Table of Contents
Emirates can be regarded as one of the leading airline companies, which is headquartered in Dubai at the United Arab Emirates (UAE). The airlines came into existence in 1985 and began its operations with aircrafts that were manufactured by Boeing and Airbus. At present, the airline is observed to operate internationally in more than 80 nations and comprises over 1500 aircrafts. The reason behind such wide range of operations of Emirates is excessive focus of the management over quality rather than quantity. It highlights that the airline stresses on enhancing the quality of hospitality and simultaneously incorporates modern flights that can provide more smooth and sensible sense of journey to the patrons. The leading position of Emirates in the global airline market is depicted from the fact that in 2016, it was accoladed with the honour of best aviation service provider globally. As a result of this, the value of Emirates brand plunged and accounted for US$7.7 billion in 2016 (The Emirates Group, n.d.).
The growth of the Emirates group can be partially owed to dnata. Dnata is a leading UAE based organisation that provides services such as flight catering and ground cargo handling. It is infact a subsidiary unit of the Emirates group. Emirates group have paved its way of development with growth in the tourism industry in Dubai. For example, Emirates have contributed significantly for the movement of tourists among Dubai and other parts of the globe such as the United States of America (USA), Asia, Europe and destinations of the Middle East (The Emirates Group, 2017).
Business strategies of Emirates are focused on providing non-stop aviation services to various nations and cities of the global market. The study, thus concentrates on exploring the strategies which are adopted by Emirates for creating a base in the tourist hubs of the world. Strategic alliances constitute to be one of the major arenas of the business goals that are useful during expansion. Pertaining to Emirates, it is observed that strategic alliances with Qantas have enabled the company to increase the influx of Australians into Dubai. Similarly, alliance of the airline with JetBlue had ushered its entry at a large scale in the markets of the USA. The massive strategies of global based expansion are clearly highlighted from the fact the airline is planning to board 70 million patrons by the year 2020. Additionally, the group is also observed to adapt its global expansion strategy despite the presence of challenges such as health problems in Africa, rise in oil prices and instability in the international political affairs. Thus, the research outlays the strategies used by Emirates to instill international market base by overcoming the challenges (Tadors, n.d.). Well-defined recommendations have been useful to obtain deeper insights regarding the expansion strategies, which can be adopted by Emirates.
In the year 2009, the airline industry at a global level faced disastrous circumstances that led the company to lose the $9.4 billion. The growing price of oil along with the global financial crisis, fierce cutting of the price, falling revenues and low confidence of the consumers led the airline industry to be on the verge of getting bankrupt. In this context, it was evident that Emirates also had to face the same problems but was performing well enough as compared to its competitors. Emirates on 31st March, 2010 carried 27.5 million patrons, which indicated a large hike in comparison with the previous years. The rise accounted for 4.7 million. IN addition, the airline company also carried 1.6 million tons worth of cargo, which depicted an increased in the overall volume by 12.2%. The company publicly announced that it earned a net profit amounting for $964 million with the support of leveraging along with brand equity over the year of its operations. The company in the year 2011 had over 5.5 million loyal customers under the flyer programme. With the fleet expansion programmes, Emirates continues to purchase new aircrafts, expand its overall networks and invest in enhancing the brand. Located in Dubai, Emirates is considered as the fastest and largest growing airline within the entire Middle-East (Nataraja & bia, and Abdulrahman, 2011).
The Emergence of Emirates
Emirates have been one of the leading airline companies that base its aviation business all over the world. Its origin can be traced back to 1985, when the airline started its flight services by taking an Airbus and Boeing at lease. Moreover, the ground cargo handling service of Emirates –dnata was formed in 1959. Emirates in the international market operated its business from the year 1989, when the airlines added its operations in Asian regions such as Manila, Bangkok and Singapore. Thereafter, in 1988 the airline entered into the capital city of Syria-Damascus. For this reason, Emirates was able to operate in 12 areas after its inception. In the following years, it was observed that the airline expanded in the regions such as Maldives, Frankfurt, Istanbul and London. Emirates also designed the Airbus A310-304 to its specifications in 1987 that made it possible to offer exclusive experience of flight to the passengers. Such massive trends in international expansion also began in 1990, wherein Emirates entered into the market of Manchester (The Emirates Group, n.d.).
