EMIRATES AIRLINE EXPANSION STRATEGY
DUBAI-VANCOUVER

About Emirates Airlines: Our Vision & Values

The principles which propel us forward

A strong and stable leadership team, ambitious yet calculated decision-making and ground-breaking ideas all contribute to the creation of great companies. Of course, these have played a major part in our development, but we believe our business ethics are the foundation on which our success has been built. Caring for our employees and stakeholders, as well as the environment and the communities we serve, have played a huge part in our past and will continue to signify our future.
Emirates flies to more than 100 destinations in over 60 countries and has been fundamental in establishing Dubai as the Middle East’s commercial center and aviation hub. It operates more than 1,000 flights per week across six continents from its base at Dubai International airport, which has the capacity to handle 70 million passengers per year.
Emirates was launched in 1985 with two leased aircraft from a rudimentary airport. It’s phenomenal growth is reflected in the 160-plus aircraft in its rapidly expanding fleet – a mix of the latest wide-body Airbus and Boeing aircraft - as well as Dubai’s state-of-the-art Emirates Terminal 3, which is used solely for the airline's flights.
Its fleet is one of the youngest in the skies, with an average age of under 80 months, and this figure will fall further as it takes delivery of the 200-plus aircraft it has on order, worth almost $84 billion at list price. Emirates is the Airbus A380 super-jumbo’s largest airline customer, with 20-plus in the air and over 60 still to be delivered.
In 2010-2011, Emirates - which has over 12,000 cabin crew of more than 125 nationalities who speak over 50 different languages - carried 31.4 million passengers, an increase of four million on the previous year.

Case for Flights from Dubai-Vancouver:
The goal of this Strategy Project is to show the viability of Emirates Airlines operating flights to Vancouver (British Columbia, Canada). As of now flights originating from the Middle East to Canada end either at Toronto Pearson International (Toronto) or Pierre Elliott Trudeau Airport (Montreal). There are no flights to Vancouver International Airport which would prove to be a valuable addition to Emirates Airlines Network. All flights departing from the Middle East to Vancouver with other competitors currently travel through their respective European Hubs, i.e. Frankfurt, Amsterdam, London and Paris to name a few. The flight time including transit takes a minimum of 16 Hours where passengers are made to take connecting flights. An Emirates flight taking off from Dubai using the A380 which has the highest Passenger Capacity currently in the Airline Industry combined with its Fuel Efficiency has the capability of making the direct flight in 15-18 Hours which would prove to be a major enticement factor for not only Commercial Passengers but Business Passengers as well. The A380’s state of the cabin and amenities would also prove to be a major influence.
In order to achieve a profitable route, this strategy will employ Michael Porters Five Forces showing that by creating an alliance with Major Asian Airlines as well operating independently its route to Vancouver; it can achieve its expansion goals.
Strategy Brief: 1) Emirates will operate a Direct Flight Dubai-Vancouver-Dubai.

2) An Alliance can be formed with Major Asian Airlines using Code-Sharing. This will allow such Asian Airlines to operate their Direct Flights to Vancouver, i.e. JAL which has a flight time of 8 Hours. These Passengers can then, on a return trip, take Emirates Airlines to Dubai where they will be provided a 48 Hours Transit Visa with Hotel Stay Package. The Passengers can then take the JAL flight from Dubai to Tokyo, thus ensuring the alliance proves beneficial to both parties. Airlines such as JAL can be further enticed into the alliance by offering Cheaper Landing Right Fees or other such considerations. The overall goal of this alliance being that all parties can operate flights to capacity encouraging tourism.

