King Saud University College of Business Administration The MBA Program

BA-549 Strategic Marketing Planning Case study:

"Emirates Airline 2009: Hub of the World"

Analysis Report

Prepared by:

Abdullah Al-Oraini Radhi Al-Hamed

Mohammed Al-Juaidan Abdulaziz Al-Thabity

Abstract:
This report is based on the case study "Emirates Airline 2009: Hub of the World". The

report encompasses an overview of the airline industry, an overview of Emirates airline and their services, and competitive analysis of heir major competitors. In the analysis part we made a SOWT analysis for Emirates, and then we defined the problems. Alternatives were addressed and evaluated to select the best one to help Emirates to manage the huge growth while maintaining profitability, high service quality, and the family atmosphere for employees with high productivity per employee. Finally, a detailed implementation plan is addressed.

Industry Overview:
There is no doubt that airline industry is extremely important in everyday life of

millions of people who travel all over the world: The global airline industry consists of over 2000 airlines operating more than 23,000 aircraft, providing service to over 3700 airports. In 2006, the worlds airlines flew almost 28 million scheduled flight departures and carried over 2 billion passengers (Ghaus, N.D., p.1). Two billion passengers seems to be a huge number, however, airline industry continues to develop extremely fast serving more and more people in different countries: In the past decade, air travel has grown by 7% per year. Travel for both business and leisure purposes grew strongly worldwide. In the leisure market, the availability of large aircraft such as the Boeing 747 made it convenient and affordable for people to travel further to new and exotic destinations (N.D., 2012, p.1). According to data provided by Ghaus, the growth of world air travel has averaged approximately 5% per year over the past 30 years, with substantial yearly variations due both to changing economic conditions and differences in economic growth in different regions of the world. Historically, the annual growth in air travel has been about twice the annual growth in GDP. Even with relatively conservative expectations of economic growth over the next 10-15 years, a continued 4-5% annual growth in global air travel will lead to a doubling of total air travel during this period (N.D., p.1). It is important to note that governments of all countries attempt to support growth of airline industry. For instance, officials of developing countries promote airline industry as a part of the program destined to improve infrastructure, attract tourists and bring funds to economy. Traveling with business purposes also becomes more overspread. It is connected with the fact that many companies are active on the international arena and

become global trying to enter new markets and attract new customers. This aim became especially topical and important after the global economic crisis. There are certain predictions regarding the future growth of airline industry: Worldwide, IATA, International Air Transport Association, forecasts international air travel to grow by an average 6.6% a year to the end of the decade and over 5% a year from 2000 to 2010. These rates are similar to those of the past ten years. In Europe and North America, where the air travel market is already highly developed, slower growth of 4%-6% is expected. The most dynamic growth is centered on the Asia/Pacific region, where fast-growing trade and investment are coupled with rising domestic prosperity. Air travel for the region has been rising by up to 9% a year and is forecast to continue to grow rapidly, although the Asian financial crisis in 1997 and 1998 will put the brakes on growth for a year or two (N.D., 2012, p.1). There is no doubt that future development of the industry will be tightly connected with traveling between Europe, Asia and North America. The industry strongly depends upon international trade and economy: During the first half of the 1990s, the industry suffered not only from world recession but travel was further depressed by the Gulf War. In 1991 the number of international passengers dropped for the first time (N.D., 2012, p.1). However, airlines usually take a number of measures to restore positive economic exponents of their business: Many have tried to cut costs aggressively, to reduce capacity growth and to increase load factors (N.D., 2012, p.1). Nevertheless, a lot of airlines are unprofitable. Naturally, airline industry will continue to develop significantly. Taking into account a difficult economic situation in the world and the fact that a lot of airlines have to struggle for survival, I believe that only strong airlines will be able to develop fast and, possibly, they will manage to take over smaller companies in the industry in the course of time.

Emirates Overview:
On 25th October 1985, Emirates flew its first routes out of Dubai with just two

aircraft, a leased Boeing 737 and Airbus 300 B4 from Pakistan Airline. Then as now, their goal was quality, not quantity, and in the years since taking those first small steps onto the regional travel scene, Emirates has evolved into a globally influential travel and tourism conglomerate known the world over for their commitment to the highest standards of quality in every aspect of their business. Emirates is a subsidiary of The Emirates Group, which has over 50,000 employees, and is wholly owned by the government of Dubai directly under the Investment Corporation of Dubai. Though wholly owned by the Government of Dubai, Emirates has grown in scale and stature not through protectionism but through competition, competition with the evergrowing number of international carriers that take advantage of Dubais open-skies policy. Not

