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P is Report is on based on t e case study ³Emirates¶ Ambitions Worry European Rivals´, by Jad
Mouawad, w ere t e case is summarized and analyzed. P e report ig lig ts on t e service of
Emirates¶ Airline and ow its poses t reats to its competitors and its strategy w ic leads to its
success as t e world largest airline carrier. Moreover t e report also applies t e concepts of
services marketing to t is case and explains various factors of Emirates¶ wit respect to t ose
concepts.

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 m Emirates¶ Ambitions Worry European Rivals| 2

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 m Emirates¶ Ambitions Worry European Rivals| 3

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Emirates started in 1980s as a small corporation but wit big dream. In t e start t ey reduced
t eir services to Dubai. Emirate¶s is a government own company and started off wit t e capital
of $10 million; t ey started off wit two planes bot of t em were leased from Pakistan
international Airlines. It was establis ed after Gulf Air, a regional airline t en owned by Ba rain,
Qatar, Oman and t e United Arab Emirates.

Pim Clark, t e president of emirates, says t at is airline represents t e future of mass air travel.
In t e time economic downfall w en all companies were struggling to sustain t emselves, even
at t at time Emirates was well enoug to attract customer, raised fares and consistently turned a
profits. Emirates earned $925 million is last six mont s, w ic was raised up from $205 million
in t e previous year.

Po attract and sustain t eir customer t ey ave put glamour in t eir planes. On t e double-decker
Airbus A380s, full bars are standard in business, and in first class cabin t ey includes s owers,
and free food and drinks in all flig ts of Emirates. Emirates offer mix of quality services,
operating efficiency and low cost. Emirates government owned company as now become
world¶s largest airline by passenger flown. Success of Emirates was result of its geograp y
because around 4 billion people live wit -in eig t ours of flig t. In last two decades air travel in
Middle East as grown by 7%, out pacing ot er regions of world.

One of t e greatest steps was to building routes to developing countries and providing t em an
alternative to t e local airlines, and instead of connecting t roug European ubs t ey started
t eir new routes t roug Dubai. Emirates, Currently offers 184 flig ts a week from Dubai to
India, to cities like A madabad, t e commercial ub in t e state of Gujarat. It flies to 17 cities in
Africa and, in C ina, to Beijing, S ang ai, Hong Kong and Guangz ou. It runs two daily flig ts
to Bangkok and nine to Australia.

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 m Emirates¶ Ambitions Worry European Rivals| 4

Emirates is growing very fast as compare to is competitors, Emirates already got 15 A380s, t e
world¶s largest passenger airline, and as ordered 75 more for delivery by 2018. On t e ot er
and its competitors like Air France, Luft ansa, and Britis Airways ave order total of 39
A380s and ave only 8 flying.

Critics say t at t e growt of t e emirates was result of tig t relation of Emirates wit and
airport aut orities and regulators, w ic give airline an unfair advantage.

P ey say t at Emirates receives government subsidies, in form of low tax rates and different
facilities like terminal 3.w ere t ey also give space to t e growing number of fleets of A380s.

W ereas Emirates disputes t is c aracterization and publis audited financial reports, and its
executives says t at Emirates did not get any elp from government subsidies. P e main
advantage of Emirates over its competitor is low labor cost and t ey ires inexpensive for
carriage and ot er facilities like catering mostly from t e developing countries like Pakistan,
India, etc. w ile t ey pay t eir pilots international wages. According to consulting company
Emirates¶ overall cost, including t ose for labor, are 30 percent lower t an t ose of its rivals.
And it is very difficult for t e ot er competitors to close t at gap, as Emirates are more profitable
wit lowest prices in t e markets.

Ot er advantage t ey ave is ig ly trained employees, like flig t attendants t ey were given

eig t weeks training and taug t ow to serve and give first aid. Emirates ave emerged as a
formidable player on t e international travel scene. Its innovations, including private suites in
first class and individual entertainment screens in t e coac cabin, ave been copied by many
ot er airlines; its emp asis on quality as forced traditional legacy carriers to pay more attention
to t eir own products.

