This SWOT analysis focuses on Fly Emirates and its services in the Asia-Pacific market segment. The Emirates Group comprises two distinct entities under one management – Emirates and DNATA. These subsidiaries operate interdependently and encompass several companies providing different services. Emirates offers air transportation, consumer goods, in-flight catering programs, and integrated hotel services through its divisions, joint ventures, and associates. DNATA primarily provides airport operations for cargo and freight logistics. From its main hub in Dubai, UAE, the carrier currently operates in several destinations globally. The airline offers short- and long-haul services to various routes in the Middle East, European Union, North America, South America, and Asia-Pacific countries.
SWOT Analysis
Explanation
Strengths
Youngest Fleet. Core competency analysis revealed that Emirates operates a younger and newest fleet in the industry. With 118 A380 Airbus planes and 134 Boeing 777s fitted with private suites and spas, the airline can provide quality services to first-class travelers (Emirates Group, 2022a). Other features such as lie-flat seats, in-flight Wi-Fi, lounge bars, and private hotel rooms have revolutionized the travel experience for First Class, Business Class, and Economy Class.
Strong Government Support. PESTLE analysis showed that ownership of the Emirates Group by the government is critical to the survival of the airline in turbulent times. The airline industry is susceptible to political factors, including pandemic-related travel restrictions, which hamper long-term growth (Abate et al., 2020). As a state-owned carrier, Emirates Airlines has access to financial and diplomatic resources to weather economic crises and obtain favorable sky policy for expansion to potential destinations in the Asia-Pacific region.
Strong Market Presence. Emirates has operations in several countries, helping mitigate risks related to overreliance on a single market. As revealed by the five forces analysis, high entry barriers in the industry ensure that Emirates has a strong presence in 78 countries globally, with Asia-Pacific (East Asia and Australasia segments) contributing 28% of its earnings in 2020 (Emirates Group, 2022b). Thus, Emirates can leverage its operations to penetrate this market further.
Weaknesses
Targets only High-end Clients. Emirates prioritizes luxury cabins to offer exceptional service at high fares. The provision of high-end products increases the airline’s unit costs. Emirates’ cost per available seat kilometer is ¢8, which is higher than ¢7 for low-cost operator EasyJet (CAPA, 2022).
Decline in Revenues. Poor financial performance may affect investment flows and growth strategy. Emirates’ revenue declined sharply in 2020, reporting $8.4 billion, which is a 67% drop from the 2019 earnings (MarketLine, 2022). Thus, pandemic-related slow growth may affect investor confidence and hurt its expansion goals.
Fewer Domestic Travelers. Emirates has a lower share of the domestic market than Etihad, the national carrier of UAE. Its seat capacity decreased by 83% in 2021 because of unfavorable routes and pricing (Thomas, 2021). Its focus on premium seats presents a weakness, as this strategy is not anchored in high-volume budget travel that is dominated by domestic passengers.
Not a Member of International Alliances. The airline has partnered with other carriers but it is not affiliated with OneWorld, Star Alliance, or SkyTeam. Its non-membership status exposes Emirates to intense competition in key routes.
Opportunities
Strategic Alliances. The low-cost segment is a growing subsector in Asia-Pacific. Strategic alliances with budget carriers such as AirAsia will enable Emirates to have a foothold in the region. Globaldata Travel and Tourism (2022) report reveals that up to 57% of travelers in China, India, Australia, and Singapore are influenced by cost and availability when traveling. Thus, there is a high demand for cheaper carriers in this region.
Diversifying Operations. Asia-Pacific countries offer opportunities for intra-regional travel that Emirates Airlines can tap into by launching new destinations in the region. Domestic and international travel is underdeveloped in India and China due to low air connectivity to tourist centers (Globaldata Travel and Tourism, 2022). By expanding to these countries through the low-cost model, Emirates will increase its inbound tourism earnings.
