Airlines Industry is large and growing, it is also the most fiercely competitive sector. It facilitates international trade, world economy growth, tourism and international investment. The airline industry has over time with the use of modern technology been able to take advantage of the short haul, high frequency and gained a competitive advantage over other forms of travel, such as buses and railroad travel. Additionally, the airline industry still holds the market for global travel at a low cost and convenient way to travel. The aviation industry gives a good contribution to the GDP which includes the following: airline services, general aviation, civil airport operations, aircraft manufacturing, and aviation passengers.
II. Introduction to Airlines
Emirates airline was started by the royal family of the Dubai in 1985. The airline is a part of Emirates Group which is owned by government of Dubai. The have a fleet of 197 aircrafts and fly to around 92 destinations in the world. They were one of the fastest growing airlines in the 90’s. It is the first airline to offer services with Airbus A380 from Dubai to New York. They paid a dividend of $776 in 2008. (Emirates, 2008)
2. Cathay Pacific
Cathay Pacific airline was started by 2 Americans, Roy C. Farrell and Sydney H. de Kantzow in 1946. The airline’s headquarter is in Hong Kong. The airline has a fleet of 128 aircrafts and flies to 58 destinations around the world. After completing its 18th year the airline was carrying its 1 millionth passenger and acquires a first jet engine aircraft. After 1997 airline made its first loss of HK$8.56 billion for 2008. (Cathay Pacific, 2008)
III. Tools of Analysis
The tools that are use to analyze the before and after recession strategies are PESTEL which analyses the airlines industry. Porter’s Five Forces and SWOT analysis is on Emirates and Cathay Pacific’s particular route i.e. from Dubai to Hong Kong.
1. PESTEL Analysis
It is a tool to analyze the macro environment factors which influence the industry and the company. For analyzing the airline industry, economical, technological, environmental and legal elements were used.
After the economic downturn in 2009, the real GDP growth in 2010 is forecasted at 3.7% (Business Monitor, 2009) Refer to Figure 1. The GDP is positively correlated to the standard of living. Dubai’s annual transportation and Communication expenditure in 2008 was AED 32,000 which is 17.6% of total consumption expenditure (Dubai Statistics Centre, 2008). Dubai’s international airport was one of the fastest growing airports in 2007 with 34.4 million international passengers. It records an annual increase of 19.3% (Business Monitor, 2009).
The technological advances in the airlines industry have been magnificent. Earlier the flight bookings were done through travel agents which had long procedure. Since, the introduction of online booking and buying tickets the procedure is a lot easier and less time consuming. Now most of the airlines provide online detailed information on the timings, dates, offers and seats available according to classes.
Emirates and Cathay Pacific both are members of International Air Transport Association (IATA). IATA has different committees like Cargo, Financial, Industry Affairs, Operations, Environment and Legal which help the airlines. It slightly different rules for flights flying in middle east like in the catering they cannot offer beef related food because in Islamic countries its halal. ‘The agency governing aviation in the U.A.E is General Civil Aviation Authority (GCAA)’ (Business Monitor, 2009).
The airlines are polluting the environment by the emission of carbon dioxide. Two companies have taken the initiative to cut the emission of carbon dioxide by using eco-efficient aircrafts, those are emirates and etihad airlines. They...