The year 1991 can be considered to be a major period pertaining to international expansion, as Emirates was able to accommodate 25,000 passengers on a weekly basis. In the same year, Emirates was also able to occupy its position in the leading airport of the world-Heathrow (In London). Thereafter, it was possible for the airlines to enter into the market of Paris by taking permission of the French government. For providing exclusive experience, the airlines resorted to install video surveillance within its flight. In the late 1990s, Emirates was observed to occupy stake in AirLanka as a part of its expansion in Sri Lanka. In 2000, it was evident that Emirates launched the frequent flyer program. It refers to the initiatives taken by the airline to offer discounts to its customers on the basis of distance travelled. Proceeding in this manner, it is also found that the A380 flights of Emirates landed entered New York. In the year 2008, dnata entered into collaboration with other logistics organisations, so that it would be possible for the company to expand the cargo handling services. Additionally, Emirate also started flight services in the regions such as Cape Town, San Francisco and Los Angeles. The huge market base of Emirates made it earn a profit of US$1.1billion during the year 2010 (The Emirates Group, n.d.).
In the following period, regions such as Munich, Baghdad, Shanghai, Rome and Johannesburg were also added to the A-380 network of Emirates. Owing to its huge operations of in the global market, it was accoladed with the brand of most valuable airline in 2014. As on 2016, the airlines were observed to have increased its brand value by 17%, which accounted about US$7.7 billion. The new networks that were added to Emirates in 2016 included Yinchuan, Hanoi, Yangon, Cebu, Zhengzhou and Clark. As on 2016, it was observed that the airlines took initiatives to securely transport pharmaceuticals, which was followed by the inauguration of the SkyPharma facility at the international airport that was located in Dubai (The Emirates Group, n.d.).
Emirates Airline, at present, is identified as one of the most premium international airlines in the world. In the year 2012, Emirates became the fourth largest airline in terms of revenues passenger kilometres (RPKs). Considering the present fleet orders and growth rate of the passengers, it was estimated that Emirates would surpass the top three airline services including Delta, United and the American in the upcoming 10 years. With operating in more than 60 countries and 130 destinations, Emirates offered services for over 1000 flights on a weekly basis. Some of the major alliance partners at the times were not at all overture, which resulted the company to rule out a any further bid for joining agreements (Al-Sayeh, 2014). Emirates has grown significantly ever since its emergence in the airline industry. At present, Emirates is highly known for their modern fleet along with luxurious designs within the premium cabin, spas and beautiful lounges. In the year 2015, Emirates fleet comprised 235 aircrafts, which included 221 passenger aircrafts, in addition to 14 cargo carriers. This also counts 145 Boeing 777, 62 Airbus 380, 5 Airbus 340, 2 Boeing 747 and 21 Airbus 330 (Mantur, 2015).
Only after three decades in the airline business, the company has only suffered losses in the two financial years. Therefore, it is essential to seek how Emirates will position itself in the world. Based on the data provided by World Air Traffic Statistics (WATS) in its 58th edition, the company was only behind Rayanair, EasyJet and Lufthansa with respect to the number of passengers it carries. The company in the year 2015 only faced competition from Delta, United and American, as published in the report. In terms of the brand value, Emirate Airlines accounted for US$6,640 million in the year 2015. In the same year, the company became the most valued airline brand in the world and at present, it is included under top 200 ranking valuable brands in considering all the industries. Currently, it is positioned at 196th rank, which depicted as a hike of 38 spots just in one year (Mantur, 2015).
The Emirates system is divide into three categories, which includes owned, earned paid. In this context, the owned is often considered as the tools that belong to the company. This mostly includes skyward frequent flyer programme, which is used for sending monthly newsletter along with reminder e-mails and helps in promoting partnerships. This further involves the use of the social networking sites and mobile applications. One of the Emirates owned system is called ICE, which an award is winning systems. These factors play a significant role in expanding its business all over the world.
The company also offers check-in-counter, chauffer drives and lounges for the customers. On the other hand, the earned tools are used for promoting Emirates airline with the support of the social media platforms. The company has more than 4 million followers in Facebook. It has been evident that a well managed social sites assists in providing low cost along with excellent promotion (Mantur, 2015).
International expansion strategy of Emirates at the Continent of America
At present, Emirates has well established itself in the airlines industry. The company has been able to operate in 41 countries, with 9000 employees approximately and with a fleet of 44 aircrafts. In the year 2002, Emirate declared an overall profit of US$110 million in the first half of that particular period. The opening revenue increased by 27% in accounting for about US$1.2 billion over the same period. The cash reserves of the company as on 30th September 2002 also increased and accounted for the US$1.1 billion, which was higher as compared to the previous year, which earned US$763 million. This was considered a great achievement for the company as on September 11, 2002. At the time, Emirates faced the problem of traffic collapse, which led the company to suffer from the viewpoint that Dubai was close to Afghanistan for guaranteeing flight safety. The company recovered quickly. Although , ironically considering its expansion plans, one of the reasons for Emirates to recover on short time period was the fact that it did not had any significant exposure to the markets of North America (Aviation Strategy Ltd, 2017).
