Emirates Airlines and Qatar Airway's Development Strategies - Case Study Example

Review of Emirates Airlines and Qatar Airway Company Overview Qatar Airways has been the chief airline company in the nation with universal branches having a base in Doha. The airline has expanded the borders to present services to an international destination comprising of over 80 destinations. The company, since its establishment in 1993 has recorded an annual growth of 35% to record satisfactory services to customers. Apart from the airline services that the company offers, the other presentation has been noticed on the carrier services that link the operations to the leading companies. The success has been witnessed in participating in joint services with other airline companies like Middle East Airlines and United Airlines, to limit competition and boost success to the destinations that experience its services. The Middle East Company has been listed as a leading competitor with a strong foundation in Asia and the global continents. Emirates Airlines, conversely, had been established in 1985 to offer airline services. The company has since been considered the overall carrier in Dubai and United Arab Emirates having established its base at Dubai International Airport. Emirates has been based on the ideology of expansion and extending services to clients on the global scene. The company has been presented with the capability of holding the largest capacity of passengers and extended services. The airline operates an enormous fleet of Boeing airplanes, with the set of Airbus to place the services offered as the leading purchaser of the Airbus A380. Moreover, the airline boasts of offering the Sky Cargo services to over 15 international countries with diverse destinations. The ownership of the company has been the Dubai Government with connections in all of the global continents possessing ownership to over 103 areas. The company also possesses an estimated 50 business units that hold the source of employment as the chief sector in the Middle East. Introduction Both Emirates and Qatar Airways are prominent names in the Middle East airlines industry. Both companies are among the most reputable companies in the industry within the Asian continent and all over the world. Emirates Airlines, which is owned by the government of Dubai, has been operating for 23 years while Qatar Airways has been in business for 18 years and is owned by the government of Qatar. The emirates began its life in 1985 with a single aircraft. However, it has grown to be among the world’s leading international airline. It has reinforced Dubai as one of the most important aviation hubs (Cumming, 2007:67). The Qatar airways on the other hand began in 1993. A royal family in the country initially owned it. However, it was re-launched in 1997 under a new management. The government of the country currently holds more than 50% of the total investment. Private investors hold the rest of the shares. Political The political scene within the Middle East region has been favorable due to agreements among countries, which facilitate trade amongst them especially in the aviation industry. These agreements provide ready markets for both airlines. However, both companies were affected by the recent uprising in several Middle Eastern countries, which resulted in the closure of several airports leading to loss of business. Political influences of the specific countries have influence to the operation of the airlines. In Dubai for instance, politics have ridden the government owned emirates airline to a fully global power (Plunkett, 2006:432). The basic aim of this is to make the competitors growth projections not clinch to their desired height. This influence has made the customers of the emirates to rise from barely 8 million in 1996 to almost 29 million ten years later. This forms the most impressive sustained growth the company has ever made. The Qatar aviation is the most dynamic in the region. It is taking sponsorship over the political influence of the country placing it among the world’s fastest growing airlines. Politics of the country influenced appointment of Akbar Al-Baker as the CEO of the Qatar airways. The new CEO has raised the flag of the aviation industry of Qatar raising it from the capacity of 4.2 million annual passengers to 7.5 million in his first two years of service. Economic Presently, airline industries worldwide have been facing a global economic decline due to the rising fuel prices. Despite this recession, both airlines and the Middle East airlines industry as a whole have shown remarkable growth in recent years. Both Airlines have low cost and luxury carriers and are strategically located in an oil rich region, which have cushioned them against the recent economic crises. Regardless of this, the Middle East markets are changing rapidly, and several governments are reforming their economic policies to suit the aviation industry. The emirates has a fine economic theory that displays its countermining power with increased oligopolisation and monopolization power due to current mergers and alliances (Page, 2003:27). The company generates tremendous revenue to the country’s government. It also offers thousands of job opportunities to the country’s citizens who directly or indirectly have influence to the economy of the country. Strategies are being laid to address the economic situation of Qatar and bring together national significance realization for the industry. The Emirates is growing so fast showing no signs for sluggish development. It has passed the annual future prediction of economic development made over the industry (Taneja, 1988:62). The increases in the number of passengers who are using the services of Qatar and the Emirates have an immediate effect on the economic progress of the industries. Social Both Emirates Airlines and Qatar Airways operate in a region that has numerous workers and employees who have a good rapport that accounts for the company’s economic progress. The labor costs are low since most employees rarely demand high remuneration. However, Emirates Airlines has been affected by the unionization of workers, which has resulted in workers demanding more compensation. The union density has varied from time to