Emirates Airlines - one of the most profitable airlines in the world

http://www.emirates.com/uae/AboutEmirates/EmiratesNews/GN_NewsDetail.asp?yr=2005&St=2


The soaring prices of oil has tremendous effect on the airline industry. Most of the airlines are suffering from fuel price hikes and are running out of cash. However, Emirates Airlines has proven to be the most efficient and profitable despite the extra costs.

Using the porter five-forces model, suppliers’ power (oil suppliers in this example) is playing a major role in threatening major carriers into bankruptcy. on the other hand, There are no barriers to entry in the airline industry due to deregulation, furthermore, the airline industry is already saturated and there are many big rivals competing to survive. All these factors prove that the airline industry is unattractive and definitely unprofitable under the current conditions. So, how could a small carrier like Emirates Airlines hit its target while giants like BA are loosing cash ?

Using Jay Barney’s VRIO Frame work, we can better understand the competitive advantage of Emirates Airlines and the reasons behind its success:

Value: Emirates Airlines has valuable human resources and a well experienced staff. The vice-chairman of the airline has more than 50 years of experience in the aviation industry. The airline provides excellent training to its staff and is keen on improving their skills regardless of the costs. In addition, Emirates Airlines is the international carrier of Dubai which is a politically stable area and has a strategic location especially for transit passengers. Human capital and the location of the airport play an important role in helping the airline exploit opportunities and avoid threats.
Rareness: I would consider the strategic location of Dubai a rare resource that provides the airline with an excellent demand for its services. Human capital is a rare resource too. For example, Sheikh Ahmed is a valuable and a rare resource and his image has a great contribution to the airline’s success. This is similar to Richard Branson and Virgin Atlantics.
Imitability: the location of Dubai is a resource that cannot be imitated easily since Dubai is the business capital of the middle east.
Organization: the collaboration between all the divisions of Emirates Airlines has achieved a lot of cost cutting and increased efficiency. Its management and policies of compensation is worth mentioning too.

To sum up, Emirates Airlines has a sustained competitive advantage based on the VRIO frame work.