January 10th, 2018
Case study on Emirates – Obstacles that Faced Emirates on its New Zealand Market
Although the New Zealand market offered Emirates a significant opportunity, various barriers existed that presented challenges to realisation of such an opportunity. Primarily, Emirates was challenged by the incomplete agreement between UAE and Australia to allow UAE airlines to operate with full lights in Australian airports (Stanik, Smith & Erakovic, n.d.). without such an agreement, Emirates flights from Dubai to New Zealand would be difficult to make since no plane could travel for such a distance without refuelling by 2002 (Stanik, Smith & Erakovic, n.d.). Accordingly, Emirates would have been forced to use another route hence forfeiting the advantages that the flight to New Zealand via Australia offered. For instance, such an alternative would mean that emirates could not make savings it would have made by using aircraft that used to stay idle in Australia when the crew was resting following a flight.
A second barrier to Emirates’ entry in New Zealand was formulating a strategy to lure passengers from the dominant players in the market. The withdrawal of United Airlines, the third major competitor, from the trans-Tasman industry, offered Emirates a head start. However, the dominant players (Qantas and Air New Zealand) still controlled a large market share (84 percent), and offered low prices to customers (Stanik, Smith & Erakovic, n.d.). Emirates thus needed to differentiate its market to offer higher prices for the longer haul and lower prices for the short haul to compete effectively with Qantas and Air New Zealand in the trans-Tasman industry. Such a low-cost strategy in the short haul may have been difficult to achieve when Emirates did not enjoy a favorable outcome in the long haul segment.
A third barrier that Emirates needed to overcome is that of transferring its brand identity to New Zealand. Such would especially be critical for the long haul where price is not the major determinant of customer decisions. As such, the entity needed to identify ways e.g. sport sponsorships popular in New Zealand and familiar in other global locations from where the entity operated (Stanik, Smith & Erakovic, n.d.). Such ways would ensure the entity informed its global customers of its newest destination while luring the New Zealand customers to use its services.
To overcome such barriers Emirates needed to employ its competencies (strengths). Such strengths arose from factors such as its position in Dubai and its ownership of fleet that could be used to capture the opportunities without necessitating an additional capital outlay. The locational advantages of Emirates were evident with increasing interest in the Middle East and the inexistence of any other airline that offered services from the Middle East to New Zealand (Stanik, Smith & Erakovic, n.d.). Accordingly, by offering such services, Emirates met the needs of tourists and business people who travelled between the two regions, who did not have business or leisure interests in other countries through which the flights between the two regions initially passed. The Dubai location also offered opportunities for Emirates in respect to travellers from Europe destined to Australia or New Zealand. Such an opportunity enabled the entity to avoid overcapacity in such a route (Stanik, Smith & Erakovic, n.d.).
Since Emirates owned various aircraft and made flights to Australia, the New Zealand opportunity did not necessitate significant capital additions. In effect, the trans-Tasman route offered Emirates the opportunity to utilize idle capacity thus generating marginal revenue (Stanik, Smith & Erakovic, n.d.). With respect to transferring its brand, Emirates chose to sponsor the New Zealand team for the America cup, a prestigious sailing race held in Europe (Stanik, Smith & Erakovic, n.d.). Through such sponsorship, the entity was able to target its European market thus enhancing its brand identity within such a market. The entity has continued to support sports e.g. the soccer world cup in Germany 2006 to enhance its brand identity in its target market (Stanik, Smith & Erakovic, n.d.). Such a strategy has been successful with the entity getting more passengers from such markets as evident from its route expansions (Emirates, 2011a). Go to part four here.