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External Factors – Headwinds for Emirates Airlines

February 9th, 2017

Emirates Airlines is one of the biggest long haul carriers that has been growing organically not only in the Middle East but also globally. The player has been aggressively expanding and opening new routes during the years with some exceptional financial performances. However, for Q1 in financial year 2016-2017, the carrier recorded for the first time a profit decline of 75% driven by weaker customer demand especially from important oil-dependent markets, price pressure from other operators, a stronger US dollar that impacted local currencies, and difficult business environment due to security issues, among others.

Fleet optimisation is a must for every carrier and Emirates is no exception. In 2016, the airline retired its Airbus A330 and A340 planes to operate a more efficient and consolidated fleet of only Airbus A380s and Boeing 777s. Emirates Airlines plans to transfer its operation by 2025 to Al Maktoum International airport at Dubai World Central (DWC). The new airport is expected to become the main operating airport in Dubai. The airline is reviewing opportunities to boost its ancillary revenues by introducing premium economy class and a new charge for seat selection and second booked luggage.

The carrier however must intensify efforts to transform its internal structures to accommodate the digital revolution. Big data analytics must be used to target consumers in a more personalised and effective way through the whole marketing mix. The establishment of a new position tasked to drive digitalisation in the company comes quite late in the day for the airline, which could undermine its competitive advantage.

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Nadejda Popova

Nadejda Popova is senior analyst for the travel industry at Euromonitor International, which she joined in September 2008. In her current post, Nadejda is specialised and in charge of the airlines segment. Nadejda has a degree in Finance (BA), and PhD in Management (University of London).

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