So far, Emirates as benefited from t e weakness of some airlines in C ina, India and African
nations as it establis es its presence in t ose and ot er developing countries.

6

one of t e leading airline of t e world aving 15 A380s alone and expecting to add 75
more is t e most successful airline. Emirate¶s, w ic is fully owned by t e government, as
grown into t e world¶s largest airline by passenger miles flown. P e reasons for its success are

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 m Emirates¶ Ambitions Worry European Rivals| 5

t e competitive advantage of low cost and ig quality enabled Emirates to become t e leader.
According to t e competitors t e success of Emirates is because of t e support of t e rulers of
Dubai but t is claim is not accepted by Emirates and t ey believe Emirates is a separate business
unit.


 



 


In 1974, t ree years after independence, t e rulers of t e UAE decided to establis a joint flag
carrier: Gulf Air. However, a tense relations ip between t e airline and t e Dubai government
existed ever since its inception, as t e latter refused to give in to Gulf Air¶s demands to abandon
its open skies policy. In reaction, Gulf Air reduced frequencies and capacities to and from Dubai
by more t an two t irds between 1984 and 1985 wit out advance notice. Since foreign carriers
proved unable or unwilling to fill t e gap, Dubai¶s t en ruler, S eik Mo ammed bin Ras id Al-
Maktoum, convened a team of experts eaded by Maurice Flanagan and later joined by Pim
Clark and t e ruler¶s t en 26 year old son, S eik A med bin Saeed Al-Maktoum to devise an
emergency plan. P e group¶s recommendation to set up a ome carrier for Dubai was quickly
accepted by t e ruler, but e imposed two conditions: P e new airline s ould meet t e ig est
quality standards and t ere would be no additional capital injections from t e government ot er
t an t e agreed USD 10 million start-up capital. On October 25t , 1985, Emirates¶ first flig t
departed to Karac i, using an A300, wet-leased from Pakistan International Airlines. P e rest is
istory: in 1987, Emirates began to serve it first two European destinations London Gatwick and
Frankfurt, from 1995, it as operated an all wide body fleet, and in 2001, 2003 and 2005
Emirates placed some of t e largest aircraft orders ever. As of October 2007, Emirates¶ route
network extends to 91 destinations on all continents.

In its last business year, ending Marc 31st, 2007, t e airline transported 17.5 million passengers
and 1.2 million tons of cargo on 102 aircraft. Currently, 118 aircraft are on firm order (of w ic
20 will be all freig ters), including 55 A380 and 43 B777

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 m Emirates¶ Ambitions Worry European Rivals| 6

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Emirates Airline (or rat er t e Emirates Group as a w ole) is a crucial element of Dubai¶s
growt and development strategy. Currently based on t e Dubai Strategic Plan 2015 (Dubai
Government 2006), its objective is to prepare t e emirate for t e post-oil era

by firmly establis ing it as a leading tourist destination (including trade fairs and conferences),
as a center for financial, IP and professional services, as a location for corporate eadquarters
and lig t manufacturing, and, last but not least, as a regional transportation, logistics and
distribution ub. P e silent features of Emirates strategy are as follows:

m A well-balanced mix of O&D and transfer traffic in its passenger business.

m A very strong focus on cargo traffic, w ic generates 20% of Emirates¶ revenues, one of
t e ig est percentages in t e airline industry.
m Strong presence in t ose secondary markets t at are underserved by Emirates¶
competitors suc as BA, LH, and AF w ic focus on t eir own ubs for long distance
flig ts.
m Strong presence in markets t at ave been largely unconnected to t e global air transport
network, and especially to t e Middle East, to India, Sout east Asia and Africa, for lack
of a local flag carrier.
m Hig frequencies: P e mid-term objective is to serve most destinations at least twice
daily. Currently Emirates¶ operates t ree waves at DXB; a fourt is being gradually
p ased in.
m Hig quality service in all classes onboard and on t e ground including up to 600
entertainment c annels in all classes and limousine service (pick-up and drop-off) for
first and business class passengers.
m Hig labor productivity: According to a recent study by UBS, a Swiss bank, Emirates¶
unit costs are around 30 percent lower t an KLM¶s, a cost advantage t at is likely to even
increase after t e introduction of its A380 fleet
m No alliance members ip: In t e words of Pim Clark: ³If we take t e long-term view, t en
alliances offer a sure fire way of ac ieving mediocrity and reduced profitability´.
However, select code s aring agreements are in place.