Emirates is observed to expand its operations in the market of the USA prior to 2000. It has focused relentlessly on expanding its business in the. As on 2013, the airline planned to expand its operations in 15 cities of the US from the existing seven destinations. The strategic decision of Emirates is focused on adding new and modernised versions of Boeing and Airbus for offering better luxury to the customers (Reuters, 2014). In this manner, the airlines is planning to make the US market as one of the major source of revenue generator. Emirates Group was observed to earn 7% of its revenue from markets of the USA as on 2014. It is clearly evident that A380 and Boeing 777 jetliners have been highly useful in such international expansion of the airlines (The National, 2014).
The strategies of Emirates in the USA and Southern America are observed to be both collaborative and direct investment by nature. Direct investment is supposed to take place in the areas, where Emirates incurred expenditure for expanding its business. The investments made by the airline to upgrade the quality of the airlines can be regarded as direct investment. For enhancing the hospitality to the patrons, the airline made investments in the airports of the USA. Moreover, alliances and acquisitions can be considered as some of the most significant initiatives, which have been adapted by Emirates to expand its aviation services in the USA. It acquired the outsourcing organisation Ground Services International, which focused on providing cargo carrier services across the USA. As a result of it, Emirates was able to provide services to 18 new airports in the USA. Moreover, Emirates also took stake in another cargo handling group of the country known as GTA Aviation. This also indicates that Emirates have been able to successfully manage its supply chain operations in the global market. During the financial year 2016-17, Emirates was able to take hold of the cargo movement in the Toronto Pearson International Airport. The period also marked addition of Rio de Janeiro and Sao Paulo airports to the existing operations of Emirates in Brazil. Such acquisition led the airline to operate in 26 airports of Southern America by 2016-17. It was observed that in 2016-17, there was a rise of 3.3% in revenue earnings of Emirates in the American market accounting for $12.4 billion (The Emirates Group, 2017).
The ground handling services of dnata are available in 25 airports of the USA. Modern A380 airline was also deployed in the Latin and North American nations during 2016-17. Emirates have also made alliance with a major airline in the USA-JetBlue, as a part of its expansion strategy. This can be regarded as a collaborative strategy, as it focuses on increasing the degree of hospitality on behalf of Emirates and USA-JetBlue. The two airlines have jointly launched a frequent flyer program, so that the passengers can get discounts on the basis of the distance that has been travelled (The Emirates Group, 2017; JetBlue Airways, 2017). Emirates is also planning to make alliances with airlines such as Qantas and LAN to get a better hold of the aviation markets pertaining to the continent of America (The Conversation Media Group Ltd, 2017). There is no such trace of import or export as adopted by Emirates for expanding into the American continent. This is due to the fact that in case of airlines business, there is absence of movement of products and services, as it has been evident for the dealing with goods.
Although, the US drives only 7% of the total Emirates’ sales, the region is considered significantly essential for growing its business. The partnership with the American Airlines has not materialised, even after the interests of America. On a similar note, in relationship with Qantas airlines, Emirate focuses on accessing the American customers, which also includes the largest frequent flyer programme in the world (CAPA, 2016).
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International Expansion Strategy of Emirates at Asia
Emirates has also been observed to expand its market operations in the Asian markets. Strategic alliances and acquisitions are evitable even in the aviation markets of Asia. For instance, in the Singapore markets, Emirates has entered into alliance with airlines such Cathay Pacific, Etihad, AirAsia, Firefly, Qatar Airways and Hong Kong Airlines. Such alliances have enabled the airline to effectively manage the ground handling tasks such as movement of carriages, ensuring proper availability of emergency vans and security checkups. It depicts that collaborative alliance is also evitable pertaining to expansion strategies that have been adopted by Emirates. The longue, which is run by dnata in Changi Airport at Singapore, enables several other airlines to manage above 350,000 patrons on an annual basis. Such massive expansion strategies have enabled Emirates to have increment in revenue earnings from the aviation market in Asia. On the contrary, this can be regarded as an example of direct investment, as it involves incurring expenses through cargo handling wing of Emirates dnata (The Emirates Group, 2017).
Even in the Asian markets, success of Emirates is evitable due to deployment of modern A380 airlines. As on June 2016, the airlines started a cargo service between Hong Kong and Delhi that enabled massive movement of goods between the cargo hubs. During the same period, freight services were further introduced between Oslo (Norway) and Dubai, which supported the movement of above 100 tonnes of cargo between the two regions (The Emirates Group, 2017). The airline has undertaken significant initiatives to penetrate into the market of China. To strengthen its airlines services, it has been planned that A380b planes will be deployed on the route, which will help in moving large number of passengers. The total seat capacity of the airlines is supposed to be 519, which is more as compared that of Boeing 777 (Sahoo, 2017). In the same manner, Emirates has also focused on increasing its services in Russia. It has therefore concentrated on enhancing the number of total flights and seat capacity, so that large number of patrons can be moved between Moscow and Dubai (The Nation, 2017).
