Critical Issue
Emirates Airlines was one of the fastest-growing airlines after its launch in 1985 and one of the airlines that adopted an approach that allowed it to stand out among other airlines, which was still the case after the 2008 recession. However, the company has been facing challenges recently. Some of the critical issues include finding ways to compete with airlines that are adopting a similar client service approach, tackling the question of hub expansion, and reestablishing passenger demand.
Critical Facts
From the beginning, it was decided to adopt a strategy that differed from its international competitors. This strategy included positioning the company as the airline connecting remote destinations. Thus, Dubai became one of the main hubs of international travel. It was also one of the first companies to introduce modern plane models, such as the Boeing 777 which allowed longer international flights. The company focused its attention on the quality of service as well, targeting the customers who could afford business class.
Analysis
Expanding the operational scope by including the longest international flights made the company stand out. In the decades when Emirates was beginning its development, it was necessary to pay attention to its geographical advantages, which Emirates did. Without that decision, the company would keep being a regional airline, which would limit its growth prospects. Besides, by this expansion, the number of airlines that could compete with Emirates was reduced significantly, as a small number of companies were as international as Emirates.
However, the hub expansion has now reached its limits and has few growth prospects in this direction. Introducing state-of-the-art plane models attracted new customers who were willing to pay for more convenient, faster, and longer flights, which not many competitors could afford in those years.
Nevertheless, now the demand for some plane models has dropped. Raising the service standards, hiring the most qualified crew members, and providing with comprehensive training allowed the company to stand out as a luxury airline, thus attracting customers who are able to pay more than average. Despite that, companies now apply similar client service approaches, which means there is more competition for Emirates.
Recommended Decision and Its Effectiveness
Some of the measures that could be taken in order to tackle these issues are the following: merging with another airline company, such as Etihad Airways. This way, the issue of geographical expansion would be solved. Besides, the focus on Dubai as the main hub could be shifted and redirected to creating a new hub. Merging with another airline company could help achieve this. As the quality of client service is already high, competing with companies trying to achieve the same level could be tackled through a substantially new marketing campaign. Highlighting the service advantages in a new way will distract the customers from other companies offering similar services.
Execution
To merge Emirates with Etihad, it is necessary to negotiate the most beneficial conditions for Emirates Airlines. The administrative mechanisms would require changes as the scope of the company’s operation would expand. Besides, it is necessary to manage the issues that Etihad has been facing (such as losing profits) so that these problems do not affect Emirate Airlines.
Scenario Planning
When launching a new marketing campaign, it is necessary to change the marketing team to one that could adopt a different approach. This would include incorporating new marketing strategies and changing the company’s image in the media. One of the problems that could arise is not being able to effectively manage Etihad’s profit loss. In this case, the implementation of new cost-minimization plans could be done. After its emergence, previous cost-minimization plans were no longer suitable. Thus, a different plan would be needed.