SENECA COLLEGE

EMIRATES AIRLINES
Marketing and Business Strategic Analysis
John Campbell
7/20/2016

Professor Wafaei
BAB-700

 TABLE OF CONTENTS:

INTRODUCTION ………………………………. 02
MARKETING AND BUSINESS STRATEGY ……... 03
CONCLUSION …………………………………. 13
WORKS CITED………………………………... 14

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 INTRODUCTION

The airplane and communication technology developments have metaphorically shrunk the

planet enabling the creation of a globalized economy. Globalization has grown tourism and

business travel exponentially and are now prominent international industries. The growth of these

industries have taken the airline industry by storm with a projected 3.6 billion passengers expected

to travel in 2016. That is 800 million more passengers than 2011 according to the International

Air Transport Association (IATA). (International Air Travel Association, 2012) This type of

economy has created great opportunity in the airline industry and currently, one of the most

dominating enterprises is Emirates Airlines.

Emirates was established in 1985 by the United Arab Emirates (UAE) government using

$10 million (USD) in start-up capital and has since operated financially independent. Their

beginnings consisted of two mid-sized aircraft flying short routes between Dubai and middle-

eastern countries. Emirates Airlines is now a subsidiary of its parent company “Emirates Group”

which consists of the Dubai National Air Transport Association (DNATA), catering services,

aircraft maintenance, a hotel and entertainment group, and other small enterprises. (Safi, 2011)

Emirates has matured into one of the world’s largest airlines operating a fleet of 250 wide-

bodied aircraft. This consists of the Boeing 777-300ER, B747-8F, and the Airbus A380. Their

large fleet has allowed them to become the fourth largest international airline, carrying forty-seven

million passengers in 2015. (International Air Travel Association, 2012) Emirates’ has a

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monopolizing presence in the UAE and accounts for 40% of all air movements at Dubai’s

international airport. Since Dubai is a central location between the the west and eastern continents,

they maintain a geographically strategic stance relative to Europe and North America by being an

ideal half-way fuel stop between Asia and America. The airline has developed an international

reputation on the basis of their excellent customer service, loyalty, value, and luxury, and has been

awarded “Best Airline in the World” by Skytrax four times. (Skytrax, 2016) They take great pride

their attention to detail, leadership, customer service, and global competitiveness. Many

competing airlines have attempted to blockade their market capitalization due to Emirates’

polarizing effect. This research paper will analyze the efforts made by Emirates to achieve these

accolades with respect to their competitive advantages in marketing and business strategy.

MARKETING AND BUSINESS STRATEGY

Emirates operates up to 3,400 flights per week and is considered the largest airline in

Western Asia. With respect to growth, the airline is the fastest in the world and has posted average

annual net-profit progressions of 20%. (Jammoul, 2013) Emirates airlines claims their rapid

growth is mainly in the ability of their employees to understand how the cultural world is glued

together. They expand on this theory in their belief that adjusting to customer’s needs is structured

around outside factors such as global economics, trade and politics, shifting populations, diversity,

and sustainability. More simply stated; “understanding their future”. (Jammoul, 2013)

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 A case study analysis written by Abedelazes Safi, claimed that Emirates has been able to

gain a competitive position and advantage in the market place since they started in 1985. (Safi,

2011) Currently, Emirates is threating to steal the “global transport’ airline market from North

American carriers such as Air France, and KLM. (Jammoul, 2013) The advantages that make

Emirates globally competitive are the following:

1. Their central hub’s location in Dubai is an ideal half way point that connects the

western world (United States, Europe) to the eastern world (India, China, Australia)

2. Strategically avoid corporate alliances to reduce decision making delays.

3. Quick and aggressive responses to global economic market trends.

4. Constant attentiveness, and technological evolution with respect to customer

service, loyalty programs, and in-flight amenities.

5. Company image is identified by luxury, top-class customer service, efficiency, and

value.

6. Their ability to provide consistent low prices by taking advantage of the UAE’s

strong economy and low labour prices.