Porters Five Forces:

Diagram 1.1

1) Threat Of New Entrants:

The Vancouver Sector is currently serviced by a number of European and Asian Airlines with competition being fierce. This can also be seen as a Barrier to Entry and explained by; (a) There are substantial start-up costs involved in operating an airline or starting a new route. If Bank Loans or Credit Facilities are easily available and cheap, more airlines may enter the market saturating it leading to extreme competitiveness (b) Loyalty to existing brands, meaning customers will prefer to stay with their specific choice rather than try something new is also a significant barrier to entry, (c) A Better understanding of customer requirements and offering of effective Incentives allows airlines to retain its returning customers, (d) Government Restrictions and Legislations, i.e. The Canadian Government refusing Emirates Airlines the authority to operate more flights to cities such as Toronto or new routes such as Vancouver. Emirates is however constantly attempting at negotiating for increasing the number of flights and routes within Canada as seen in the recent visit by a Trade Delegation in March where Emirati Foreign Affairs Minister Sheikh Abdullah bin Zayed al Nahyan, who met with Canadian Foreign Affairs Minister John Baird Monday as part of an official visit declared that relations were heading in the right direction, (e) Major Airlines in an existing market also have the capability of reducing its fares intentionally to block out potential new rivals

2) Supplier Power:

There are 3 Major Supplier Influences; (a) The price of Jet Fuel has been increasing on a regular basis over the last few years taking into account the economic crisis as well political led disruptions in the Middle East/ Africa. To combat this most Airlines use ‘dynamic hedging strategies’ allowing them to cap higher fuel prices in the future reducing their costs. Emirates Airlines has also utilized this strategy in the past where it incurred a loss of Dhs.1.5Billion when it predicted increasing fuel costs; however a sudden drop in 2009 led to lower than expected Profits for the airline. (b) The increasing power of Jet Fuel Supplier has reduced the influence of Airplane Manufacturers namely Boeing and Airbus, who until recently wielded significant influence over its customers taking into account the lack of substitute competition. However, with most airlines facing losses due to rising operating costs and competition between Boeing and Airbus, has forced them must to work hand in hand with its customers to ensure sustainability for all parties involved. Emirates however is working towards increasing its fleet size such as purchasing 93 Boeing 777’s taking into account previous years of profit taking and proper strategies being implemented. (c) Labor is also a major cost to Airline operations, with a number of them having to be involved with industry unions to look after employee welfare. However there is also the issue of Strikes occurring such as in the case of Air Canada’s Pilots which lead to a number of flight delays and cancellations. Emirates Airlines does not currently allow unions to form within the company by ensuring staff requirements are met as well can be while maintaining its profitability.

3) Buyer Power: Consumers over the last decade have been exerting considerable pressure/ power on Airlines especially with the economic recession and current political instabilities to reduce airfares. Airlines have been facing a reduction in Revenue per Passenger per Mile while Available Seat per Miles has been increasing. As the ‘Seat’ is perishable in nature, Airlines are being forced to reduce ticket prices to ensure higher ‘Load Factors’. Airlines such as Emirates Airlines are now moving towards greater online activities through their websites for ticket purchasing in order to reduce costs while offering better prices to its customers. There are also tie-ups between companies such as Travelocity and Expedia that customers might prefer to use within their local market. Airlines have also become extremely Price Sensitive in order to entice customers as many are now forsaking Brand Loyalty over cheaper Airfares. 4) Internal Rivalry: There are a number of Suppliers (Airlines) that have little or no differentiation between their services/ products. A majority of airlines are now trying to create the differentiation based on customer loyalty programs and improved passenger services. Current economic conditions have also necessitated the need for alliances being formed between major airline carriers to ensure their sustainability while seeking protection from their respective governments. Some of these alliances i.e. The Star Alliance which has Air Canada as its member which actively seeks the protection of the government to ensure Emirates Airlines as well other Middle East Carriers are unable to penetrate the Canadian market which would lead to significant losses as it is unable to meet passenger satisfaction. There are also other Star Alliance members who have a vested interest in maintaining the status quo, i.e. Lufthansa who themselves would lose customers who are forced to fly via Frankfurt; would more than likely switch carriers if given the option of direct flights. These alliances also mean that prices and routes can be forced upon customers and therefore should be carefully monitored to ensure fair practices are being pursued. Emirates Airlines is currently not a part of an alliance, however this strategy will show that Code-Sharing would give greater power to Emirates and its chosen partners, more than likely forcing new markets to open up with greater penetration into existing ones through liberalization which is part of its core philosophy. 5) Substitutes: There are no perfect substitutes for Long Haul Airlines such as Emirates, Lufthansa, Singapore Airlines. At most, traveling by sea would be the only viable option. Substitution would depend on Time, Personal Convenience, Money and Personal Preferences.