At present, the airline has planned to partner with Qantas Airways for expanding its operations in the markets of Asia. Strategic alliances are also evitable between Emirates and Malaysian airlines. It is expected that such strategies of international expansion will enable the company to provide service to higher number of patrons. Such alliances will enable Emirates to connect passengers between Middle East and Asia (Malaysia Airlines Berhad, n.d.). Emirates further expanded its operations in Asian nations such as Sri Lanka, Pakistan, Bangladesh and Maldives (The Emirates Group, 2017).
With respect to expanding its business in the Asian region, Emirates has focuses focused on India, as it is one of the key emerging economies in Asia. The company has therefore concentrated on using of the A380s and small sized 777-300. Between the years 2015 and 2016, the India had the largest capacity, which was followed by the United Kingdom, the USA and Australia (CAPA, 2016).
International Expansion Strategy of Emirates at Africa
The airline is observed to undertake strategies for expanding its aviation business in the African countries. It has entered into partnership with ASKY Airlines, which is operated by the African government. Such alliances are depicted to improve connectivity among the nations of Western Africa and Dubai. Other than movement of passengers, the flight service of Emirates has enabled movement of cargo since 2011, in regions including Johannesburg. Such initiatives and exclusive freight services provided by Emirates have supported it to achieve honouring awards. Apart from airline service, the expansions strategy of Emirates also includes organizing sports, so that people become aware of the existing services. With the help of celebrity endorsements, Emirates has been able to successfully attract more number of customers pertaining to the creation of brand image (The Emirates Group, 2017).
The football matches are organized by Emirates in nations such as Kenya and Ghana. The massive operation of the Emirates Group in Africa is depicted from the fact that in the year 2014-15, around 13,000 individuals were employed at Emirates-Africa (The Emirates Group, 2017). Emirates also has a significant presence in African nations such as Arusha, Dar Es Salaam, Addis Ababa and Zanzibar (The Emirates Group, 2017).
The expansion strategy of the airlines is observed to include 10 additional routes to Africa by the end of year 2025. It will involve inclusion of aircrafts, which are able to carry more passengers and freight than the existing ones. The airline service is primarily intended to supply cargo and freights to the oil and gas reserves that are present in the African nations (Yousef, 2014; African Business Central, 2017). There are glimpses, which highlights the partnership of Emirates with South African Airways for expanding its operations in the continent. As a part of its strategic expansion, Emirates have entered into partnership with TAAG. TAAG is infact an airline business that is managed by the government of Angola. The alliance has enabled higher movement of freight and goods between Angola and Dubai. Partnership between TAAG and Emirates is expected to train crew members in the area for providing better hospitality and simultaneously provide regular flyer program schemes. As a part of its expansion strategy, it was observed that in the year 2013/14, Emirates operated its business in the region of Luanda in Africa (CAPA, 2016; CAPA, 2014).
International Expansion Strategy of Emirates in Australia
Since, the introduction of services to the country of Australia in the year 1996, Emirates has carried over 24.3 million customers through Australian flights increasing the countries yearly export earnings by AUD$30 billion from tourism. Therefore, in the year 2014/15, the airline carried for more than 3.26 million passengers, which had an average seat factor of 80%. This is the highest among any carriers, which is operating in the Australian market. The strong passenger carriage was significantly replicate in cargo with the overall carrier of 111,120 tonnes worth of high value cargo. Emirates is considered to be the largest foreign carrier that is operating in Australia. Emirates has increasingly up-gauged direct services to Melbourne, Sydney and Brisbane. In addition, Emirates is also considered as the largest carrier of cargo in Australia with the market share of 11.6. Emirates has significantly become a part of the Australian community. Emirates in the country have sponsored various community groups along with different event. The partnership with Qantas aviation focuses on providing customers with flawless global as well as Australian network and flyer benefits. This has significantly increased the competition in the aviation markets of Australia (Emirates, 2015).