Expansion of Supplier Diversity. Presently, Emirates operates with Airbus 380s and Boeing 777s. Though these planes give the airline competitive advantages, reliance on these two companies exposes it to supply chain risks due to high supplier power. Emirates has an opportunity to buy from other major manufacturers, including Lockheed Martin, and Commercial Aircraft Corporation (IBISWorld, 2022). Partnerships with suppliers in the design would ensure fuel efficiency to cut costs.
Threats
Intense Competition. State-owned LCCs in Asia-Pacific countries present a significant threat to Emirates’ growth plans in the region. Airlines such as AirAsia and SpiceJet already have a strong foothold in China and India (Globaldata Travel and Tourism, 2022). Emirates must provide innovative and affordable products to compete in this market.
Foreign Exchange Risks. Emirates faces a threat from currency fluctuation risks during the conversion of earnings into dirham. IATA (2021) notes that fuel and ground operations costs and airplane prices are set in US dollars. Thus, uncertainty in exchange rates presents a risk to Emirates since its earnings in Asian subsidiaries are denominated in Yuan or rupee.
Predictable Pilot Shortage Globally. A predicted pilot shortage will impact fleet size operated by airlines. According to Perez (2020), the airline industry will need over 23,000 new pilots by 2029 to match growth in air travel. Thus, the shortage is likely to affect operations and profitability in the long term.
Recommendations
- Emirates should establish a low-cost in-house venture for entry into the Asia-Pacific region to avoid reputational costs.
- The airline should establish strategic alliances with partners and associates as a low-cost entry strategy in this region.
- Emirates should purchase aircraft from other manufacturers to minimize supply chain risks.
Recommended Strategy and Its Justification
Based on the SWOT diagram above, a differentiation strategy is recommended for Emirates to tap into opportunities in the low-cost segment and cut costs. In a differentiation strategy, a firm attempts to provide distinctive value in its industry. It involves choosing one or more attributes regarded as crucial by target customers and providing products tailored to those needs. Differentiation varies by industry and can be focused on product, service, image, price, cost, or distribution channel (Islami et al., 2020). Applying product and service differentiation will yield substantial long-term strategic advantages for Emirates.
Justification
Many airlines have prioritized product innovations in a bid to gain competitive advantages. For example, major carriers, including Emirates, Etihad, and British Airways, provide lie-flat seats, the newest entertainment system, and in-flight meals for business travel (IBM Global Business Services, 2022). However, these products are not inimitable, which results in undifferentiated product offerings. With abundant similar choices, switching costs are low, resulting in high buyer power. According to Bouwer et al. (2017), travelers do not see product differences, which makes them less likely to pay high prices for undifferentiated services. This trend suggests the need for airlines to rethink their strategy and adopt differentiation to deliver unique value.
Without a differentiation strategy, airlines have focused on costly innovations, leading to high operational costs. The Emirates Group reported a 128% growth in revenue after a US$ 1.6 billion loss in 2021, partly due to the relaxation of pandemic-related restrictions (Emirates Group, 2022a). However, Emirates, like other full-service airlines, has struggled to maintain leaner overhead and contain the threat of LCCs. For example, its operational costs rose by 73% compared to a capacity increase of 40% in 2022 because of a 65% growth in fuel prices (Emirates Group, 2022a). A differentiation strategy should be employed in the next 2-3 years for the airline to continue with this growth trajectory, achieve cost savings, and appeal to the growing price-sensitive segment.
Product Differentiation
Physical products are differentiated to make them distinctive and superior to rival brands. Firms use differentiation to design and develop products with valued features in the market, such as quality, innovative design, dependability, and durability (Aisyah, 2020). The goal of this strategy is to provide superior quality and exclusive benefits to customers. It creates long-term brand loyalty, which is crucial for competitive advantages in the industry.
A key rationale for product differentiation is to sustain a growth trajectory in the next 2-3 years. As an established full-service carrier (FSC), Emirates can gain strategic advantages by differentiating its product to target specific segments. Over time, travel has evolved from a preserve of the wealthy to a product consumed by people of different ages and income groups (IBM Global Business Services, 2022). For this reason, airlines must offer specialized products tailored to specific customers’ needs.