7. Generates internationally recognized marketing campaigns through large sports

teams, and clever adverts.

8. Overall, has a very recognizable and consistent brand image that is attractive to all

types of consumers.

These advantages have provided an unprecedented competitive edge over other large carriers in

Europe and North America. Emirates’ recent massive profits, and aggressiveness towards new

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markets has prompted airlines such Air France, to claim they are receiving unfair subsidies from

their government. Emirates’ response explained that they do not receive any subsidies and run as

an entirely separate entity from the UAE’s government – a fact confirmed by auditing and analyses

performed by various international banks. (Jammoul, 2013)

Value, is one of Emirates’ most competitive aspects. The airline in terms of value has

multiple advantages due to originating in the UAE. According to an Oxford Economics data

analysis, Emirates’ labour costs are 40% lower than competing airlines such as Air France, and

KLM, and half of American Airlines and United Airlines. (Safi, 2011) Labour can be

approximately one-quarter of overall operational costs. (Demir, 2014) Thus, cutting this cost can

have a significant impact on the airlines budgeting and cost per ticket. Figure 1 illustrates the

Figure 1: Graphical representation of an airline’s cost of operation. (Demir, 2014)

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typical cost of operation for a typical airline. Labour costs are determined on the basis of the

government and country of origin. It is understood that North America and Europe have higher

labour costs due to government standards and taxes. In contrast, the UAE does not have a

corporate tax system and only charges personal tax for incomes above $350,000 CAD. (Export

Enterprises SA, 2016) This tax system alone, lowers the cost of operation and employee living

costs significantly and as a result, Emirates can offer lower ticket costs and pay their employees

Figure 2: Labour cost comparison among European, North American and Middle Eastern Airlines. (Export
Enterprises SA, 2016)

much less than a Western company. Figure 2 illustrates the contrast of labour costs between

competing airlines. The result of Emirates’ lower labour costs is they can spend more money on

marketing and customer service upgrades which in the end, attracts more customers and increases

their overall competitive advantage.

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 Emirates has become a globally familiar brand for many reasons, however, one the most

recognizable reasons are because of their aggressive marketing campaigns throughout the sports

and entertainment world. Emirates considers themselves the most recognized airline among

sports. (Emirates Group, 2016) They are currently heavily involved with European Football

through FA Cup and eBenefica sponsorship, PGA Tour golf, Formula 1 racing, America’s Cup

sailing, horse racing, and more recently, Major League Baseball. (Emirates Group, 2016) Emirates

just signed the largest sponsorship deal in ATP Tennis history that represents brand presence

across 60 tournaments over 5 years. In short, the campaign will be in 29 countries (90% of which

Emirates has flights to) and will reach over 800 million people internationally. (Emirates Group,

2016) In comparison to other airlines, it is rare to find such global marketing campaigns and goes

to show the aggressiveness that Emirates chooses to represent. To substantiate this further, in May

this year, Emirates became the lead partner for the European FA Cup being held in 2018. This

tournament reaches football fans from 700 clubs and generates a global audience of 1.1 billion

people. (Emirates Group, 2016) Both of these recent deals demonstrate polarizing marketing

strategy and are only possible because of Emirates’ ability to continuously create massive revenues

and their independent business philosophy.

One of the main differentiating characteristics that assisted Emirates in maintaining their

commercial prominence is their stance against corporate alliances. There are currently three global

alliances known as Oneworld, SkyTeam, and Star Alliance. Combined together, they consist of

nearly all major air carriers in the industry. Emirates’ reason for avoiding alliances according to

their senior vice-president of commercial operations was; “your ability to react in the marketplace

is hindered because you need a consensus from your alliances’ partners [prior to making any big

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decisions].” (Safi, 2011) This philosophy can be broken down into the idea that Emirates believes

independence is strategic if they want to accelerate ahead of the status quo. Furthermore,

