History of Emirates Airlines
Question:
Discuss about the Tourism and Hospitality Operations Management.
With the introduction of the airways, the transportation becomes easily as well thus there has been the significant increase in the movement of the people in various parts of the world. This has helped tourism sector to grow and see new trends (Mok, Sparks and Kadampully, 2013). Taking about the current scenario there are lots of players which are available in the market who are delivering quality services and out of all Emirates is one of them. It is the largest carrier in the Gulf and also has been known sponsoring some of the biggest teams in the world. This below-mentioned task is basically an organizational report through keeping the scenario of Emirates airlines. There will be the overview of this organization thus highlighting the history of the company and after it, there is brief about its business activities and its structure. After that, there is identification and evaluation of the strategic vision, mission, and aims of the company (Buhalis and Crotts, 2013). Vision and mission help an organization in setting their business in the organised way as they are aware that what they want from the business activities they will be carrying out. Other than there is the critical analysis of the strategic challenges the organization faces.
They are the airline which has maintained the market all around the world. Today it has become the world leader and this story started in the 1980s when Dubai flights were scaled by airline Gulf Air (Albalate, Bel & Fageda, 2015). This was the move which has made the concern that was in Dubai as they thought that they were assisting other flight groups by only serving as local feeder airlifts. After this, the royal family of Dubai especially Sheikh Mohammed Bin Al Maktoum and Sir Maurice were discussing the launching of a new airline in Dubai. Finally, in 1985 they came out with a small airline. Sir Flanagan was appointed to set up a new airline with $10 million as he was happy with this success of working at Dnata. It was the just that he wanted to decide the name. He has suggested the name of the airlines as both Dubai Airlines and Emirates but it was the Sheikh who decided that the country’s new airline will be called as Emirates (Ashworth & Goodall, 2012). After one year the investment of $10 million was easily repaid thus getting a better positive start of the transporter.
Business Activities and Structure
The official launch date of the Emirates airline is March 25, 1985, and they have decided to work without the support of the government thus taking any kind of funds of them (Bendito & Ramírez, 2011). Sheikh Ahmad became its Chairman and Sir Maurice as CEO of the airlines started looking forward to starting their run. Time Clark who was working with the organization was on the priority of becoming the president of the airline in future. As they have enough money to purchase anything for aircrafts so they have dedicated to starting a deal with the Pakistan International Airlines who gave the wet lease of two aircraft and among them, one was new Boeing 737-300 and an Airbus A300 B4-200.
Other than this at the same time the royal family of Dubai gave two other aircraft from the Dubai Royal Air Wing as a gift to them. Boeing 727-200 was the two aircrafts (Bornhorst, Ritchie & Sheehan, 2010). The Emirates put their effort to ensure that they secure the deal with the flights to Karachi as well as the roots of an agreement. Not only Karachi, New Delhi, and Bombay were the major cities. The first airline of Emirates started on Oct 25, 1985, to the Karachi destination under the flight number EK600.
Flight from the started the flights of Emirates saw a new hike and it can be said that there has been the hike in the organization and as the result, the share of Gulf Air came down up to 56% in their profits but after that year more profit has gone down (Buhalis & Michopoulou, 2011). In the same year, they have started the flights for other four routes and these were Amman, Colombo, Cairo, and Dhaka.
The success of the airlines continued in the year 1987 when the acquisition of their 1st new aircraft Airbus A310 taken place (Croy, 2010). This aircraft was built according to the specification or features which would attract the new people and was according to the Airbus were offering a passenger superior a flying experience as compared to their opponents.
It was from the starting to the 7 years they maintained a growth rate of 30% and it was the year in 1988 when they have started their flight to Damascus and then they were the first one to have such growth in just 38 months of business. Till then they were offering their services to 11 destinations and after this, it was the 12th destination.
Evaluation of Strategic Vision, Mission, and Aims
Till the 1990s it becomes one of the world’s quickest-mounting airlines and when they started their journey they had the revenue of approx. $100 million each year. By 1993 this number has sudden gone up to $500 million by 1993 (Danaher & Rossiter, 2011). At the same time, they have changed the trend in this segment and do not stop here and continued with the growth rate. Although during that time there was Gulf War started this has hardly impacted them.
In the year 1991 they gained success in obtaining a slit at the London Heathrow Airport which at that time was known for one of the areas for world businesses. To make some technological changes that they have introduced a person in-flight amusement system throughout the chalet on board the whole fleet. The only flight which has done this thing in past was Virgin Atlantic they started this in1990 but they have not done on the whole. In the same year, Emirates become the 1st aircraft to order a $20million full Airbus Simulator. In order to expand their market been have started making conversation with the French government so that they can fly to Paris. It was observed that they were facing the issue of space available in the aircraft so they had decided to spend $2 million on a terminal at Dubai International Airport. A minibar is provided with closing doors providing privacy. A 23 Led is also given with a 2 meter long fully flatbed (Du, Bhattacharya & Sen, 2010). The Skycrusier seating is part of Boeing 777-300s. Catering on Emirates flights is given by Emirates Flight Catering. They provide meals for all classes, based on the age, dietary restrictions, preferences and religious interest.
