Case 34: Emirate Airline a Case Study
Essay by Enuj • March 27, 2019 • Case Study • 1,708 Words (7 Pages) • 1,933 Views
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Case 34: Emirate Airline A case study
Submitted by:
REMJUNE L. MAGLUPAY
Submitted to:
Ernesto A. Quidet Jr., DBA
November 2018
- Executive Summary
The Emirates airline is a subsidiary of The Emirates Group, which is wholly owned by the government of Dubai's Investment Corporation of Dubai. It is the largest airline in the Middle East. Emirates flew its first routes out of Dubai on Oct. 25, 1985, with just two leased aircraft, a Boeing 737 and an Airbus 300 B4 (www.emirates.com).
Currently, with a fleet of more than 265 aircraft, Emirates is currently flying to over 155 destinations in more than 80 countries around the world. Over 1,500 Emirates flights depart Dubai each week on their way to destinations on six continents, and their network is expanding constantly.
In the first quarter of 2015, Emirates along with the other two Middle East carriers was singled out by a report from one of the largest US airlines that charged them with allegations that they received $42 billion in government subsidies and tax breaks since 2004.
Though emirates is trying to make a way to separate itself from competitors, challenges come through along the pipe when competitors also tried to improve on their offerings. Airlines also were fighting to attract more upscale segment as higher fare increases profits without these airlines adding more capacity. Also, these airlines are creating more options in the menu and were very creative with the innovation of the airlines inflight facility.
- Statement of the Problem
How should Emirates compete? What internal resources and assets does Emirates have that may give it a competitive advantage?
- Data Analysis
The case study uses PORTER’S FIVE FORCES model to analyze industry condition and to see how emirates fits into it.
FORCES | INDUSTRY SCAN | IMPACT |
Threats of New Entrants | There are low barriers to entry, especially for short-haul airlines, but international travel requires alliances to break into new routes, reducing the new entry threat for established carriers. The existence of barriers to entry like patents, rights and national carrier. | LOW |
Bargaining Power of Suppliers | Boeing & Airbus are the only aircraft suppliers. Thus, oil producers control jet fuel supplies & prices. Switching costs of supplier is relative to firms switching costs. | HIGH |
Bargaining Power of Buyers | Buyers switching cost is relative to firms switching cost. Buyers can easily switch airlines they might find competitive schemes and offers or cheaper tickets and or better services. Some international airlines might have to bargain with corporate clients, but end consumer has little economic power. | MEDIUM |
Threat of a Substitute Products or Services | There are no real substitutes for quick international travel. For the business traveler, the substitute is not to travel and use teleconferencing instead. Buyer propensity to substitute is very high as there are two types of players in the market –budget and luxury which leads to very high price difference. A lot of people prefer travelling cheaper | MEDIUM |
Rivalry Amongst Existing Firms | Many rivals compete in the international airline business. Convincing customers that one carrier is different or better than another is difficult when the amenities are similar and options are easy to switch. There are 37 competitors fly from and to Dubai. | Very High |
The study also uses VALUE-CHAIN ANALYSIS. Value-chain analysis is a strategic analysis of an organization that uses value-creating activities. It’s important to figure out the internal sources that will show how emirates would respond to challenges.
PRIMARY ANALYSIS
Value Chain Activity | How does Emirates create value? |
Inbound logistics | Assistance with booking made customers feel valued. Organized catering system and exclusive emirates terminal for fuel storage. |
Operations | Dubai airport design allowed for efficient throughput of passengers & cargo. Check-in, service desk, boarding and lounge services and baggage and handling. |
Outbound logistics | Control of gates allowed efficient scheduling and skycargo. |
Marketing and sales | Innovative marketing to targeted customers, employees carefully selected & groomed to support marketing message. Official sponsorship, awards achieving and pricing strategy. |
Service | Flight attendants had strict guidelines for responding to customer demands. Emirates lounges, hotels and resorts and ICE. |
In terms of primary activities, the key to Emirates’ ability to successfully compete in the market appeared to reside primarily in its operations, marketing & sales, and service. From the very beginning, Emirates understood the value of its location and the importance of a well-functioning airport to handle the traffic as it grew. It also had a clear picture of its premium customer and knew the service quality required to keep this customer. Recognizing that the brand needed better promotion, Emirates developed a creative and effective marketing campaign targeting its primary market of sophisticated world travelers.
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