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Value Chain Analysis: Emirates Airline

Introduction

The government of Dubai uses oil revenue to make investments that improve its economy. It wholly owns the Emirates Group made up of Emirates Airline, an airline, Dubai National Air Transport Association, a company that provides airport transport services, and a hotel chain. Emirates Airline is the largest airline in the world. It has prospered greatly in the recent past due to the ‘open skies policy’ implemented by the ruling sheikhs. This policy has led to a significant increase in the number of foreign airlines in Dubai International Airport, making it the busiest airport in the Middle East. Therefore, it was vital for the airport to increase its efficiency to facilitate flawless operations. Since its incorporation in 1985, Emirates Airline has grown to become one of the most prestigious airlines in the world. First, it had only two operational aircraft, which transported only a few thousand passengers in a year. However, the airline has grown rapidly and in 2014, it transported more than 40 million passengers and more than 2 million tons of cargo. Emirates Airline mainly operates Boeing and Airbus aircraft. The airline purchases new airplanes regularly, which has helped in reducing the average age of its aircraft to slightly more than 70 months, which is significantly lower than the industry average. The regular purchase of new airplanes has also made the airline boast having one of the largest fleet of Boeing 777 and Airbus A330, A340, and A380. In 2013, the airline made an order for the purchase of 150 Boeing aircraft and 50 Airbus A380 aircraft, which increased Emirates’ fleet by 200 aircraft. Analysis of Emirates’ value chain would involve an analysis of support activities and primary activities (Besanko, Dranove, & Shanley, 2014).

Support Activities

Emirates Airline utilizes vertical integration as the major strategy of building its infrastructure, which has enabled the airline to diversify its properties. The airline has check-in and service desks, boarding and lounge services for its customers, as well as baggage and handling services. Emirates Airline also owns several hotels and resorts, which cater for its clients. Furthermore, the airline transports cargo via Emirates SkyCargo. It also has an aviation college that trains its pilots and staff. The Emirates Engineering Center engages in the repair and maintenance of the airline’s aircraft. Therefore, the vertical integration ensures that the airline’s operations progress seamlessly. However, they increase the operating costs of the airline. The fact that the Dubai government owns Emirates makes it have access to vast capital to increase its infrastructure. Dubai International Airport is an Emirates’ hub. Free tax at the airport and the standardized fleet of aircraft help in reducing the operating costs of the airline (Taneja, 2014). Boeing and Airbus aircraft are designated to operate only on certain routes.

Human resource management is one of the major components of support activities of Emirates Airlines. It has more than 60,000 employees, making it one of the largest employers in the region. The airline recruits its workers from its learning institution – Emirates Aviation College. Students in the college are taught subjects that are related to aviation, which makes them potential employees of the airline. According to Emirates, human capital is one of the most important assets. The unique uniform makes Emirates’ air hostesses easily recognizable. They act as ambassadors of the airline. Due to the great importance placed on human resources, Emirates Airline offers its employees numerous cash and non-cash benefits. Furthermore, it offers its workers accommodation and transport allowance to ease their activities when they are in various cities around the globe. The airline also has a reward system that rewards high-performing employees. This strategy helps in improving the performance of the airline’s staff (Thompson, Strickland, & Gamble, 2007).

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The airline industry is a technology-intensive business. Having the latest technology provides companies in the industry with a competitive edge over other organizational and allows them to gain business that is more lucrative. Emirates Airline acknowledges the importance of technology in its operations. The airline has made huge investments in the latest technology, which has helped in differentiating Emirates as a five-star standard airline. The company regularly orders new aircraft to update its fleet. It also possesses one of the newest Boeing and Airbus aircraft, which incorporates the latest technology. In fact, Emirates Airline is the most modern airline worldwide. The company has entered into an agreement with Aero Mobil, which has enabled its aircraft have on-board mobile coverage. A significant proportion of the airline’s aircraft also provides free Wi-Fi. The company expects all its aircraft to have free Wi-Fi within the next few months. Emirates Airline focuses on the improvement of technology prompted the company to set up its in-house research and engineering centers. The airline also has a computer reservation center that enables customers to reserve their seats online. The flight scheduling system of the company helps in improving the efficiency of operations of the airline. Emirates’ technological advances have made it receive numerous awards (Taneja, 2014).

Procurement is also one of the Emirates’ support activities in its value chain. Emirates Airline procures its fleet of aircraft from Airbus and Boeing, as well as its products from different sources, which may be within or outside the Emirates Group. Furthermore, the Emirates Engineering Center provides the technical assistance needed by the airline. On the other hand, Emirates flight catering provides in-flight catering services.

Primary Activities

Emirates Airline strives to reduce the amount of time that passengers spend at airports waiting to board their flights. The airline provides self-operation for services such as check-ins, baggage handling systems, airport pushback, and boarding and lounge services.

Moreover, Emirates Airline attempts to create the image of a premium brand among its customers. The airline seeks to ensure that clients also associate it with utmost safety and luxurious in-flight services. The airline is one of the major sponsors of sporting events across the globe. It uses the slogan ‘Fly Emirates’ in its sponsorship deals. Currently, the airline sponsors various major European football clubs, which include Real Madrid, Paris Saint Germaine, and Arsenal. In their turn, these football clubs have the slogan ‘Fly Emirates’ printed on their jerseys. Emirates Airline also has received numerous awards due to the provision of high-quality services. The airline uses the awards in its sales and marketing strategy (Taneja, 2014).

In addition, Emirates Airline has various high-quality services that help in differentiating it with other airlines in the industry. The airline has Emirates Lounges located in various airports around the globe. Emirates Hotels and Resorts provide the airline customers with high-quality services between flights. Emirates in-flight entertainment services are the industry’s benchmark. It has consistently been voted as the best in-flight entertainment service in the industry, which enables passengers to make mobile phone calls, access the internet and watch movies on demand. Passengers are also updated on current news on screens, which are in front of their seats. Emirates Airline also offers its passengers Skyward Miles. They enable passengers to spend their earned miles in other companies in the retail, banking, and hospitality industry, which have collaborated with the airline. Emirates Airline also provides customers with a service that allows them to check-in 24 hours before their flights. The passengers can access their boarding passes via their mobile phones (Cavusgil, ‎Knight, & ‎Riesenberger, 2014).

Inbound logistics is one of the key elements of the primary activities of Emirates’ value chain. As was previously mentioned, Dubai International Airport is the hub of Emirates’ operations. The airport is large enough to handle the enormous number of flights of the airline. Emirates Terminal 3 of the airport is exclusively reserved for Emirates. Dubai International Airport is also highly efficient, which in turn increases the efficiency of Emirates Airline. The latter is also less dependent on supplies from external parties, which increases the efficiency of its operations (Sales, 2013).

Emirates SkyCargo, which is the cargo division of the airline, handles its outbound logistics. However, its main hub is not Dubai International Airport, but Al Maktoum International Airport. Emirates SkyCargo operates flights to 20 destinations, which are in 15 countries. Furthermore, Emirates SkyCargo can also access more than 70 additional destinations through Emirates network. Finally, Emirates SkyCargo has more than 40,000 employees (Sales, 2013).

Conclusion and Recommendations

Emirates Airline is the largest airline in the world. High productivity, cost efficiency, and entrepreneurial management have made Emirates have a competitive edge over other airlines in the industry. However, to undertake a better comparison with other airlines one should conduct an analysis of the external factors of the company. A PEST and a SWOT analysis would help in highlighting the airline’s position in the market. However, the company is on the right track. Continuous implementation of innovative strategies would guarantee the airline’s future growth and profitability.

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