Scientific reflection
1. Introduction to Emirates’ overall growth over the last decade.
Arabian Gulf carriers have been experiencing exponential growth for decades now. The aim of this scientific reflection on O´Connell´s (2011) paper is to ask and research the negative aspects and hidden sides of Emirates that are not mentioned in the paper.
Not all that glitters is gold. What´s behind this apparently perfect and modern façade of the giant Emirates?
Let´s take a step back in time to when the large growth of the Gulf airlines, especially Emirates, began. According to O´Connell (2011), the air carrier Emirates seems to have started to grow consistently since 2008 without any stop, except for the pandemics.
Fig. 1. Number of Emirates passengers from FY 2010/11 to FY 2021/22 (in millions).
Source: Emirates, Statista (2022)
Fig. 1 represents in a very clear graph the growth of Emirates passengers over the last decade. The number of passengers is more than doubled. In fact, according to Nataraja and Al-Aali (2011), behind the growth explosion of Emirates Airlines since the earlier stages, there is Al-Maktoum, the prime minister of the UEA. His aim was to turn Dubai into a hub for mainly tourism and trade. About more than only 10 years later it must be said that the aim has been successfully fulfilled. Even though, growth remains still a point in the future development among the Gulf-based carriers.
Some of the many aspects that have facilitated the rapid growth of the airline are traffic freedom because of their respective hubs, high-quality inland flight products, and loyal customers because of the many brand awareness campaigns (O´Connell, 2011). In the next paragraph, it is going to be analyzed more in-depth the success factors of Emirates.
2. Emirate´s determinants of a successful growth
2.1 Legal environment
O´Connell (2011) in his paper explains what made Emirates grow so quickly compared to other airlines around the world.
The legal structure of the company is an important element that has to be analyzed because it is an important competitive advantage among worldwide airlines.
Emirate airlines is completely owned by the government of Dubai in a tax-free environment with almost no legacy costs. This aspect is a double-edged sword because it enables the establishment of more and more companies in Dubai foresting the economic development of the city. In fact, according to O´Connell (2006) Dubai is a very attractive city because of its leading hub in the Middle East, fast-growing tourism industry, and shopping malls. This is the perfect zero-tax environment where to establish and expand international businesses. At the same time, the Airline saved lots of money to invest for example in large-scale orders of aircraft. This is one of the reasons why Emirates was already 2008 one of the most profitable airlines worldwide (O´Connell, 2011).
2.2 Strategic location
Geography plays in favor of big business for two reasons. the first is Dubai's strategic location. in fact, it lies equidistant between Europe and Asia. If back in the years Dubai was considered only as a corridor, nowadays it became an important hub where to stop. The second reason why Dubai´s location is an advantage compared to other airlines worldwide is the proximity of the city to fuel sources.
While airlines worldwide are feeling the pinch as a result of the rise in fuel prices and the decline in the dollar, Emirates has been able to exceed sales targets by achieving record seat factors and yields thanks to its carefully planned revenue plan and sales strategy (Banerjee, 2013).
2.3 Low labor costs
Another success factor that also enabled and is still enabling Emirates to grow, is the low labor costs. O´Connell (2011), in his paper, compared the personnel costs of Emirates and British Airways. It came up that Emirates has way fewer costs than the other company because it operates in expensive cities. The key reasons for this competitive advantage are the low taxation laws and also the outsourcing of the working force from poorer countries such as India, Pakistan, Sri Lanka, Bangladesh, and Nepal. Core information has to be added at this point: in UEA strikes are forbidden and there are no trade unions.
Banerjee (2013), affirms that the labor costs of Emirates are definitely lower than all their competitors. This enables, also with a fleet of new and efficient aircrafts, to run the airport all around the clock. Also outsourcing labor force from emerging markets in the neighborhood is a cost-saving strategy.
Fig 3. Comparison of Mean Values as per the Cultural Groups for factors influencing Job Satisfaction, from Chaudhry & Randeree (2008).
Fig 2. Shows us the salary dissatisfaction among adults in the UEA. Only 36% of the interviewed are satisfied with their salary, and 16% of the interviewed are neither satisfied nor dissatisfied with it.
Nevertheless, UAE nationals feel that salaries do not significantly affect the happiness they feel about their jobs, but the nature of the work, job flexibility, and job security are factors that strongly influence their satisfaction with their jobs (Chaudhry & Randeree, 2008). In Figure 3 we find the comparison of the main values of job satisfaction, concerning salary satisfaction, in the United Emirates salary satisfaction has one of the lowest scores (with the lowest about inflation). One big advantage for Emirates in this field, is that UAE forbid strikes, so it is part of the culture not to strike and it makes a big difference, even if the dissatisfactions of the employees is quite high.
3. The success factors of Emirates´ marketing mix
According to O´Connell (2011), the three success factors of Emirates´ marketing mix are the creation of a mega-hub in Dubai, the low-cost structure (taxes, employees, fuel, and big-haul aircraft orders), and the high focus on branding strategies including sponsorships of big sports events to increase the brand awareness. This core elements let Emirates ,ang generally Gulf carriers, grow exponentially among the last decades among the airline industry.
3.1 Marketing mix of Emirates
Alshubaily (2017) summarized the competitive advantage of the airline in seven points.
The most relevant point, compared to the points explained by O´Connell(2011), is pricing, and promotion. Concerning pricing, Emirates has a pricing strategy that combines the value-for-money principle with the quality of the services offered. In this case, the excellent additional services will improve the customer´s willingness to pay more. Also, during the lecture with Mr. Alhaider (2022.10.06), a Senior Manager of Online Sales Development and Head of Commercial Emirates Holidays in the company, he explained us that the airline is perceived by customers as premium economy carrier. Promotion plays also a big role in the company´s growth. Social media are fundamental communication tools, that allow reaching the right target groups. Another successful promotion strategy of the company in order to increase customer loyalty is to offer customer relationship programs (Alshubaily, 2017).
