Interesting Article: How Sustainable is Emirates' Business Model

[Panama Jack]

Read it here (.pdf document):

http://www.aerlines.nl/issue_38/38_Knorr_Eisenkopf_Emirates_Business_Model.pdf

[fractional]

Reading the report and on cultural stand point, there are some inaccuracies on the first column. The rest seems to be all right, but I need to have the time to read it carefully.
... Gulf Air reduced frequencies and capacities to and from Dubai by more than two thirds between 1984 and 1985 without advance notice
(Wilson 2005). Since foreign carriers proved unable or unwilling to fill the
gap, the Dubai’s then ruler,... Sheik Mohammed bin Rashid Al-Maktoum, convened a team of expertsWrong! The Ruler was Shk Rashid Bin Saeed Al-Maktoum.
... and the ruler’s then 26-year old son, Sheik Ahmed bin Saeed
Al-Maktoum – to devise an emergency plan...Wrong again. Shk Ahmed is not Shk Rashid's son. At least not the name's (bin) sequence and lineage.
And, is this true? I wasn't here then.[QUOTE]...The new airline should meet the highest quality standards and there would be no additional capital injections from the government other than the agreed USD 10 million start-up capital...[QUOTE]
Regardless, Dubai and Emirates are still a good place to live and work.

[atiuta]

Yes it is true. The whole article is about the best piece of journalism I have seen on Emirates or any business. It is factual and, rather than regurgitating the company spin, Andreas Knorr and Alexander Eisenkopf have identified the key reasons why Emirates works. Obviously well researched and composed and worthy of an A* had it been a university paper......that's probably why they are university professors (duh). They even got the warts correct.

[Desert Diner]

Yes,

A nice shine job if there ever was one.

I do hope their Business Model works in the future. But at the very least, in the case of future head to head competition with the likes of EY and QR, they have the best chance of coming out the best.

[atiuta]

Could be wrong on this one but I believe that "His Highness" (Emirates Chairman) is the brother of Shk Rashid, that would make him the Uncle of the current ruler Sheik Maktoum. Long history on this one I believe.

[fractional]

Except for those little mistakes, I also find the article quite good. You don't find much of this (about aviation) in this part of the globe. There are few details that portray the reality of the Gulf aviation reality such as:
1. It is noteworthy that the term “statedowned” has a different meaning the context of Gulf societies compared to the West because many assets are owned by the ruling families. This, in turn, means that “state-owned” companies there are more similar to Western-style family businesses than to Western-style state corporations.
2. Moreover, and again in clear contrast to Western practices, most of Dubai’s “stateowned” enterprises must operate in open, competitive markets on commercial terms. Their profits and dividend payments – instead of taxes – are also the main source of income in Dubai’s state budget.
3. Also, Qatar Airways currently operates a fleet of 57 aircraft with another 113 on firm order, and Etihad’s fleet comprises 25 widebodies (plus 21 aircraft on order). While Qatar Airways’ catch-up strategy with Emirates seems to rely largely on undercutting its competitor while offering similar product quality, Etihad’s expansion might prevent Emirates from obtaining much needed traffic rights to countries that do not pursue an open-skies policy (note that both Emirates and Etihad are UAE based carriers). What is more, both the Qatari and Abu Dhabi’s governments (i.e. ruling families) have devoted huge budgets to the expansion of their local airport facilities. By 2008, Doha’s airport will be able to handle 50 million passengers (compared to today’s 6llion), while Abu Dhabi’s airport will be upgraded to 40 million pax (9 million today) – in addition to a substantial expansion of cargo facilities. It remains to be seen whether this unprecedented buildup of capacity by two (still) unprofitable regional competitors (and their government owners) will have a negative impact on Emirates in the long-run.