An LCC subsidiary will enable the airline to cater to price-sensitive consumers. According to Allied Market Research (2022), the low-cost segment is the fastest-growing segment, with the Asia-Pacific market projected to grow by 12% by 2030. Since price is a key consideration by travelers, having an appropriate LCC offering with affordable rates in addition to the mainline brand is a feasible strategy for Emirates. Some FCSs, such as Singapore Airlines, operate an LCC subsidiary (TigerAir) to supplement the main product (Bouwer et al., 2017). Product differentiation would be an effective strategy for entering the lucrative LCC segment.
LCCs have experienced exponential growth globally due to various social and economic factors. PESTLE analysis reveals that a flourishing tourism industry, urbanization, and increasing consumer preference for budget travel are key growth drivers for LCC (Allied Market Research, 2022). In addition, the middle class in emerging economies, especially in Asia-Pacific, have acquired greater buying power, driving lifestyle changes towards more travel. By designing a different product, Emirates can tap into opportunities in the middle-income segment. However, fluctuating oil prices, terrorism threats, COVID-19-related travel restrictions, and natural disasters threaten this industry (Sobieralski, 2020). Product differentiation will help Emirates adjust capacity in times of low demand occasioned by these disruptions.
The delivery of undifferentiated services means that customers spend several hours looking for the right product. The available choices are similar because airlines have the same aircraft suppliers. For example, Etihad operates A380s and 777s planes, which also comprise Emirates’ fleet (Etihad, 2021). Thus, they deliver undifferentiated customer experiences, as product differences may not be easily discerned by the customer. Airlines have also used technology to differentiate their products (Raynes & Tsui, 2019). However, such solutions are rapidly replicated by rivals, making travel experiences indistinguishable.
Differentiated products can help reduce Emirates’ high product-related costs and overheads. At airports, terminal costs for LCC will be low and onboard service will include basic meals and drinks and density seating arrangement (Bouwer et al., 2017). Thus, product-related cost savings and an increase in seat capacity will be significant. By establishing an LCC subsidiary with a different brand name, Emirates will mitigate reputational damage due to negative reactions from its traditional high-end client base.
Product differentiation outside the Emirates brand is justified as a cost-saving strategy for Emirates and entry mode into the growing LCC segment without arousing negative consumer reactions. For example, Singapore Airlines established Scoot for its low-cost medium-haul operations, allowing access to the lucrative budget travel segment, which could not be reached using the FSC strategy (Raynes & Tsui, 2019). In addition, most Asia-Pacific customers (57%) are budget travelers that are mainly influenced by price (Globaldata Travel and Tourism, 2022). Since the products demanded by this segment are different from Emirates’ primary offering or premium prices, differentiation is justified. The airline can develop and launch a different product to target LCC and cut its high unit costs.
Service Differentiation
Besides LCC, another way the airline can contain costs is by differentiating its services. This approach requires that service offerings are tailored to the specific needs of each customer segment (Raynes & Tsui, 2019). Intense competition in the airline industry is partly due to commoditization, whereby services offered by different airlines are closely similar (Aisyah, 2020). A strategic choice that Emirates can use is tailoring its services to each specific segment of travelers. Its current strength profile is suited for luxury travel but without strategic partnerships with global airline networks, Emirates can only compete using aggressive service-based innovations.
Targeting narrower segments with differentiated, personalized services will be a more effective strategy than the airline’s current one-size-fits-all approach. As with other FSCs, Emirates’ current fleet is largely uniform, comprising luxury planes – 118 A380 Airbus and 134 Boeing 777s with similar high-end features for first-class travelers (Emirates Group, 2022a). Therefore, for this airline, innovation entails lie-flat seats, in-flight Wi-Fi, and lounge bars. However, the travel population is complex and not all customers may be satisfied with these services. An unmet customer need identified from PESTLE analysis is seamless transitions at airports. Narrower segmentation will help identify travel and accommodation preferences for specific customer segments after leaving the airport. This approach will help differentiate Emirates’ services and provide a distinctive value to customers.
