Is This the Right Strategy
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Business Strategy
Emirates Airlines In a League of its Own
By Prof Dr M. S. S. El Namaki
T
With the global economy
Is this the Right Strategy?
booming,
globetrotting
is no longer a perk in the corporate world. With the advent of internet and rapid innovations in the field of communications and travel, the world has truly shrunk in size. Plastic money is passé. Time is the new global currency.
he airline industry, which plays a pivotal part in any country’s economy, is one of the most volatile industries, plagued with excessive losses, restructuring and bankruptcies. There is a long history of bailout packages in the United States, and efficiency seeking mergers in Europe. The industry is cyclical. Four or five years of poor performance precede five or six years of improved performance. But profitability in the good years is generally low, in the range of 23% (net profit). In times of profit, airlines lease new generations of airplanes and upgrade services in response to higher demand. Consolidation is a trend, though variable in shape. Airline groupings may consist of limited bilateral partnerships, long-term, multi-faceted alliances between carriers, equity arrangements, mergers, or takeovers. Since governments often restrict ownership and mergers between companies in different countries, consolidation is restricted within the country. The Middle East is a textbook example of such weaknesses. Events such as September 11, the Iraq conflict, the conflict in Lebanon and Palestine, constitute to the socio-political imbalance in the region. These factors invariably affect the economy of the region. Directly or indirectly. Emirates Airlines was conceived within this turbulent environment and has demonstrated an unfailing ability to grow in these unstable conditions. Moreover, it has been able to develop a global strategy that has taken it beyond the limits of the regional market. (New Nation Online, 20 May, 2006). The following case study...
Emirates Airlines In a League of its Own
By Prof Dr M. S. S. El Namaki
T
With the global economy
Is this the Right Strategy?
booming,
globetrotting
is no longer a perk in the corporate world. With the advent of internet and rapid innovations in the field of communications and travel, the world has truly shrunk in size. Plastic money is passé. Time is the new global currency.
he airline industry, which plays a pivotal part in any country’s economy, is one of the most volatile industries, plagued with excessive losses, restructuring and bankruptcies. There is a long history of bailout packages in the United States, and efficiency seeking mergers in Europe. The industry is cyclical. Four or five years of poor performance precede five or six years of improved performance. But profitability in the good years is generally low, in the range of 23% (net profit). In times of profit, airlines lease new generations of airplanes and upgrade services in response to higher demand. Consolidation is a trend, though variable in shape. Airline groupings may consist of limited bilateral partnerships, long-term, multi-faceted alliances between carriers, equity arrangements, mergers, or takeovers. Since governments often restrict ownership and mergers between companies in different countries, consolidation is restricted within the country. The Middle East is a textbook example of such weaknesses. Events such as September 11, the Iraq conflict, the conflict in Lebanon and Palestine, constitute to the socio-political imbalance in the region. These factors invariably affect the economy of the region. Directly or indirectly. Emirates Airlines was conceived within this turbulent environment and has demonstrated an unfailing ability to grow in these unstable conditions. Moreover, it has been able to develop a global strategy that has taken it beyond the limits of the regional market. (New Nation Online, 20 May, 2006). The following case study...