Emirates Porter’s 5 Five Forces: (2022) Detailed Overview

Written by portersfiveforcesteam in Porter's Five Forces Analysis

 Porter’s 5 Five Forces Analysis of Emirates

 

Key Facts

 

Name Emirates, Part of The Emirates Group
Industry Aviation ,Airline
Founded October 25,1985
Headquarters Garhoud, Dubai, UAE
CEOs His Highness Sheikh Rashid Mohammed bin Rashid Al Maktoum
Revenues 59.18 Billion AED,FY Ending March 31,2022
Profit/Loss (4.38) Billion AED, FY Ending March 31,2022
Competitors Singapore Airlines,Air China,Cathay Pacific Airways

 

 

Company Overview

Headquartered in Garhoud, Dubai, UAE, Emirates is a largest airline in Middle East and national airline of United Arab Emirates serving 150 airports in 78 countries with dnata, which is serving above 300 airline passengers in 37countries, both the entities are running under single management and reporting separately, as Emirates Group.Emirates gave a recovery revenue after COVID -19 of 59.18 billion AED with an Operating loss of 4.38 billion AED ,with net assets of 149  billion AED in Financial Year ending March 31, 2022, ranked 474 by Fortune Global 500.Emiartes moved 19.6 million passengers in 2021 and ranked 7th on World’s Top 10 Airlines by Passenger Traffic List.

The Global Airline Industry estimated to be valued at US$ 359.3 billion in 2020 while expected recovery to US$ 471.8 billion in 2021.

 

 Porter’s Five Forces Analysis

The most widely referred model to design companies’ strategies in reference to its industry for better profits and less exposure to competition is “Porter’s Five Forces Analysis”, defined byProfessor Micheal E. Porter in 1979,at Harvard Business School.

 

Emirates Rivalry among Existing Competitor

 

  • Global Aviation Industry: The Aviation industry negatively affected due to COVID-19 pandemic and experienced a 65% decrease in passenger air traffic, the number of passengers reduced by 2.7 billion in 2020, with 16.9 million flights only, compared to 38.9 million flights in 2019.Due to low activity employees faced a job-loss and airlines companies experienced bankruptcies or need financial support to continue operations.
  • Emirates Geographical Operations & Business Revenue Segmentation: Emirates is present in North America,Europe, Africa, Middle East, Asia and Australasia. Emirates operating in 3 main Business Segments which are Passenger, Cargo and Non Transport (sale of goods, hotel operation and others).Passenger Revenue account for 32.91 billion AED, which is 57% of total revenue in FY-2021-2022.The other segments contributed as follows; Cargo accounted for 21.65 billion AED and Non-Transport Revenue accounted for 3.7 billion AED, which are 37% and 6% respectively.
  • COVID 19 Impacts Revenue Recovery: Emirates experienced a recovery of revenue, an increase by 92.8% by generated 58.3 billion AED in FY 2021-2022, compared to previous year 30.2 billion AED in FY 2020-FY 2021. While before COVID it was maintaining an average of total revenue 92 billion AED annually from FY 2017-FY 2018, FY 2018-FY 2019 to FY 2019-FY 2020,mentioned by Emirates Group in Annual Report 2021-20222.
  • COVID 19 ImpactsRecovery – Passenger Number: The number of passengers Emirates moved is 19.6 million in FY 2021-2022, compared to 6.6 million passengers in FY 2020-FY 2021.While before COVID it was maintaining an average of moving 58 million passengers annually from FY 2017-FY 2018, FY 2018-FY 2019 to FY 2019-FY 2020,mentioned by Emirates Group in Annual Report 2021-20222.
  • Competitive Advantage Year 2020- 2021-Expo 2020& Emirates Pavilion: Emirates being a Premier Partner of Expo 2020-a 6 month, event took the advantage of bringing people to Dubai from 6 continents. It also invested 200 million AED for promotion and advertising of the Expo 2020 in global markets and present Emirates group at Emirates Pavilion in Expo 2020.
  • Competitive Advantage Subsidized Fuel Prices: Being a subsidiary of a government owned holding company and present in oil reserves rich region, Emirates is having the benefit of subsidized fuel prices, with the largest fleet in Gulf Cooperation Council (GCC).
  • Competitive Rivalry in the Airline Industry: Airline Industry operates with marginal profits, maintaining a low cost some time results in poor customer service opposite of this Emirates charges high price and provide premium quality.Emirates is facing close competition from Qatar Airways, Etihad, Lufthansa,Singapore Airlines,Air China, and Cathy Pacific Airways.
  • Emirates Partnership Programs to Beat Competition: Emirates is into different partnerships to fight with existing and future competition, for example Emirates had a partnership with JetBlue Airways for a codeshare deal, recently terminated. Now Emirates signed a contract with United Airlines for major connecting operations in USA, started from November 2022 and expanding in March 2023 so Emirates customer can have transfer flights in 200 US Cities via United Flights.