Emirates have taken numerous initiatives to expand its business operations in the aviation market of Australia. The company has significantly focused on the movement of cargoes in the most effective manner in the Australian market. On February, 2017 the dnata started its new cargo terminal service at Aldelaide. Outstandingly, the airlines provide services of catering to other airlines that operate within Australia. In case of Australia, it has been observed that organic expansion strategies are responsible for growing its operations in the Australian markets. It involves expanding into new market areas without the need of mergers and acquisitions. Rather than acquiring new cargo service provider, Emirates resorted to built new terminals in Australia as a part of its expansion strategy in 2016-17. It enables Emirates to handle large number of customers and freights in Australia without the need of depending on some other cargo service providers. Similarly organic growth has also been evitable in catering services of Australia (The Emirates Group, 2017). During the year 2016-17, the airlines have opened new kitchens at the areas of Cairns, Canberra and Melbourne. This has enabled to provide fooding services to large number of airlines. The catering along with food and beverages has enabled Emirates to gain large popularity and goodwill to the airlines. Pertaining to Cairns, the total number of kitchens that were operated by Emirates was 11 (The Emirates Group, 2017).
The expansion of Emirates into the market of Australia is due to the fact that it has partnered with Qantas. It indicates that there is also a prevalence of inorganic growth pertaining to the strategies of expansion which are adopted by Emirates for entering in Australian aviation market. Strategic alliances often enable the airline companies to share the overall costs that have been borne for mitigating the risks in the Australian market. As a part of the partnership, Emirates has planned to operate in the secondary cities of Australia. Moreover, the major destinations, where Emirates is supposed to fly in Australia include Brisbane, Sydney, Adelaide, Perth and Melbourne (Reuters, 2015). Emirates have also planned to expand its market in the region of Auckland. As on 2015, the total number of weekly scheduled flights between Dubai and Australia was 28. It represents about the significant initiatives were taken by the airline to expand its business into the Australian market (Chong, 2016).
International Expansion Strategy of Emirates in Europe
Europe has been one of the major sources for Emirates to operate its international business. The services of A380 can be regarded as a major initiative for expanding aviation services in the European regions such as Prague. These facilities are supposed to raise the comfort of the passengers, as A380 aircrafts are better known for the wide range of facilities, which are available in comparison with Boeing. The airline has entered into an alliance with railway authorities of France, so that it is possible to quickly transport the passengers in fastest way to the airport. The contract has been signed with Train à Grande Vitesse (TGV), which can be regarded as one of the fastest rail network in France (The Emirates Group, 2017).
Partnership with some of the major clubs in Europe can also be regarded as a strategy for expansion that has been adopted by Emirates. For example, in the year 2015, the airlines made contracts with Benfica, Real Madrid, Arsenal, AC Milan, Holden Special Vehicles (HSV) and Paris Saint Germain, so that it is possible to easily move the players in and out of Europe. Such contracts are economically beneficial for Emirates, as more than 2,000 flights of Emirates have transported players from the clubs to other parts of the world. The airlines have been offering cargo handling services in Europe as part of its international expansion strategy (The Emirates Group, 2017). Even in Europe, the airline company has entered into strategic alliance with other airlines. As on 2012, the airline also has entered into joint venture with Qantas for the upcoming 10 years. It is therefore supposed to raise the flow of passengers between Dubai and Europe. Additionally, the costs of transportation got shared between the two airlines i.e. Emirates and Qantas. As a part of the joint venture, Qantas was supposed to provide A380 services between London and Frankfurt, via Dubai. In order to attract more number of customers, the two airlines have entered in providing frequent flyer program. This has enabled customers to get discounts on the basis of the distance that has been travelled pertaining to the European skies (The Conversation Media Group Ltd., 2012).
Emirates’ intends to expand its operations in Germany at a large scale. It involves daily air services to destinations such as of Franfurt, Munich, Hamburg to Dubai. Emirates have introduced A380 in the route, as it is more luxurious and have greater seat capacity as compared to Boeing jets (The National, 2014a). The expansion strategy of Emirates in Europe is observed to be based on providing dual benefit. This is because the strategies of expansion are focused on entering into the aviation market of the American continent. Under the Open Skies agreement, signed between Europe and the USA focused on increasing the scheduled flights between the two regions. Emirates have taken this opportunity to establish its base in Europe to increase the flow of passengers to North as well as South America. As a part of its expansion strategy, Emirates have launched its services between New York and Milan (France) during 2013 (Reuters, 2015a).
Challenges in International Expansion and its Remedies
Though, the airline has undertaken significant initiatives for expanding into the international markets, there have been certain issues that Emirates has to confront with. For example, instable political climate, health issues in African nations and fluctuations in the prices of oil are some of the basic parameters that have led to the airline to face challenges within its operations. On 2015, the airlines faced losses due to fall in the value of dollar. It indicates that rising value of the dollar increased the overall operating expenses of the airlines, especially in the international markets such as the USA and Europe. In the same manner, it is observed that the war in the Middle East nations such as Libya, Syria and Yemen was also a reason for growing challenges of the company. Such instances have reduced the capacity of the airline to continue its operations in the most effective manner. It is further depicted to cause shrinkage in the revenue earnings of Emirates (Tadors, n.d.; Dudley, 2016).