Facts:

27 Thousand Canadians reside in the United Arab Emirates as of 2012. There are some 40,000 Canadians residing in the Middle East. Approximately 2.8 Million Canadians live outside of Canada.

Ethnic Demographics for British Columbia:

Diagram 1.0

East and South East Asia | 584,895 | South Asian | 208,535 | Arab Origin | 14,170 |

(These are potential clients who may travel on a regular basis or might also have family members traveling to visit them.)

Viable reasons for Tourism Passengers to travel on this sector from the UAE/ GCC, either as a final port of disembarkation or transiting to other destinations: 1) Tourism: (a) Wilderness/ Wildlife (b) Sports & Adventure Activities (c) F&B (Winery’s and a multi-cultural cuisine environment) (d) Art & Culture (Specifically Aboriginal/ First Nations)

(2) Business: (a) Mining (Including Alberta)
(b) Oil & Gas (Alberta)
(c) Farming (Prairies and British Columbia)
(d) Fishing (Maritimes & British Columbia)
(e) Manufacturing & Services (Ontario)

Possible enticement factors for tourism from British Columbia (Vancouver/ West Coast) to UAE would range from tourist attraction sites, the shopping festival, weather conditions are also favorable in the UAE during Canadian Winters. This would be a major factor in local tourism as many Canadians like to maintain a healthy lifestyle promoted through outdoor activities that cannot be enjoyed year round especially in British Columbia.

Other Target Segment:

There are approximately 150,000 International Students studying in Canada primarily from India, China and other East Asian or South Asian countries including the UAE and other parts of the Middle East. Targeting this segment should be a priority as not only students fly in and out of Canada for their higher education; their families would also be potential customers who would like to visit them. British Columbia and Vancouver have a number of Colleges and Universities that are internationally recognized drawing a sizable number of students in joining them. There is also the possibility of using the UAE as a “Meeting Hub” or central location for students and their families who wish to vacation together but are unable to travel all the way to Canada due to Time or possible Visa Restrictions(from Canada). There is also a significant number of Permanent Residence Card holders (Immigrants with the right to reside in Canada but are not considered citizens) who travel back and forth. A number of these P.R. Card holders originate from China, India, and Pakistan as well as the Middle East and other East / South Asian countries that could easily transit through Dubai.

Vancouver Airport Passenger Enplaned/ Deplaned:
In 2009 44% of International travel originated from Asia primarily from China and Japan followed by other Asian countries with a growing trend from Korea and Taiwan. YEAR | DOMESTIC | TRANS-BORDER | ASIA PACIFIC | EUROPE | MISCALENOUS | TOTAL | 2009 | 8,667,360 | 3,848,606 | 2,117,671 | 1,104,391 | 431,284 | 16,179,312 | 2010 | 8,781,417 | 4,133,938 | 2,318,761 | 1,131,881 | 412,777 | 16,778,774 | 2011 | 8,875,301 | 4,165,119 | 2,391,072 | 1,150,828 | 450,422 | 17,032,742 |

As seen in the above table there is a significant number of passengers that travel internationally through Vancouver Airport. However, Domestic and Tran-Border Passengers should also be targeted by providing the most convenient connection possibilities as they currently outnumber International Travellers.

Long Haul Planes capable of direct flights to Vancouver:
BOEING:
Plane Type | Maximum Flight Distance | Number of Passengers | Fuel Efficiency Per Seat/100Km | 747 | 8,350 Nautical Miles | 467 (3 Class Config.) | 2.8 Liters | 777 | 9,695 Nautical Miles | 301 (3 Class Config.) | 3.7 Liters |
AIRBUS:
Plane Type | Maximum Flight Distance | Number of Passengers | Fuel Efficiency Per Seat/100Km | A340 | 9,000 Nautical Miles | 379 (3 Class Config.) | 4.1 Liters | A350 | 8,400 Nautical Miles | 350 (3 Class Config.) | 3.1 Liters | A380 | 8,300 Nautical Miles | 525 (3 Class Config.) | 2.9 Liters |

Dubai – Vancouver Flight Time and Distance:
6,342 Nautical Miles which can be covered in a flight time of 15-18 hours Direct.