only do they support that policy, but they see it as vital to maintaining their identity and their competitiveness. After making its initial start-up investment, the government of Dubai saw fit to treat Emirates as a wholly independent business entity, and today they are thriving because of it. The airline has recorded an annual profit in every year since its third in operation. With a fleet of more than 170 aircraft, Emirates currently fly to over 115 destinations in more than 60 countries around the world, and their network is expanding constantly. Over 1,000 Emirates flights depart Dubai each week on their way to destinations on six continents. In fact, Emirates flights account for nearly 40 per cent of all flight movements in and out of Dubai International Airport. The company also operates three of the world's ten longest nonstop commercial flights from Dubai to Los Angeles, San Francisco, Houston and Dallas. In recent years, Emirates has made numerous significant announcements regarding the future of its already state-of-the-art fleet. Emirates order-book stands at more than 230 aircraft, with a total value of approximately USD 84 billion as of November 2011. In combination with what is already the youngest and one of the most modern fleets in worldwide commercial aviation, this commitment to the future reflects their goal to develop Dubai into a comprehensive, global, long-haul aviation hub. The airline ranks amongst the top 10 carriers worldwide in terms of revenue and passenger kilometers, and has become the largest airline in the Middle East in terms of revenue, fleet size, and passengers carried as of 2007. In 2010 the airline was the sixth-largest airline in the world in terms of international passengers carried and largest in the world in terms of scheduled international passenger-kilometers flown. The airline was also the seventh largest in terms of scheduled freight ton-kilometers flown. In February 2011, Air Transport World gave Emirates Airlines the title of "Airline of the Year" for 2011. The award has been given based on recognition of its commitment to safety and operational excellence, customer service trendsetters, financial condition including a 22year consecutive annual profit.

Cabin:

Background about the Product

First Class There are 3 types of first class seating; the full suite with doors, flat bed 'Skycruiser' seat (without doors) and 'Sleeper' seats. The full suite options come complete with closing doors to ensure privacy, a mini-bar, a coat rack and storage. They also feature the ICE system on a 23 in (58 cm) LCD screen. The seat converts into a 2 m (6 ft 7 in) fully flat bed. Private

suites are available on all A380-800, A340-500, Boeing 777-200LR aircraft, as well as 27 of 39 3-class Boeing 777-300ER aircraft. 'Skycruiser' seating is available on the remaining 12 Boeing 777-300ERs, Boeing 777200s and Boeing 777-300s feature seat that extend to flat beds using integrated passenger seat control, along with the ICE system and a 19 in (48 cm) screen. First class seats may also include a personal minibar. 'Sleeper' seating is available on 3-class A330-200 and A340-300 aircraft. The seats feature a pitch of 72 inches (A330-200) and 86 inches (A340-300) and lie nearly flat. On its newly delivered A380-800, first class features private suites, two showerequipped lavatories and spa, and access to the first/business class bar area and lounge.[146] Premium class seating is located on the entire upper deck of A380-800 aircraft. In 2009, Emirates was voted the second best First Class by Skytrax. Skytrax had said that the Emirates A380-800 product greatly helped influence its position. Business Class Business class on Boeing 777-200LRs, Boeing 777-300s and 29 of 39 3-class Boeing 777-300ERs as well as 5 of 14 2-class 777-300ERs feature seats with a 60 in (150 cm) pitch that recline to 79 in (200 cm)-long, angled lie-flat beds. Amenities include massage function, privacy partition, winged headrest with six-way movement, two individual reading lights and an overhead light per seat, in-seat power supply, USB Ports and an RCA socket for laptop connection, over 600 channels of entertainment on ICE, shown on a 17 in (43 cm) wide TV screen. The A340-500s have deeply reclining sleeper seats which have a 60 in (150 cm) pitch and are 18 in (46 cm) wide. All A340-500 aircraft feature the ICE system in all three classes. The Boeing 777-200s and remaining 777-300ERs have deeply reclining seats which are almost lie-flat. They have a 58 in (150 cm) pitch and are 20.5 in (52 cm) wide. The Boeing 777-200s also feature the ICE system. On Airbus A330 aircraft and A340-300s, the seats are standard business class recliners and feature a leg rest and seat back screens. These business class seats are smaller than other business class seats in the Emirates fleet as these aircraft are used predominantly on short-medium haul routes. On Airbus A380-800 aircraft, the seats recline to form a fully flat bed and are equipped with personal mini-bars. Due to the unique staggered layout, half of the business class seats on Emirates A380 are 9 inches shorter than the others, at only 70 inches long. Business class passengers also have access to an on-board bar at the rear of the aircraft. Business class passengers have the ability to customize and save seat and in-flight entertainment settings to a memory key for re-use on future flights.

