The Strategic Diagnosis

Third, Revised and Enhanced Version

THE STRATEGIC DIAGNOSIS:

EMIRATES AIRLINES
Ahmad JAMMOUL, University of Nice Sophia Antipolis, Nice, France

owadays, we cannot imagine the world without the airline industry, because of its fast
services and huge benefits, which offers to many other industries and societies. Also, its
critical role in creating the new global economy. According to the U.S. department of
transport, this industry is divided into four categories:
1.
2.
3.
4.

International: Airlines which provide services from continent to another.

National: within a country
Regional: within the geographical region. They focus on short hauls flights.
Cargo: airlines that provides goods transportation

Today, the airline industry is one of the most important industries, because it is supporting the
internationalization and globalization objectives for many businesses around the globe. This need
creates big pressure on the plains producers and all other suppliers of airline companies. Also, it
drives them to increase investments, inventions and innovations to satisfy their partners
expectations by delivering their satisfaction.
I have chosen Emirates, because it is a major competitor for many global companies, especially
Air France. The New York Times mentioned: Emirates growing reach, from its Dubai hub,
is unnerving rivals like Lufthansa and Air France. In this paper, I am analyzing the competition
between Emirates Airlines and Air France; Air France is one of the sky teams founders, which
is a carrier network of 19 international carriers and for this reason, I decided to analyze the
competition between Air France and Emirates Airline with its independent growing strategy,
because the carrier network companies cooperate on a substantial level and there is no real
competition between them.

Introduction
Emirates is an airline company based in
Dubai and founded by the United Arab
Emirates government in 1985. Its main
activity is the provision of commercial air
transportation services. Emirates is the
largest airline in the Middle East and
operating nearly 3,400 flights per week. It is
the worlds fastest growing international
airline and its growth has never fallen below

20% a year. The percentage of passengers

increase is 18.4% in 2012 comparing by
2011.
The Emirates Understand (annual Report)
At the Emirates group, much of their
progress is rooted in the ability of their
people to understand how the world fits
together. It is not just about their customers
and industry; it is also about the outside
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factors which influence both, thinking like
global economics, trade and politics, shifting
populations, diversity and sustainability.
Some call it understanding the big picture,
but they call it, understanding their future.
Emirates versus alliances
The philosophy of Emirates is focused on
consumer interest, an ability to grow based
on their own business plan without seeking
permission from an alliance partner (2). The
Emirates started its introduction in the issue
2 of its Open Sky in 2009 by saying:
Competition Who Cares? Emirates
mentioned on the Open Sky they didnt
join any alliance and they dont have any
plan to join any one of them. The Emirates
see them as having significant anticompetitive elements and believe that their
membership in one would be an artificial
speed brake on their own business plans. (1)
Emirates Strategy and competitive
Advantages
The strategic decision and location of
Emirates
The growth of Emirates had its effect on
many companies operating in the airline
atmosphere, such as Air France, which
merged with KLM, and that growth was one
of the reasons that lead to merge. Also, the
Emirates growth drives Air France to
discuss with Etihad Airline as a step to
cooperate with the Emirates competitors.
Also, Emirates strategic decision had its
effect on Air France, Emirates wanted to
reposition itself as a global transporter and
the strategic location of its hubs in the
International Airport of Dubai, which links
the east by the west, supported that decision.
Emirates can serve the travelers, who are
coming from Asia and Australia to Europe
and America, stopping in Dubai, and it is
very difficult for European and Australian
companies -Air France one of those- to

Third, Revised and Enhanced Version

compete with it, because of its low cost and

their high cost and that is what makes
Emirates a major threat for Air France.
Service Development and selection
Emirates operates in a high competitive
market, there are many companies looking
at it, and thinking how they can compete
with it. For that reason, Emirates had to
improve it services continuously. Emirates
was the second company, which ordered the
biggest airplane in the world, the Airbus
A380. Emirates orders were 90, while Air
France orders were12. Moreover, Air France
orders were approximately after nine months
of Emirates orders, which shows that
Emirates is more responding to the market
and the customers expectations (3).
Emirates major competitor Air France
argued: it would seem difficult to meet all
their growth targets, but Emirates
response: Emirates has ordered the A380,
because we believe it represents the most
efficient,
friendly
environment
and
productive large aircraft available for our
fleet growth and replacement strategy over
the next decade. It, along with our B777
300ERs, are the most efficient aircraft in
current operation on a per passenger basis
(1). Because of its service improvement,
Emirates has been ranked the top in a
customer service quality survey of airlines
operating longer haul flights out of the UAE,
its overall score is 92.3 percent while Air
France score is 72.3 percent. This survey
was conducted by the independent
organization Ethos Consultancy, which is
a third party (4). Airbus, the European plan
maker, said about the mix of quality service,
the efficient operation and low cost of
Emirates are the reasons which make the
global airlines like air France to be afraid of
it success. Also, Airbus mentioned that
Emirates is the top customer of it. (By John
Leahy, chief operating officer of Airbus)
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The Strategic Diagnosis

