Emirates Five Forces Analysis Of Porter's Five Forces

The Strategies Emirates’ strategies are a function of the environment where it operates and the product of intrinsic strategic thinking from within the carrier. The environment could be viewed in terms of Porter’s five forces i.e. threat of entrants, power of suppliers, and power of buyers, substitution effect and rivalry:

• Threat of New Entrants: It seems, to all appearances, that the airline industry is a low entry barrier industry. Finance, the prime entry barriers, is readily available in the Middle East and technology and expertise are purchasable. • Power of Suppliers: Boeing and Airbus are the two main suppliers and competition among them is probable, observable but not abominable! Also, the likelihood of a supplier integrating vertically

Emirates Airline's revenues totalled AED 22.7 ($6.3 billion) for the year 2006 or 27% above 2005 level. Passenger seat factor also reached 75.9%, 1.3% above 2005 level too. And capacity increased to 15,803 million tonne kilometres. Breakeven load factor remained relatively low at 60.3%, and yield improved for the fourth consecutive year, to $0.55 cents per Revenue Tonne Kilometre. These results clearly show that Emirates' customer-oriented approach and investments in providing a quality product - the best aircraft that money can buy; top-flight service and travel experience at a competitive price - has paid off in terms of retaining and winning new customers

According to the standard measure in the industry and comparing to other companies, the costs per available seat-kilometer are very low. According to 2010 data from the forecasting firm Oxford Economics, labour cost per employee at Emirates is about 40 percent of Air France-KLM's and Lufthansa's, and half of American Airlines and United Airlines. This low cost gives the Emirates a very strong competitive advantage comparing with its competitors.

Because of these low prices, Air France claimed that Emirates receives financial aids from its local state, which provides a wide array of services: airports, civil aviation authorities, airport and navigation charges, and finally complementary infrastructure. Emirates however answered saying:

• It receives no subsidies from its government and is run as a fully commercial airline; a fact confirmed by their independent auditing and analysis by various international banks.

• Emirates pays the same airport and ATC charges as any other airline operating in Dubai and receives no subsidy or preferential treatment.

• Emirates pays for comprehensive staff healthcare and housing, as well as for an end of service benefit/provident scheme contribution as disclosed in their audited financial accounts. On average every year, Emirates bears a cost in excess of USD$400million for employee benefits in the