Case study Emirates

Long-haul strategy
Maeve Hosea looks at how Emirates airline has capitalised on its extravagant global sponsorship campaigns and how the brand hopes to taite advantage of its Dubai base where East meets West The Middle Eastern airline Emirates seems to enjoy a competitive environment. You can see the command "Fly Emirates' adorning some of the world's most hotly-contested sporting teams - Arsenal football team, the jockeys of the Godolphin racing stable and the Samoan Rugby Sevens. But it is not just the airline's sponsorships that are competitive. The business itself is attempting an aggressive expansion in a crowded market where new airlines and flight routes are opening virtually every week. The industry is in growth mode after a slump for several years caused by the tragedies of SARSand9/ll. Emirates, which is based in Dubai, is keen to become a major long haul global carrier while its domestic base is transformed into a natural hub for airlines. The business - started by Sheikh Mohammed bin Rashid Al Maktoum in 1985 - hopes to encourage more passengers to use flights connecting at Dubai rather than other locations such as Singapore or Bangkok. Mike Simon is head of corporate communications at Emirates; he is in charge of the brand's marketing. He explains the attitude behind the marque: "I was drawn to the brand initially because it was a small airline that was going places. Dubai itself is a lure, a city suddenly sprouting up out of the desert with so much potential." Gale, who previously worked on the branding for Czech Airlines, suggests that the brand has done well to link itself strongly with Dubai. As it grows rapidly in terms of commerce and tourism, he suggests that the airline brand and regional brand will be able to feed off each other's success. "It is a young brand and it has managed to build its reputation quite quickly. Operationally, it has also managed to grow quickly and piggybacked on the development of the Gulf as a region. It is closely tied to the brand of the Gulf in general and Dubai in partictUar." he explains. "Both the brands of Dubai and Emirates have gained tremendous reputation over the last few years because Dubai has become such a hub."

Simon continues: "When we started out. we had a blank sheet of paper. We didn't take on any of the encumbrances of the legacy airlines and wanted to make sure we didn't make the same mistakes. We bad brand new aircraft, exciting people and new destinations." Twenty years on and Emirates has 103 aircraft flying to 89 cities around the world. Simon claims that it is currently the seventh or eighth largest intercontinental airline in the world and the third- Going places most profitable. JB Groh. senior research analyst, aerospace and transportation equipment at research business DA Davidson & Co, Super-size carrier At the moment. Emirates is one of the adds that Emirates is boosted by its busibiggest purchasers of the Airbus 380 ness strategy. He says that it operates super-jumbo aircraft. Simon explains wide-body aircraft and Oies mostly long tbat the company has lots of new ideas baul: this lowers its per-seat-mile costs for using the large planes, including non- so it can be competitive on pricing. stop routes to Houston, Texas and South Groh points out that because EmiAmerica. He says that by 2012, the com- rates is a relatively young airline, its pany will have around 140 destinations fleets are also newer than some other caron offer. riers, which means it isn't burdened with Shahar Silbershate, strategy director, EMEA, at brand consultancy Siegel + higb maintenance or replacement costs. This "newness' also attracts the higherbrand strategy july/august 2007

Emirate?; Case study

"Whether you are shoving a bag on a conveyor belt, selling a ticket or working on the planes themselves, everyone is involved in marketing." Mike Simon, head of corporate communications. Emirates
paying consumers. "Airlines make the most money from the first and business class travellers. Emirates consistently win awards for its service in first and business class," he reveals. Just as the state of Singapore is widely seen as a model for Dubai's capitalist aspirations, Singapore Airlines with its reputation for customer service - is also seen as branding inspiration for state-owned Emirates. It has tried to follow Singapore Airlines in using distinctively Asian elements to create a premium product that appeals not only in its home markets but also to a Western audience. Siegel -f Gale's Silbershatz explains: "Emirates built the brand as an Asian airline and Asian airlines such as Singapore and Cathay have a much hetter reputation years and is one of the most, if not the most, aggressively expanding airlines in the world for the lastfiveyears. Its order book for the next 10 years is immense," he enthuses. "Within 10 years it will more than double in terms of passenger capacEastern promise ity, which is extraordinarily dramatic, Both Singapore Airlines and Emirates consideringcompetitorslike British Airuse similar language to talk about the lines and Singapore Airlines are not brands. They highlight innovation, supe- expanding at anywhere near that sort of rior customer services and the advan- rate." tages of operating primarily In the Emirates differentiates itself further long-haul sector. from competitors hy attempting to proDespite these similarities with Sin- vide a high level of service, especially gapore Airlines. Robert Cullemore, a sen- in its first-class section where it pioior consultant at analyst Aviation neered the concept of private mini suites Economics, claims that when it comes to complete with dining tables. It was one growth. Emirates has an incomparable of the first airlines to introduce in-flight record. entertainment systems in all three "It has only heen around about 20 classes. When the airline launched for customer service, primarily for the cabin crew, but also they seem to be ahead of the curve when it comes to things like entertainment systems or ushig mobile phones on the plane."