Differentiation
To pioneer itself, to achieve its objectives
and to compete with global carriers like Air
France, Emirates made its services more
professional and defer than all competitors.
For this reason, Emirates was the first that
put in a personal video in all three classes,
the first to present private suite in the plane
and the first to have on board showers.
Marketing campaigns
On the website, Emirates launches a very
competitive marketing campaign, which is
aiming to compete with Air France in its
home. Emirates offers Direct flights from
Lyon to Dubai and more than 130
destinations (5). While with Air France, if a
customers wants to book a ticket with Air
France from Lyon to Dubai or other
international locations, they need to stop in
Paris, wait in the airport and also pay more;
its very tiring and expensive for customer.
Emirates
has
more
competitive
advantages, and create more value to
customer through the diversified and
effective services.
Low prices
Emirates competes in pricing. According
to the standard measure in the industry and
comparing to other companies, the costs per
available seat-kilometer are very low,
According to 2010 data from the forecasting
firm Oxford Economics, labor cost per
employee at Emirates is about 40 percent of
Air France-KLM's and Lufthansa's, and half
of American Airlines and United Airlines.
This low cost gives the Emirates a very
strong competitive advantage comparing
with its competitors.
Because of these low prices, Air France
Claimed that Emirates receives financial
aids from its local state, which provides a
wide array of services: airports, civil

Third, Revised and Enhanced Version

aviation authorities, airport and navigation

charges, and finally complementary
infrastructure. Emirates answered on that
claims by the following:
Emirates receives no subsidies from its
government and is run as a fully commercial
airline; a fact confirmed by their
independent auditing and analysis by
various international banks.
Emirates pays the same airport and
ATC charges as any other airline operating
in Dubai and receives no subsidy or
preferential treatment.
Emirates pays for comprehensive staff
healthcare and housing, as well as for an end
of service benefit/provident scheme
contribution as disclosed in their audited
financial accounts. On average every year,
Emirates bears a cost in excess of USD$400
million for employee benefits in the UAE.
As the correction of these facts illustrates,
there is hardly a competitive advantage.
Then consider that the greatest form of
subsidy is protection from competition by a
carriers government something Air
France has enjoyed for decades compared
with Dubais open skies.
There is no corporate tax payable by any
company in Dubai. Yet Emirates pays its
government shareholder dividends and pays
all taxes in all countries it operates to,
including the billions of Euros we have paid
in taxes in Europe.
Customer Relationship Management
Knowledge-driven In-flight Service (KIS)
Emirates used a specific CRM database,
which runs during the flight in order to
maintain the profitable lasting relationship
with their customers by delivering
satisfaction.
In 2004, Emirates provided 1,000 pursers
with HP tablets as part of Knowledge3

The Strategic Diagnosis

driven In-flight Service (KIS). It allows the
airlines cabin crew to see which previous
trips a passenger has taken with the carrier
and based on this, know their food, wine and
seating preferences, or any issues a customer
had during their travels. Moreover, the
gathered data supports Emirates in the
segmentation and targeting, because it can
be analyzed to very specific information
about customers expectations. This
information is the key that supports the
decision making processes of Emirates in
adding and offering the right services that
satisfy its customers expectations.
This system allows Emirates to provide
more focused and personalized services.
Pursers use KIS to brief the cabin crew
before every flight and check passengers
special needs, as well as see who is enrolled
in Emirates frequent flyer program
Skywards. This enables the crew to invest
more in those loyal customers and to
providing a more personalized service.
Cabin crew can also use the KIS system to
perform in-flight upgrades to Business or
First Class, as well as post customer
feedback thats emailed to headquarters
upon landing. That is one of the most
important sources of information that
pioneers the competitive intelligence process
and allows Emirates to improve its services
and keeping its customers loyal and
satisfied.
Loyalty Program
Emirates offers the miles loyalty program.
Two types of membership can be identified:
Emirates Skywards and Business Rewards.
This loyalty program presented hereafter
was implementing in order to satisfy the
customer by first of all allowing him to save
money, but also in order to gather personal
information concerning those clients.
Moreover, because a high number of miles

Third, Revised and Enhanced Version

are needed in order to benefit from them,

those loyalty programs created a lock-in
system where the customer should remain
with the same airline in order to benefit from
them sooner.
Emirates Skywards
Cumulate Miles every times you travel
/Spend those miles on different
destinations, depending on the number of
miles you acquired
Have access to a miles dashboard,
allowing to quickly seeing the miles you
have, and the advantages you can get out
of them.