Emirates focusses their growth on surrounding consumer interest rather than decelerating

themselves by seeking permission from alliance partners. (Jammoul, 2013) One can assume that

because of this stance, Emirates strongly believes in their market capabilities and does not need

assurance from other airlines. However, Emirates does take part in code sharing agreements with

multiple airlines to better connect themselves with places they do not reach. Code sharing is a

business agreement whereby two airlines share the same flight and a customer can book through

either of the participating parties. As of 2015, Emirates codeshares with the following airlines:

Ø Air Malta Ø Korean Air

Ø Air Mauritius Ø Malaysia Airlines
Ø Alaska Airlines Ø Oman Air
Ø Bangkok Airways Ø Qantas
Ø Copa Airlines (in development) Ø S7 Airlines
Ø Flybe Ø South African Airways
Ø Japan Airlines Ø TAP Portugal
Ø JetBlue Ø Thai Airways International
Ø Jetstar Ø WestJet
Ø Jetstar Asia

A short analysis of the list of airlines reveals that Emirates does not have many agreements with

North American companies. On the basis of Emirates’ global agenda, it appears as though their

future intentions are to puncture into the American market on an independent level. These

intentions are not fully clear however, and are only a developing assumption.

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 Strategically, Emirates sees growth potential in every facet of their business plan. They

have broken things down to the basics and understand that customer satisfaction is derived from

one simple aspect: customer service. This is why Emirates continues to invest in new technologies

to ensure their customer service standard is constantly evolving. Customer service is defined as

the provision of service to customers before, during and after a purchase and its performance can

be divided into many variables. From an airline’s standpoint, customer service is based on but not

limited to:

• Customer-employee relations and treatment

• Fluidity of check-in

• Technology implementation and interaction (mobile apps, online booking)

• Cleanliness

• Loyalty programs

• Food service

• Seat comfort

• Disembarkation

• Overall atmosphere of experience

These variables can be difficult to control based on their unpredictable nature. This is why

Emirates has worked tirelessly to create strong customer service related business culture while also

actively invests in customer service technology to ensure widespread consistency.

In respect to customer service technology, Emirates has invested in “Knowledge-driven In-

flight Service (KIS) which monitors the personal qualities of passengers on board. KIS is a

technology developed by Emirates that uses server-based tablets to store passenger information.

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It actively collects data regarding passengers’ food, wine, seating preferences, and historical travel-

related issues. The data can then be analyzed to develop a strong understanding of an individual’s

travel expectations, allowing the flight cabin-crew to provide more focussed and personalized

service. (Jammoul, 2013) Chief stewardesses use KIS to anticipate the demographic of the

passengers on-board to better allocate the strengths of each cabin crew and can suggest which

passengers are most deserving of an in-flight upgrade to business or first-class seating. It also

Figure 3: Stewardess using Emirates’ KIS technology.

allows them to see who is enrolled in Emirates’ loyalty program “Skywards” and which passengers

may require extra assistance during the flight. This extra oversight during the flight, provides a

passenger with a greater sense of importance which increases loyalty and overall customer

satisfaction. It can be said that KIS, further differentiates Emirates from airlines yet to invest in

this technology creating an even stronger competitive advantage in the industry.

A less obvious contributor to Emirates’ success is their choice of aircraft for long haul

operations. Emirates currently operates nearly 250 aircraft consisting of the Boeing 777-300ER,

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747-8F, and Airbus A380 with plans to purchase 50 A350 XWBs in the next few years. They

consider the the A380 their fleet’s flagship aircraft and have entitled it the “superjumbo”. The

777-300ER and A380 from their perspective are a strong representation of Emirates’ business plan

in their ability to provide modern amenities, fuel efficiency advantages, and adaptability with the

changing market. Table 1 demonstrates the competitive efficiency of the Airbus A380 compared

to other wide-bodied aircraft. A quote directly from Emirates’ underlines this ideology:

“Emirates has ordered the A380, because we believe it represents the most efficient,

friendly environment and productive large aircraft available for our fleet growth and

replacement strategy over the next decade. It, along with our B777-300ERs, are the most

efficient aircraft in current operation on a per passenger basis”. (Jammoul, 2013)

Table 1: Economic comparison between wide-bodied aircraft.

