Case Study of Emirates and Air Etihad Airlines

Document Type:Research Paper

Subject Area:Business

Document 1

Introduction Etihad Airways is a national Airline of UAE. It is the second largest airline after Emirates. Etihad is based in Abu Dhabi which is the second populous city in UAE. It was established in July 2003 and by Royal Decree and started its operation in November the same year. Despite its young history in the aviation market, Etihad Airways is one of the fastest growing airline companies in the history of aviation industry. Etihad Company reached a break-even point in the year 2011. Nowadays it serves its flights in more than 85b destinations in more than 62 countries. Emirates Airline on the other hand is an airline company based in Dubai. It company is owned by the Government of Dubai and it is the largest airline in Middle East. It operates more than 3500 flights every week from Dubai to various international airports. PEST Analysis of Etihad and Emirates Airlines the in United Arab Emirate PEST analysis is an important tool that helps in scanning the general environment where the business is conducted. The word PEST is an acronym that stand for Political, Economic, Social and technological factors. Some authors have extended the acronym by adding legal and environmental factors but the legal aspects covered in the political factor while the environmental aspect cover people’s lifestyle. PEST analysis is used to identify the hazards and the factors forming by identifying and monitoring weak signals. PEST analysis varies from one country to another depending on technological, economic political and social factors. Political The political factor deals with the government policy and its effect.

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Political factor entails the legal elements such as the government stability, taxation policy and the government regulation. Just like any other industry, the aviation industry is directly or indirectly affected by the unstable political. Aviation industry is sensitive to political changes. Political situations may involve the economic conditions or war experience in a particular country or in a particular region where a particular airline company operates. Favorable economic conditions will enable a country to make profits and grow. In any economy, money is the most important element that is required in developing airports. Money will also be used in would also be necessary in equipping the airports and purchasing the best aircrafts. The UAE has invested a considerable amount of money in developing Emirates Airline. This has in turn generated huge profits because this airport is up to the international standards and is mostly preferred by virtually all customers and airline.

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Technological factors can either be a blessing or a curse in our daily lives. Security systems at the airports have been enhanced with the introduction of new technology. Technology has enhanced security systems at the airports. Technology has made the systems more effective and powerful. Furthermore technology has made it easier for people to book flights through e-booking system and this has considerably reduced congestions at the booking offices (Al-romaithi, 2014 p 15). Threat of rivalry Etihad’s main competitors in terms of market share are Emirate and Qatar Airways. These companies offer strong competition to Etihad Airways in terms of market penetration because of the services they offer to their customers. Emirates and Qatar Airlines are increasing their number of fleets every single day making competition to be tenser. Threats of new entrants With more airline companies being launched every single day implies these new entrants need to penetrate into the market by charging low prices than the already established companies so that they can attract customers.

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Bargaining power of suppliers Airbus and Boeing are the only two suppliers of aircrafts and this indicate that to some extent, these two companies dominate in the market and they may advice Etihad Airways on the most efficient airbus that would suit the requirements of their customers. Another weakness Etihad experience is its connectivity between Washington DC and New York (O'Connell & Bueno, 2016 p 21). Opportunities Despite Etihad Airways being young in the Aviation market, it enjoys numerous opportunities as it has new aircrafts to offer. Etihad Airway is planning to take advantage of new destinations on EY network worldwide. It also looks forward to establish a good relationship with airports to offer premium facilities to its passengers to improve share as well as winning the customers’ confidence in the brand. Threats Etihad Airways faces completion from Emirate and Qatar Airways in the Middle East.

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Emirates focuses on businesspeople are its main flyers. Emirates are planning to improve and expand its routes to gain more market shares. Emirates Airways is practicing strategic cooperation with other airlines and this has enabled it to improve its branding. Emirate cooperation is currently publishing its magazines and send them to other companies to attract their attention as well as advertising their services to passengers who have not experienced their services before (Al-Ali & Ahmad, 2014 p 21). Apart from improving and expanding their fleet, catering and entertainment programs, emirates airways is strategizing in scheduling roster which creates diversity in cabin crew to serve people from all walks of like and from different cultural diversities. The competition is so stiff to an extent that the industry is experiencing boosting growth of LCC. Bargaining Power and Buyer Due to high competition from other established Airlines, Emirates cooperation is facing threat from customers in terms or reducing prices for the products they get from Emirate cooperation.