Attain a membership level relevant

to the number of miles you were able to
cumulate. Levels available are Blue,
Silver, Gold and Platinum that last 14
months. An example of benefits you can
get with the gold membership are lounge
access and priority check. Assessments
upgrades membership levels occur after
12 or 13 months, giving an extra month to
earn miles and reach a higher level.
Business Rewards
Earn miles Business Rewards and
Emirates Skywards for each flight
Business Rewards Earn 1 mile for every
dollar spent
The ability to book online at
emirates.com
or
through
your
designated travel agent or Emirates
customer center service
Competitive rates for all classes across
the Emirates network
Redeem Miles against theft and
upgrades
Exclusive special offers and discounts
from our partners Business Rewards
Tools easy to use online to manage
your account, membership, your
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The Strategic Diagnosis

itineraries and trip reports
The convenience of 24 hour access on
24, 7 days on 7 and booking process
easy online
AMEX/VISA Cards
Both cards allow the client to earn miles
while spending. Money spent using those
cards does not have to relate to Emirates;
it can be spent on anything. It is as simple as
this: 1 mile for every spent anywhere, then
2 miles for ever spent EMIRATES
Airlines.
Technologies Used
Emirates has been doing a really good job
on the technology side. As you will see
below, they have been using every media
available. From social media to apps and
online ads, the user feels closer to the brand.
Call Centers
Like most call centers, Emirates can be
reached by phone for any reasons:

Booking
Complain
Baggage claims
Reservation with partners
General questions

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Google Adwords / Adsenses

After researching for Emirates CRM
presence on the net, we quickly noticed the
increasing number of Ads I we see on my
Internet browser. Moreover, we could also
notice their adwords banner on top on our
Google research. Meaning that not only they
use internet as a commercial platform in
order to again have the user feel closer to the
brand, but also it allows Emirates to monitor
who has been clicking on their ad, from
where, when, and how many times. This
information is essential to Emirates
allowing them to focus on the right clients,
with the right needs.
Phone Apps
IPhone and android apps can be found as
well. Those apps can be used for buying
tickets, online check-in, or monitoring its
membership. Through those apps, Emirates
is within reach of your pocket.
Workplace Quality level
The management of Emirates is highly
qualified, for example the president has 42
years work experience in the airline sector.
They Emirates employees are from different
region, religion and cultures and all create a
very productive team.

Social Media
As mentioned earlier, Emirates is present
on every social media existing. Whether
they are highly active or not, they are
registered in the following social media:

Emirates Reputation
On the services level
Emirates offers high quality services in an
increasingly way, because customers
expectations are the only certainty for any
business, it is normally go up.

Financial Performance
Emirates airline is always growing by no
less than 20% a year, the profit margin
increased from 2010 to 2011 from 12.7% to
19.4%.

Facebook
Google +
LinkedIn
Twitter
Instagram
YouTube
Pin Interest

The Strategic Diagnosis

Social responsibility level
Emirates respect the standards and
policies in dealing with societies and
environment; every year, it issues an
environment report, highlights Emirates
position as a leader in the airline industry for
fuel efficiency and CO2 emissions due to its
young, technologically-advanced fleet.
In order to improve its reputation,
Emirates has committed to sponsorship

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around the world since 20 years. For

example: the partnership with FIFA. Trip
Advisor is one of the most respected travel
website, which provides travelers rating for
airline companies. Emirates is rated very
good while Air France is rated average.
This shows that Emirates has better
reputation comparing to its competitor Air
France.

SWOT Analysis
Strength
Weaknesses
Strong Hub in Dubai and strategic location
Does not cater a lot of places in US
Has a strong workforce of over 50,000 employees
Labor policies need to be revised
entering the cargo shipping
(Salaries)
top global brand
a strong corporate culture
effectively managing the needs of their target
audience
Low emissions and environment friendly
Opportunities
Threats
Emirates and Tourism Australia signed a global
Increasing Competition in Middle
marketing agreement for joint marketing activities
East
focused on Australia.
Market
Emirates and the Mauritius Ministry of Tourism
Increasing fuel costs
signed
Economic slowdown
an agreement for the development of a series of
joint activities. The UAE, Dubai and Emirates
Airline have secured over 60 open or highly
liberal aviations
Agreements
Table:1
Conclusion
COMPETITORS are fighting back!
Because of the strong competition and
strategies, the global alliance and Sky team,
which includes Air France, mentioned, that
it would add two airlines, the Middle East
Airlines from Lebanon, and the Saudi
Airline of Saudi Arabia, to counter the

dominance of Emirates in the Middle East

region. This addition of airlines companies
shows that Air France and its current
partners are not able to compete with
Emirates and that justify its successful
strategies. Also, that what unnerving rivals
like Air France and Lufthansa as the New
York Times stated. Emirates competitors
are trying to stop its growth by any way; the
strategy has prompted a strong reaction from
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The Strategic Diagnosis

airlines like Air France and Lufthansa.
These carriers hope to persuade their
governments to limit Emirates access to
French and German airports. Emirates
strategy is aggressive, says Pierre-Henri
Gourgeon, the chief executive of Air
France, who complains that Emirates is
Among top 10
By Scheduled Passenger-Kilometres Flown (Millions)
By Scheduled Freight Tonne-Kilometres Flown (Millions)

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siphoning off passengers from Europes

traditional hubs. Europe is at the center of
the global aviation world.(New York
Times) (6). Emirates ranked higher than
Air France in several terms, which proof the
success of it strategies. (Table 2)
Emirates
th

5
3rd

Air France
th

7
Not in the top 10

Among top
10 Emirates
Table:-2

The Strategic Diagnosis

Third, Revised and Enhanced Version

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