Introduction
Emirates Airlines also referred to as the Fly Emirates, is the largest airline company in the Middle East and the fourth largest globally. It is a subsidiary of the Emirates Group, with approximately 59,519 employees from 172 nationalities, and is owned by both the royal family in Dubai and the government. It has a fleet size of 270 operating in 157 destinations comprising 55 countries across six continents (Emirates, 2020a). The airline has specialized in transporting passengers and cargo. Between 2019 and 2020, Emirates Airlines ferried approximately 56 million passengers (Emirates, 2020a). It is essential to examine the influence of external forces on the airline’s operational environment as it helps determine the possible risks and opportunities that the company might face or exploit. The PESTEL analytical tool evaluates the impact of political, economic, social, technological, environmental, and legal factors on business operations.
Political
The UAE has signed Open Skies Agreements with several countries, such as the U.S., and this has significantly impacted its commercial aviation sector (Embassy of the United Arab Emirates, 2017). This has enabled Emirates Airlines to establish itself as one of the world’s dominant global airline companies. However, the continued liberalization of the industry may intensify the competition. Furthermore, Emirates Airlines is susceptible to the adverse effects of political instability as it operates across several continents. For instance, the travel ban on some Muslim state citizens by the Trump administration is expected to decrease Middle Eastern airlines’ frequency in the U.S (The Washington Post, 2017).
Economic
Emirates Airlines, headquartered in the UAE, has grounded its operations in a country with a relatively strong economy. The robust market is crucial to facilitating the stable growth of the company. Furthermore, since Emirates Airlines operates at an international level, it collects its revenue in multiple currencies (Paraise, 2016). Therefore, an abrupt change in the exchange rate can significantly impact the revenue generated.
Social
The demand for air travel is affected by the growing world population, as it is expected to increase. Furthermore, the current generation of individuals, including the generations X and Z, are avid adventurers and travelers; thus, air travel demand is likely to increase (Cederholm, 2015). Emirates Airlines also operates in various countries worldwide; hence, it provides services to people from different cultural backgrounds.
Technological
Airline companies need to keep up with digital space to earn a 5-star standard. The emergence of information technology and the Internet has revolutionized how Emirates Airlines conducts its business operations. The company is the largest operator of Boeing 777s and even launched the first 777X model (Embassy of the United Arab Emirates, 2017). Furthermore, there is an increasing demand from the customer to utilize technology to make their bookings on mobile applications and to use them on board. Together with Aero Mobile, Emirates Airlines developed in-flight mobile coverage that allows passengers to use their phones on-board (Accenture, 2016).
Environmental
The airline sector is responsible for approximately 12% of the total carbon emissions in the transportation segment. With the problem of climate change and global warming, the world is increasingly becoming environmentally conscious. As a result, airline companies have begun to adopt “green flying”. Emirates Airlines have embraced various social responsibility initiatives, such as the operation of modern and fuel-efficient aircraft, responsible consumption, and participating in activities that aim to preserve biodiversity (Emirates, 2020b).
Legal
The sudden emergence and growth of Gulf carriers, including Etihad, Emirates, and Qatar Airways, has led American and European governments to protect their airline companies by placing protectionist policies (Flotau, 2015). However, the presence of the Open Sky Agreement limits the degree to which such policies apply. The recent travel restriction of citizens from high-risk countries into the U.S. might be regarded as one of the possible ways through which American airlines are trying to limit the access of Middle-Eastern airlines in their market.
References
Accenture. (2016). Make your digital connection: From digital strategy to airline strategy. Web.
Cederholm, T. (2015). Why social and demographic factors influence air travel demand – Market Realist. Market Realist.
Emirates. (2020a). About us.
Emirates. (2020b). Our planet. Web.
Flottau, J. (2015). Protectionism won’t work against new competition. Aviationweek.com.
The Washington Times. (2017). Emirates cuts US flights, blames Trump travel ban.
Embassy of the United Arab Emirates. (2017). UAE Ambassador highlights benefits of “Open Skies” Policy in visit to Boeing facility.
Parasie, N. (2016). Emirates profit falls 75% on stronger dollar. MarketWatch.