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Therefore Emirate Cooperation is unlikely to generate more revenues over time because of reducing the prices of their tickets and investing more of their resources in technology. Bargain from suppliers Boeing and Airbus are the major producers of aircraft in the world. Since most airline companies depend on these two producers, Emirate Company is likely to face the threat of paying high prices or at time experience delays in delivery. SWOT Analysis Strength Emirate airline has strong backing of the government of the United Arabs Emirates. The airline is an important pillar in the economy of the Arabian Kingdom and this has made the company to be in a good position both financially and operationally (Al-romaithi, 2014 p 15). Emirate airline is the leading recognizer brand sponsor in various sports. Emirate in the sponsor of the English FA cup until 2018 and the main aim of sponsoring the FA is to increase its visibility in Britain.

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Emirate has also ventured in baseball making it the official airline sponsor of Los Angeles Dodgers in 2015 which has promoted the airline brand in the US. Emirate airline has partnered with Boeing and Hollywood stars like Jenipher Aniston for promotion. Weaknesses • One of the major weaknesses of Emirate airline is high operation cost which is associated with huge investment that is made on buying of aircrafts and implementing of new technologies • Emirate Airways is well known for its high process of tickets as compared to other Airline companies such as Air Arabia which offers cheap price tickets. • Emirates Airline does not have a hub in Abu Dhabi airport and this has made it difficult for it to compete favorably with other companies there like Ethiad airways. Opportunities • The UAE government is investing in developing the main airport s in Abu Dhabi.

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• High population growth rate in the Middle East r countries and the world provide the future market for Emirates Airline. Which represents 7. increase compared to the previous years? The number of passenger increased from 44. million to 49. million over the same period of time. Passenger seat factor increased from 79. Load factor reduced by 3. to 76. Load seat factor reduced because of the competition from other Airline companies that offered better services than Emirates Airline. The cargo carried in 2015 increase by 4. to 2. The airline turnover in 2014 increased to $244. million compared $241. in the same period last year. In the same year, Air Arabia served more than 2. million passengers and it had the average seat load of 78. Seat factor 79. Number of aircraft 121 110 Codeshare partners 49 49 Partner revenue (US$ million) 1,379 1,129 Cargo tonnage (tonnes ‘000) 591 569 Number of employees 26,566 24,206 Recommendations The product strategy of all Airlines in the UAE is differentiated premium air travel.

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Emirate has focused much of business segment which has earned them loyal customers and more profits. Etihad on the other hand have focused on holiday segment. It is therefore advisable for Etihad Airways to offer more product selection to their customers that will enable them attract more customers and generate more revenues. Emirates is perceived as the most expensive airline in the entire Middle East but the revenue they generate has made them to maintain their premium brand image and improve its services delivery to its customers. Once Etihad achieved certain level of brand familiarity in its countries of operation it should increase its fare so that it can improve on the services their offer their passengers and catch up with Emirates. Promotion is the most important strategy that Etihad should embrace and focus on for them to compete with other airline companies such as Qatar Airways and Emirates Airways.

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Most customers worldwide prefer direct online contact using social media platforms such as Twitter and Facebook. Both Etihad and Emirates has international pages and the main content in their pages are offers, prices lists and campaigns. The new entrants also find hard to compete with the already established companies due to high operational cost that is required. However Emirate Airline has standout to be an attractive airline company because of the strategies it has adopted that places it in a better position than the rest of the companies. Emirate Airline, 2015 p 14). Emirate Airways has succeeded in creating its brand as it is recognized all over the world. Most of its customers are loyal and they find it difficult to shift to other airline companies for the fear that they may not get the quality services they get from Emirates.

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Emirates, the international airline of the United Arab Emirates. Dubai, United Arab Emirates, Emirates. Khayat, A. Designing air transport networks that serve sparse demands. handle. O'Connell, J.  F. Bueno, O.  E. A study into the hub performance Emirates, Etihad Airways and Qatar Airways and their competitive position against the major European hubbing airlines.  Z. Etihad Airlines: growth through successful strategic partnerships. Emerald Emerging Markets Case Studies, 4(5), 1-17. doi:10. eemcs-09-2013-0184 Top of Form Top of Form Top of Form Top of Form.

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