The Skyward Loyalty Program of Emirates Airline

Topics: Airlines, Loyalty Words: 1904 Pages: 7

Introduction

Emirates Airline has developed an award-winning loyalty program alongside Flydubai. The intention is to change how customers experience the world by offering them a chance to win miles when they purchase tickets and deciding how to spend them (Emirates, n.d.; ALL, n.d.; Saleh, 2021). The customers earn reward miles on their tickets based on the distance flown and the class as opposed to the ticket cost (Rawson, 2021; Steinberg, 2021). The program can be described as revolutionary because of the effect it will have on the company’s reputation and marketing potential. The program has been associated with other such benefits as exclusive deals for consumers at over 500 retail, recreational, and dining attractions across Dubai (TTR Weekly, 2021; THISDAY, 2021). Considering the nature of this program, it is important to explore how the external and internal environment affects the company’s marketing mix associated with it. A key point to note is that the loyalty program can be regarded as a marketing tool, which means that the analysis of the business environment will focus on how the program affects the marketing mix of the actual services offered by the Emirates.

External Environment

Competitive Environment

The Skyward program of the Emirates Airlines can be considered to be a leading loyalty programs offering benefits similar or better to most those offered by competitors. Porter’s five forced of competition can be used to assess the competitive environment by focusing on the threat of new entrants, bargaining power of buyers and sellers, competitive rivalry, and threat of substitutes (Adamkasi, 2018). Barriers to entry are low because many airlines can easily develop and fund loyalty programs. Airlines have formed partnerships to offer customers useful benefits. Example include the TrueBlue program that brings together such partners as Icelandair, Emirates, JetBlue, JetSuiteX, and South African Airlines (TravelPerk, 2021). Even though the bargaining power of consumers is relatively low, they can demand quality services and constantly go for relatively cheaper options (Pride & Farrell, 2016). The bargaining power of suppliers is very high considering only two major firms, Boeing and Airbus, supply aircraft. Emirates Airline has developed close ties with both to help it get the best products for a better customer experience (The Emirates Group, 2018). However, pricing decisions are entirely controlled by the suppliers as they compete with each other.

The threat of substitutes is high because customers are spoilt for choice when selecting loyalty programs. However, competition remains stiff between Emirates and such competitors as Etihad, Turkish Airlines, and Qatar Airlines, all of which have loyalty programs (Owler, n.d.; Craft, n.d.). Therefore, competitive rivalry can be considered to be relatively high because these companies compete to develop the best program to offer their customers. However, Emirates copes with the competition by creating new partnerships and alliances with other airlines and other businesses in the aviation industry (Stawski, 2021; TTR Weekly, 2021; Orban, 2021). The partnerships help reduce the pressure and aid the company is exploring opportunities for mutual benefits.

Political/Regulatory Environment

The Emirates Airline enjoys massive support from the government, which gives it a conducive political and regulatory environment. Firstly, the company is a property of Dubai, which saw the government inject over $2 billion into the firm in 2020 (Adamkasi, 2017; Rahman, 2020). However, global operations are affected by political stability, including such destabilizing events as terror attacks and Brexit (Shehata, 2021). Loyalty programs face little pressure from governments and the Emirates Skywards can be implemented across multiple countries.

Social Environment

The Emirates Airline is affected by the demographic changes taking place across all the markets it serves. In the United Arab Emirates (UAE), a growing population means more demand for its services (Mirza, 2021). Even though predominantly Muslim, the UAE is increasingly becoming a multicultural region, which means the company’s operations and culture have to adapt (Emirates, 2019; Kaddoura, 2019). Lastly, Dubai is a world-class entertainment and shopping destination, which helps bring customers from the regional tourism industry. Despite the class differences, the Emirates Skywards appeals to all customers served by the company.

Economic Environment

The economic environment facing the Emirates Skywards program is connected to the company’s overall operations. The Emirates Airline faces a favorable economic environment in the UAE. The company is tied with other major industries that contribute significantly to regional growth. Additionally, the economic growth of the region means that more consumers with high disposable incomes. Most importantly, the growing tourism business in the UAE makes Emirates Airlines among the most-demanded airline providers in the region (Carvalho, 2021; Al Saed, Upadhya, and Saleh, 2020; Emirates, 2021). The company responds by offering better services, which includes the Skywards loyalty program that offers special benefits to loyal customers.

Technological Environment

The airline industry is often massively affected by technological developments involving various aspects of its operations. Technology is quite volatile, which means that airlines are forced to keep adapting (Future Travel Experience, 2020; Euro news, 2021; Fast Company, 2021). The Emirates Skywards can be considered a technological innovation because it automates several processes involved in awarding and redeeming to loyal customers. Emirates Skywards program is part of those technologies accelerating digitization of customer service. (International Airport Review, 2021; Emirates, 2019; Wilson, 2021). While some technologies are enforced by the market forces and regulatory environment, others are intended to help revolutionize the services offered by the company.

Internal Environment

The Emirate Airline is an aviation company offering both domestic and international flights. The company’s philosophy has been described by its president, Sir Tim Clark, as aeropolitical multilateralism supported by liberal air access where the protection of national carriers no longer yields positive cost-benefit results (Emirates, n.d.). Therefore, it can be argued that the company seeks to continually expand in the international airline market as illustrated by the newly launched flight to Tel Aviv (Desk, 2021; Paul, 2021). Additionally, the company also increased capacities to such destinations as Melbourne (Rao, 2021). The geographical expansion has been in the form of venturing into new markets and serving more destinations, which can be viewed as the implementation of the liberal air access philosophy. The Emirates Skywards is facilitated by these internal environmental factors. For example, the global expansion means that the loyalty program is offered to clients across multiple national borders.

