantage of Emirates Airline as it is not committed towards paying pensions since it is a relatively new company in the flight market, having operated only for 23 years (Perreault, 2003). Emirates Airline has also diversified into other new facets of investments such as airport management.
Emirates Airline believes in maintaining a free market and has successfully stayed away from mergers and alliances in order to remain competitive in its quest to provide excellent and quality flight services. The company has also embraced technology which has further given it a competitive edge against its competitors in the market.
The relative security within the Asian Pacific region has enabled Emirates Airline to expand and grow amidst instability in other regions of the globe. Finally, the involvement in various environmental initiatives has enabled the company to excel and gain a positive corporate image, hence making it more competitive in the flight market.
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