time considering the service concentration. The unions basically demand for increased payments and compensation for extra services (United Nations, 2007:54). Workers of the international airlines and specifically the Qatar airways are always on constant complain of how their lives are in danger due to the risk of losing their job. The unions formed advocate for workers rights and ensure that the working conditions of the workers are conducive. Performance With services to over 100 international destinations, Qatar Airways has included an employee base of over 20, 000 individuals, and 80% working in the airlines while the rest in other branches affiliated to the company. The company has established several branches to offer affiliated services to the company like catering, holidays, distribution and the Media Industry. All of these packages have supplemented the aircraft and cargo industry to generate the desired profit, to place Qatar as a leading competitor in the global market. The cargo division is capable of holding the 750, 000 capacity of cargo with the inclusion of the Boeing services. The International flights have placed the airways as a leading competitor within the global sector with the services operated from Europe to Asia. The aircraft operates a fleet that composes slightly above 100 planes with the opinion presented in expanding the capacity (BBC News, 2009). With the recent launch of new branches in advanced nations, the company managed to be accorded the title of airline of the year last year. The success of the airline has accorded the services to be presented with the noticed level of a five star airline operating in numerous branches. Emirates Airlines operates the aircraft within a diverse international platform with the capacity to be termed as the largest fleet within the Middle East (About Emirates, 2012). The capacity of the company to belong to the international Emirates Group has been linked to their possession of 10 large airlines within the global environment. The entire Emirates group has presented the capacity to own a large fleet of cargo with an estimated 50, 000 employees. The property of Dubai government has presented the capacity to operate a fully equipped fleet with the focus issued to the Boeing 777(Fattah, 2010). Other services have included the operation of the Airbus to be ranked among the world’s leading airlines with the maximum revenue generated. The airline has expanded the operational services to include annual revenue of $100 million with the capability of cargo capacity of 68, 000 tons. The expansion saw investment in the SriLankan Airlines in 1998 presenting the potential of developing the business since its formation. With the ownership fully belonging to the Dubai government, the mandate had been issued that there is no involvement in the operations of the airlines to present independent action. The success had led to the development of an increased passage capacity to generate added profits with 2010 being the highest recording $27 million in revenue. Globalization Qatar has expanded the operational activities in Asia and Africa composing the total of destinations served to contain 64 countries (Qatar Airways 2012). With the branches expanded to coati cargo services and the cabin crew, the expansion included branches in America and Europe. The staff members of the airline have been recruited from international branches to accommodate the changing society and satisfy the developing clientele from a diverse background (About Emirates, 2012). The international flights have made the expansion more flexible with the engagement business relations and incorporation of foreign staff members in its headquarters. Emirates Airways has expanded based on its international dominance with an expanded destination of over 115 regions, gaining instructions from the headquarters in Dubai (About Emirates, 2012). The expansion has witnessed growth in Australia and Argentina. Further expansion has been included in Asia with the branches expanded in Europe. This ensured an increase in the passenger number with the consideration issued on advancing the profits to accommodate a diverse customer relation. The company has also included the hospitality sector, expanding the cargo capability with the motive to increase accommodation and capacity. The provision by the government to accord independence to the airline has also produced the needed venture to expand the operations and accommodate a higher capacity of individuals. Structure Qatar Airways has established the headquarters in Doha with a systematic organizational structure to promote the needed success to drive success to the operational activities. The airline has established branches in Africa, Europe, and America and established its headquarters in Asia (QatarAirways, 2012). Each branch holds a manager to oversee the events within the given branch with all of them reporting to the headquarters under the CEO. The branches are in need of thorough supervised surveillance and with a skilled professional workforce, the 20, 000 employees are guided to fulfil the expectations in realizing the desired growth. Each branch in the established regions holds members who must report to the supervisor liable to the branch manager. Qatar Airlines under the board of executives implement the decisions and the verdict on the variable managers after intense research in the market. The current CEO is Akbar Al Baker who is one of the leading executives of Qatar Airways (Fattah, 2010). Emirates airways operates under the CEO of the larger Emirates group and Patrick Sweeney had been elected as the current leader (Bloomsberg, 2012). With the group presenting branches in various international societies, there is the need to present managers in the set branches who oversee the operational activities. With the Independence achieved from the Dubai government, the airline has bragged of obtaining sufficient operational activity with the provision issued on the need to present the structural operation from the central branch to the subordinate and achieve efficiency. Culture, System and Process Qatar Airways established during the 1993 period had been established to offer the carrier services to the international destinations, and first saw