Business organizations should monitor the political, social, and economic trends experienced in different regions to develop the most appropriate business strategies or models. This paper begins by giving a detailed profile of Emirates Airline and the major initiatives that make it a leading competitor in the aviation industry. It goes further to describe how it exploits economies of scale in an attempt to remain profitable. The discussion also presents evidence-based recommendations that can ensure that this company achieves its business objectives.
Emirates Airline is currently the largest airline company in the Middle East. It is owned by the Investment Corporation of Dubai and is managed and operated by the United Arab Emirates (UAE) government. It has its headquarters in Dubai. It operates over 3,600 flights every week to over eighty countries across the world (Hsu & Flouris, 2017). It has several subsidiaries that make it more competitive and successful in the industry, including Emirates SkyCargo, Emirates Holidays, Arabian Adventures, and Emirates Tours. This company has been in service since 1985 and was founded in 1985. It is based at Dubai International Airport and has a fleet of around 258 aircraft.
The current chief executive officer and chairman of the Board of Directors are Ahmed bin Saeed Al Maktoum. The organization’s president is Tim Clark. In 2018, the country’s revenues stood at 13.3 billion US dollars (“Emirates Airline,” n.d.). During the same period, its net income was around 62 million US dollars (Tsang, 2018). It has a total of over 64,000 employees who support the established strategies. Emirates Airline’s leaders and supervisors implement powerful measures and strategies to guide their followers, solve emerging problems, and propose superior models that have the potential to make the corporation profitable. They also consider the political, economic, and social factors experienced in different parts of the world in order to transform the company’s business strategy and meet the changing needs of different customers.
This analysis reveals that Emirates Airline operates in the passenger transportation and consumer discretionary sectors. As a leading provider of exemplary services, this corporation meets the needs of many people from different regions across the world. It also specializes in first-class lounges, air catering, in-flight entertainment, and accommodations for young flyers (“Emirates Airline,” n.d.). These attributes make it possible for this company to support the diverse expectations of many people while at the same time maximizing its competitive edge in the industry. It provides flyer programs that encourage customers from different regions to continue choosing its services. All managers engage in continuous market research and identify modern technologies in order to provide exemplary and competitive services to their passengers. This business model has continued to support this organization’s business objectives.
Since 1985, the managers and leaders at Emirates Airline have been utilizing aggressive measures to expand the organization’s network and serve more people in different regions. These measures have made it one of the fastest-growing companies in the aviation industry (“Emirates Airline,” n.d.). Currently, it is the leading customer for both Boeing and Airbus. It has the highest number of wide-body Airbus A380 aircraft. Through its subsidiaries, Emirates Airline has continued to provide exemplary travel and cargo services in these regions: South Pacific, North America, Africa, Asia, South America, and Europe. Emirates SkyCargo is a useful division since it meets the needs of many individuals, governments, and companies in over 40 destinations (Hsu & Flouris, 2017). It would, therefore, be appropriate for Emirates Airline to continue pursuing these strategies and initiatives in order to remain competitive and provide high-quality services to its customers.
How Emirates Airline Exploits Economies of Scale
Business organizations consider various attributes and initiatives that can minimize operational costs and increase profits. The term “economies of scale” refers to the cost advantages pursued by firms depending on the scale of their operations (Tsang, 2018). Many companies consider this aspect by focusing on measures that will ensure that the cost per unit reduces significantly after increasing total quantities of production. With this kind of information, it is evident that Emirates Airline exploits economies of scale to achieve its goals and remain competitive in its respective markets.
The idea behind the economy of scale concept is to maximize profits by reducing production costs per production or service delivery. As described in the above section, Emirates Airline remains one of the leading purchasers and users of Airbus A380 aircraft. With an increased carrying capacity, these planes make it possible for the organization to minimize its operational and fuel costs while at the same time ferrying more passengers from point A to B. Vega, Pamplona, and Oliveira (2016) reveal that the seat cost per mile for the A380 is lower compared to that of the other aircraft. This means that the company has managed to make maximize its profits with this type of aircraft. The other approach emerges from the organization’s use of the A380 as its favorite aircraft. With many airports becoming more congested, the use of this plane doubles its carrying capacity without the need to incur extra expenses. The inclusion of a younger fleet ensures that the company serves and meets the needs of more passengers. Combined with the use of newer aircraft, this model makes it possible for Emirates Airline to exploit economies of scale.
The above examples reveal that Emirates Airline has been able to exploit economies of scale effectively. However, there are numerous opportunities and ways through which the organization can do better in this area and achieve its business objectives. The first suggestion is for its managers to consider the importance of cheaper flights. Such an approach can attract more customers and improve it’s earning while at the same time maintaining the quality of its services. Another proposal is for this company to consider the need of merging or acquiring troubled airlines (Tsang, 2018). These initiatives will ensure that the organization has more aircraft without the need to hire additional employees. Such a model will make it possible for this company to combine all managerial and supervisory roles and deliver high-quality services to all passengers (Tsang, 2018). The company can go further to spread its internal functions across its major subsidiaries. This means that accounting operations and information technology processes will be coordinated without the need to duplicate roles. This initiative will increase Emirates Airline’s operational efficiency and minimize operational costs.
The above discussion has identified Emirates Airline as a leading competitor in the global aviation industry. Its leaders pursue evidence-based initiatives and strategies that can drive organizational performance and reduce operational costs. This organization takes the issue of economies of scale seriously in an attempt to record low costs per unit and increase profitability. It can go further to lower its prices and merge with smaller firms in an attempt to succeed in different sectors.
Emirates Airline. (n.d.). Web.
Hsu, C. C., & Flouris, T. (2017). Comparing global airline merger experiences from a financial valuation perspective: An empirical study of recent European based airline mergers. Transportation Research Procedia, 25, 41-50. Web.
Tsang, A. (2018). Emirates offers A380 a lifeline, signing $16 billion deal with airbus. The New York Times. Web.
Vega, D. J., Pamplona, D. A., & Oliveira, A. V. (2016). Assessing the influence of the scale of operations on maintenance costs in the airline industry. Journal of Transport Literature, 10(3), 10-14. Web.