Logistics/Supply Chain Customer Service of Emirates Airlines Presented By Ajay P Appukuttan (3966744) Irfan Contractor (3768673) Shaheen Ahmed (4459520) Nazeem(4315844) Ahmed Said Alsarihi(4205170) Under the guidance of DR. SLIM SAIDI SUBJECT: Logistics Systems Management (TBS 928) 1 Table of Contents EXECUTIVE SUMMARY ............................... Error! Bookmark not defined. INTRODUCTION ................................................................................... 4 EMIRATES A COMPANY OVERVIEW ......................................................... 5 DYNAMICS OF AVIATION INDUSTRY ..................................................... 6 ISSUES IN AVIATION INDUSTRY .......................................................... 6 PORTERS & SWOT ANALYSIS .............................................................. 6 EMIRATES CUSTOMER SERVICE PLANS ................................................ 8 DNATA AIRPORT SERVICES ............................................................... 10 RECOMMENDATIONS .......................................................................... 14 CONCLUSION ........................................... Error! Bookmark not defined. REFERENCES ........................................... Error! Bookmark not defined. 2 EXECUTIVE SUMMARY The report speaks about the Aviation giant, Emirates Airlines based at Dubai, United Arab Emirates. The company being a service oriented industry and rather no tangible product flow, the report first showed not adhering to the subject, Logistics Customer Service. However, as Emirates thrives and are well known for their customer service, we had great opportunity presenting the topic well suiting Emirates. The report starts with an Introduction, it speaks a little about the company and its overview, the Dynamics of Aviation industry as a total and Issues in Aviation Industry. We can find a detailed analysis using SWOT and Porters Five rules. Service quality requirements are also detailed. The report provides the core of topic at Emirates Airlines Service Plan. Here we get a brief description of how the service plan helps Emirates excel in its customer service and become the number three airline in world. Dnata offers a great deal of customer service to Emirates‟ customer, so their operations are described too. As with any company, Emirates also calls for a room for improvement, so there are many Recommendations this report provides to its readers. The report ends with a suiting Conclusion for the topic. 3 INTRODUCTION The recent years has seen major shifts in global airline business and passenger movement. The Middle East carriers, particularly the airlines of Arabian Gulf have showcased exemplary methods of routing the traffic and get saturated at all parts of world. The growth in passenger movements in Middle East, measured in RPKS were 7% for the year of 2008, approximately 4 times that of global averages. The most responsible players for these big figures are those carriers based in Gulf, who were successful in capitalizing the geographically centric benefit of them. They cannibalized the traditional flows of traffics between European and Asian hub, started connecting the cities in secondary list, utilizing their rights of Sixth Freedom Traffic. The estimates show that more than 4.6 billion populations are residing within an 8 hour flight span from Middle East, which provides a great scope and potential for a huge part of world population to be connected via a single hub, like the same way Emirates operates. Emirates Airlines is the most dominant in the region, whereby Etihad Airways and Qatar Airways combine makes upto only 70% of that of Emirates. As for the 12 months ending April 2011, Dubai ranked the fifth in International passenger per year (47.62 Million) and the first in its ranking for Number of International Carriers handled, which was 150 numbers. (Source: ACI and ATI passenger numbers for 12 months ending April 2011) 4 Emirates – A company overview The largest airline in the Middle East, Emirates operates more than 2400 flights every week. It is based at Dubai International Airport, Dubai, United Arab Emirates. The airline is fully owned by the Government of Dubai and it operates completely tax free with no legacy costs. (John F. O‟Connell) It has a hub-spoke system, where the hub is at Dubai Terminal 3 and destinations to 116 cities within 68 countries all across 6 continents. Emirates as of now is one of the best brands in aviation business all over the world, especially in the areas of excellence in customer service, robust growth figures, and consistent profit making for last 7 years. Emirates was voted as the 8th best airline in the world. The diversified businesses of Emirates include Airport Services, Engineering, Hospitality, Catering, and