Economy class Emirates Economy Class offers a 3234 inch seat pitch (8186 cm) and standard seat width (except on the Boeing 777 fleet). The seat features adjustable headrests, a 6001000 channel ICE In-Flight-Entertainment and in-seat laptop power-outlets on newer aircraft and laptop recharging facilities in galleys in older aircraft. There is additional recline on A380 Economy Class seats. Emirates is unusual in that it operates a ten-abreast, 3-4-3, seating configuration on its 777 fleet (rather than the customary 3-3-3 or 2-5-2 configuration). This results in a cramped cabin environment especially during meal times due to the reduced width of the seat. Other airlines with this layout include Air France-KLM (except on 777-200ER aircraft operating for KLM), China Southern Airlines, Philippine Airlines, and Air New Zealand (only on 777-300ER aircraft). In-flight entertainment system Emirates became the first airline in the world to introduce a personal entertainment system on a commercial aircraft after introducing the worlds first seat-back screens in 1992. All three classes feature a personal in-flight entertainment (IFE) system on Emirates aircraft. There are three types of entertainment system on Emirates: ice; ice Digital Widescreen; and Emirates TV & Radio. Emirates has won the award for best in-flight-entertainment from Skytrax for their ICE system every year since the systems inception in 2003. At present, almost 70% of the fleet has the ice in-flight entertainment and by 2011 the entire Emirates fleet is set to have the system. ICE offers more channels than any other in-flight entertainment system. Emirates TV&radio is also offered mainly on short haul routes, and 30% of the Emirates fleet offers passengers with 15 video and 26 audio channels, as well as 50 video games. Also available are BBC headlines, an airshow and external cameras giving a bird's eye view from the plane. ICE ICE (Information, Communication, and Entertainment) is the in-flight entertainment system operated by Emirates. Introduced in 2003, ICE is available on all new aircraft and features between 600 and 1200 channels to all passengers. ICE is found on the airlines Airbus A380-800, Airbus A340500, Boeing 777-300ER/ULR and Boeing 777-200LR/ULR aircraft. It is also available on all Boeing 777300 aircraft which have all been retrofitted.

In July 2007, Emirates introduced ICE Digital Widescreen, an updated version of ICE. It offers over 1200 channels of entertainment (up from 600) available to all passengers. ICE Digital Widescreen is available on all new aircraft. Information The system is based on the 3000i system from Panasonic Avionics Corporation. ICE provides passengers with a direct data link to BBC News. ICE is the first IFE system to be connected directly to automatic news updates. This is complemented by ICE's Airshow moving-map software from Rockwell Collins. Exterior cameras located on the aircraft can be viewed by any passenger, through the IFE system, during takeoff and landing. Emirates was also one of the first airlines to introduce high-speed, in-flight Internet service along withSingapore Airlines, by installing the Inmarsats satellite system and became the second airline in the world to offer live international television broadcasts using the same system. Communication ICE also contains a link to an in-flight email server which allows passengers to access send or receive emails for US $1 per message. ICE also contains a seat-to-seat chat service. In November 2006 the airline signed a deal with mobile communications firm AeroMobile to allow in-flight use of mobile phones to call or text people on the ground, on selected 777s. The service was first introduced on a commercial service between Dubai and Casablanca on 20 March 2008. Entertainment The ICE system includes movies, music, and video games. ICE offers over 130 ondemand movie titles and 15 video on demand channels, 60 prerecorded television channels, 350 audio channels, and around 50 video-game titles. ICE can also be accessed in 10 languages such as English, French, German, Spanish, Arabic, Korean, and Japanese. Since 2003, all entertainment options are available on-demand to all classes with options to pause, forward, and rewind them. Emirates now feature docking capability for Apple Inc.'s iPod portable music and video player as of mid-2007. This allows the device's battery to be charged, but also allows integration with Emirates' in-flight entertainment (IFE) system. This also enables the IFE system to play music, television shows, or movies stored on the iPod, as well as function as a control system. Ground services Passengers may check-in between two to 48 hours prior to flight departure. This may be done over the counter or at the lounge within the airport. Self-service kiosks are also available at Dubai International Airport, as well as at certain stations of the Dubai Metro.

Alternatively, they may check-in through the Internet or by short message service. Online printing of boarding passes is available through Internet check-in. Passengers on short trips may also check-in on their return flight upon departure from the city of origin. Lounges First and business class passengers, as well as Skywards Gold and Silver members, have access to Emirates Lounges. The airline has 28 lounges in 26 cities. Skywards Silver members can use the lounge in Concourse 1 at Dubai Airport. At airports in which Emirates does not operate a departure lounge, a third party departure lounge is usually provided for First and Business class passengers as well as Skywards Gold members. Chauffeur-drive First and business class passengers can make use of complimentary chauffeur-driven airport transfers in selected cities. Frequent-flyer program Emirates uses Skywards as their frequent-flyer program. Skywards is a four-tier frequent-flyer program operated by Emirates. It is used by over 5.72 million customers. The three primary tiers are Blue; Silver which requires 25,000 tier miles for entry; and Gold, which requires 50,000 tier miles for entry. Cargo Service: Emirates SkyCargo is a cargo airline based in Dubai, United Arab Emirates. It is the air freight division of Emirates, which started operations in October 1985, the same year Emirates was formed. Since then it has been the main cargo division of Emirates, and the anchor cargo airline at Dubai International Airport, its main hub. Emirates SkyCargo operates dedicated cargo flights to 20 destinations in 15 countries from Dubai International Airport, and through the Emirates network has access to additional 79 destinations. Whilst using bellyhold capacity in the Emirates' passenger fleet, it also operates freighter aircraft to various destinations. Emirates SkyCargo is a subsidiary of The Emirates Group, which has over 40,000 employees, and is wholly owned by the Government of Dubai directly under the Investment Corporation of Dubai. In 2008 Emirates SkyCargo moved its operations into a 43,600-square-metre (469,000 sq ft) Cargo Mega Terminal, which has the capacity to process 1.2 million tonnes of cargo annually. During the financial year 2008-09, EmiratesSkyCargo carried in 1,408,300 tonnes of cargo, an improvement of 9.8% compared to the previous year. Emirates SkyCargo, accounts for 20% of Emirates transport revenue.