Sports sponsorship )s a good way to reach a wider base of consumers with varying degrees of weatth. investing in high quality products for both your premium and standard level customers will build loyalty across the board. Basing the brand In a region which is undergoing huge economic expansion can bring many financial and operational advantages. The frequency of service is an important consumer issue in the travel Industry. The premium product can subsidise cheaper products that puU in more customers. Capitalise on local impressions of your area - for example. Emirates has built on the reputation of Asia for good customer service.

brand strategy July/august 2007

Case study Emirates

Emirates facts
Emirates was founded in 1985 with a budget of Siom (Esm). Emirates currently flies to 89 cities in 59 countries. it is wholly owned by the Government of Dubai. it started operations with flights to Mumbai and Delhi followed by iCarachi. > Emirates first became involved in > sponsorship in 1987, only two years after the airline began operating, it sponsors local and country-level teams and international tournaments in football, horse racing, sailing, rugby, motor racing, cricket and golf. Emirates makes a contribution to the arts in Australia with Its sponsorship of the Australian Film industry Awards. Arsenal Football Club sees Emirates become not only its shirt sponsor for eight years - starting in 2006-07, but fioom funder of its new football stadium in North London. It was previously the sponsor of Chelsea Football Club. Emirates now operates scheduled passenger services, with nearly 550 flights each week. ' By 2012 Emirates will have about 140 destinations including new openings in South America.

in the 1980s, increasingly demanding passengers were looking for a travel experience that offered not just competitive cost but reliability of service and in-flight quality. The airline also tries to look at the whole process of travel to make it as consistent with the brand values as possible. Emirates' Simon says: "Travelling can be boring and inconvenient so we try and ease that. It is about creating a seamless experience all the way from the time you are picked up in a chauffer-driven car, to the time you get on board, to the time you arrive at your destination." In its first year, Emirates opened nine new destinations and it has been expanding ever since. Since it is investing money in new planes and building the brand through expensive sponorships, the management is keen to keep its profits growing at a steady rate. Where East meets West The strategy behind that profitability, says Emirates' Simon, is a combination of new, more luxurious aircraft, competent staff and keeping costs fairly low. The base in Dubai is also seen as a vital part of the growth strategy as the company believes that its location between East and West will be increasingly convenient for consumers. However, Emirates is not the only brand that is keen to put Dubai on the map. George Hamlin, managing director of US consultancy Airline Capital Associates and a former executive at Airbus, says: "There are other carriers such as Etihad and Qatar that are attempting to emulate it although they are starting from a position much further behind. So it will get some additional direct competition." Emirates' Simon agrees that the competition for the airline is becoming stronger but he is determined to look on the bright side: "There are other airlines in the Middle East trying to emulate Emirates. We operate an open skies airline in Dubai so we welcome competition, which in the end makes us a stronger brand." Currently, Emirates competes with more than 115 airlines in its home base of Dubai, without government protection. DA Davidson & Co's Groh suggests that potential problems may be less about competition with other carriers and

