The continuing success of Emirates Airline raises questions for students of leadership. In what ways have culture, location, and internal strategic decision-making contributed to the growing success of the business? Has leadership made the main difference, or is it more to do with powerful financial backing at State level?
Recently, [May 20th, 2010] Air France-KLM announced record losses. A strategy of merging two ailing airlines has yet to prove a success. Meanwhile, in complete contract, Emirates airline ordered 32 Airbus 380 super jumbo jets. This order, announced at the Berlin Airshow, is worth just over $11bn,and it seems to be a record for the Airbus A380.
In addition, Emirates airline has said it will hire 2,000 more cabin crew members to support its growth and operations this year. The airline has added 14 aircraft to its fleet in a year since March 2009, raising it from 131 to 145.”Around 660 cabin crew and more than 60 pilots have been recruited since March 2009. It is expected that a further 2,000 cabin crew will be hired this year,” the airline said on Tuesday. The airline also said it had invested $72 million in airport lounges to date [Travel Trade Gazette UK & Ireland; 12th March 2010, Issue 2904, p26-26].
What is the Business Model?
Who or what is behind the growth of Emirates Airlines? What can we learn from its Business model? Should we link its success to the leadership of the company, or to Dubai Government support?
The company is growing very fast within the airline industry, and competitors are concerned about the consequences of its success. The airline has been accused of receiving fuel subsidies from Dubai government, and of recruiting low- cost labour.
Regardless of such issues, Emirates has a strong marketing strategy which has created strong brand awareness worldwide. It sponsors sports clubs and events in both the UAE and around the world, regarding sponsorship as vital to the airline’s marketing strategy. The new order of airbus A380, and its excellent geographic location, will enable the company to continue to grow and serve its competitors’ main hubs.
According to The Times
Emirates fares are already typically 25 to 50 per cent cheaper than those offered by European rivals. The additional capacity offered by the A380s could make it increasingly difficult for older flag carriers such as British Airways to compete on certain routes.
Overall these factors can be seen as contributing to Emirates’ phenomenal growth, but this success seems unlikely without a strong and stable leadership. The key to the Emirates success has been the continuity of its management team. At the helm of the company can be found a group of talented executives with proven track records in their fields of expertise. Sheik Ahmed Bin Saeed Al-Maktoum, Chairman and Chief Executive of Emirates Airline, is also one of the leaders of Dubai’s wider transformation. Under his leadership, Emirates has grown from a regional airline with just two leased aircraft and three destinations, to an acclaimed international airline with a fleet of more than 100 aircraft and as many destinations across six continents, and fastest-growing intercontinental carrier.
It raises questions for students of leadership. In what ways have culture, location, and internal strategic decision-making contributed to the growing success of the business? Has leadership made the main difference, or is it more to do with powerful financial backing at State level?
The Qantas alliance
Recently, [Sept 2012] Emirates moved towards forming an alliance with Qantas airlines. The move is in accord with other transformational arrangements between airlines, including mergers. Whether this is a move towards closer links between Emirates and Qantas is less clear.
A major update of this post is planned.
This legacy post has consistently attracted visits to LWD, and an update is planned.
A recent example [ November 2014] of developing strategy is its decision to end its sponsorship of FIFA. CSR considerations are believed to have influenced the move.