As of 2009, Emirates SkyCargo is the seventh largest cargo airline in terms of the total freight tonne-kilometres flown and sixth largest in terms of international freight tonnekilometres flown.

Competitive Analysis:
The airline Industry is a complex business that is affected by many internal and

external factors. The successes and failures of this industry are constantly fluctuating over time. While deregulation brought great triumph and positive change, the tragedy of 9/11 was the initial factor leading to the downward spiral of failure that the current airlines face today. Currently, the International Air Transport Association (IATA) reported that the airline industry suffered a net loss of $8 billion dollars during 2008. The current failures are most affected and influenced by competition, buyer power, technology, and the economy. While it is evident that the airline industry is suffering as a whole, there are two airlines that are flourishing with achievement amongst the failing industry, Emirates airlines and Southwest airlines. For Emirates airlines, there was a unique way of operating has generated a consistent profit throughout the most influential factors that affect the industry. We will take in our process for the analysis for the competitive analysis two domestic airlines, and one international airline, for the domestic airlines we will take one economic airline which is Alarabia, and for the other domestic airlines we will take Etihad airlines, for the international airlines we will take the Lufthansa airlines. An Alarabia airline, a small regional airline, aspires to become a much larger airline. They pride themselves on being an efficient, single-class, on-time and reliable airline. Currently, Alarabia serves small locations throughout the MENA area. Alarabia airlines strategy is to provide the basic services to their customers, and this is in order to cut the costs, to provide the low tickets. Then, an Alarabia airline has been able to keep low-cost, low-fare competition and filling seats with leisure passengers using discounted tickets. But the main issue in Alarabia now, the UAE government does not support them in the crises; also Alarabia cannot go too far. Alarabia airlines bay high taxes in order to land in the main airports. Also, Alarabia airlines cannot land in Dubai, it's landing in Alsharjah, and if you want to go to Dubai, you have to take a taxi from Alsharjah airport to Dubai. Also one more disadvantage for Alarabia airlines, you cannot take more bags. An Alarabia airline has the pros of low tickets prices. For Etihad airlines, the UAE government support them in more than one dimension, especially financially, Emirates airlines do not has this benefit, Also, the main opportunity for the Etihad airlines is the advancement of the jet engine into a turbine-propelled in their aircrafts. This advancement in technology can greatly reduce operating cost by cutting the amount of fuel used as well as the down time of planes. Another benefit for the Etihad airlines is the technology, and gain access to a wider market. Etihad airlines are campaigning aggressively to ensure passengers have the latest technology and the best available service at

their fingertips. Etihad airlines has introduced a range of new creature comforts to its first, Business, and economy classes. Alongside in-flight improvements, including luxury sleeper seats and international cuisine, Etihad airlines has implemented a new entertainment system. Passengers can choose their own movies to watch or CDs to listen to from the extensive collection on board. In keeping with this new technology focus, Etihad airlines has launched a mobile phone service using WAP. Passengers can access information on flight schedules and promotions, and a directory of international Etihad airlines offices through their WAP-enabled phones. The major weakness for Etihad airlines is the high rate for the tickets, and this is in order to overcome their costs. Also, the government support may will have a negative impact on their competences in the future. Etihad airlines, is not a performance airlines, but prestige airlines, and this will suffering them in the future, they do not target the segment of low, and mid income people. For Lufthansa, today there has been an important growth of strategic alliances in the airline industry because of the airlines wanting to compete at a global scale. Airlines are cooperating with other carriers through alliances. There are four major airline alliance groups, one of them is Star alliance which led by Lufthansa, and this is one of the Lufthansa pros. Lufthansa Airlines became the first airline to establish the biggest home page on the internet and now attributes more than 25% of its passenger revenue from its internet site, www.Lufthansa.com, after visiting the website, Lufthansa airlines must be commended on an impressive number of customer options. The Lufthansa airlines goal is to become a global carrier and it has entered into strategic alliances to overcome competition by cooperating with other partners and by purchase of airlines in other countries. It has also purchased a stake in other airlines to gain access to the main airline markets in those regions and countries in which it does not operate in order to achieve a global mode of operation. The major weakness for the Lufthansa airlines is the replacement and maintenance of their aircraft as the planes age, also the current issues are directly related to the high costs and sagging revenue. Other limitations for the Lufthansa airline are the restrictions in the global market of ownership of foreign carriers. The Germany government does not support them in crises. Also, one more threat facing the Lufthansa airlines is the cost of fuel to power the jets. The price of jet fuel on average has increased by almost 60% globally from February 2006 to June 2010. Then, Lufthansa faced with rising aviation fuel prices, increasing competition between them and the other European airlines, they had new openings into Asian countries and additional flying routes being launched.