more about logistical issues surrounding growing so fast. He warns: "Getting its hands on enough planes will be a challenge going forward. Emirates is committed to the A38() and that plane's entry into service has been delayed several times. Use of that equipment is key to its growth plans, so further delays could limit growth." Ironically, having a glut of seats poses challenges for Emirates too. Aviation Economic's Cullemore argues that finding enough routes that the airline can fly and fill up all the new aircraft it has ordered will be tough. "The company has an extraordinary number of planes on order; something like 50 planes including Airbus A3ao and Boeing 777 aircraft. No other airline in the world has a delivery schedule on aircraft anywhere near that." However, Emirates says it is committed to the Airbus 380 because it offers the large capacity required by high-demand routes as well as relatively low seat-mile costs because of high fuel efficiency, a move to combat future pressures regarding fuel prices and global warming. But there is also another qualitybased challenge for the brand in expanding so fast. Cullemore adds: "From a branding perspective, what is interesting is that with an aggressive growth profile, a big challenge for the company is going to be maintaining that perception of being a top-rate airline - not flooding the market with cheap seats. It has always been a vice for airlines across the world. That top-quality image and standards need to be maintained at the same time as undergoing aggressive expansion." Emirates' lofty founding principles were about creating a brand with the objective of being the best airline on every route it flies. Emirates' Simon argues that avoiding the word 'marketing' and instead talking about "corporate communications' helps the company to focus on the brand better. He says: "Whether you are shoving a bag on a conveyor belt, selling a ticket or working on the planes themselves, everyone is involved in marketing." Wider reach The sports sponsorship carried out by the brand also falls under the marketing banner. Emirates' Simon says that sports sponsorship helps the brand reach out to a new, wider demographic who can
brand strategy july/august 2007

Emirates Case study

Emirates growth and profits 200^1-2007 Group Revenue Net profit Revenue Net profit Passengers carried Passenger seat factor Cargo carried (tonnes) $8.5bn (4.2bn) $6.6bn (3.3bn) $762 m (381 m) S6.3bn (3.ibn) $674m (337m) 14.5 million 75.9% 1.0 million $5.2bn (2.7bn) $7o8m (354m) $4.9bn (2.4bn) 12.5 million 74.6% 838,400

S8.ibn (4bn) $844m (42 2 m) 17.5 million 76.2% 1.2 million

Source: Company's own (figures rounded up to one decimal place)

now afford to fly "Because of the affordability of travel, the target market has changed and we have had to widen our base into things like sponsorships and outdoor advertising," he says. "You have to use as many media as possible - outdoor advertising, internet and sponsorship. If it moves, you've got 'Fly Emirates' on it. Sponsorship has given Emirates some credibility in terms of an airline that is not just advertising itself on CNN as Asian airlines typically do. Siegel + Gale's Silbershatz comments: "It tries to get involved locally, such as it did in the UK with the multi-million investment in the Arsenal football stadium. The sponsorship of sports events and sports teams, such as the deal it had with Chelsea Football Club, has been quite powerful for it, especially to build

reputation in Europe." But can such budget-busting sponsorship investments really pay off? Emirates' Simon defends spending so much cash on just one media channel. He argues: "Some people have criticised the amount of money we spend on sponsorships, which makes up 50% of our corporate communications budget. But we spotted that sponsorship was becoming an effective way of reaching a wide audience." He adds that it is a good way to move Emirates' appeal away from simply business travellers. The sports sponsorship can help introduce the name to holidaymakers. Simon says; "I am never too impressed by travel advertising -1 don't think we as an industry are as good as we should be. "We are a quality brand and we reflect

that quality and never dip our toe in the mud, so to speak. However, now we are trying to come a little bit downmarket because everybody flies these days and we can't just concentrate on reaching the top income people. Everybody is now in the market for seats on our aircraft and you have to reflect that in your advertising and brand building." Service is what counts Airline Capital Associates' Hamlin agrees that sponsorship is a good strategy for the Emirates brand which will help it boost its profile among leisure travellers. He does claim, however, that while marketing strategies such as sponsorship are important, it is the quality of service that really helps boost an airline brand's reputation. He says: "Step one is that you have to have good service, step two is that you have to tell the world about it to get them to acknowledge it." For now, the company seems to be sticking with its sponsorship deals. It is. however, trying out some more creative avenues of marketing too. A recent outI loor campaign in Dubai featured a hightoch billboard 'snowing' at night in the middle of summer. In Australia, it used interactive plasma screens at bus stops to nominate a favourite world city from a choice offered. As long as the skies are open. Emirates is keen to compete with its better known rivals, build the brand of Dubai as a destination and draw in new consumers through its multiple marketing methods. As its ad campaign asks: "When was the last time you did something for the first time?" The brand is hoping that people will respond: "Fly Emirates."

Arsenal's Adebayor and Flamini sporting the club's Fly Emirates shfrts
brand strategy July/august 2007