Emirates have total 239 fleets and fly over 141 destinations of 81 nations and other than this they also provide cargo activities through Emirates Sky-Cargo (Evans, Stonehouse & Campbell, 2012). They have mixed fleet of Airbus and Boeing widebody aircraft so they are considered as one of the few aircraft to execute in all wide-body airplanes fleet.
Emirates give their services in the 1st class, Business class, and Economy class. In 1st class, there are two varieties of spaces that is full suite with doors and flatbed ‘Skycrusier’ seat that means it is without the door.
Today, Emirates has expanded themselves into different services which are concerned with the airport services, engineering, and catering and tour operator functions. They have 7 subsidiaries and its parent organization has more than 50 (Fredman & Tyrväinen, 2010. Approximately they have the total staff of 50000 and out of which 10785 are handling the position of cabin crew, 2,237 are flight deck crew, 1,904 are in engineering and etc. They provide various benefits to their staff like comprehensive health plans and paid maternity and sick leave.
Analysis of Strategic Challenges
Fly Emirates are known for its high-class service in all over the world which is bounded by its vision and mission (Hays, Page & Buhalis, 2013). Vision and mission are important as it assists in the creation of successful brand management. The strategic success of the firm depends on the ways it has made vision, mission and aim for the company. It is also essential to communicate all these to their staffs so that they know what they are working for. It also helps in shaping the business strategy of the firm as well as it helps in defining the direction following which company can gain its position in the market share and shape the increment growth curve. For such a passionate company as the Fly Emirates it is important for the firm to set clearer goals (Horng & Tsai, 2010). Vision, mission, and aim of the company are as follows:
To be the leader in the airline’s industry especially in the innovation, environment protection with the global network of coverage which is further a gift of its strict compliances with responsibility, safety in flight, dependability, product and service quality (Lähdesmäki, 2012). It sets itself for the competitiveness while creating tourism without limits to alter the lives for better.
One of the greatest examples of embodiment of vision set by Emirates can be seen in its campaign that is launched under the name “Hello Tomorrow” launched in the year 2014. This type of strategic vision helps to shape future strategy for the company so as to perform their activities in a best possible manner (Moriarty et al., 2014).
The mission statement of Emirate airlines states the ways in which it will reach to place in the international flight where it wants to be:
- To develop and grow as the most coveted facility throughout the world (Morrison, 2013).
- To deliver the product and service in the market that is having the highest quality standards.
- Enhancing the comfort for the passengers so as to provide them extensive pleasure.
- To maintain a sustained development leanings over an industry.
- Capitalize in new expertise so as to satisfy the needs of the customers and making the bigger name in the market.
- To reduce the crashes or accidents to almost zero (Pike & Page, 2014).
- Maintaining the tactic of open sky determining new borders for consumers and clients.
- Taking care of the environment by making use of eco-efficiency, biofuel also involving all the updated mechanism and methods for preventing fuel and emission.
- To invest more in the workers so as to develop the qualities that help in maintaining the competitive staffs (Redondi, Malighetti & Paleari, 2011).
Through this entire strategic mission they want to achieve some of the key values:
- Customer gratification: Forestalling the exact requirement of the consumers, thoroughly analyzing and meeting them as well as operating as a consumer-focused firm.
- Leadership: To develop the quality of the leadership which tends to motivate their employees and hence influencing activities and thoughts of people so that they work together to achieve common goals.
- Emotional attachment: To become consumer’s choice by considering emotional ties and bonds by delivering its character and emotion (Shani et al. 2010). For this, they make use of high-class staffs as well as making expensive advertisement campaigns.
- Reliability: They want to be reliable by delivering one-time performance, minimum luggage cost, an absence of accidents or crashes etc.
- Community engagement: They want to increase brand awareness among consumers, social media existence, charity, sponsorships and donation campaigns. Celebrity endorsements are the prime technique of advertisements.
- Accountability: Places great worth on communal nationality and social responsibility and believes in its own business ethics, promoting pollution-free business.
- High-quality service and product: Producing best quality services and products for the comfort of people.
- Innovation: This Company links its consumer requirements with a strategy of innovation with a newest fleet in aviation industry creating the fascinating experience for consumers. They implement new strategies and ideas for processes so that whole productivity of the firm gets increased.
- Professionalism and teamwork: It trains its employees so as to enrich them with best industrial practices (Kotler, 2014). They are highly investing in the professional standards of the firm which helps in making competitive advantage in the market. This company believes in the power of working in teams and hence has adopted a culture where every firm can achieve more accurate results.
- Emirates aims to become the world leader in the aviation industry in future.
