The case study involves a detailed analysis of the factors that shape up the organizational environment of Emirates, one of the world’s most reputed international airlines. Emirates Airlines is owned by the government of Dubai, which is located in United Arab Emirates.
Emirates Airlines has been operating for more than twenty years.Political environmentThe growth and success of Emirates Airlines can be largely attributed to the consistent backing of the government. The support of the local government has certainly provided the necessary impetus to Emirates Airlines to move ahead of its competitors. The primary reason behind this is that Emirates Airlines is owned by the state government. A number of policies and regulations have been implemented by the government which is favorable for the growth of the airlines.The open sky policy adopted by the government supports the expansion of the airlines.
The open sky policy permits other countries to establish routes to Dubai. This particular policy enables Emirates Airlines to establish a strong connection with countries all over the world and thus maintain its status as a reputable international airline. As of now, Emirates Airlines are connected to about hundred different destinations in sixty countries, worldwide. The open sky police have enabled Emirates Airlines to extend its services to the secondary markets like Manchester and Newcastle in Britain, Hamburg and Düsseldorf in Germany or Kochi and Kolkata in India.
Moreover, this particular policy minimizes the scopes of government interferences in the running of the airline. As a result, the airline authorities have the liberty to implement effective business strategies, without facing obstacles like stringent government rules and regulations.The government and the airlines share common goals and interests. Thus, regarding any important decisions, generally there is full support on the part of the government.
One of the most favorable aspects of the political environment of Emirates Airlines is the liberal immigration laws and policies. This implies that passengers, who change airlines at Dubai International Airports, do not have to pass through strict immigration checking. Also the policies regarding transit visas for foreign passengers are much more liberal compared to the other major competitors.The government positively promotes the travel and tourism industry, which is the main source of revenues for Dubai. As a result, the government takes initiatives to smoothen the operations of Emirates Airlines. Thus, in spite of frequent air curfews, Emirates Airlines can consistently maintain high fleet utilization rate.
On an average the jets of Emirates Airlines fly eighteen hours on a daily basis.Economic environmentThe overall economic environment of Emirates Airlines is favorable and conducive to the growth of the business. The fuel costs that Emirates Airlines have to maintain are much lower than the other international airlines. In the current scenario of worldwide inflation, this particular aspect helps Emirates Airlines to minimize its costs.
Low fuel and labor costs has helped Emirates Airlines to overcome the adverse effects of global recession.One of the principal aspects of the economic environment of Emirates Airlines is that the employees do not have to pay income taxes to the government. This implies that the overall or gross salaries paid to the employees are much lower, as compared to the other major airlines. It has been studied that the labor productivity maintained at Emirates Airlines are quite high.Social environmentThe social environment of the Emirates Airlines is congenial for the business. The cosmopolitan environment of Dubai acts as a stimulant as far as the growth of the airlines is concerned.
As a popular tourist destination and financial hub, Dubai attracts people from all parts of the globe, which has given rise to an eclectic mix of cultures. This particular environment of multi ethnicity has given Emirates Airlines the necessary impetus to flourish.In the initial part of the last financial year, the real estate and construction sector of Emirates group were affected by the global economic recession. This, to a certain extent created a negative reputation for Emirates group, as a whole.
However, Emirates Airlines, on the basis of quality services and safety records, succeeded in overcoming this particular situation.TechnologicalEmirates Airlines has incorporated the latest information technology systems to maintain relationships with its customers. The customer databases are maintained with the help of state of the art technologies and communication systems.To a large extent, the latest technologies are incorporated by Emirates Airlines to provide quality services to the customers. Co-operation on the part of the government enables the airlines to use advanced technologies to retain and extend the number of passengers.
Performance appraisalThe last financial year has been steady for Emirates Airlines, in terms of the revenues earned, considering the worldwide recession and the losses incurred by the other major international airlines. Emirates Airline’s revenues increased by .4 per cent amounting to US $11.8 billion.
Airline profits of AED 3.5 billion (US$ 964 million) marked an increase of 416 per cent over 2008-09’s profits of AED 686 million (US$ 187 million). The number of passengers, who availed the services of Emirates Airlines, increased by twenty one per cent. The number of passengers increased by 4.7 million.
One of the contributing factors for the continuous growth of Emirates Airlines is their successful expansion plans. In the last financial year, Emirates Airlines expanded its routes to new destinations like- Seoul, Bangkok, Toronto, Paris and Jeddah. These expansions proved to be strategically correct and profitable for the Airlines. Most importantly, Emirates Airlines have been able to maintain the high standards that it usually sets, in terms of customer service and satisfaction. Compared to the other international airlines, there have not been any compromises in the quality of services, because of cost cuttings due to global recession.
Current strategiesAt present, Emirates Airlines are implementing strategies for further expansion. A number of new routes gave been included. In the current financial year, Emirates Airlines have implemented some significant expansion plans and other strategies. Emirates Airlines, has extended its services to four new destinations- Tokyo, Madrid, Amsterdam.
In order to support the current expansion strategy, the airlines has started hiring mew pilots, on a large scale, from continents like Europe, the Middle East, Africa, Asia and United States of America. Also, the airlines have included a number of A-380s to support its growing base of passengers.ConclusionThe current business environment and market scenario of Emirates Airlines certainly supports its ambitious expansion plans. As far as the political environment is concerned, Emirates Airlines enjoys strong support from the government. The liberal open air policies and the streamlined rules and regulations are, to a large extent, designed to sustain the growth of the airlines. Economically, Emirates Airlines enjoys certain competitive advantages over other international airlines, such as the reduction of costs in certain aspects like labor and productivity.
There are certain issues regarding the social environment. The construction and real estate sector of Emirates Groups suffered setbacks due to the global recession. However, this failed to have any adverse effect on the brand image of Emirates Airlines. Thus, overall it can be concluded that the current strategies and future plans of Emirates Airlines are quite feasible, considering the environment and the market in which it operates.