3.2 Branding strategies: sports events sponsorships
O´Connell (2011) in his paper explains the importance of sports events sponsorship.
In 2015 Emirates invested 8 million Euros in sponsorship for Sport Lisboa e Befica athletic clothing sponsorships. In fact, according to Silva (2020), this kind of sponsorship is very effective in increasing the customer´s brand awareness, but only if some criteria are respected success is guaranteed.
It is due to the perceived congruence that fans' identification with sponsorships and their intentions toward purchasing sponsorship products are closely related. Sponsored team products are more likely to be purchased by fans who perceive a logical and balanced connection between the sponsor and the sponsored team.
So, if the fans feel identified with the spots team and also find congruent the sponsorship decision, they will be more likely to purchase from the sponsored company. In fact, the identification of the fan with the team plays an important emotional role in purchasing decisions.
4. Challenges
During this scientific reflection, all factors for the airline's success were listed. Many of these, however, are also challenges and vulnerable elements that could go to affect the success of the company itself. Fuel prices, vulnerability of the industry, sustainability and competition are some of them.
Alshubaily (2017) made a detailed PESTEL analysis of the Arabian company, the technological and environmental points are nowadays more and more important to implement in order to be always competitive. For what concerns the technological development, its goals are goals-efficiency, safety and sustainable protection. The technology in this case plays a big role in the organizational and operational management tasks.
Regarding the environmental aspect it is important to say that the customer is getting more and more conscious regarding issues such as sustainability and environmental protection. This is one of the mayors driven motivations of the company to do more concerning this topics because it is becoming more and more a must to include in the corporate social responsibility (Alshubaily, 2017).
According to Amankwah-Amoah (2020), the tree key pillars of the sustainable development airline industries are: air emissions, noise emissions and waste elimination. Those tree pain points are already improvable by using more fuel-efficient fleets for example. Emirates is already working on it because of the new aircrafts ordered are fuel efficient and don´t need high reparation costs. The COVID crises, was not only a challenge for the airline industry, but also a big opportunity where to invest for sustainable options and improvements.
Another of the core weaknesses of the airline company Emirates that has to be mentioned is, according to O´Connell (2010), the big number of debts that the company has that are interlinked with economic, financial, and political relationships.
5. Conclusion
Emirates is for sure one of the most successful and fast-growing airlines carries in the world. As it has been said during this scientific reflection, there are lots of successful points that enabled and are still enabling Emirates to grow so fast. Among customers, the image of Emirates is to be a luxurious, modern, and high-standards airway. But behind this successful business story there are some side aspects that are not mentioned that often yet.
The Arabian airline company, changed the way to travel between Asia and Europe, making Dubai the biggest hub in the Country where millions of people travel yearly. In the last decades, the UEA has been seen as a corridor territory only where to pass by. But since the airline industries are growing so much in this strategical positioned area, simultaneously with the city and economic potential, Dubai and the entire territory seems to be filtrating the foreign airway traffic cannibalizing the traditional flows.
But not all that glitters is gold. Emirates and all the Gulf airline carriers are a booster for the shiny and modern city of Dubai, which has grown and developed at an incredible speed never seen before. What´s behind this disproportionate and modern growth is not always as shiny as the façade, but it´s shown too less putting emphasis on the development of this modern Arabic metropolis.
References:
Alshubaily, A. (2017). Exploring the key success factors for young airlines. A focus on emirates airlines and its regional competitors' strategy for success. Saudi Journal of Business and Management Studies, 2(1), 30-37.
Amankwah-Amoah, J. (2020). Stepping up and stepping out of COVID-19: New challenges for environmental sustainability policies in the global airline industry. Journal of Cleaner Production, 271, 123000.
Banerjee, A. (2013). Emirates airlines-An exploratory study. ZENITH International Journal of Business Economics & Management Research, 3(5), 133-141.
Bayt.com, & YouGov. (2017). Job satisfaction regarding salary and allowances among adults in the United Arab Emirates as of February 2017 [Graph]. In Statista. Retrieved December 07, 2022, from https://www.statista.com/statistics/668032/uae-job-satisfaction-regarding-salary-and-allowances/
Chaudhry, A. G. & Randeree, K. (2008). Understanding the Employee Perspective in a Multicultural Environment: A Case Study into Job Satisfaction and Organisational Commitment in the United Arab Emirates.
Emirates. (2022). Number of Emirates passengers from FY 2010/11 to FY 2021/22 (in millions) [Graph]. In Statista. Retrieved December 07, 2022, from https://www.statista.com/statistics/300253/number-of-passengers-emirates-airlines/
Nataraja, S. & Al-Aali, A. (2011). The exceptional performance strategies of Emirate Airlines. Competitiveness Review: An International Business Journal incorporating Journal of Global Competitiveness. 21. 471-486. 10.1108/10595421111171966.
O'Connell, J. F. (2006). The changing dynamics of the Arab Gulf based airlines and an investigation into the strategies that are making Emirates into a global challenger. World Review of Intermodal Transportation Research, 1(1), 94-114.
O’Connell, J. F. (2011). The rise of the Arabian Gulf carriers: An insight into the business model of Emirates Airline. Journal of Air Transport Management, 17(6), 339–346. https://doi.org/10.1016/j.jairtraman.2011.02.003
Silva, A. (2020): Fans identification: the bright side of football sponsorship
effectiveness, Journal of Sport & Tourism, DOI: 10.1080/14775085.2020.1824800