ownership form a private organization in the royal family. The management had been later changed to present half the stake to the Qatar government that presented new incentives to the operation of the airlines. The company expanded to receive added incentive in an Airbus aircraft by the year 1997. The growth had been witnessed to lead to the needed expansion and withdraw the merger to Gulf Air by 2002 (Singhal, 2011). With the expansion in addition of 20 Airbuses and extension of services to over 22 destinations, Qatar Airways went to become a leading company by 2011, winning the Skytrax Award. The services offered in the Cabin flights have included First Class services, the Business class with fully equipped comfort facilities and the needed entertainment equipment. There is also the Economy class that earned the airline the accorded stature with the comfort presented to the passengers. There is also the In-flight entertainment fitted within the crafts to preset competition to the other airlines that are noted as the threat to the development of the noticed profits (Singhal, 2011). Emirates Airways had been established based on the desire to offer carrier services to Dubai in 1985. During the initial years of establishment, an estimated 260, 000 passengers had been transported with a subsequent 10, 000 tons in the freight commodities. These actions saw the expansion of the airline present the needed strategies for expansion through the purchase of Airbus A310 to begin operation in 1987 (Singhal, 2011). The expansion had seen the development of the airline to be ranked among the leading performers within the global society as compared to other competitors like British airlines. In 2000, there was the addition to the fleet of an Airbus A380 to be considered the most massive civil aircraft to be constructed (. The airline under the larger Emirates group has been dubbed the most successful within the Middle East with a continental operation activity to generate added profit. The expansion saw the addition of staff within the hospitality, catering, engineering and the touring sector that is directed towards improving the service quality. The employees have been calculated to be 50, 000 with the labor division directed towards flight, cabin crew and the engineering department, to offer maintenance. The operations include First Class, Business class and the Economy class with an updated In-flight entertainment system. The flight applies the latest in the communication technology to accord the needed facilities to provide updated systems on the operations of the flights and the cargo sector. Strategy, Vision and Process The target presented by Qatar airways has been to satisfy a selected target within the society and offer the needed comfort. The target has been to satisfy the corporate middle and upper class sector. These have been the presented targets to outline the mission to generate added profit to the organization and the established units have been fitted with the right equipment to offer the needed satisfaction to the members. The Qatar executive had been launched to cater for the selected class with the economy class offering the needed incentives in complete services at affordable prices. The diverse nationality composing over 120 nationals have also served to increase efficiency of services and be voted among the top participants. Emirates Airways boasts of owning the largest fleet of aircrafts with the destinations stretched to occupy the larger global scene. These presentations have contributed to the elevated services with updated technology presented within the aircraft and the ground services. The flights have also been built with the technology to contain minimal environmental hazards to present the desired competition (Borenstein 1992, p47). Technological Technology provides a competitive advantage for companies in the airline industry. Increasing advancement in technology has resulted in both airline companies introducing e-ticket and other online services where customers can book their plane tickets from the comfort of their homes, and access other online services. The major technological invention to the Qatar international airway is the introduction of the jet engines, which have shortened the travel duration considerably. In addition, the introduction of a well-bodied aircrafts has also marked economic development of the airline industry (Plunkett, 2006:476). These dual developments have generally reduced the cost of travel hence positively impacting their demand. The emirates airline has computerized the airline system to maintain large database within their flights. The airlines of Qatar have developed yield management system programs that look in the future flights and dynamicity. This has improved the number of special care seats that solely depend on the number of reservation and outstanding orders. Environmental Environmental campaigns are part of the corporate responsibility strategy of both Emirates Airlines and Qatar airways. Both companies have adopted strategies that guarantee upstanding corporate image. For instance, Emirates Airlines takes part in several environmental sustainability projects like tree planting. Despite their fight towards environmental conservation, the airline industries have an adverse impact towards the environment. However, most of the environmental effects from the aviation industry have been due to technological advancement. During flight, the aircraft engines emit harmful gases that have effect on the atmosphere in a variety of ways (Cumming, 2007:103). The airlines have established both long term and short term to offset the impact of air pollution by the industry. First, the aviation industries have given the customers a chance to purchase carbon offsets that minimize their carbon emission footprints. The Qatar airline has joined hands with the west jet company to offset the environmental impact caused by their jets. The Emirates airline has also collaborated with Jest Star Airways in Britain to conserve the environment in various ways. For the long-term environmental conservation programs Qatar airways has collaborated with other industries that think in a business model. This will probably influence the way the industry moves persons