Introduction
Emirates Airlines, founded in 1985, in the course of time has grown into one of the world’s largest commercial airlines, and it continues its expansion. One of the primary reasons for such immense success considered to be the use of the hub-and-spoke model. The company employed this model to retrieve maximum benefits of its geographic location. However, in today’s increasingly competitive airlines market, Emirates Airlines faces several challenges, which are caused by various factors, including numerous rival companies and problems related to expansion. To gather a full understanding of the current condition of the company, this paper aims to conduct a SWOT analysis on the hub-and-spoke model, describing its efficiency and aspects to be improved.
Strengths
First of all, it is essential to dwell upon the strengths of Emirates Airlines’ hub-and-spoke model. This model, which is also referred to as spoke-hub distribution paradigm, represents the system of connections, in which all traffic is arranged according to several spokes connected to the hub in the center. The company under discussion decided to use Dubai as its primary hub, and this decision was immensely beneficial.
First of all, one of the principal advantages of the hub-and-spoke model is that it allows the company to perform significantly less number of flights while reaching the same amount of destinations, compared to the point-to-point model’s index. Secondly, Dubai’s strategic location on the crossroads of global transit routes makes it possible to cover the majority of European and Asian regions within one flight. Therefore, the vast number of people and companies use the hub every day for long and middle-haul trips to various destinations as well as for the trafficking of different products, with “882 inbound and 880 outbound flights” each day (Logothetis and Miyoshi 5). Concerning another advantage of Dubai’s geographical position, it is possible to mention that the headquarters of various businesses, departments, and multinational companies are vastly present in Dubai, and thus it provides a permanently high inflow of customers. Thirdly, one of the principal strengths of Emirates Airlines’ model is the highly efficient network of spokes, which was developed over time to cover the locations in Europe, Asia, Africa, and Oceania to the maximum extent (Alcacer and Clayton 3).
Weaknesses
Further, it is of high importance to discuss the weaknesses of the model under consideration. One of the primary weak spots in the current Emirates Airlines’ approach is its nearly exclusive dependence on the international onward moving traffic (“Emirates SWOT Analysis, USP & Competitors”). Secondly, it is essential to mention that the company, pursuing further expansion and growth, has made an ambitious, yet risky step of purchasing new aircraft to grow its fleet (Logothetis and Miyoshi 5). Even though it allowed the company to increase the number of flights without increasing the frequency, the operating costs have risen significantly (Logothetis and Miyoshi 5).
Thirdly, as it is suggested in the research by Sun and Wandelt, many contemporary air transportation systems are the subjects for disruptions, caused by various factors, including weather conditions and targeted attacks (1). Even though Dubai’s weather significantly benefits from relatively good weather compared to other major hubs, the authors mention Emirates Airlines among the companies that can be discontinued if their “network breaks down with only a very few nodes being disrupted” (Alcacer and Clayton 3; Sun and Wandelt 12). Additionally, it should be observed that the company has been the proponent of protectionism and anti-competition for a long time, which makes its position in the highly competitive market less advanced (Alcacer and Clayton 6).
Opportunities
Since the strengths and weaknesses of Emirates Airlines were discussed, it is possible to suggest which opportunities for improving the company have, and which threats are posed to it. It is apparent that the company’s primary strength is its superior hub efficiency (Logothetis and Miyoshi 8). Therefore, it could be suggested that the company should continue to build its strategy upon this advantage by expanding its network to reach new destinations (Alcacer and Clayton 9). This strategy includes both the extension of the routes which are already served and the coverage of new markets (Alcacer and Clayton 9).
Secondly, another opportunity for growth should be discussed. In his study, Klophaus mentions that the company has a significant business potential in operating scheduled flights from Germany to the United States (125). The author explores this particular example from different perspectives, including “regulatory, operational, and commercial constraints” (Klophaus 125). He suggests that if Emirates Airlines are aiming to continue its global network expansion, it will need fifth freedom rights (Klophaus 133). Exemplifying the flights operated by Emirates Airlines from the airport in Germany, Klophaus concludes that the company should recognize the opportunity for providing long-haul trips not only for third and fourth freedom markets (Klophaus 133).
Threats
Finally, the threats, which are posed to the company, should be discussed. First of all, Alcacer and Clayton observe that there is a significant need in more competitive approach to the market (15). Tim Clark, President of Emirates Airlines, emphasized that the company which has a sole owner can focus exclusively on its operating performance. However, this advantage does not seem to satisfy other companies in the market since they consider it to be unfair. Also, the anti-competitive policy was the reason for restricting Emirates Airlines from entering new markets more than once (Alcacer and Clayton 15).
Secondly, it should be mentioned that Emirates Airlines are not the only air transporting company which operates in Dubai. Accordingly, it is apparent that the capacity of the airport facilities was about to reach its maximum at some point. To fulfill this necessity, Emirates Airlines introduced Al Maktoum, new airport further in the desert outside Dubai (Alcacer and Clayton 15). Even though it was a considerably reasonable decision, the particular aspects of the new airport’s operating process, such the priority of flights, appears to be debatable. Additionally, it also evident that the presence of competitors from both developed and emerging markets (for example, Turkish Airlines) poses a considerable threat to the success of Emirates Airlines.
Conclusion
Since the SWOT analysis on the Emirates Airlines’ hub-and-spoke model was conducted, it is appropriate to summarize the findings of the research and to retrieve a conclusion. First of all, it was evidently demonstrated that the company’s primary strengths are the geographical location of its hub and significantly vast network of spokes across the world. The weak aspects of Emirates Airlines’ model are its high operating costs and the policy of protectionism and anti-competition. However, the company has a distinct opportunity for further growth through entering the fifth freedom markets. The threats which are posed to the company are determined primarily by its weaknesses. In conclusion, it should be stated that Emirates Airlines has a relatively stable position in the market, but it has to employ the existing opportunities for improvement.
Works Cited
Alcacer, Juan, and John Clayton. “Emirates Airline: Connecting the Unconnected.” Harvard Business School Case 714-432, 2014.
“Emirates SWOT Analysis, USP & Competitors.” MBASKOOL.
Klophaus, Richard. “Fifth Freedom Airline Network Expansion: The Case of Emirates Flying between Germany and the USA.” International Journal of Aviation Management, vol. 3, no. 2-3, 2016, pp. 125-135.
Logothetis, Michail, and Chikage Miyoshi. “Network Performance and Competitive Impact of the Single Hub–A Case Study on Turkish Airlines and Emirates.” Journal of Air Transport Management, 2015, pp. 1-9, Web.
Sun, Xiaoqian, and Sebastian Wandelt. “Complementary strengths of airlines under network disruptions.” Safety Science, vol. 103, 2018, pp. 1-15, Web.