Political issues such as Brexit, is observed to create and impact the operations of Emirates Airline. It is primarily due to the decision taken by Britain to withdraw from the European Union. This was therefore supposed to retard the flow of passengers between the European nations and the United Kingdom. As a result of lower demand, it is almost difficult for the Dubai based airline to operate successfully in the European market, as there are low chances of covering the operating costs. The Chairman of Emirates has been primarily concerned, as it has not been possible to determine the time that will be involved in resolving this particular issue (Reuters, 2016). Brexit is also depicted to worsen the business conditions of Emirates due to fall in the number of passengers between the United Kingdom and Dubai. This is mostly due to the fall in the value of British sterling, as it would lower the purchasing power of the UK citizens. The fall of business activities in the UK is observed to lower down the flow of cargo among the UK and other regions of the global market (Gazzar, 2016).
The fall in the international price of oil is also responsible for creating adverse effect on Emirates, as it led to fall in the ticket prices of the flights. This is responsible for lowering the profit margin that pertains in the aviation industry. As a result of this, Emirates was only able to generate less earnings in the year2015, for the purpose of international expansion (Kane, 2015). In addition, Emirates also faced the issue of lower economic conditions in the African nations, especially due to fall in oil prices. In certain destinations such as Lagos and Abuja, Emirates significantly face the problem related to its earning after fall in the prices of oil (Dzimwasha, 2016).
As already depicted, the business strategies of Emirates are focused on making constant innovations, so that it is possible to give the customers a delightful experience. On 2016, the company restructured its aircrafts by adding more than 30 aircrafts and excluded 25 aeroplanes from the service. The fall in the price of oil lowered down the value of currency in certain African nations. Such devaluations reduced the purchasing power of individuals to afford flights for international travel (Dzimwasha, 2016; Al Nisr Publishing LLC, 2017).
Emirates has been managing the business in a well defined manner by using modern A380 airbus for its service. However, the rise in price level of goods and services in Dubai have made it difficult for the airlines to cope up with the problem of managing growing operating costs. The issue is coupled with increase in the level of competition from other international airlines such as Etihad, Turkish Airways and Qatar Airways. Additionally, the growing era of protectionism can be regarded as another hurdle for Emirates. Though, USA has signed the contract of Open Skies Agreement with Emirates, the airline company at present have taken initiatives to prevent losses of the domestic airlines due to international competition. Such initiatives have reduced the ability of Emirates to penetrate into the American market. Such factors have slumped down the customer base, as compared to earlier times, before Emirates entered in the global markets. It is depicted that fall in the customer base made the supplier of aircrafts- Airbus to reduce overall manufacturing of the planes and airbuses. This was viewed to create another problem before Emirates (Gazzar, 2016).
The pandemic health issues in Africa have led to a significant shrinkage in the inter-continental flights. For instance, during the breakout of Ebola in 2014, the West African government restricted the movement of international flights in and outside Africa. This is because regular movement of flights is depicted to increase the spread of pandemic diseases to other areas. Such situations are depicted to reduce the international flight services of Emirates in the other regions (Tadors, n.d.; Omoleke, Mohammed & Saidu, 2016). Strong value of the US currency as against Dubai was also a challenge for Emirates (The Emirates Group, 2017).
Emirates is observed to attempt to mitigate the threats that exists in the external environment. The fall in the international oil prices have reduced prices of tickets, but has enabled to increase the demand of flights. Moreover, the fall in the prices of tickets have been done in a manner, so that minimum level of profit is maintained (Reuters, 2015). To deal up with the issue of rising competition, Emirates has resorted to offer exclusive services to passengers. The A380 flights have been highly luxurious, which focus on providing good quality food (Gorenstein, 2016). The fair strategies of competition are depicted from engagement of the airline to agree on alliance with Qantas Airways. This has enabled the airlines to easily get hold of sufficient number of passengers between Europe and Australia from Dubai (Leo, 2017). In the same manner, the strategic alliances of Emirates are evitable in the USA, Asian, Australian and the European markets. The management has decided to offer frequent flyer programs jointly with these airlines (The Emirates Group, 2017). Though, in the initial phase, the West African governments restricted the movement of international flights, but later on such decision was withdrawn, as it hampered the trade relations among the regions. Such initiatives are depicted to resolve the issue, which was faced by Emirates due to outbreak of pandemic diseases in Western Africa (CountryPortal, 2014). Apart from the West African government, the management of Emirates was observed to halt the number of scheduled flights during the outbreak of Ebola in 2014. It was mostly to reduce the chances of the passengers getting infected due to the pandemic diseases that prevailed in Africa (Kitching, 2014).
