Brief History
The Emirates Airlines is a wholly-owned company by the government of Dubai in United Arab Emirates (UAE). It is a part of a larger conglomerate, the Emirates Group which comprises companies in diverse areas such as aviation support service, hotel and tours, IT and engineering, etc. Emirates Airlines has taken advantage of the “open skies” policy of Dubai. Notable persons in the company are Sheikh Mohammed bin Rashid Al Maktoum and Maurice Flanagan who laid-out the business plan of the Emirates Airlines in 1984 (Bloomberg Newsweek, 2014). It was established on top of the Dubai National Air Transport Association (Dnata) which was already the agent of 25+ airline companies in 1984. By 1985, Emirates had its first flights from Dubai to Karachi, Pakistan with two aircrafts (a Boeing 737 and an Airbus 300). Emirates had acquired at startup, through the help of Sheik Mohammed, two additional units of Boeing 727 from Dubai Air Wing. The next year, Emirates suffered its first and only financial year with a loss due to expansion and acquisition of new aircrafts. It has then grasp market on flights to Cairo in Egypt, Amman in Jordan, Dhaka in Bangladesh, and Colombo in Sri Lanka. In the succeeding years, Emirates has added more flights to countries in Europe, Asia and America.
Since then, Emirates became a fast growing airline company due to its marketing efforts focusing on luxury, expansion to other routes, and pricing. By 2014, it already has 217 aircrafts to its fleet operations, and it is targeting 50 million passengers and 2.25 million tons of cargo for fiscal year 2014-2015.
Type of Business and Market
The Emirates Airlines is into the international air transport sector. It moves passengers from country to country. Specifically, it is targeting passengers from the middle class to the upper middle class. Its slogans give a hint to passengers to the quality of service that they offer. Their company slogans: “Be good to yourself, Fly Emirates” and “Fly Emirates. Keep Discovering” are in the forefront of their great customer service. They are committed to highest standards and are targeting quality and quantity in their business dealings. It has even diversified to having an award-winning cargo division, a travel management and tours division, and airline information technology developer. With this, they are not only into transporting passengers but also cargo and other necessities. They are also in to providing their passengers with travel options making vacations and tours easy and effortless for the frequent travelers. This is through their frequent flyers program dubbed as Emirates Skyward and Business Rewards programs. They are offering this not juts to frequent tourist, but also to the frequent travelling businessmen and employees. Moreover, they are also targeting the upper class segment of the market recently with their Emirates Executive. Emirates Executive is an exclusive private jet service from UAE. Moreover, they are using their experience to help other airline companies in terms of their information system and engineering needs.
In terms of business, Emirates Airlines posed revenue and operating income of 87.8 billion AED (UAE Dirham) for FY 2013-2014. This is higher by 13.2% from FY 2012-2013. This is attributed to business in international flights. Competitors of Emirates Airline include Etihad, Qatar Airways, Air India Express, etc.
Organizational Structure
The Emirates Group is headed by Sheikh Ahmed Bin Saeed Al Maktoum as the Chairman and Chief Executive. Timothy Clark is the President of Emirates Airlines and Gary Chapman is the President of Group Services and DNATA. Basically, bulk of the business is in the Airlines and the support services are an integral part to the success of the company. The company has several executive vice presidents who lead their respective areas in the corporation: (a) flight operations, (b) facilities and project management, (c) DNATA, (c) human resources, (d) service departments, and (e) commercial operations. Shown in Appendix 1 is the organizational chart for the Emirates Group (The Emirates Group, 2014). There are a diverse set of functions to be managed in the different areas within the conglomerate. Most important is the management of the daily flight and cargo operations. Their flight operations strategy is of going further and giving world class services to flyers. They are investing in support infrastructures such as airport facilities and hubs aside from their additional aircrafts into its fleet. Currently, Emirates Airline have a fleet composed of 232 aircrafts with an average age of 6.2 years. They have 1 Airbus A319, 21 Airbus A330, 8 Airbus A340, 57 Airbus A380, 2 Boeing 747, and 143 Boeing 777. With 80+ destination countries, the Emirates Airlines continue to grow their business by analyzing current trends in air transport. Their business is not only derived from passenger flights, but also on cargo hauls. For 2013-2014, the business translates to 2.3 million tons of cargo.