SWOT Analysis:

Strengths: One of the largest airlines in the world: Emirates considered one of the well-known airlines in the world in term of revenue, fleet size, and passengers carried. Also, it has very fast growth; growth has never fallen below 20% a year. In its first 11 years, it doubled in size every 3.5 years. They are good in managing crises: Emirates Airline was one of very few airlines in the industry that survived from many global crises and still profitable, such as, 11 September attack, and the economic recession in 2008/2009. High quality of service: Emirates is superior in quality of service provided to customer and win the "Airline of the Year" The Sophisticated Dubai: The huge growth of Dubai infrastructure and facilities. The Dubai Airport and the new airport in Jebel Ali are considered from largest airports in the world. Also, Dubai considered one of the important commercial cities in the region. Dubai is very attractive for tourisms, and also it hosts many international sport events and international conferences. They are good in communicating, learning, and developing the staff: They communicate vision, value, and strategic plan to first line staff and emphasis cost control with them. Also, they are providing a periodic training and development of their staff. Diversity of the senior management style and the multi-nationality staff: Managements are different people from different places bringing a wealth of experience; it's the combination of the best of each cultural style. Emirates consist of more than 80 nationalities, it's multicultural environment working together as a family. Flexibility and fast decisions making: Managements are working in very informal basis. It's not the traditional model of the western world, it's much more fluid. They have small managements team and get a decisions very quickly. Youngest fleet in the industry: Emirates Airline operates one of the youngest fleets in the industry with an average age of 65.89 months, compared with an industry average of 156 months. High operations efficiency relative to others measured by trip length: Analysts estimated that Emirates longer trip length of nearly 4,000 kilometers per average trip in 2003provided operating efficiency relative to flag carriers such as British airways. Air France and Lufthansa with average trip lengths in the range of 2,000 to 3,000 kilometers. Strategic location: When we look at the Middle East, Emirates is placed at the middle of a market with four billion people: China, India, South-East Asia, the Russian Federation, and Europe.

Attractiveness of Emirates environment: Employees were attracted not only by Emirates reputation as an employer of choice, but also by the competitive salaries, the lifestyle offered and the absence of income tax for Dubai residents. Unlike other airlines, Emirates was not saddled with legacy systems or archaic legacy trade union agreements; it relied on robust HR systems to redress staff concerns.

Strong branding strategy: Emirates branding strategy is key to its international growth. The airline spent approximately $300 million per year on sponsorships, promotions, events and media relations. One half of this investment was spent on advertising in the six continents where the airline flew and 40% was allocated to sports sponsorships. Weakness:

No formal succession plan: Emirates Airline does not have a formal succession plan for its senior managements. Lack of UAE nationality: UAE National recruitment is a big challenge. More opportunities were offered to UAE National, only about 5% of the staff are UAE Nationals. On the other hand, at the manager level the percentage of UAE nationals is about 25%.

Dis-economic of scale: Emirates management worried reaching a point where the airline could start to face diseconomies of scale. Emirates getting complex and expenditures start increasing.

Threats: High competitive regional and international market. In October 2003, the first low-cost carrier in the Middle East, Air Arabia started to operate from Sharjah, UAE. Then Etihad Airways from Abu Dhabi started as aggressive competitor to Emirates. Also, Emirates faced regional competition from Qatar Airline which is considered one of the best airlines in the world and with very aggressive growth. Furthermore, Emirates faced competitor from other international carrier like Lufthansa and British Airways Airlines industry is highly affected by the economic crises: Airlines industry is very sensitive to economic crises, many suffering huge loss or bankruptcy. As we seen Emirates recorded significant decline in profit during 2008/2009 recession. Oil prices: Fluctuation on oil prices is highly affecting the cost of operations, because oil cost considered the second large component of operations cost. Fluctuation of demand and inability to forecast: Fluctuation in consumers demand affect the ability of future expected demand while Emirates made huge investment in the aircrafts.

Opportunities: Development of more advanced airline services: To develop continuously new generations of more advanced airline and aviation services, and in result tap into more markets. Leveraging Emirates Airlines infrastructure business to get first choice. Opportunity to tap budget travelers' market. Building global hub-and-spoke system: Passengers able to fly from any major city in the world to any large destination through Dubai.

Problem Definition:

There are many challenges faced by Emirates. Below is the list of challenges sorted by priority: 1. Managing the huge growth of Emirates Airline while maintaining profitability, high service quality, and the family atmosphere for employees with high productivity per employee . 2. Diseconomies of scale, Emirates getting complex and expenditures start increasing. 3. Improving productivity, and deployment of measurement system. 4. Challenges to increase the number of UAE nationals in the company.

Alternatives Evaluation:

For the alternatives evaluation, our target is to find solutions for Emirates airlines in order to overcome their challenges; the following are the three suggested alternates to them: 1- Development of Internal Marketing Programs: Internal Marketing is the ongoing process whereby an organization aligns, motivates and empowers employees at all functions and levels to consistently deliver a positive customer experience that helps achieve business objectives.(Mulhern , 2009). Organizations thrive on the ability of employees and business partners. Optimizing use of resources and competencies to convert opportunities into revenue is the objective of an efficiently run enterprise internal marketing facilitates this by accurately and continually communicating the right message to all stakeholders. The long-term sustainability of the business depends on companys willingness and ability to continue delivering value and a positive experience to customers. Internal marketing is central to this objective; a well-informed, enthusiastic and skilled workforce boosts productivity, minimizes costs and facilitates a mutually beneficial customer relationship to strengthen the external value of the corporate brand.