 

Emirates Threat of New Entrants

 

  • High Capital Investment

The entry barriers are high in airline industry due to the operational structure form purchasing and maintaining aircrafts, licensingrequirements, qualified pilots, maintaining fleet and cabin crew,fuel, maintainer, airport fees etc. Only one Boeing 737 series average cost starts from US$ 90 million to US$ 292.5 million.

  • Regulatory Compliances

There are different international aviation authority’s rules and regulations are required to follow including from Licensing to regulatory compliance, quality standards,flight operations, safety and risk management.

 

Emirates Bargaining Power of Suppliers

 

  • Aircraft Companies: There are only 2 major companies producing aircrafts Boeing and Airbus so in terms of aircrafts, suppliers have substantially influencing the airline bus. Normally suppliers has close ties with the airline companies to understand their technical and design requirements.
  • Other Supplies and Requirements: Other necessary requirements including technically qualified Human Resources specially pilots, maintenance staff and Fuel availability and prices may also influence the business decisions.

 

Emirates Bargaining Power of Buyers

 

  • Premium Services and Pricing Structure: Emirates is enjoying high brand loyalty and maintaining a premium quality service provides with a premium pricing structure so in this way customers have very low bargain power due to high customer loyalty
  • Customer Satisfaction: Emirates ranked 48% in terms of brand awareness in Unites States, declared by Statista. Emirates A380 is highly recommended by Pilot Patrick.

 

Emirates Threat of Substitute Products or Services

 

  • Luxury Airline Emirates is being classed as Luxury Airlines with a strong brand image. It is 4th largest brand globally with a brand value of US$ 5.0 billion so substitution at the cost of brand loyalty is challenging.
  • Alternate Modes of Transportation or Cheap Tickets:Alternative modes for short distance transportation can be a substitution, also cheap offers from Airlines like EasyJet can also play a role of substitution.
  • Macro-Economic Events – General Shift in Life Style Patterns : Any shifts in general economic environment like current global recession, Ukraine – Russia war 2022,COVID -19 pandemic also shifts the general life style and travelling patterns, like more use of digital platforms, more digital meetings ,digital summits ,shrinkage in travelling budgets etc.

 

References

  1. Aviation Business.Com (September 5,2022) Emirates retains its position on the world’s top 10 airlines list. Available at
  2. Statista (September, 16, 2022) Number of Emirates passengers from FY 2010/11 to FY 2021/2022 (in millions) | Available at Statista
  3. Emirates Annual Report 2021-2022.Available at Emirates
  4. Statista Aviation Available atStatista
  5. Statista (September, 28, 2022) Market size of the airline industry worldwide from 2018 to 2021 (in billion U.S. dollar) | Available at Statista
  6. Statista (August, 29, 2022) Average prices for Boeing aircraft as of March 2022, by type (in million U.S. dollar) | Available at Statista
  7. Statista (June 4, 2022) Emirates ranks 4th most valuable airline brand globally. Available at Statista
  8. Statista (Oct 18, 2022) Emirates brand awareness, usage, popularity, loyalty, and buzz among airline customers in the United States in 2022. Available at Statista
  9. First time flying on board of the A380 Available at
  10. Flight Global, (September 15,2022) United and Emirates strike broad partnership that “terrify” competitors, Available at

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