In addition, a differentiated service can be achieved by greater integration with other travel modes. Collaborating with rail operators, hotels, and cab service providers will ensure seamless travel planning for customers (IBM Global Business Services, 2022). Integration across transportation modes, including airport hotels, will ensure value-added services and depict the airline’s extended responsibility for its customers. By mitigating travelers’ frustrations in booking cabs or hotels, Emirates will differentiate its services from those of competitors.
Innovative on-board services, such as life-flat seats, or in-house staff training college can be easily copied by other airlines. For example, like Emirates, Etihad has an aviation training center that provides safety and service programs for its employees (Etihad, 2021). Thus, focusing on easily replicable service innovations may not give Emirates long-term competitive advantages. However, complex services, such as integrated booking of hotels and cabs tailored to each customer group may be less imitable. Journey-based elements, including coordinating schedules with cab services, changes in transit, and hotel check-ins, are complex and may not be copied easily (IBM Global Business Services, 2022). Thus, innovations requiring uncommon inputs can differentiate Emirates’ services from those of rivals.
Seamless travel is one way the airline can deliver unique value to travelers. This goal can only be achieved by better coordination across the travel value chain. Emirates should prioritize efforts to develop innovations that would make seamless travel a reality to attract travelers. Currently, customers spend several frustrating hours searching and booking hotels and rail and road transport (Sobieralski, 2020). Implementing this solution is likely to differentiate Emirates’ services and create a loyal customer base because of the unique value delivered. The challenges of controlling operating costs and competition from LCCs can be overcome with the recommended differentiation strategy. By differentiating its products and services, Emirates will deliver unique travel experiences, attracting a loyal client base and reducing costs. The airline can do so through an LCC subsidiary to avoid negative reactions from its current target customers.
Academic Analysis
Differentiation is a generic strategy for competing in an industry. It enables an organization to deliver unique value by providing superior products or services compared to those of rivals. Differentiation can be achieved using segmentation or integration to ensure a firm’s offerings are adequately differentiated to meet specific customer needs (IBM Global Business Services, 2022). Some strengths and weaknesses of differentiation have been identified in the literature, which influence its value as a competitive strategy.
Strengths of Differentiation
For a firm to gain a competitive advantage in its markets, it must differentiate. Differentiation is recognized as a fundamental generic strategy for improved performance of small and medium enterprises (SMEs) (Knight et al., 2020). In a business environment characterized by uncertainty, risks, and competition, differentiation is useful for maximizing financial performance. Compared to cost leadership strategy, differentiation helps SMEs develop unique capabilities focused on customers to outperform rivals and increase their degree of internationalization (Cho & Lee, 2018). Thus, for organizations with limited resources, a differentiation strategy has been demonstrated to drive performance.
Some scholars have shown the direct benefits of pursuing a differentiation strategy. Islami et al. (2020) used a model comprising causal effect and cross-sectional and longitudinal elements to evaluate the performance impact of the differentiation process. Employing this strategy was associated with competitive gains and performance improvements. Notably, for manufacturers, flexibility in choosing business goals and integration of organizational and industry-level factors were associated with successful differentiation. Pursuing this strategy is associated with increased profitability, as consumers are willing to pay higher prices for distinctive products or services (Islami et al., 2019). In addition, differentiation results in inimitable offerings, which can discourage new entrants into an industry. Consequently, incumbent firms will experience less competition and growth in market share and profitability.
Product differentiation has been linked to an improved competitive position in an industry. Türkes et al. (2021) identified differentiated products and prices as indicators of efficiency. As a business strategy, differentiation delivers unique value in the food services sector, which reinforces a restaurant’s competitiveness in its market segment, enhancing organizational performance. Türkes et al. (2021) further note that differentiation promotes innovation, enabling a firm to tap into lucrative opportunities and experiment with ideas for new products to become market leaders. It directly impacts brand positioning in its industry (Rua & Santos, 2022). Companies can achieve competitive advantage by leveraging technology and value derived from intangible resources to differentiate their products.
