Airline strategic management

Strategic Management in Emirates Airlines1 Abstract This report investigates the management of Emirates Airlines in comparison to other airlines. The first part provides a brief outlook of the Emirates Airlines and there is a look at where the company came from. The various development stages are discussed showing the changes the company had to make to accommodate its growth. There is a look at the goals of the company which the management strives to achieve. These objectives necessitate the formulation of strategies including a diversification strategy, an intensive strategy and a generic strategy to ensure the airline remains one of the top airlines in the world. Emirates Airline has been innovative in the use of technology to enhance its service and has set the trend in the industry. This report also discusses the strategic alliances that the airline has made to increase its reach and therefore access more customers. It also delves into the stages a company goes through facing different challenges and competition. There is a look at some competitors in the industry and other similar type of organizations. British Airways and Singapore Airlines offer the best examples of the diverse competition that Emirates Airlines faces. There is a look at the similarities and contrasts in challenges and strategies taken by these airlines in comparison to Emirates Airline. A swot analysis then goes through the strengths, weaknesses, opportunities and competition that the company may have. Recommendations on how the airline can ensure it remains competitive and profitable are then stated in conclusion. Strategic Management in Emirates Airlines2 Introduction After a gap was left by the closure of Gulf Air, Emirates Airlines was established in the 25th of October 1985 by the Dubai government with only two aircrafts at the time. It has now over 142 aircraft and flies to 78 destinations that are spread over 102 countries throughout the world. The cabin crew is so diverse that it accommodates 95 nationalities. Recently it made aircraft orders of at least 27 billion dollars for 45 Airbus A380 making it the largest buyer of Airbus super jumbo in the world. Emirates Airlines is also the fifth most profitable airline worldwide. According to a BBC report, it has been growing by at least 20% each year for the last 17 accumulating a profit of 637 million dollars in 2004-2005. Offering consistent and high quality for money service and being the best airline on all routes is the Emirates Airline’s mission which it is committed to achieve. Towards this goal it has been known to be innovative and customer oriented in the provision of services including personal entertainment system offers in all classes, 22 audio channels, 18 TV channels and an online booking service enabling customers to search for flights, book and choose seats. It remains one of the fastest growing airlines. Strategic Management in Emirates Airlines3 Existing Management Strategy When Emirates Airlines was created, the management was small and able to take quick decisions. It was efficient and did not follow the orthodox model of hierarchies and board of directors. The employees are said to have been treated as family and normal workers. These building blocks were important in helping them maintain a low cost structure. They also offered a good quality of service and had a young fleet in comparison with other airlines that existed at the time (mbaassignments, 2009). The high performance of the airline depends on strategies that are being formulated and implemented. There is a mixture of a variety of operational strategies including a diversification strategy, an intensive strategy and a generic strategy. The most important operational strategy of Emirates Airlines is the high quality provider strategy. Being an airline that is concerned with passenger safety, it plans to have 120 Airbus A380 once a new airport space is available. It is also working with Boeing as the plane manufacturer works on the 777 jets next generation. Emirates Airline is also known for pioneering market trends which is another operational strategy. It has managed to differentiate itself from others through offering of modern services such as advanced aircraft, comfortable seats with personal entertainment systems, use of mobile phones on board, an e-ticketing system, private first class suites, SmartLanding and SmartRunway safety solutions. The company has also implemented several intensive strategies including market development, product development and market penetration. There is also a reduction of operations costs when there is sharing of resources with different companies through alliances. The companies benefit from a wide range of customers too. Also, long term agreements with suppliers create strong relations with suppliers and discourage any sudden changes in pricing. There is still a need for airlines to cut prices and improve services for a strong and winning aviation market. Strategic Management in Emirates Airlines4 Emirates Airline is also known for customer service operational strategy. It provides the best ground services through easy and early check-in, chauffer driven airport transfers in some cities and waiting lounges. It was the first airline to introduce digital windscreen systems. The airline industry has been affected by political and other economic factors especially after the 11th September disaster which resulted in a great change in the travelling abroad for business, studies or even visits. Also, the rapidly rising of oil prices all over the world has increased costs and consequently reduced profits with reports estimating the losses to be 6 billion in 2009. There has been a global recession which had an enormous impact on business.