Assignment Task: The date October 25, 1985, marks a remarkable day in the history of United Arab Emirates (UAE). About 34 Years ago Emirates first flight took away. The Flight number Emirates Airline (EK) 600 flew with UAE royal dignitaries on board from Dubai to Karachi at 11:45am and also other two planes took flight to the Indian cities of Mumbai and Delhi. It all started in 1959 when dnata (Dubai National Air Transport Association) was established by the Dubai government with just five staffs to provide ground handling services at the new Dubai International Airport. Afterwards in 1960. Emirate is the airline which can be considered as a true global leader. The carrier started out small in 1985 with just two aircrafts flying out of Dubai, being mostly an aircraft carrier that connected passengers from and to Dubai with other operators. It commenced with the help of 10 million USD by the government of Dubai and leased aircrafts from Pakistan and also some technical as well as administrative support. There must be something or the other exceptional about an airline if it is invariably ranked at the first place in the world. Emirates seem to have received praise, with a Hub at one of the world's most beautiful airports and outstanding customer service, both in flight and outside it.
Literature Review:
Kim, Han; Singal, Vijay (1993) examined price changes associated with airline mergers during 1985-1984, a period of natural experimentation in which mergers were not contested by the government. The results show that prices increased on routes served by the merging firms relative to a control group of mutes unaffected by the merger. Mergers may lead to more efficient operations. But on the whole, the impact of efficiency gains on airfare is more than offset by exercise of increased market power Richard Hollowell (2003)36 focuses on how the financial difficulties facing the air travel industry are also affecting secondary enterprises. The study stated that the airline industry has a significant percentage of small businesses making between $10 and $75 million in annual sales, and these businesses have been experiencing great difficulty in retrieving loans after large financial institutions redlined the airline industry. The study mentions that smaller airlines are looking for partners to merge with because replacement financing is hard to obtain. Clougherty, Joseph (2001) analyzed that the globalization literature question national autonomy in a world where MNEs spur increased international flows of capital and trade. This study empirically tests whether globalization undermines the autonomy of domestic airline competition policy. A comprehensive panel data set, covering twenty-one nations over 1983-92 periods, yields two major findings: (1) globalization undermines domestic airline competition policy autonomy; (2) government institutions mediate globalization's impact. Ms. Radha (2003)33 compared the capital structure and profitability of Indian Airlines and Air India. The study found that return on capital employed, liquidity and turnover were positively associated with debt equity ratio. The study suggested that both the corporations should try to use less interest-bearing loans.
Anderson, William; Shah, Amit (2004) analysed the terrorist attacks of September 11, 2001, had a hugely negative effect upon the airline industry. However, because of their direct involvement in the terrorist attacks, two airlines were especially vulnerable in the aftermath of the disaster: American Airlines Inc. (AA) and United Airlines Inc. (UAL). This study examines the stock market effects upon AA and UAL to see if the markets punished them more severely than the rest of the airline industry. It has been found that market reactions to airline crashes were different depending upon whether or not the airline involved in the crash was seen to be at fault or not. Airlines that were not seen to be at fault did not suffer in the markets as badly as did airlines that clearly were liable for the crashes.
The study emphasizes that the September 11 attacks were not the only factor in the financial problems faced by the airlines Pandit, Ranjit (2005) 40 focuses on the impact of economic reforms in India. The study states that while India's foreign reserves were $1.1 billion in 1950-51, domestic savings did not keep pace with the expense for investments needed to contain unemployment. It mentions that in 1991 India began to reform its economy, motivated partly by China surpassing India in all major economic indicators. It comments on the increase in foreign investment in India and how only comparisons with China makes it look like a failure of India's economic policy. It mentions improvements in India's automotive and airline industries after deregulation as well as the liberalization of other business sectors, but that retailing, banking, defense, and news media have yet to be deregulated. As per Holloway (2008) "Airlines have annual revenues of approximately half a trillion dollars and employ over 2 million people. They directly support another 2.9 million jobs at airports and civil aerospace manufacturers and may indirectly support more than 15 million jobs in tourism (Air transport Action Group 2005)." The global airline industry has a powerful influence on a global economic. It is not only providing a service to every country in the world, but also impacting on other industries, like aircraft manufacturing and tourism (Belobaba, Odoni & Barnhart, 2009). It cannot be denied the importance of an industry that affects tourism, trade and investment Modern tourism is impossible without air transport, air infrastructure and worldwide air transport connections. sport networks. The development of air transport and tourism are dependent on each other, and this relationship is considered either implicitly or explicitly in the business models both fields adopt (Bieger & Wittmer, 2006; Forsyth 2006, 2010; Duval 2013). Air transport is important for tourism development. Macchiavelli and Vaghi (2003) found air accessibility was a factor in tourism development in Southern Italy. Tourism is highly influenced by international airline alliances through fare and total travel time reductions, better connectivity, convenient schedules, and stronger tourism destination marketing initiatives (Morley, 2003). While alliances have general impact, single carries could also influence the tourism development of certain destinations.