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Implications of International Expansion and Recommendations
The strategies of expansion, which have been followed by Emirates created significant impact on its financial status. During the year 2016-17, the airline was observed to make an investment of AED 13.7 million as part of its expansion strategy. The investments were particularly made for purchasing modern and luxorious aircrafts, entering into strategic alliances and upgrading the existing service quality. Though, such initiatives led to the rise in revenue earnings as compared to 2015-16, but was also observed fall in the profit level during the year. It was primarily due to rise in operating expenses and costs of fuel (The Emirates Group, 2017).
The European market has been one of the major contributors of revenue of Emirates. As on 2016-17, the total revenue from European market accounted for AED 23.9 billion. The markets of Australasia and Eastern Asia contributed 27% of the total revenue that was earned during the year 2016-17. In figures, the total revenue earnings of Emirates from the region stood at AED 22.6billion. The aviation market of America is observed to contribute at large scale for revenue by having the maximum growth rate in earnings during 2016-17 as compared to 2015-16. On the contrary, revenue earnings fell including regions such as Indian Ocean and African markets. On an overall basis, the airlines has been observed to increase the total number of passengers during 2016-17, but it was offset due to slump in the oil prices that caused fall in the prices of tickets (The Emirates Group, 2017).
Other than passenger transport, the strategies of expansion also created impact on cargo division of Emirates. As compared to 2015-16, it was observed that revenue earnings of Emirates reduced by 5% in 2016-17. This was primarily caused due to fall in the exchange rate as compared to dollar rate. Thus, fall in the oil prices lead to lower the freight charges. Emirates observed such shrink in the revenue earnings despite of rise in the areas of cargo destinations including Cambodia and Phnom Penh. Revenue earnings are observed to obtain a momentum from the food and beverages services that were offered by Emirates. The total earnings from hotel operations are observed to be increase accounting for to AED738 million that is observed to be a 5% rise as compared to 2015-16. Emirates has observed to have increase in the operating costs due to rise in the expenses caused on leasing of aircrafts. On 2016-17, Emirates additionally took 23 aircrafts on lease, which raised the charges by AED 2.4 billion on 2016-17, as compared to 2015-16. In the same manner, there was rise in the costs of depreciation due to purchase of 12 new planes for gaining dominant position in the international market. The costs of promotion dropped in the given year due to online advertising expenses on two key campaigns namely, “Spin the Globe” and “Be There” (The Emirates Group, 2017).
The expansion strategies of Emirates were observed to be successful due to wide range of employees. As on 2016-17, the total workforce of Emirates accounted for 105,000. The company focuses on recruiting the best talents from the global markets on an online basis. Emirates had resorted to undertake excellent training programs for increasing leadership and competency. This can be regarded as a way of managing the human resources in the global market. As on 2016-17, Emirates has been observed to devote more than 4,000 days for providing effective training to its employees. Apart from the need of educating the employees about technical aspects of flight maintenance, the training programs were also focused on making them aware about the regulatory norms. The international strategies of human resource management are observed to be intended on promoting the spirit of leadership among the employees of Emirates. As an initiative to train employees on an online basis, Emirates offered virtual programs of learning to above 47,000 managers and workers. To train its pilots, Emirates have entered into alliance with Boeing. The pilots are observed to receive training from the Emirates Flight Training Academy (EFTA), which helps in them in being aware of the processes used for operating flights and the software requirement. The total number of employees, who are depicted to receive training during 2016-17 was recorded to be over 3,500. Additionally, the airline is also observed to run the Emirates Aviation University, so that has received huge accolades and accreditation (The Emirates Group, 2017).
The international strategies of workforce management at Emirates are also focused on making the employees aware of the sustainable methods. For example, training programs are intended on creating awareness regarding the need of using fleets that causes minimal air and sound pollution. The training programs also create awareness on the need of minimizing harm to the wildlife (The Emirates Group, 2017).
The airlines had resorted to effectively manage the international expansion strategy in the most effective manner. However, the airlines have been unable to meet up with the issues of falling oil prices. It led the airlines to face considerable loss in the cargo and passenger services. For the future course of actions, it is apt for the airlines to halt operations at times of economic uncertainty. This is because it is rational not to incur losses due to rising costs. Outsourcing seems to be another way that can be adopted by the airlines to get rid of the market uncertainties. Rather than operating in areas of cargo handling, the contract can be given to a third party. The contract and outsourced agent can be improved based on the performances of the company.