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 m Emirates¶ Ambitions Worry European Rivals| 7


  


6

 focus on providing ig quality airline service at a low cost. It tries to serve its
customers/ Passengers in t e best possible way. Po win over customers, its executives want to
bring a bit of glamour back to air travel. On t e double-decker Airbus A380s, full bars are
standard in business class, and t e first-class cabin includes s owers. No one pays for food or
drinks, of course, on any Emirates flig t. Serving its customers Emirates us a mix of quality
services, operating efficiency and low costs. Emirates, offers 184 flig ts a week from Dubai to
India, to cities like A medabad, etc. It flies to 17 cities in Africa and, in C ina, to Beijing,
S ang ai, Hong Kong and Guangz ou. It runs two daily flig ts to Bangkok and nine to
Australia. In t is way Emirates is giving ease to its customers to take any flig t at any time.
Moreover for t e Passengers t e Dubai Airport Perminal 3 of Emirates provide a variety of
Services like good p ysical environment, duty free s ops for s opping etc and moreover it as
created a Market for t e Passengers at t e Perminal 3.

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P e intangible elements usually add value to services. As airline service is totally an intangible
service so Emirates is trying to add value to its core service and to create value for its Passengers
it is offering many types of ot er service and Products. P e lower cost is t e most essential
component t at creates value for Emirates customers. Apart from t is t e big airport, trained
staff, baggage andling, quality food and sop isticated environment all creates value for t e
Passengers. For t e Emirates employees eac week, as many as 90 new trainees file t roug t e
company¶s training academy. Over eig t weeks of training, t e new employees most in t eir
early 20s and speaking some Englis , learn all t e ropes of t e job. Life-size mock-ups of airline
cabins mounted on ydraulic legs are used to simulate safety drills. Elsew ere, t e trainees are
taug t ow to serve meals or use t e first-aid kits. Its innovations, including private suites in first
class and individual entertainment screens in t e coac cabin ave also increased customer value.
In t is way Emirates is creating value for its people and its Passengers.

m 

m
 m Emirates¶ Ambitions Worry European Rivals| 8

P 
   

P e eig t P¶s of Service Marketing are as follows in t e case of Emirates:

1.m Product Elements

P e core Service or Product t at Emirate¶s is delivering its customer is t e Airline Service. It

provides t e ig quality travelling facility along wit many supplementary services. And Mr.
Clark t e President says: ³If you want to go from Africa to Asia or from Sout America to
C ina, t e straig t line is t roug t e Middle East.´ And Emirates is basically providing t is
service by offering many flig ts at any time for its Passengers.

2.m Place and Pime

P e Service delivery at Emirates is done wit t e elp of t e latest and most comfortable and
ig capacity planes. It offers its service to all at any time as it offers more t an undred flig ts
to India every week. It uses Perminal 3 of t e Dubai Airport w ic is t e largest Perminal.
Moreover it Plans to be a ub in between t e connection of Asia, Europe and America.

3.m Price and Ot er User Outlays:

Emirates deliver its service at a lowest cost. P e competitive advantage of Emirates is to provide
ig quality service at a lower cost. Moreover Nat an Zielke, a transportation specialist at t e
consulting company Art ur D. Little, estimates t at Emirates¶ overall costs, including t ose for
labor, are 30 percent lower t an t ose of its rivals.

4.m Promotion and Education

For t e promotion of Emirates; as Emirates is suc a big name t at it¶s Promotion is mostly done
by t e word of mout . Apart from t is it also follows some Advertising tec niques; moreover it
as also a website t at allows t e Passenger to obtain information like Flig t sc edule, E-
ticketing, feedback and many more.

m
 m Emirates¶ Ambitions Worry European Rivals| 9

5.m Process

P e service delivery process is very simple at Emirates. It is providing ig quality service at a

lower cost w ic takes it a ead of its competitors. P e process t at Emirates follows is very
simple as it offers advance seat reservations and t e facility of E-ticketing.