from one place to another in an efficient and timely manner. Legal Companies such as Emirates Airlines have grown because of favorable government regulations that have opened up airline companies to competition. There are few legal barriers within the Middle East region, which have ensured that airline companies follow the rules of economics to maintain a competitive advantage. Emirates Airlines has adopted an exceedingly unique business model, which prospers upon embracing the existing external environment. The company management is rather creative and constantly develops ways to improve operations. This is one way through which the company has weathered economic problems that have plagued the industry. The government owns 39% of the market share in the Middle East airline industry and embraces expansion strategies for its future operations. The company is also considering venturing more into other non-Asian markets (China Economic Review, 2006:342). Qatar Airways’ business model promotes the Arab way of hospitality while simultaneously embracing openness to other cultures and the modern society. It shows unprecedented growth and an aggressive strategy to make Qatar Airways a global brand. The company has ensured brand awareness by making use of such channels as advertising through radio, print, television, and internet (Plunkett and Plunkett, 2006:463). The airline owns a fleet of 100 aircrafts expected to triple by the year 2015. The company has also launched aggressive growth plans, in recent years, to ensure it offers greater destination choice, more flights, and flight products. Emirates recruitment process includes an open day conducted by an appointed agency to screen applicants, an assessment day, which is about two weeks after the open day, and lastly, a final interview. Qatar’s recruitment process involves assessment tests and a final interview. Both airline companies are ranked as Five Star by the independent aviation-monitoring agency, Skytrax. The employment-dedicated staff provides them with adequate support and training before the commencement of work (Plunkett, 2006:546). Opportunities of the airline industries The government has unprecedented routes for the expansion of the airline industries in the specific countries. Qatar airways has remained bullish in its network expansion plans with its current announcement that regards the new routes that exceed its 2009 launched program. The industry has a focus on the new route development for this year. Emirates airline has anticipation to operate four destinations by 2010; in Africa compared to the four destinations it currently holds (Cumming, 2007:186). However, Qatar will launch six new destinations by the end of 2010. Etihad airways, which is the second largest airline after Qatar, launched eight new destinations in 2009 and its anticipating to announce two more come this next year. The company suggests the additional destinations are purely out of its profits. Network plans Emirates airline has announced plans to add a new destinations to its network. However, it has launched carrier plans to increase their number of tours to various countries that have business links with it. It has increased the number of travels to Amsterdam, Prague, and Madrid. The Qatar has a busy schedule round the year but plans to add capacity across several regions like the Southeast Asia and the pacific region. It also plans to boost its access to the republic of Australia. Qatar also plans to launch a service to Sydney sometime in 2012 (Oxford Business Group, 2006). Challenges The main challenge facing the Emirates airline is competition. This comes out of the fear from other companies that conduct the same business as it. The industry is termed as a threat to the regional carriers. The threat is simply because the emirates company gets aids and subsidies from the government as well lowering of fuel prices. This makes the company have relatively lower charges compared to other industries. The challenge accompanied by this is the crowding of passengers at the airports wanting to travel through the airline. This leads to deterioration of firms in the industry. In the near future, the industry may take over as a monopoly; hence, the country may experience the problems that come with monopoly. Another problem facing the Emirates airline is the political instability in the Middle East countries. This has forced the industry to stop some of its visits to countries that are war prone. The Emirates airline is faced with the challenge of making its brand relevant and ensuring that it is adopted across the globe. Another problem is the negative perception of the people against the Arab world. This forces most of the citizens prefer American products and services to those of Dubai (Plunkett, 2006:569). The problems that occur in the emirates airline are also evident in the Qatar airways. In addition, the Qatar airways also face a problem of inconsistency and government influence. Since the Qatar government holds most of the company’s shares it influences the management of the same. Any decision made in the industry has high political influence. This has made decision-making and in the company bureaucratic and politically oriented. Conclusion Emirates Airways aspires to redefine the industry by providing value and quality experience by acting with openness and honesty and having respect for the individual. Qatar Airways, however, seeks to develop innovative projects while integrating economic, cultural, and social values into design solutions. The Emirates faces profound effects on network development, this translates that the selected airports will receive a large share in takeoffs and landing in the networks. The increasing market consolidation in Qatar and the continuing growth means that the environmental damage will continue to grow (Taneja, 2008:234). The technological development in Qatar will continue to affect the environment; therefore, new policy measures are necessary in the environmental conservation in the country. The ticket used in emirates raises the cost of travel and hence influences the passengers travel behavior. Bibliography China Economic Review., 2006. China Foreign Enterprise Directory. 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