Chung and Whang (2011) stated that LCCs (low-cost carriers) stimulated new demand for Korean islands, as well as tourism jobs growth and income. Similar research conducted by Donzelli (2010) identified that LCCs have positive impact on local economy and tourism in Southern Italy. Several previous research have highlighted the lack of studies on the overlap between air transport and tourism industries. Duval (2013) has highlighted the gap between the economic regulation of international commercial air transport and tourism research and presented three main common practical issues: "(1) the economic regulation of international commercial air transport; (2) the relationship between destinations, connectivity, and airline business models; and (3) the relationship between aviation-related emissions and climate policies" (Duval, 2013, p. 495). Apart from this study other literature reviews of air transport and tourism are not available suggesting a need for further research. Some 40% of international tourists travel by air (Dobruszkes & Mondou, 2013). Aviation regulatory regimes underpin air travel, since regulation may restrict the range of routes operated by airlines, prevent competition and control fares, thus restricting the tourist business and influencing its spatial patterns (Forsyth, 2008). The importance of aviation liberalization, air transport policies and "open skies" agreements and their impact on tourism has been discussed through different case studies (Dobruszkes & Mondou, 2013; Zhang & Findlay, 2014).
Analysis:
Strategies for success Emirates birth and progress can be associated with the development of new policy initiatives and infrastructure facility at UAE. The government in the 80's implemented the open skies policy followed by the establishment of the Airline. This was followed by the launch of Emirates within a year. Gulf Air, during the mid-1980s, began to retrench its services to Dubai. This was because it was bothered of providing regional feeder flights for other carriers. Due to this, Emirates airline was formulated in March, 1980 with backing from Dubai's royal family. It was also required to operate independently of government subsidies, apart from 10USD. In the mid-1980s, Pakistan International Airlines also played a beneficial role in establishing the Emirates airline. It provided administrative and technical assistance to the new carrier and also leased a new Boeing 373-300 and an Airbus A300 B4-200. The Royal Family's Dubai Royal air Wing also provided the airline with two used Boeing 727-200 Adv. The first flight of the Emirates was flight EK600 which departed from Dubai to Karachi on 25th October, 1985. During the first year of Emirates, carried about 260,000 passengers and 10,000 tons of freight. Also, in the same year of Emirates operations, Gulf Air suffered a drop of 56% in profits and a loss in the following year. This can be highlighted as the airlines' early success story. The airline added new destinations such as Colombo, Dhaka, Amman and Cairo to its route network by the year 1986. In 1987, a second Boeing 727 was purchased from the government of Dubai and an A300 was fleetingly replaced by a second example from Kuwait Airways.
Emirates received its first bought aircraft named Airbus A310 (registration A6-EKA), and with two examples, launched daily non-stop services to London Gatwick on 6th July, 1987.The airline in 1987 added Frankfurt via Istanbul, and Male (Maldives) and was known serving 11 destinations by the end of the year. There was an expansion into the Far East market in 1989, with flights to other destinations like Bangkok, Manila and Singapore & Hong Kong in 1991. During the first three years of its operations, the airline did not make much of the profits but later on had an immediate and extraordinary success. In 1986, it started expanding outside the immediate vicinity, the services that were provided to the Southeast Asia and Egypt. The non-stop flight to Gatwick London and regular flights to 11 destinations in 1987 was an achievement. By the time the company was ten years old, it had been consistently declaring profits for seven years and the growth percentage which averaged around 30. Emirate runs around 221 aircrafts actively and has the largest fleet of Boeing 777s, which are the enormous passenger aircrafts on the market and of Airbus A380. The average age of the airplanes is about 6.3 years and the company has pledged to maintain that standard. There is no mean feat when the sheer size of its fleet is considered. At present, Emirates runs services to 142 destinations in about 78 countries.
The hub of Emirates is stationed at Dubai which is geographically an appropriate location for operations. As Dubai lies in the middle of east and west, it is a popular stop-over and refueling point. According to the reports from Emirates, there is an increase in its passenger traffic by 20% annually. The central location is not the only reason for its success. The carrier operates out of Dubai International Airport, which is one of the best airports in the world. Emirate is well-known for its magnificent Business and First-class services. Not to say that Economy class receives anything but excellence service, the seating is comfortable with great legroom.
Question: Evaluate the company's external environment (Dubai) by preparing a detailed (political, economical, social, technological, legal and environmental analysis).