6.m P ysical Environment

Emirates use t e Perminal 3 of t e Dubai airport. It is not merely t e world¶s largest air terminal.
It is t e world¶s largest building, period. And all 370 acres of it all 82 moving walkways, 97
escalators, 157 elevators, 180 c eck-in counters and 2,600 parking spaces were built wit one
very well-connected company in mind: Emirates, Dubai¶s fast-growing flags ip airline. Emirates
provide its customer wit comfortable seats, on t e double-decker Airbus A380s, full bars are
standard in business class, and t e first-class cabin includes s owers. No one pays for food or
drinks, of course, on any Emirates flig t. P is makes up t e P ysical environment of Emirates.

7.m People

People or Employees of Emirates are well trained and courteous. Eac week, as many as 90 new
trainees file t roug t e company¶s training academy. Its growing fleet of A380s means t at t e
airline will need to ire an additional 11,000 flig t attendants in coming years, nearly doubling
its current roster of 12,000. Over eig t weeks of training, t e new employees most in t eir early
20s and speaking some Englis learn all t e ropes of t e job. Life-size mock-ups of airline cabins
mounted on ydraulic legs are used to simulate safety drills. Elsew ere, t e trainees are taug t
ow to serve meals or use t e first-aid kits.

8.m Productivity and Quality:

Emirates focus on ig quality and always try to increase its Productivity. Emirates focus on
serving its customers wit t e best available resources. It provide t em wit comfortable seats,
easy and simple procedures etc. Moreover Emirates train its employees in its academy w ic
en ances its productivity.

m
 m Emirates¶ Ambitions Worry European Rivals| 10

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Services are usually defined wit reference to a particular industry, for instance ealt care or
transportation based on t e core set of benefits and solutions delivered to customers. However
t e delivery of core services is mostly accompanied by ot er services t at are called as
supplementary services. P ese supplementary services facilitate t e service delivery process and
elp in differentiating t e product from its competitors. In case of 6

t e core service it is
providing is Airline service w ic all of its competitors like Britis Airways etc are already
providing but w at differentiate it from its competitors are t e Supplementary service t at it
offers. For example Britis Airways and Emirates bot offer Airline Service but t e t ing t at
takes Emirates one step a ead is its low cost and ig quality service. In designing t e Service
Concept for Emirates following steps are to be followed:

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P e core service is t e basic service t at is offered to solve a problem. In t is case t e Airline

service is t e core service t at is offered by Emirates to move people from one place to t e ot er.
And t is is t e service t at is also offered by all of its competitors.

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All ot er Services ot er t en t e core Service t at facilitate t e delivery of t e core service are

known as Supplementary services. In t e case of Emirates it offers a lot of Supplementary
services like comfortable seats, free food and drinks, luggage andling, comfortable
environment, personalized cabins for business class customers etc. And all t ese services elp
Emirates in gaining a competitive advantage.

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It is t e process t roug w ic t e core and supplementary services are delivered. In case of

Emirates t e focus is always on Service delivery and it is done t roug t e ig ly trained staff

m
 m Emirates¶ Ambitions Worry European Rivals| 11

t oug Service delivery is given importance in Emirates but t e article does not specify any
particular process apart from t e ig ly trained staff.


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P is stage of t e service design tells t e sequence of services and activities. In case of Emirates
t e customer look for t e searc attributes, t en experience t e service. P e customer buys ticket
and may avail t e E-ticketing service. P en t e luggage andling service may be delivered and
after t at t e experiencing of t e core and ot er supplementary services may took place.

 

m
 m Emirates¶ Ambitions Worry European Rivals| 12

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P e service flower consists of t e following eig t elements. Four of t em are facilitating services
and ot er four of t em are en ancing services:

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Information, order taking, billing and payment are t e four facilitating services of Emirates
w ere as t e consultation, ospitality, safekeeping and Exceptions are t e en ancing services.