External marketing thrives on the premise of delivering long-term value to external customers. By the same token, internal marketing thrives on delivering long-term value to internal customers (employees). It is far easier to convince external customers to believe in the brand if internal stakeholders believe on it. One goal of internal marketing campaign should be to improve employees' perception of the organization. Through various approaches, including empowerment; shared responsibility and accountability; actively encouraging participation; understanding personal hardships and ongoing training & up skilling.

Effective and efficient communication of Internal Marketing: There are various techniques and tools that help organizations implement effective internal brand building and marketing communications. These are intranets, extranets (partner communication on the web), newsletters, posters and pamphlets informing about new initiatives, better systems, company events, internal rules, policies and procedures. To be effective, internal marketing needs to accurately segment internal customers. Like external customers, they too have their own buyer behavior, i.e. identifying with the changes which organizations plan to implement. Broadly speaking there are three segments supporters, neutral and opposes. Each segment requires a different internal marketing mix to deliver on internal marketing goals. Each segment will require a different approach to convince them to buy into the new initiative. The Internet is an exceptional internal marketing tool: The Internet offers one of the best platforms for a consistent internal marketing experience across regional, national and international sections of an organization. The webs self service function and anytime/anywhere accessibility allows employees to leverage internal marketing programs without significantly impacting their primary job roles. Besides this, the web allows the employees to form communities based on their personal likings and unofficial designations/department affiliations. This allows effective employee bonding, branding and learning at both the formal as well as informal (cultural) organization levels. Proven web tools include intranets or even an internal facing website that creates online events, e-learning programs, expertise communities, discussion forums. Intranets/websites also serve to keep employees consistently and accurately informed about the latest organizational initiatives and innovations so that they can leverage them when interacting with external customers.

As the web enables the building of communities, within the organization, people can leverage them to work in an efficient, collaborative manner. The web also facilitates instant internal information sharing on new achievements, initiatives and innovations. The Internet is the most potent yet customer-friendly internal marketing tool and it also facilitates tracking, so companies can evaluate what does and doesnt work. Pros: Foster a strong relationship between employees, employees and senior management. Satisfied employees lead to satisfied customers. Increase employees' performance and productivity. Empowers employees and gives them accountability and responsibility. Better understanding of the organization goals and objectives by effective communications. Helps non-marketing staff to learn and be able to perform their tasks in a marketinglike manner. Improve employee loyalty and reduce turnover. Creates good coordination and cooperation among departments of the business. Proper information flow within the organization. Foster "Learning organization".

Internal Marketing Challenges: Managerial incompetence in interpersonal, technical and conceptual skills. Poor understanding of internal marketing concept. Individual conflict and conflict between departments. Rigid organizational structure. Ignoring and not listening to subordinate staff. The tendency of ignoring employees' importance and treating them like any other tools of the business. Unnecessary protection of information against employees. Resistance to change.

2- Standardization of Service Provision and Internal Business Processes: Since Emirates Airline getting more complex and hence expenditures start to increase, also Emirates had relied on informal networks of cabin crew to monitor and enforce consistently high service quality, but as the number of personnel increased, cabin crew members often did not know one another or had not worked together in the past. Cabin crew teams, moreover, generally consisted of multiple nationalities and typically had less than half hour to form a team before boarding begin.

For these reasons, it's suitable for Emirates to standardize their service provision; here we do not intend the industry standards, but Emirates' internal standards. Standardization describes a process of unification, especially in terminology, capabilities of personnel, technology, and organizational processes. Standardization ensures swift communication between employees themselves and between employees and customers which leads to great efficiency and high productivity with minimum costs. Because every employee knows exactly where everything is and how to do his/her job. In a first step towards standardization, it is important to identify areas with a potential for standardization in which customer demand also exists: Terminology: Unambiguous communication between employees themselves or between employees and customers is only possible through the description of services using clear terminology. In addition to immediate communication benefits, standardization of terminology serves as the basis for the development of additional standards. Personnel: Standardization of personnel qualifications facilitates the recruitment of appropriate workers. This area of standardization is important because customers often choose a service provider primarily on the basis of personnel and the quality of the services they deliver. Technical systems: The standardization of technical systems and their interfaces, often described as compatibility standards, allows exchange among different users. Processes and approaches: The standardization of processes or approaches clearly defines how a service is to be provided, which minimizes errors. Results: Standardized results are achieved through the establishment of qualification requirements and standards that define how a service is to be provided. The quality of results is further supported by uniform processes for the evaluation of the provided service. This encourages transparency for the customer, and can in turn be utilized as a referential standard in the development of more innovative services. What Emirates needs to do, is to establish a clear rules and procedures to standardize their business processes across the organization especially that touch their customers. Also, to develop performance measurement system that link to the senior managers to monitor the performance of their services. Each employee should receive extensive training for the rules

and procedures that related to his/her job and each employee should be evaluated based on his/her compliance with the standards. Pros: Attract and assure customers about the service quality. Increase in efficiency and productivity. Create competitive advantage. Cost-effective. Fast communications between the staffs.