Another function is the support infrastructures under the Projects Management group. Another is the Dnata which is one of the world’s largest air services provider. Dnata specializes in ground handling services in Dubai International Airport. Aside from this, it also offers cargo, travel, and flight catering services. It is basically a support group to the Emirates group. One that is backed by years of experience. Human resources also have to be managed since employees nowadays are considered human capital. Business grows with the people since people factor is a key in the interface with customers. Moreover, there is also the service department for finance, legal, IT, insurance and treasury services. Commercial operations are also given focus since sales increase is part of the business plan.
SWOT Analysis
An analysis of the company’s strengths, weaknesses, opportunities, and threats are discussed to have a main grasp of the company. First are the strengths. These strengths include: (a) being backed up by the government, (b) investment from petroleum resources, (c) open sky policy of UAE, (d) corporate culture and branding, (e) dedicated workforce, and (f) market reach. Emirates Airlines is backed by the UAE government. It is a government-owned company but with that, the corporate culture looks that of a private institution. There is that feel of quality and competitiveness in the company mindset and atmosphere. Moreover, it is located in a petroleum-rich country. Vespermann, Wald, and Gleich (2008) discusses that investment from the petroleum resources boosts the airlines business in UAE. Another strength is the open sky and open port policy of UAE which basically invites commerce, industry, and tourism. Again, there is this branding of quality service for Emirates Airline. This results in happy customers and repeat business. This is possible due to the human capital involved. As of 2014, there are 75,496 dedicated employees for the Emirates Group workforce. And then there is this market reach of flight and cargo operation to over 80 countries in the world. This is part of the basic business plan of identifying niches and growth markets with Tim Clark’s vision (president of Emirates Airline). Next are the weaknesses. Emirates Airline relies much on international traffic which is highly unpredictable. Another weakness is the high operating expenses due to the high standards set by the company in terms of benchmark practices, luxury services, and quality support to travellers.
Opportunities for improvement include: (a) brand new fleets, and (b) additional niche destinations. Emirates Airline is on the process of upgrading its current fleet. At the 2013 DUBAI Air Show, Emirates Airline announced its largest order of aircrafts: 150 Boeing 777x and 50 Airbus A380. This is in line with Emirates Group vision of accommodating 70 million passengers by year 2020. Also there is this constant process of identifying niche markets. Emirates Airline in 2014 announced daily service from Dubai to Male, Maldives and added a second daily service to Dar es Salaam, Tanzania. For the threats to business, there are two: (a) congestion in the Middle East market, and (b) stricter government regulations. Stiffer competition particularly from Qatar Airways and Etihad is slowing down growth for passenger growth (O’Connel, 2006). Although Emirates is the bigger airline company in terms of fleet, partnerships with other international airline companies in the global scene is coming into place. Also stricter regulations brought about by recent air accidents such as the MH370 will come. It is just a matter of time and careful panning by aviation authorities and will likely affect Emirates international flights. This would call for additional infrastructures, safety aids, and employee training for the company.
REFERENCES:
Bloomberg Businessweek (2014). Company overview of Emirates. Retrieved from http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=7672958 (December 30, 2014).
O'Connell, J. F. (2006). The changing dynamics of the Arab Gulf based airlines and an investigation into the strategies that are making Emirates into a global challenger. World Review of Intermodal Transportation Research, 1(1), 94-114.
The Emirates Group (2014). Emirates group history. Retrieved from http://www.theemiratesgroup.com/english/our-company/our-history.aspx (December 30, 2014).
Vespermann, J., Wald, A., & Gleich, R. (2008). Aviation growth in the Middle East–impacts on incumbent players and potential strategic reactions. Journal of Transport Geography, 16(6), 388-394.
Appendix 1: Organizational Chart of the Emirates Group
