Emirates SWOT Analysis

Strengths

Emirates' major strength is its location: from its central hub at Dubai airport, the vast majority of the world's population could be reached within a single flight, making the region an excellent transition point for long-haul travellers, which contributed to Emirates phenomenal growth since its foundation (Parker, 2013). Emirates has also built a globally recognisable powerful brand and has diversified into various related segments of the air travel industry (such as catering, maintenance, ground handling) that reduce the airline's dependence on third-party service providers (CAPA, 2015). Emirates has an extensive route network across six continents served by a continuously growing fleet of modern aircraft that offer many international passengers a high quality and convenient transportation solution (Emirates, 2017). Although Emirates does not receive any financial aid from the Dubai government, as the government controls the majority of the shares (Emiratesnbd.com, 2017), the airline may enjoy an increased bargaining power (and financial flexibility) when negotiating flying rights on international routes.

Weaknesses

Recent commentaries published about Emirates' declining revenues may reveal some of the hidden weaknesses of the organisation. One presumed weakness is Emirates' overly ambitious and unsustainable future growth plan (shown by a large number of aircraft ordered) (Economist.com, 2017). Further to this, Emirates predominantly focused solely on the premium travel segment, which might be consistent with older generations' expectations, however, it is uncertain if and how Emirates could market itself to Millennials (without contradicting its brand values) with an insatiable demand for convenient (instead of luxurious) travel at an affordable rate (more on this is discussed under the 'threats' section).

Opportunities

Emirates' strategy to focus on the premium travel segment has proven to be a successful decision, however, changes in its business environment (increasing competition from low-cost long-haul airlines suitable for Millennial travellers' expectations) also create opportunities. Considering the fact that Emirates has never suffered a shortage of resources to grow, launching a subsidiary airline with a low-cost business model could be an opportunity worth exploring. In addition, Emirates could expand under its fifth freedom rights in Europe by connecting European cities with destinations currently underserved by local airlines (so in a sense, this would allow Emirates to establish smaller hubs outside Dubai and to deploy new aircraft) (ArabianBusiness.com, 2016). Emirates currently operates two flight pairs under this freedom (Athens-Newark and Milan-New York), however, exploring other route pairs to exploit fifth freedom rights could be a valuable opportunity to utilise a large amount of aircraft to be delivered to Emirates in the next five years.

Threats

Emirates has never enjoyed a favourable relationship with European and American airlines – these companies frequently accuse Emirates of receiving government subsidies (providing Emirates with an unfair competitive advantage) which are an illegal practice in the US and in the EU (Flightglobal.com, 2014). In case airlines' lobbying activities will be successful, Emirates may need to face restrictions on its European and North American routes. While the UAE is by no means an area frequented by extremist terrorist groups, Emirates serves many countries which have been identified as potential security concerns by the Trump administration (Alkhalisi, 2017). The new security procedures (i.e. the travel ban) implemented for the US bound flights so far had negative repercussions for Emirates, which forced the airline to reduce its flight frequency to the US (whether or not this was a political or a security measure is debated, yet the adverse effects are apparent for Emirates) (Alkhalisi, 2017). Finally, Emirates is increasingly threatened by the emergence of long-haul low-cost airlines (such as Norwegian Air, AirAsiaX or Wow Air), which will further increase competition on long-haul routes (Fehrm, 2016). So far, it is the Asian region where long-haul low-cost airlines are enjoying a rapid growth, however, European full-service airlines have been investigating the feasibility of launching a low-cost long-haul subsidiary to benefit from this high-potential market (Fehrm, 2016).

SWOT Analysis Resources

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References

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