The benefits of outsourcing in case of Emirates are depicted to provide competitive advantage. This is because the airlines will be able to increase its customer base along with its market share. As the airline market is growing more competitive on a daily basis, so it is important for Emirates to have a first mover advantage. This can be done by entering into alliances and penetrating the uncovered markets at the earliest. The expansion strategies must however be sustainable, so that harm to the society and environment can be minimised. This can be done by introducing aircrafts, which consume less fuel and emits minimal amount of carbon dioxide. The expansion of the Emirates Airline business all around the world will enable the company to attain significant competitive advantage. The benefit of this would lead the Emirate airlines to gain large number of the customer all over the globe, which can help in global domination within the airline industry in the upcoming future. In addition, the expansion strategy will also help in increasing the revenue as well as the profit level of the company. The company therefore needs to ensure the smooth flow of the entire business operations, so that the customers are treated in a proper manner. The company can also focuses on providing safe and comfortable environment for attracting large number of customers, which will ultimately help in achieving success. Thus, the penetrating into the foreign market will not only assist in increasing the revenues but can also help Emirates for improving their market share within the airline industry.
The sustainable expansion strategy, which can be followed by Emirates is aligned with organisation culture of the airlines. This is because there has been continuous focus by the airlines on the aspect of social responsibility. Emirates corporate culture values on the use of fleets that are eco-friendly in nature. Eco-friendly initiatives have been taken by Emirates in both the domestic market as well as international regions such as Australia (The Emirates Group, n.d.a).
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The Dubai based airline- Emirates, is observed to commence its aviation service since 1985. Boeing and Airbus are the main aircrafts that are operated by Emirates. The intense focus on quality and hospitality can be regarded as the reason that has led to massive growth of the airlines in the international market. It operates in over 80 nations and provides both services of passenger as well as cargo movement. Dnata is the cargo handling division of the airlines that operates at international level. Strategic alliance with other airline seems to be an effective way for the airlines to expand in the international market. Such alliances are present in the markets of America, Europe, Asia, Africa and Australasia. The airline is observed to offer frequent flyer programs to its customers in association with other airlines. It enables the passengers to earn discounts on the basis of distance travelled. The airline is observed to face challenges due to various aspects such as fall in oil prices, Ebola breakout in Africa and war in the Middle East. To cope up with the issue of Ebola, Emirates was observed to cancel the flights between Africa and Dubai during the breakout of the pandemic epidemic. It is suggested that Emirates must adopt outsourcing strategies for its cargo services, so that the costs of operations can be reduced.
Pertaining to the market of the USA and the continent of America, it is observed that Emirates had primarily used new and modern aircrafts manufactured by Boeing and Airbus to provide a luxurious experience to the passengers. Investments have been made by Emirates in the airports of America for ensuring easily handling of large number of patrons as well as cargo. Emirates acquired the cargo handling organisation Ground Services International to expand its operations in 18 airports, which are located in the USA. Alliances in America enabled Emirates to successfully handle large number of cargoes at some of the busiest airports. Entering into the markets of South America such as Brazil has assisted the airline to have increment in its revenue earning. Strategic alliance with airlines such as Etihad, Cathay Pacific, AirAsia, Qatar Airways, Firefly, and Hong Kong Airlines are the standing causes, which assisted Emirates to successfully enter into the market of Asia. The expansion strategies in Asia were mostly focused on offering flight services with aircrafts of Airbus.
In case of Africa, the airline focused on adding the number of routes for increasing the number of flights between the Africa and Dubai. Pertaining to the market of Australia, Emirates provides services of catering other than cargo handling and services to the patrons. The exclusive services of catering provided to the airlines have increased the popularity of Emirates. In case of Europe, Emirates is observed to enter into partnership with football clubs so that it is possible to take contracts of moving players during international games. Moreover, Emirates have entered into contract with railway authority in France, which is useful in fast movement of the passengers in the airports. Based on the study findings, it can be stated that Emirates is regarded as the fastest growing Gulf airline. Emirates was reported to have an increase of 43% in terms of its annual profits in the year 2014. This was possible due to the international expansion of its business operations with the support of the newly purchased jets that helped in moving millions of customers through the Dubai hub. The net profit of the company also increased to 303 billion dirhams from 2.3 billion as compared to the previous year of 2013. The company has been able to successfully manage all its business operations. It can further be state that Emirates also has large number of profitable routes within the continent of Europe, which can assist in subsidizing the route (Clark, 2014). The airline business of Emirates is considered as the most important component of the Emirates Groups, which also comprises the Dnata air services firm. The profit of the Group accounted for $364 million for the period of six month in the year 2016. In addition, it also depicted as sharp drop of 64% in the previous year, while the revenue of the Emirate Group just increased by 1% accounting for $12.7 billion (Dudley, 2016).
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