Dubai is considered one of the most important trading hubs in the Middle East region. Its rapid growth in its major infrastructure elements had attracted many multinational companies across the world to open their regional offices in the city. This had its positive effects on Dubai economical growth as it became a golden gate for regional Middle East businessmen to trade with other international companies. As a result of this, the need for a low cost airline that provides its services for business men within the region had increased. The city experience with the airline industry is not new as it is the home city of Fly Emirates, which is considered one of the best airlines in the region. This industry had its great effect on Dubai economical growth in the past 20 years and will have its strong impact in shaping the emirate future. In March 2008, the second low cost airline was lunched under the name of Flydubai and started its operations in Dubai International Airport Terminal 2 in June 2009. (For more information on Flydubai and its operations, please refer to Appendix 1).
We have defined our relevant market for Flydubai as a low cost carrier (LCC) within the product form level. Being positioned as a low cost national airline carrier, it's facing a high competition from other national airlines which force the relevant market to be within the product form. (For more information on the relevant market please refer to appendix 2).
This paper will focus on presenting an environmental scan of the airline industry within the Middle East region during the time frame of 3 years (2009-2012). In order to do so, we will identify the significant trends and their consequent implications on Flydubai relevant market. This report will include an in depth review of the macro, micro analysis and its implications of Flydubai relevant market in the next three years. Body:
In identifying the major key trends in the macro environment of Flydubai, we have addressed several issues that include the political, social and economical trends.
Flydubai was established by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Prime Minister and Vice-President, and Ruler of Dubai orders in march 2008 and started its operation in its first flight to Lebanon on June 1st 2009.Being fully owned by Dubai government and enjoy the full facilities offered in terminal 2 at Dubai International Airport, the company is having a competitive advantage compared to its rivals in the market as it enjoy the full government support and airport services. Furthermore, the current government trend in the labor force is towards emiratization and protecting labors rights. Being a part of the Fly Emirates Group, the organization will face no problem in emiratization as it will follow Fly Emirates emiratization strategy. The major challenge that Flydubai will face is being able to offer high paid jobs and reduce its operational costs as it is considered a low cost airline company.
Living in the current financial crises era, Flydubai was established in one of the most difficult time the country economy had faced in the last 25 years. “Falling oil prices, cooling real estate and construction markets, together with a slowdown in the tourism sector, especially in Dubai, means the UAE is expected to post low or possibly negative GDP growth in 2009”, according to analysts (Arabian Business, 2009). This information may be considered negative to many airline companies but it may be positive to a low cost airline like Flydubai as people are now focusing more in reducing their expenses as the incomes are reduced. This means their tendency of consumers focusing more on prices is increasing.
Furthermore, consumer behavior is changing towards low cost airlines especially in the Middle East region as consumers are persuaded by low prices and a better service offered by low cost airlines. According to a study done by Arabian Business website,...