Differentiating a company’s products from those of competitors is related to branding. Researchers have linked differentiation to brand development strategies for developing product attributes to levels incomparable to those of rivals (Veloutsou et al., 2020). Differentiating a brand requires close relationships throughout the product development cycle. Thus, to develop a strong brand with differentiated characteristics, customers’ values, preferences, and emotional aspects must be considered.
Regarding competition, scholars have identified differentiation as the best strategy for competing effectively in a market niche characterized by many substitutes. Lamb et al. (2022) found successful internationalization of SMEs is driven by product line diversification. Risky international markets require innovative products and skills to achieve efficiency and competitive gain, which is a differentiating factor in any industry. Delivering superior value compared to other firms in the market requires a value-adding strategy to provide products that cannot be duplicated, resulting in profitability (Rua & Santos, 2022). In this regard, differentiation entails optimizing key resources to acquire a competitive advantage in the industry.
Differentiation is also the basis for favorable positioning in the market. Rua and Santos (2022) describe competitive positioning as differentiating a product or service from those of rivals to make it appealing to a specific audience. It is the perceived value of a brand to consumers. As described by Fumasoli et al. (2020), to achieve positioning, Italian universities have differentiated themselves by establishing a distinctive and inimitable profile. Their strong competitive position is derived from internal resources and efficiency. In developed economies, greater differentiation focused on clients is an arbitrage strategy for reducing supplier power, minimizing key risks, and promoting innovativeness (De Kluyver, 2010). Thus, a company can leverage differentiated products to bargain for favorable prices or better regulations in its industry.
Sustainability standards are a key differentiator for companies, especially with the growing environmental concerns. They provide an opportunity for any organization to differentiate its products and gain a positive image as an environmentally responsible brand (Unruh & Ettenson, 2010). Sustainable practices can be a differentiator as consumers are increasingly seeking green products. For example, in the pay TV industry, DISH Network seeks to leverage its sustainable infrastructure to differentiate its services (Unruh & Ettenson, 2010). Innovation is key to achieving a differentiated service at a lower cost. According to Prahalad and Mashelkar (2010), resource-constrained firms build unique innovation systems or acquire new capabilities – an important differentiating factor that allows them to offer cheap products and services. Thus, differentiation is driven by technical expertise and rare resources and infrastructure.
Weaknesses of Differentiation
Scholars have investigated the weaknesses of differentiation as a competitive strategy. Widuri and Sutanto (2019) found that firms pursuing differentiation are unlikely to use earnings management, resulting in high operating costs. As companies attempt to differentiate themselves, they tend to disregard overheads. Therefore, implementing differentiation is usually an expensive venture for firms. Differentiated products must be sold at a high price to offset costs. While customers willing to pay a premium for high-quality brands will make a purchase, others are less likely to do so (Zhao et al., 2020). In addition, inferior brands or substitutes may have a larger market share, affecting sales of differentiated products.
The success of differentiation is dependent on advertising intensity, which may not be cost-effective. One study found that, even for differentiated products, the likelihood that a customer knows about a firm’s product is dependent on its promotional efforts (Lauga et al., 2022). However, advertising is not always cost-efficient, which forces companies to spend less on ads. As a result, heavy advertisers with low-quality products may perform better than companies with differentiated offerings. Thus, advertising levels and pricing are key considerations that influence the success of differentiation strategy.
Many studies have analyzed the relationship between inputs and prices for differentiated products to estimate the impact of differentiation. Loy and Weiss (2019) empirically analyzed the effect of differentiation on the pass-through in the retail industry. They established that cost savings from differentiated products are less likely to be passed to consumers. This result suggests that firms use a differentiation strategy to gain more market power rather than reduce prices when costs decline. Companies employ product variation as a competitive factor for favorable pricing (Bittmann et al., 2020). Thus, differentiated products are generally more costly than competitor brands.