Cons: 3Inflexibility, and may force to provide a service in certain way when other options are just as good, sometimes better, than what a standard dictates. Customers are different and may need a different treatment for the same service. Does not lead to a coherent team members. Less Engagement and empowerment of employees. Because they just receive orders. Standards need to be revised frequently in response to rapidly changing circumstances. Maintain a great customer services for Emirates Airlines: We should know that, a great customer service causes a customer to feel valued and stay loyal. According to TeleFaction [Consultant Company], a 5 percent decrease in customer defection rate can cause a 25 to 80 percent increase in profits. Customer service requires both managers and employees to work hard, remain ethical and sacrifice personal comforts to meet the expectations of the customers. Poor customer service has harrowing effects such as decreased profits for the company, a negative workplace and tarnished reputation that is difficult to overcome. These points are : 1) Emirates Airlines should hire employees that display interest in the company and they including the company in their overall career goals. During the interview, they have to notice the negative and positive aspects of the interviewees' personality. They should verify with their past employers their experience and attitude toward the workplace to see if they have the skills and character needed for the position. 2) Emirates Airlines have to gather feedback from their customers. Take customer comments into consideration and implement valid concerns through new policies. Encourage their employees to develop professional relationships with the customers to ensure that customers can express their opinions with ease. They should reduce the barriers for customers to communicate their feedback and create many forms of

simple contact. They have to construct incentives for customers to provide feedback such prize drawings for completing surveys. 3) Emirates Airlines should use the feedback to improve their service routinely. Investing the time, resources and money necessary to address customer complaints and perfect their service. They have to seek expert advice at conventions and research breakthroughs within the industry that apply to their Airlines. They have to encourage employees to use their knowledge, education and prior experiences to suggest any needed changes. They have to assign each employee a role in quality control. They have to update the skills and transfer the information to the employees through retraining. 4) They have to develop detailed procedures for handling customer complaints. They have to give employees specific guidelines for handling common customer issues to streamline the process and enable them to solve issues briskly. They have to study the service beforehand. They have to attempt to foresee any problems with their service to strengthen the employees' knowledge on issues they may encounter. They have to designate a role for employees in resolving specialized complaints that match their background, experience and education. Customers will be relieved to speak to a qualified employee to address their problems. 5) Emirates Airlines should hold employees accountable for their actions. Thoroughly explain to each employee his role in providing great customer service, even for employees who are behind the scenes. They have to give feedback regularly and schedule timely performance evaluations. They have to refrain from being harshly critical, instead coach employees. They have to give advice on effective methods for handling difficult situations with a calm and positive attitude. They have to reward employees who maintain exceptional customer service. 6) Emirates Airlines should create rewards for returning customers. Returning customers are one of the main components to success. Offer discounts, prizes and free products or services to reward customer loyalty. They have to give the appropriate leeway in company policies to create flexibility for the customers. Emirates Airlines and Automated customer services: Customer service may be provided by a person, or by automated means. Examples of automated means are Internet sites. An advantage with automated means is an increased ability to provide service 24-hours a day, which can, at least, be a complement to customer service by persons. Another example of automated customer service is by touch-tone phone, which usually involves a main menu, and the use of the keypad as options (i.e. "Press 1 for English, Press 2 for Spanish", etc(.

However, in the Internet era, a challenge has been to maintain and enhance the personal experience while making use of the efficiencies of online commerce. Online customers are literally invisible to Emirates Airlines, so it's easy to short change them emotionally. But this lack of visual and tactile presence makes it even more crucial to create a sense of personal, human-to-human connection in the online arena. Automated means can be based entirely on self service, but may also be based on service by more or less means of artificial intelligence. An automated online assistant providing automated customer service on a web page. Examples of customer service by artificial means are automated online assistants that can be seen as avatars on websites. It can avail for enterprises to reduce their operating and training cost. So, when Emirates Airlines using the automated customer services, they can cut the costs, and enhancing the provided services. Emirates Airlines and Social media : Social networking websites allow individuals to interact with one another and build relationships. When Emirates Airlines join those sites, people can interact with their services. That interaction feels personal to users because of their previous experiences with social networking site interactions. Social networking sites like Twitter, Facebook, Google Plus, YouTube, Pinterest and blogs allow individual followers to retweet or repost comments made by the services being promoted. By repeating the message, all of the users connections are able to see the message, therefore reaching more people. Social networking sites act as word of mouth, because the information about the services is being put out there and is getting repeated, more traffic is brought to the services of Emirates Airlines. Through social networking sites, Emirates Airlines can have conversations and interactions with individual followers. This personal interaction can instill a feeling of loyalty into followers and potential customers. Also, by choosing whom to follow on these sites, services can reach a very narrow target audience. Pros: It isnt fun to have a bad experience with customer services. Sometimes, expectations are not met when you are on the other side of the phone. Studies show strong customer service pays great dividends to an organizations long-term stability and growth; many companies employ a customer relationship management system to help keep customers happy. With that said, there are a number of benefits of customer service : Satisfied Customers & Customer Relationship Management: The first benefit of customer service is obtaining customer retention. Happy customers become repeat customers . Customer Loyalty & Loyalty Marketing: A key indicator of quality customer service is customer loyalty. Customer loyalty means what it says. Customer retention occurs when a product or service is consistent in what its supposed to do. The result can be a steady revenue stream and consistently fulfilling a

