Sucess of Emirates airlines

 

Founded in 1985 by Maurice Flanagan a British businessman   Maurice Flanagan was tasked with the ambitious mission to launch an airline in 5 months with $10 million seed funding. He was told that the airline had to “look good, be good, and make money”. With limited funding, Emirates started its first flight to Karachi and Mumbai by wet leasing. They borrowed flights from Pakistan International Airlines and within 6 months of establishment had its first flight. Wet leasing allowed Emirates to explore the most profitable routes and finally, in 1987 it started investing in its own fleet.

Fuel expenditure, comprising an average of 22% of operating costs, can be a significant vulnerability for airlines. Geopolitical turbulence and other externalities can drastically inflate oil prices, jeopardizing airline profitability. Emirates, however, has proactively adopted fuel hedging, a financial strategy akin to pre-purchasing winter apparel during summer, mitigating the anxiety of sudden price surges. While this approach can incur higher fuel costs during periods of low oil prices, it provides a crucial shield against price hikes, enabling Emirates to navigate its financial landscape with greater precision

Emirates: Balancing Cost Efficiency with Labor Practices

Emirates stands apart in the airline industry with its unique approach to employment and its strategic positioning within the booming Dubai tourism landscape. Here's a breakdown of the key points:

Employee Practices:

• Fixed-Term Contracts: Emirates primarily utilizes fixed-term contracts for its workforce, offering competitive salaries and benefits within this framework.
• Limited Labor Unionization: Unionization and strike action are not permitted in the UAE, impacting the traditional dynamics of labor relations compared to certain European airlines like Ryanair.

Financial Advantages:

• Lower Cost Percentage: The combination of fixed-term contracts and Dubai's lower living costs compared to some European countries translates to a lower employee cost as a percentage of Emirates' revenue, contributing to their financial competitiveness.
• Premium Market Focus: Catering to a segment of travelers willing to pay for premium service allows Emirates to generate more revenue per employee compared to budget airlines.

Dubai's Tourism Boom:

• Increased Demand: Dubai's meteoric rise as a global tourism destination has fueled passenger growth for Emirates, further solidifying its market position.
• Strategic Partnership: Emirates' close collaboration with the UAE government has fostered mutually beneficial growth for both the airline and the country, capitalizing on tourism opportunities.
• Transit Hub Advantage: Dubai's strategic location as a major transit hub for international travel further bolsters Emirates' passenger volume and network reach.

In conclusion, Emirates' unique employment practices, coupled with its strategic positioning within Dubai's thriving tourism ecosystem, have contributed significantly to its financial success.