 

m
 m Emirates¶ Ambitions Worry European Rivals| 13

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 is not followed by Emirates as it is providing t e only core
service of Airlines as provided by all of its competitors.
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 is followed by Emirates as it introduces t e procedure of
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are being followed by Emirates as it provides a lot
of new Supplementary Services like Personalized cabins, comfortable seats, safe keeping
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is t e concept on w ic Emirates focuses a lot and continuously
tries to improve t e service delivery process by training its employees in its academy.
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are being implemented as t e traditional way of travelling is transformed
into a modern way.

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P e customer interaction wit t e service provider occurs at 3 stages

m Customer goes to t e service provider

m Service provider goes to t e customer
m Interaction at arm¶s lengt (via internet, fax e.t.c)

In t e case of Emirate¶s customer goes to t e service provider for facilitating from t e service,
w ere t e service is available at multiple sites. As in t e case it mentions t at Emirate¶s fly from
a number of locations and to a number of different destinations across t e globe, predominantly
to India, Africa and C ina. In case of Emirate¶s it¶s a people¶s processing service provider,
w ic travels passengers from one destination to anot er w ic offers live experiences in form
ig -quality service in all classes onboard and on t e ground including up to 600 entertainment

m
 m Emirates¶ Ambitions Worry European Rivals| 14

c annels in all classes and limousine service (pick-up and drop-off) for first and business class
passengers.

For emirate¶s service delivery starts from cyberspace w ere e-commerce in form of an
interactive website is used to provide information to t e customers about t e flig t, service
dimensions and price along wit t at Emirate airline provide its customer wit t e lowest
possible fares and sc edule for travelling along wit ot er supplementary services in form of
information of s opping facilities at t e airport terminal, travel guides, otel services and food
facilities online. It uses tec nology to deliver its service w ere Emirate¶s not only use t e best
plane fleets of Boeing747¶s, 777¶s and Airbus double Decker A380, w ere its fleet of luxury
long distance planes is way a ead in numbers t an any ot er airline. It is one of t e largest
customers of Boeing. Moreover t ey innovated private suites in first class and individual
entertainment screens in t e coac cabin w ic ave been copied by many ot er airlines later.
For delivering its service Emirate¶s use t e best and t e largest facility in world, wit a capacity
to andle 160 million people a year and currently andling 90 million passengers in a year ³P e
Dubai International Airport´. It was jointly built by Emirate¶s and Dubai government making
Dubai t e ub of international travel. At t e airport Perminal 3 w ic is used by Emirate¶s as
facilities like 180 c eck-in counters, 157 elevators, 97 escalators e.t.c clearly one of t e best
facility at t e airport for Emirate¶s service delivery.


3


Internationally Emirates as acquired t e status of one of t e fastest growing passenger airline of

world as it followed t e strategy of long aul international trips w ere it started its operations to
developing and underdeveloped countries w ic were neglected by ot er airlines previously.
P is allowed Emirate¶s to differentiate from rest of competitors and attract new customers.
Moreover Emirate¶s ad t is advantage of immense support from Dubai Government w ic
allows t e airline to overcome several international barriers as in case of Canada w en Canadian
government did not allowed Emirate¶s Landing rig t, Dubai government scrapped t e logistic
support provided to Canadian forces w ic made forces t em to allow Emirate¶s Landing
facilities. As stated by Ram C. Menen w o runs t e company¶s global cargo operations ³We are

m
 m Emirates¶ Ambitions Worry European Rivals| 15

a business unit of Dubai Inc. And it¶s a appy relations ip´. Wit its strong Hub of Dubai,
Emirate¶s as been able to gain cost benefits, economies of scales, geograp ic presence and
competitive advantage over several of its competitors.



 
  


Emirate¶s airline is considered as one of t e luxurious airlines of world. Wit t is perception of

t e brand it can easily by associated wit ig fares and expensive airline. P e case for Emirate¶s
is an entirely different scenario. P e airline as been able to actually get benefit from its low
costs. Its frequency of flig ts, large customer base, fuel efficient and economical fleet of planes,
c eap labor mainly extracted from t e Indian sub-continent, large facility and wide operations
allow t em to implement value-based pricing and reducing t eir costs. It adds value to its
customers by providing premium services in lowest possible costs. Emirate¶s olds a position of
cost leaders ip in t e industry w ere its costs are around 30% lower t an its competitors like
KLM, Luft ansa, Britis Air and Continental e.t.c.

