Emirates Airline Business

1.1: Emirates Airline Business

(Airlines) Emirates Airlines founded in 1985 is one of the largest global airline serving 156 airports in 82 countries from its hub Dubai, United Arab Emirates. They are operating the world’s largest fleets of Airbus A380 and Boeing 777 aircraft, their main activity is the provision of commercial air transport services. The Emirates Airline is a subsidiary of the parent company Emirates group, which is a completely owned by government of Dubai’s investment Corporation; operating over 3600 flights per week from its hub. They have been rising in terms of their growth and Innovation, making a significant milestone amongst its fleet, network, and product innovation initiatives, cementing its position as a market leader and a trendsetter along with positioning themselves as one of the most premium airline experience. In addition, they have Cargo activities undertaken by the SkyCargo, they also have frequent flyer program under Skywards and subsidiaries such as Emirates holidays, Emirates tours, Arabian Adventures, etc. (Airlines) FlyDubai is a low cost carrier founded by the chairman of Emirates in 2008 having some cooperation with Emirates.

(Dnata Group) Dnata is a leading provider of air and travel services offering ground handling, cargo, travel, and flight catering services across continents. It is one of the largest travel management services company in UAE. (Dnata Group) Emirates and Dnata are under common management wherein Emirates has a vertical integration approach and Dnata focuses on Horizontal expansion. The fact that they are also into retail and the contacts that they have established and the investments that they have made into this segment they are able to serve the right things in their aircraft.

2.1: Driving Forces

(Emirates Group, 2017) The future of what’s going to actually impact them, things like Hyperloop and supersonic aircrafts where in Supersonic are going to bring back the segment that actually died a while back, the fact that commercial airline industry is going behind chartered industry very aggressively for example: (Singapore)Singapore airline suite that’s where the aim is with those sort of first class offerings which will take over people who generally fly private, giving them an option to fly commercial, as its comparatively more safer, a lot more trusted and has its more advantages because of a lot of other services being offered in a much better way, and would be much economical and more consistent as well as quality control being a major factor for large brands.

The supersonic aircraft is bringing a part of the industry that had died with the death of concord in the 1990’s or early 2002 and they phased it off. It was already a supersonic aircraft that use to fly almost double the speed that we currently travel at, but the technology wasn’t perfect and was dangerous having high profile crashes but it’s basically business class and about travel only, as It is very very high speed and take it to another level. In addition to this Airline is industry in terms of green movements it’s one of the worst in the world but then when u add supersonic to it then it gets much much worse.

Every external industry can have an impact on either costs or revenues and hence the below section is split into the two explaining the driving forces from these two aspects.

Revenue: Emirates Flights, Dnata, retail food and beverages under which comes MMI as well.

Flights: Passenger flights and Cargo, Passenger flights include travel for business, travel for pleasure, different impacts on the travel, such as globalization, IT, making businesses work across borders, disparity in labour markets for example cheaper labour in china, availability of capital and other resources.

Travel for pleasure: (Emirates Group, 2017) Due to globalization, people have been travelling for work, they have been more aware of countries, advancement in tourism industries, economies are opening up, governments are paying more attention to it, they want to drive tourism business implementing policies and procedures, marketing is done on a high scale and on international level, higher availability of information through IT such as TripAdvisor and other sites that helps you plan the trip in different cities. In addition, the millennials and the younger generations are inclined more towards travelling more, as it’s a status core to explore and the importance given to globalization. Moreover, there are also detrimental effects such as safety wherein both airports and aircrafts are a soft target for terrorism and other attacks, as it is a factor that has a negative effect on the whole industry.

Safety from the technical standpoint is also a concern in recent times as there has been a few accidents such as plane crashes, planes disappearing, etc… and can have a negative effect on the revenue from these things.

Immigration laws: (Report, Deloitte- Annual, 2017) Recent US elections, tightening up of the visas being issued, (Deloitte) Brexit, the turkey crisis and the coop attempt, these factors have more to do with the government and how it has impacted the socio economic conditions.

Cargo leading to Global and macro-economic factors: It might be cheaper to produce in china and airfreight the goods than to produce in the more expensive parts of the world, for example US, Europe. There is certain limitation when it comes to the logistics industry, preservation and refrigeration industry that do not allow things to be preserved for longer, for instance flowers have a shelf life of a few weeks at best and they have to come by airfreight as they cannot come by the shipping channels. Lastly the Global warming and extreme weather conditions have led to certain conditions where time is very critical and it has to be expedited/delivered in a very time runt situation, such as natural disasters: floods, earthquakes etc.. in which things needs to be moved quickly, they cannot wait for ships or even by road.

Requirement/demand for airport, passenger business cargo, ground clearances and that’s where Dnata plays a major role as they are linked together. Here a lot of Government policies are at play because all these are right and they are very protective of them, in terms of; which airlines comes in, who is studying what, there are different airline brands such as Saudi, Cathy Pacific as Dnata is into Aircraft maintenance and services. All these things tie in Dnata revenues which is more than Emirate’s revenue.

Moreover, another aspect of Emirate’s revenue is retail and Food & Beverage sales as the retail food industry in UAE has expanded tremendously over the period of time and there are a lot of exposure and culture. MMI (Maritime & Mercantile International) has grown at a record rate with 10% increase in sales as that’s a huge amount, the alcohol industry has an impact as sales are only going to generate if the new entrants are there in the market, new trends of craft beers, different and smaller brands coming into play.

Government policies, also have a role in this in terms of how much taxes are levied, how accessible it is to people through permits and minimum barrier of salary needed, general condition of the culture and accessibility of alcohol; is it something that is easily accessible, not part of the culture or not part of a normal life wherein most people would not indulge in it.

Emirates Costs: (Emirates Group, 2017)

Global financial market which is the bond market as they are raising bond in international markets and if interest rates were to go up, which they are right now then the Fed or the Central banks would raise the interest rates in these regions then this would have a detrimental effect on them as they will have to pay more with each bond or their bonds will not be as sort as they are since they would have some issues since the laicising capital or cost of capital could go up. Another thing would be the downward pressure from other airlines which is a sub industry for the airline industry which is the low cost/ no frills airline such as Ryanair, etc. that have really changed the landscape of the industry and had a lot of effect on the working of the premium airlines like Emirates, Lufthansa, etc. as they were forces to kind of segregate their brands into two different montages; the low cost option of Fly Dubai and Emirates. (Emirates Group, 2017)

Lastly, due to pressure from different airlines, rather than paying for landing rights everywhere and high premiums to enter into new markets they have started code sharing to add new destinations and that is linked to the airline airport policies, government policies, as it would help them add more destinations to their portfolio without having to pay a lot to get the airline there. In addition, they had to invest heavily in their assets to differentiate themselves from the rest of the pack and to show the customers that the value add was there for example Inflight entertainments, live updates on News and Sports, and they work very hard on the food and wine department to deliver the value of special and premium quality by having some exclusive wine options that are being served in Emirates only.

3.1: Ecosystem:

4.1: Identify the Trends and 2 Key Uncertainties

(Emirates Group, 2017)

Globalization has been playing a major role in this industry wherein the outsourcing has led to a significant growth in travel, more businesses expanding into other markets, tourism and business expansion has led