- Increasing the customer satisfaction level by enhancing the quality of the services that it is delivering.
- To expand its business in the across new boundaries and finding routes that cover almost all the places all around the world.
- To support the life of the stakeholders by increasing their profit sharing in the organization and doubling the economic strength of the employees.
- To work for the society for uplifting its standards.
There are various strategic challenges that are faced by the Emirates. Some of the main challenges that are faced by the organization:
- Competition: There are a large number of companies that are operating in airlines industry hence it is making the competition cutthroat hence making the whole environment red. Since the company has to tackle such a large competition hence it has to make business plans in a better way. Some of the biggest competitors such as British Airways are having the large amount of resources which it can utilize for its development and come out of the competition (Nkechi, Emeh Ikechukwu and Okechukwu, 2012).
- Fuel prices: With the depleting crude oil levels and increasing conflicts in the middle east countries have raised the fuel prices. There is inflation in every part of the company and hence it is reflected in the prices of the crude oils. This has increased the costing of the overall operations and hence the profit margins of the company have decreased. This has lead company to find new kinds of fuels especially that suits the environment.
- Pollution: Since the governments all around the world are forcing companies to make use of methods that reduce pollution. The transportation industry has been hit by the pollution standards all around the world.
- Inflation rates: Due to increasing in the inflation rate all around the world this company is facing a lot of financial strategic challenges. Due to high prices for the flight tickets customers are unable to purchase it especially in the developing countries. The inflation rate has reduced the power of the consumers to spend more and has been reflected in the business of the firm.
- Economic instability: There is huge economic instability all around the world especially in the European continent. The case of Greece and slowdown of the American economy has reduced the revenue generation capacity of the firm. This kind of economic instabilities has decreased chances of the company to expand its business in new horizons and hence has increased the chances of business failure and hence the company has to formulate the new financial strategy to combat such conditions. The previous cash deposits with the company are helping it in such kinds of situations.
- Political changes: There had been many new political bonds that have been made all around the world and at the same time many have broken. This had changed the laws and policies of immigration which needs to be taken care of by the company.
- Legal laws: There are many kinds of legal laws that have changed all around the world and hence company needs to comply with all those so as to ensure that is no legal glitch in its operations. Legal laws related to employment as well as environmental pollution are a great challenge for the development of the company.
- Industry: This industry is on the rise as more and more people are choosing flight as a medium for traveling (Kandampully, Zhang and Bilgihan, 2015). Especially with the expansion of the tourism industry the aviation industry has also been benefitted. Even after such a large potential for growth due to extensive completion, it has become difficult for the company to operate its functions.
- Emirates have large back support of one of the financial stable economy that is Dubai. Government helps company in any financial crisis.
- It has an advantage of being present at the Oil Rich country like Emirates which helps them in getting less fuels at lower price.
- Strong position in Dubai has helped company in having access to Emirates airlines across Europe and Asia.
- Large number of customer base who are highly satisfied by the company operations.
- Having a large workforce of around 50000 workers. Such a diverse workforce helps company in satisfying the needs of various consumers all around the globe.
- It is having its connecting flights to across 70 plus countries in 6 continents.
Weakness:
- Rely heavily on the international traffics.
- Higher cost of tickets has reduced the number of customers who are availing the products and services of the company.
- Low presence in the local or domestic airlines
Opportunities
- Brand new fleet added in the airlines base can help in adding confidence in the company operations.
- Finding new tourism destinations for extending the market share.
- Expanding in new markets especially in developing countries by taking use of joint ventures.
Threats
- Increasing competition in Middle East Market can affect the business of the company.
- Rise in the fuel cost have reduced the profit margins of the company.
- Many changes in the government and business policies all around the globe has created panic in tourism as well as airlines industry.
- Increasing instability in the market have reduced the company chances of making risk oriented business.
After analysing the above-based report some of the things that can be recommended are as follows:
- The company can expand its business in the domestic markets all around the world especially in the countries such as India and China.
- To become the global leader in the airline’s industry the quality of the services needs to enhanced especially making use of the innovation in technology:
- The company can make the strategic alliance with domestic airlines company so as to increase the market share of the firm.
- Emirates can use its financial resources for training and development of the employees so that they can serve in a better way.
- Extra facilities to the customers can help a company in achieving higher satisfaction level.
Conclusion
From the above-based report, it can be concluded that Emirate Airlines is one of the leading company in the aviation industry. This company has its business all over the world. This company has made the innovation on the part of their business strategy. They want to make business plans according to the need of the market as well as to achieve competitive advantages. Creating a vision and mission of the company is very important as it helps staffs in moving in a particular direction. So it is also essential for the leaders to make use of the teamwork as well as train their employees as per their requirement. There are several strategic factors that are disturbing the position of the company in the market and it is important for the firm to make plans to tackle this entire situation. More use of technology will be highly beneficial for the company.
Recommendations
References
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