Emirates, Off Course?

As per the International Air Transport Association, Airlines worldwide, in 2009, which witnessed the worst demand-decline in the airline history, are estimated to have lost USD 9.4 billion. For the same year, Emirates will announce even more profits, including another record for passenger traffic, perhaps above the 23 million mark! How?

Between April 2009 and December 2009, when all other Airlines were getting into a price war to lock-in passengers, in order to fend off the global recession, Emirates increased its fares by 35 percent across its network. The surprising, but strategically-planned outcome of doing so was that the demand for Emirates grew up! Seat factors went up, so did the loads!

The decision for hiking the fares did require a little retrospect for Emirates. It was quite tempting for Emirates to get into the global price-war, but, then, it realized that having spent millions of dollars in building a premium brand, getting into the price war wouldn’t make sense at all.

For example, Emirates had put first-class showers on its A380 super-jumbos; had sponsored horse racing, yachting and football events across the world. All these strategic, brand-building investments would be in a stark-contrast to its decision for getting involved in the global price-war! Thus, to show the world what it was, and, perhaps, what it is, it hiked its fares across the board. Moreover, it also identified a much-untapped goldmine in first-class and in business-class passengers coming out of Europe, Asia, and South America. Awesome! Isn’t it?

But, its competitors are crying foul, as they claim that Emirates has an undue advantage over its competitors, as it has full support of the airport and civil aviation authorities, especially of those of Dubai. But, then, that is Emirates’ strategic, niche business-model for cutting travel-time short for its passengers by creating new “city-pairs” via a single stop at Dubai, and also for realizing Dubai International Airport’s strategic growth-model that seeks to be the world’s busiest aviation hub. Now, this is called aligning your growth strategies with those of your business-partners – a strategy for devising a win-win solution for all the parties involved, even for your customers as you shorten their travel-time while still putting them on a luxurious flight!

Emirates is chalking out a big-potential-for-growth strategy by linking 500 profitable destinations worldwide under its “city-pair” business-model, up from its current network of 101 cities. It says, “It’s just the tip of the iceberg!”

The only constraints that it may face will be the physical constraints of Dubai International Airport, in terms of airspace, runways, and other physical infrastructure that might limit the use of its “city-pairs” concept. Emirates, off course? Of course, not!