Other aspects of the internal environment include the company’s resources and core competencies that offer a competitive edge in the market. A strong brand name and identity are critical for many businesses. In the case of Emirates, its brand has grown in value to reach US$7.7 billion in 2016, which illustrates the company’s financial strength (Emirates, 2016). The subscription to the Emirates Skyward loyalty program is also evidence of the strong brand identity as the membership has already surpassed 27 million (Gosai, 2021). Many of the subscribers are from the United States (10%), which illustrates how the brand has been embraced globally.

From a marketing perspective, Emirates Skywards several core competencies that help drive its growth. The strategies used involve segmentation, positioning, and targeting. Value-based positioning makes Emirates one of the best brands associated with quality services. Across these strategies, the program has been designed to appeal to all markets, from luxury to economy. Targeting is majorly done to attract specific niches and groups of potential customers (Shamsul, 2021). Most importantly, the newly-launched Skyward loyalty program illustrates the company’s commitment towards its consumers and the desire to keep all its loyal customers. The program has been designed to compete in a market where rapid rewards are becoming an integral part of loyalty programs.

Marketing Mix

Product

The Emirates is an airlines business, which means flights are its core service. The external environment exerts competitive pressure on the company as illustrated by high competitive rivalry. Therefore, the company has adapted its services to remain the most competitive. Examples include personalized videos across all classes. Additionally, multiple cabin modifications have been made to make all its planes more aesthetically and functionally appealing than its competitors (Bhasin, 2019). Other aspects include better healthcare and housing for customers and employees. A global network means that the company has a larger outreach and can serve multiple markets. Lastly, the Skyward loyalty program means extra services can be offered to customers who have earned many miles on their cards.

Price

Dubai can be considered to be the main link between the east and west, which means that major carriers would be competing for customers. The Emirates does so by offering low-cost tickets as compared to rivals. Even though the bargaining power of buyers is relatively low, the consumers often prefer cheaper alternatives and those with higher perceived quality. Emirates’ pricing across all routes follows the same low-cost strategy (Bhasin, 2019). The UAE society is also highly varied, which means that the company has to use flexible pricing to accommodate everyone. As such, premium pricing for customers demanding luxury and exclusivity is also offered.

Promotion

Emirates engages in extensive marketing practices comprising major ad campaigns that address current issues. For example, the #StaySafe#StayHome campaign has become a major hit due to its important safety message on the coronavirus pandemic (Menon, 2021). Other slogans include the “Fly Emirates. Keep Discovering“, which appeals to many. The promotional campaigns are necessitated by both the competition and the economic factors, including growth in such industries as tourism. Internally, the company’s resources and global brand identity sustain the campaigns and the company’s reputation.

Place

The Emirates serves multiple destinations across the world and manages all its operations. Dubai is the hub of the company but over 80 countries can be served by daily flights, which is facilitated by the Emirates philosophy. Customers often book online, which illustrates the influence of technology and internal competence in adapting and innovating to serve customers better (Rahman, 2020). Additionally, agents are strategically located across all destinations to help improve customer service.

People, Process, and Physical Evidence

These three aspects of the marketing mix can also be visible in the company’s activities and the influence of the internal and external environment is also apparent. For example, a diverse workforce can address multiculturalism and employee training and development manifests core competencies. The processes are also varied to include flight booking, customer service, and customer management illustrated by the Skyward loyalty program. Lastly, the physical evidence includes its facilities and planes, which have all been designed to improve both physical and aesthetic appeal.

Recommendations and Conclusion

The Skyward loyalty program can be described as a prudent move by the company because it has massive competitive potential for the company. Based on the external and internal analysis, the first recommendation is that Emirates should also include all partner airlines in the loyalty program. The mutual benefits by all partners should be followed by joint loyalty programs to create a level of standardization across the marketing activities. The second recommendation involved technology adaptation where innovations should also be incorporated. Today, such technologies as virtual and integrated reality have become a key part of many businesses’ operations. Emirates should find new applications for them to remain ahead of the competition.

Overall, the Emirates Skywards loyalty program can be described as a prudent move by businesses that face high competitive pressure. The external and internal environments reveal that the company faces a relatively favorable operating environment. The few challenges encountered can be addressed and should not have any devastating effects. As a global brand, Emirate’s Skywards program should allow the company to attract the new client and maintain the current ones.

List of References

Adamkasi (2017) PESTLE-PESTEL analysis of Emirates Airlines.

Adamkasi, 2018. Porter’s five forced of Emirates Airlines.

Al Saed, R. (2020) ‘Role of airline promotion activities in destination branding: case of Dubai vis-à-vis Emirates Airline’, European Research on Management and Business Economics, 26(3), pp. 121-126.

ALL (n.d.) Emirates Skywards: the award-winning loyalty programme of Emirates Airline.

Bhasin, H. (2019) Marketing mix of Emirates airlines – Emirates marketing mix.

Carvalho, S. (2021) Aviation and tourism’s share to UAE GDP seen at $128 billion in 20-years: IATA.

Craft (n.d.) Emirates competitors.

Desk, W. (2021) Dubai flights: Emirates to launch daily service to Tel Aviv from December 6.

Emirates (2016) Emirates brand value grows 17% to reach US$7.7 billion.

Emirates (2019) 145 nationalities and a kaleidoscope of cultures come together to make history on EK 2019.

Emirates (2019) Emirates uses advanced navigation technology to increase cargo capacity to Kabul.

Emirates (2021) Emirates forges partnership with Indonesia to support tourism industry recovery.

Emirates (n.d.) Emirates Skywards.

Emirates (n.d.) Our business model.

Euro news, 2021. How technology is helping airline businesses bounce back from COVID.