Differentiation requires specialized skill sets, which may be lacking in smaller organizations. Experts and core competencies are needed to cost-effectively create and market differentiated products or services. However, owing to resource limitations, small and medium enterprises (SMEs) typically have more generalists than specialists (Galli-Debicella, 2021). Their workforce includes people doing general functions, including marketing or management. They lack job specialization or competencies in specific domains that are needed to deliver products with differentiated characteristics. Thus, a differentiation strategy may not be appropriate for organizations with a smaller resource pool or lacking competitive skill sets. For SMEs, this strategy may not be sustainable, as it can be easily duplicated by bigger firms with resources and competencies.
Best Approach to Implementing Differentiation in Practice
Broad-based differentiation enables firms to provide value propositions that motivate consumers to pay more for a product or service. However, to successfully pursue this strategy, companies must have an established brand (Galli-Debicella, 2021). Businesses that have existed for many years have built key competencies, economies of scale, or distribution systems to support differentiation. Thus, firms must first seek to establish a strong brand to profitably deliver a differentiated product or service.
As the firm grows, it acquires more resources and sustainable competencies that may not be easily copied by others. As Wheelen et al. (2018) state, the unique characteristic must be scalable and patentable. Scalability entails decreasing unit costs through economies of scale or distinctive technology or skill sets. Firms must seek to develop superior people-based competencies and acquire innovative infrastructure before using differentiation. Importantly, a culture that fosters skills development will generate scalable competencies (Lamb et al., 2022). Thus, hiring individuals with unique skills or establishing in-house training programs are ways firms can attain differentiation advantages over rivals.
Process-based competencies also enable firms to effectively differentiate their products or services. Creating distribution systems based on target customer preferences or building stronger market research capabilities to help develop products with unique attributes results in competitive advantages (Galli-Debicella, 2021). Thus, a niche strategy is needed before transitioning into differentiation. Differentiated products are tested in a specific niche before broadly differentiating. Differentiation is pursued after developing core competencies and cost advantages in a given market.
How Emirates can Make Differentiation Work
For Emirates, a differentiation strategy will help develop a compelling value proposition, especially because the services and products currently offered by most airlines are less differentiated. Emirates has several avenues to a successful implementation of a differentiation strategy. First, the airline should define a consumer niche (for example, Asia Pacific) to rapidly determine its needs (Galli-Debicella, 2021). Through customer interactions, useful insights will be gained to help differentiate or customize Emirates products and services for the local market. Before using broad-based differentiation, a high-quality niche strategy should be employed to test LCC at a smaller scale in the Asia Pacific region. Providing a fresh image for its services will differentiate them from other LCC offerings in this market.
Second, Emirates should leverage its core competencies to execute a differentiation strategy. Its strong brand image of quality service, resources (fleets), and distinct skill sets of its staff and processes will enable the airline to achieve efficiency and pass lower operational costs to low-cost travelers. With the initial niche strategy, Emirates will build core competencies in LCC that other large airlines may not replicate (Wheelen et al., 2018). Current LCCs may not match Emirates’ resources, giving its differentiated product a distinct advantage. The airline can leverage its competencies, technology, and workforce to deliver a better service than LCCs. However, a culture that fosters key skills and mentorship will be crucial to creating inimitable expertise, which can then be applied to the development of a differentiated product or service.
Third, Emirates should use establish a superior innovation process to drive differentiation. This approach will require investment in consumer research to help deliver differentiated products quickly to the market. Innovation in in-flight services, for example, providing organic food, will lead to sustainable differentiation advantages. Operational costs will also be reduced by adopting technology in check-ins and booking flights and using fuel-efficient engines. The cost savings can then be passed to consumers, resulting in cost-differentiated products according to the income profiles of travelers.
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Appendices
PESTLE Analysis
Political
Socio-political tensions in Asia will impact Emirates Airlines. It must grapple with strained relationships and military conflicts in its important routes in Iran, Taiwan, Russia, and Ukraine, which have affected tourism. In addition, travel restrictions imposed by different countries due to the COVID-19 pandemic will affect Emirates’ operations globally. However, the airline has found stability in Asia and Africa (Emirates Group, 2022b).