Competition: Dubai via Transit Point (Europe/ Asia) or Direct to Vancouver

1. Cathay Pacific: Code Share with Alaska Airlines
Plane Type: Boeing 747/ Boeing 777
Flight Times: A Direct flight from Hong Kong-Vancouver is 13 Hours.
Airline Rating:

2. Singapore Airlines: Code Share with Alaska Airlines via Los Angeles
Plane Type: A380 (International)/ Boeing 737 (Domestic)
Flight Times: 25-30 Hours Including Transit Time via Tokyo and Los Angeles
Airline Rating:

3. Qatar Airways: Code sharing with Air Canada via Doha & Montreal
Plane Type: Boeing 777/ Airbus A320
Flight Times: 23-26 Hours Including Transit Time via multiple airports
Airline Rating:

4. Air Canada: Operated by Lufthansa through Code Sharing.
Plane Type: A340
Flight Times: 20-23 Hours Including Transit Time via Frankfurt.
Airline Rating:

5. Lufthansa: Code Share with Air Canada via Toronto or Montreal
Plane Type: A340 (International)/ A320 (Domestic)
Flight Times: 20-28 Hours Including Transit Time via Frankfurt or Munich
Airline Rating:

6. British Airways
Plane Type: Boeing 777/ Boeing 747
Flight Times: 20-35 Hours Including Transit Time via Heathrow & Amman
Airline Rating:

7. Air France: Code Sharing with Delta, Alaska & KLM, Air Canada, WestJet
Plane Type: Boeing 777/ Boeing 767/ Boeing 747/ Bombardier Dash 8
Flight Times: 23-28 Hours Including Transit Times via multiple airports
Airline Rating:

8. JAL
Plane Type: Boeing 767
Flight Times: Direct Flight Tokyo-Vancouver is 8 Hours, Osaka-Vancouver is 9 Hours
Airline Rating:

9. Qantas: Code Share with Alaska Airlines & WestJet for Trans-Border flight.
Plane Type: Boeing 747/ Boeing 737/ Airbus A380
Flight Times: 19-28 Hours Including Transit Times via Los Angeles
Airline Rating:

10. Jet Airways: Code Sharing with Air Canada via Heathrow
Plane Type: Boeing 777
Flight Times: Approximately 24 Hours
Airline Rating:

11. China Southern
Plane Type: Airbus A380/ A330/ Boeing 777
Flight Times: 17-28 Hours Direct Flight & Transiting Through Multiple Airports
Airline Rating: 12. Korean Air
Plane Type: Boeing 777
Flight Times: 24-41 Hours Including Transit Time via Seoul, A direct flight Seoul-Vancouver is 10 Hours.
Airline Rating:

13. KLM: Code sharing with multiple airlines i.e. Air France & Delta Airlines Plane Type: Boeing 737/ Boeing 777/ Airbus A320/ McDonnell Douglas MD-11, Dash 8
Flight Times: 24-27 Hours Including Transit Time via multiple airports.
Airline Rating:

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Emirates Airlines holds an Airline Rating of:

Conclusion:
As seen from Porter’s Strategy and the above mentioned data, Emirates has the potential to enter this new market if given the opportunity to do so. It possesses the needed infrastructure, product/ service capability and backing of its stakeholders which has been its reason for such a rapid yet sustained growth in a short period of time while most other Airlines are declaring bankruptcy or scaling back their business operations in order to remain operational. In order for it to operate with efficiency, the A380 would be the chosen plane to service the sector which would be both economical and environmentally friendly. The strategy to utilize code sharing would all Emirates to gain an extremely profitable sector while living up to its core philosophy of ‘Open Skies’ and liberalization of the industry.

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