The values shown in Table 1 demonstrates the ability of the A380 to provide more cost-effective

service for an airline with 2.6% fuel consumption per seat advantage over the 747-8i. For

Emirates, this has dropped the cost of operation significantly allowing them to allocate more

capital in marketing and customer service. These new aircraft are attractive to customers because

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they are new, efficient, and have also been luxuriously designed interiorly to provide a unique

experience for passengers. This, combined with Emirates’ excellent customer service reputation

has ranked Emirates the top airline in the world for customer service with a score of 92.3%.

(Skytrax, 2016)

SWOT ANALYSIS
Strengths
• Ideal geographical location providing a half way stop between the west and eastern
continents
• Low labour costs because of taxation rules in the UAE
• Top global brand with strong reputation in customer service and value
• Effectively manages the needs of their customer base using technology
• Highly modern and efficient aircraft fleet
• Strong corporate culture

Weaknesses
• Limited to long haul operations due to geographical distance
• Long flight times
• Labour policies in Dubai are globally scrutinized
• Rising fuel costs
• Receives uninviting welcomes from other airlines in Europe and North America
• Competes against airline alliances that may have more power

Opportunities
• Signed global marketing sponsorship with ATP Tennis
• Growing market in Asia as their middle class continues to grow
• Global tourism rates growing rapidly
• More efficient aircraft such as the A380 NEO and 777X about to be released
• Dubai becoming a more recognized tourist location

Threats
• Increasing competition in the middle east from Qatar and Saudi Arabian Airlines
• Potential uncertainty of the global economy due to tensions in the middle east

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 CONCLUSION

Emirates Airlines is currently the highest rated airline in the world by SkyTrax. The

reasons behind Emirates’ success have been defined by their competitive advantages within the

airline industry. These advantages were analyzed throughout this paper and were described as,

low labour costs, fuel-efficient and customer service tailored aircraft fleet, avoidance of corporate

alliances, aggressive sports marketing, and dedication to premier in-flight customer service. It be

said that their most prominent advantage is their lower labour costs as it allows Emirates to lower

their ticket prices, and invest more money in aircraft upgrades and marketing. The future for

Emirates is bright, as they will continue to invest in customer service technology, and upgrade

their fleet to even more fuel efficient aircraft such as the A380 NEO and 777X. They are also part

of the current middle-class development in Asia which will generate more tourism demand.

Emirates will capitalize on this opportunity as well as offer more flights to North America because

globalization continues to accelerate.

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Works Cited

Demir, R. (2014, April 2). Slide Share. Retrieved from MRO Trends Summary:
http://www.slideshare.net/reyyandemir/aviation-industry-and-mro-sector-trends

Emirates Group. (2016, June). Emirates Airlines. Retrieved from Annual Report:
http://www.theemiratesgroup.com/english/facts-figures/annual-report.aspx

Export Enterprises SA. (2016, June 1). Santrader Trade Portal. Retrieved from United Arab
Emirates: Tax System: https://en.portal.santandertrade.com/establish-overseas/united-
arab-emirates/tax-system

International Air Travel Association. (2012, Dec 06). IATA. Retrieved from Airlines to Welcome
3.6 Billion Passengers in 2016: http://www.iata.org/pressroom/pr/pages/2012-12-06-
01.aspx

Jammoul, A. (2013, December). The Strategic Diagnosis: Emirates Airlines . The Strategic
Diagnosis.

Safi, A. (2011). Analysis of Luxury Airline Emirates Airways and Competitors . Faculty of
Economics , 6.

Skytrax. (2016). World Airline Awards. Retrieved from Top 10:
http://www.worldairlineawards.com/Awards/worlds_best_airline.html

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