Economic
Emirates experienced a sharp decline in its earnings in 2020, reporting $8.4 billion, which is 67% lower than the 2019 earnings (MarketLine, 2022). In addition, the weak demand for premium travel due to the pandemic-related economic slowdown has affected its performance in major markets in Africa and Asia.
Social
Air travel has changed significantly, with passengers increasingly looking for personalized service, including online check-ins. According to Thomas, Emirates’ seat capacity dropped by 83% due to unfavorable route choices and high fares. Thus, a quality-price tradeoff is needed to meet customer expectations.
Technological
Emirates operates two kinds of aircraft fitted with key features that improve the travel experience: A380s and Boeing 777s. These airplanes have lie-flat seats, lounge bars, and personalized entertainment systems (Emirates Group, 2022a). However, these features have increase unit the cost per available seat kilometer to ¢8, which is higher than ¢7 for low-cost operator EasyJet (CAPA, 2022).
Legal
Legal restrictions limit the number of destinations in which Emirates Airlines operates. National low-cost airlines such as AirAsia and SpiceJet dominate Indian and Chinese domestic markets because of the favorable regulatory landscape (Globaldata Travel and Tourism, 2022). Emirates will face many hurdles to gain regulatory approvals to operate in these markets.
Environmental
To contribute to environmental sustainability, Emirates Airlines must cut its carbon footprint. Using fuel-efficient engines, optimizing ground operations, using recyclable materials, and serving food farmed sustainably are some of the measures the airline employs to protect the environment (Emirates Group, 2022a).
Five Forces Analysis
Threat of New Entry
The threat of new entry is considerably low as capital requirements for starting an airline are prohibitive. Additionally, the aviation industry in the UAE, Asia-Pacific, and globally is dominated by a few airlines. New entrants may not operate profitably in these markets.
Buyer Power
Asia-Pacific countries are an ideal market for low-cost carriers. According to Globaldata Travel and Tourism (2022), up to 57% of travelers in China, India, Australia, and Singapore are influenced by cost and availability when traveling. In light of the growing price considerations in Asia-Pacific and globally, the power of buyers is high.
Threat of Substitutes
The threat of substitutes is relatively low in the airline industry. Emirates operates technologically advanced fleet with cutting-edge in-flight features designed for comfort. Thus, other substitutes, including cars, ships, and low-cost carriers may not match these qualities.
Power of Suppliers
Supplier power is considerably high because Emirates relies only on two suppliers: Boeing and Airbus. Purchasing a new fleet from other manufacturers, including Lockheed Martin and Commercial Aircraft Corporation, can ameliorate supply chain risks (IBISWorld, 2022). However, switching to new suppliers may be disruptive and costly.
Competitive Rivalry
Emirates faces stiff competition locally from Etihad, which controls a larger market share in UAE (Thomas, 2021). European airlines and low-cost carriers such as AirAsia and SpiceJet have a strong foothold in China and India (Globaldata Travel and Tourism, 2022). By diversifying into the low-cost market, Emirates will reduce its dependency on high-income clients.
Competitor Analysis
Emirates has many direct and indirect competitors in domestic and international markets. Its main competitors include Etihad Airways, Qatar Airways, Lufthansa, and Fly Dubai.
- Etihad Airways – it is the second-largest carrier in UAE founded in 2003. It operates from its Abu Dhabi airport as a government-owned airline that dominates the domestic market. It has excellent branding and operates locally and internationally in Asia and the EU.
- Qatar Airways – it is Qatar’s national carrier that was founded in 1997 by the Qatar government. It operates in several countries on six continents. It focuses on sponsorships and ads to increase brand awareness.
- Lufthansa – it is a German airline with operations globally. The carrier operates in many sectors, including hotel and catering and logistics. Its strong global presence makes Lufthansa a strong competitor of Emirates Airways.
- Fly Dubai – this low-cost carrier was founded in 2008. Its destinations are predominantly in the Middle East, Asia, and Africa. Because it provides affordable fares, the airline is a strong competitor of Emirates Airways.
Core Competency Analysis
Value Chain Analysis
The value chain model applied to Emirates will show how the airline creates customer value to drive its growth strategy.