Tour Operation. Emirates airlines has 7 subsidiary companies while the parent company, the Emirates Group has more than 50 subsidiaries. Emirates employs more than 38000 staff as per figures of 2011 fiscal year. Emirates puts its primary focus on delivering superior service for customers. It ranks among the top 10 in terms of amount of revenue per passenger kilometer (RPK). It is currently the largest airline in Middle East in terms of fleet size, revenue, number of passengers. It had one of the highest operating margins of full service airlines, earning 11.6% in 2007/08 (Emirates Financial Statistics, 2007/08). Emirates employs Hub and Spoke system, which provides a number of cities linked to the central hub, while each extra spoke has potential to magnify the benefits of linkage and that of through services. Hub and Spoke mechanism usually consolidates short haul traffic in to long haul operations. Anyhow emirates has the core competency of having long haul to long haul traffic flows between Asia, Europe, India & Australia through its Dubai hub.(John F. O‟Connell). 5 Dynamics of Aviation Industry Very few inventions have altered the way in which people perceive and experience the world, as much as the invention of the AIRCRAFT. As time passed, the huge demand of aircraft from government during times of war, lead to a vast improvement in the way aircraft were being developed and manufactured. The very first commercial airline routes were introduced at the end of the World War 2. Air travel has become such an integral part of everyone‟s life that we cannot imagine life without it. Aviation has progressed so much that it has shortened the time to travel and has eradicated the concept of distance and reach. IT has also changed how business is conducted, enabling people to reach any part of the world in a short amount of time. However, the airline industry exists in a cut throat market where competition is intense. Nowadays airlines are owned privately as compared to the past, where airlines used to be owned and operated by government. According to the United State Department of Transport, the airline industry can be categorized into four divisions: 6 1. International Airlines: Planes which seat more than 130 people and are capable of taking people anywhere around the world. Such airlines also have annual revenue of 1 billion dollars. 2. National Airline: annual revenue between 100 million - 1 billion dollars. 3. Regional Airline: Short Haul flights are the main focus. Revenues are less than 100 million dollars. 4. Cargo Airlines: Such airlines typically transport goods. Issues in the aviation industry 1. Weather: being very unpredictable, adverse weather conditions might shut down airports; cancel flights by which airlines lose money. 2. Fuel Cost: The second largest cost to an airline is FUEL, according to Air Transport Association. Efficiency can also vary between short haul and long haul airlines, due to the fact that a short haul airline would make numerous take offs and landings as compared to long haul airlines. 3. Labor: Air Transport Association says that labor is the number one cost for an airline, as they have to pay flight crew, ground staff etc. 4. Other issues include capacity at airports, scheduling and routes, leasing or buying aircraft etc. Porter's Analysis on Aviation Industry 1. Threat of New Entrants: It is not an easy industry to break into, since the capital involved is very high. Moreover, there are giants like Emirates, Singapore Airlines, KLM, American Airlines it is difficult for new entrants to set their base. 2. Power of Suppliers: Boeing and Airbus are the two main suppliers in the aviation industry. There is a significant amount of competition between the two giants. Furthermore, a chance of seeing these players vertically integrating is also very bleak. For example, none of these two companies are going to provide flight service instead of manufacturing aircraft. 7 3. Power of Buyers: The bargaining power of airlines is very insignificant, due to the fact that there is limited choice. 4. Availability of substitutes: in case of regional airlines, people do have a choice o drive or take the train. However when you consider cross continental travel, there wouldn‟t be an alternative to air travel. 5. Rivalry: There is significant amount of rivalry as there are allot of airlines operating. SWOT Analysis 1. Strengths: Emirates was formed in 1985 from scratch, it‟s got a very flat hierarchical structure, which ensures smooth flow on information and leads to effective decisions. Secondly since it is based in Dubai, it is exempted from various fees, since it is government owned. Emirates, just like any other company benefits from the fact that there is no direct Tax system. Furthermore,