costumer's expectations increases the customer's loyalty. A study by US News and World Report reports 68% of why customers leave a product or service for a competitor is because of a bad experience. The typical customer will talk to people about a negative customer service experience than a positive experience. The typical customer will tell between 8 and 25 people about a negative experience, and the Internet continues to increase this exposure. A typical customer will only tell one or two people about a positive experience. However, if you reward customers for their loyalty (with rebates, coupons, freebies, etc.) they feel valued for their choices and continue to remain a consumer of a company's product or service. Less Costs Needed to Attract New Customers: Quality customer service relieves pressure on the organization to attract new customers. Statistics show that it costs more to gain new customers that it is to retain existing ones. The benefit of customer service comes into play here. A thorough customer service program will help maintain an existing customer base rather than lose a percentage of it.

Edge on Competitors With Good Customers Relationship Management: If your organization out-performs another competitor in customer service, most likely, your organization will be one of the leaders in your industry. Interestingly, if a company offers a product or service at a higher price than a competitor, it doesnt necessarily mean the more expensive competitor will lose its customer base. According to Accentures 4th Annual Study on Customer Service for the United States, 73% report they left a service provider because of poor customer service, versus only 47% who left because of a lower price. Promotes Customer Service Employee Retention: Customer service representatives who understand they are the face of the company will help them communicate with customers on the other side of the phone. Proper training in handling phone calls and trouble-shooting issues can promote job satisfaction, which translates into longer employee retention. Maximizing the Customers Experience: Todays customers are more selective and demanding. Their expectations regarding their service experiences are higher than ever. Customers who are not satisfied with the service they receive spend their hard earned cash elsewhere. Cons: Focus only in external customers. Not ensure a coherent team member and productivity improvement. Less Engagement and empowerment of employees.

 Some customer service practices may encompass high costs, like "service recovery".

Selection of the Best Alternative:

We develop below an alternatives matrix in order to choose the best alternatives

among the three mentioned above. The matrix contains some points of interest that need to be addressed in order to solve Emirates challenges. Every point of interest is weighted and every alternative is rated to choose the best alternative that contributes to solve Emirates issues. Points of interest Coherent team Productivity Service quality Implementation cost Engagement Brand loyalty Total 0.1 0.2 1.0 4 4 3.6 0.4 0.8 1 2 2.5 0.1 0.4 2 2 2.6 0.2 0.4 Weight 0.2 0.2 0.2 0.1 Internal Marketing Rating 4 4 3 2 Weighted 0.8 0.8 0.6 0.2 Standardization Rating 2 3 3 4 Weighted 0.4 0.6 0.6 0.4 Customer service Rating 3 2 4 2 Weighted 0.6 0.4 0.8 0.2

According the above table we select the internal marketing as the best alternative. Internal marketing considers all the aspects of Emirates issue. Internal marketing contains the greatest strength and the fewest disadvantages. If we look at the points of interest in the table, we see that Internal Marketing has the greatest weight except for the implementation cost and the service quality points. We have selected Internal Marketing because it has the greatest net advatages.

Implementation Plan:

Resources

Ghaus, M. (N.D.). Airline Industry Overview. Web. 30th Mar. 2012. Retrieved from http://shiftfiles.com/files/130349E_airline-industry-overview-21732.htm

N.D. (2012). The Airline Industry. Web. 30th Mar. 2012. Retrieved from http://shiftfiles.com/files/130348E_airlineindustry.html http://WWW.Alarabiaairlines.com http://WWW.lufthansa.com http://WWW.Etihadairlines.com Regional Airline Association > RAA- Home. Retrieved from http://www.raa.org Costello, J. (2009, October 19) airline safety and pilot training improvement act of 2009. Bartlett, et al. (2004). Transnational Management: Text, Cases, and Readings in Cross-Border Management (4th Ed.). Boston: Mc Graw Hill.

ROI. (2011). Effective Internal Marketing for Improved External Marketing. Retrieved form http://www.roi.com.au/general-marketing/effective-internal-marketing-forimproved-external-marketing/#.T39ZFez8kox. Emirates Airline web site. (2012). Retrieved from http://www.emirates.com/sa/English/about/the_emirates_story.aspx.

Wikipedia. (2011). Emirates (airline). Retrieved from http://en.wikipedia.org/wiki/Emirates_%28airline%29 Frank Mulhern, Don Schultz. (2009). Internal Marketing Best Practice Study. Northwestern University. Retrieved from http://www.incentivecentral.org/pdf/internal_marketing_best_practices_study.pdf http://www.emirates.com