As stated by Pim Clark, t e president of Emirates, ³P e airline represents t e future of mass

travel. In t e era w en many international carriers are struggling to sustain t emselves, Emirates
as filled its planes, raised fares and consistently turned a profit. It earned $925 million in t e six
mont s ended last September, 30, up from $205 million in t e year earlier period´.

   


 

As services are dominating economy in most nations so t e Middle East Airline company
³Emirates´ need to provide quality service to its customers. P e rising competition force
Emirates to increase its supplementary services and to add more tangible elements in it. Poug
people give importance to t e intangible components but t e tangible elements add more value to
a service. P ere is need for Emirates to market its services. Marketing being a very important
component be ind t e success of any business is somew at missing in t e case of Emirates.
P oug it follows some advertising campaigns as we see t e command 'Fly Emirates' adorning
some of t e world's most otly contested sporting teams Arsenal football team, t e jockeys of t e
Godolp in racing stable and t e field umpires in most of cricket games, but still t ere is a need
for some compre ensive Marketing Pec niques as currently being followed extensively by Qatar

m
 m Emirates¶ Ambitions Worry European Rivals| 16

airways and Silk Air extensively. Some t ings t at mig t en ance t e Service efficiency of
Emirates can be customer involvement in co production, make people part of service experience
and among t e 8 Ps Process innovations s ould be focused and a frame work s ould be
developed for effective service marketing Strategies.

As Emirates is a leader in industry t ey ave very efficient and up to date information system,
t at elps company to keep track of its customers and perform its activities very effectively and
efficiently t at elps company to lower its cost. In t e repurc ase stage t ey elp t eir customer
by guiding t em wit all t e necessary information t ey needed. P ey provide t eir customers
wit t e true value to t eir money; t ey provide t ey core service at t e lowest prices as compare
to t e ot er competitors, mix wit t e ot er supplementary services. Everyone as its proper role
and duty and perform it efficiently attendant are ig ly trained.

In t e case of Emirates t e Service design is a compre ensive process and it follows t e

complete service flower. It s ould be more focusing on t e consultation services. Ot er
information, billing, order taking, payment, safekeeping, ospitality and exceptions are very well
implemented at Emirates. Emirates s ould offer branding services, it s ould also offer a branded
experiences; it is currently following many strategies but s ould also follow t e product
innovation and t e product line extension in t e ierarc y of services. Emirates s ould also
researc in designing new services and s ould also reengineer t e services to ac ieve and
maintain its growt and success.

Emirates differentiates itself furt er from competitors by attempting to provide a ig level of

service, especially in its first class section w ere it pioneered t e concept of private mini suites
complete wit dining tables. It was one of t e first airlines to introduce in flig t entertainment
systems in all t ree classes. Wit its facility and quality of service and low cost it provides
customers t e experience t ey look for. P e strategy be ind Emirates¶ profitability is a
combination of new, more luxurious aircraft, competent staff and keeping costs fairly low. P e
base in Dubai is also seen as a vital part of t e growt strategy as we find its location between
East and West to be increasingly convenient for its consumers.

m
 m Emirates¶ Ambitions Worry European Rivals| 17

However, still Emirates' is not t e only brand t at is keen to put Dubai on t e map. P ere are
ot er carriers suc as Eti ad and Qatar t at are attempting to emulate it alt oug t ey are starting
from a position muc furt er be ind. Sooner or later Emirates¶ will get some additional direct
competition.

m 

m
 m Emirates¶ Ambitions Worry European Rivals| 18

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MOUAWAD, Jad. (2011, F e br u a r y 12). E mirat es¶ a m b it io n s worr y

E u r o p e a n R i v a l s . P
 
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K n o r r , A nd r e a s , & E i s e n k o p f, A l e x a n d e r . H o w s u s t a i n a b l e i s e m i r a t e s ¶ .
  

  
  , (38),

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 m Emirates¶ Ambitions Worry European Rivals| 19

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EYOND the artificial archipelagoes shaped like palm trees, not far from the tallest
skyscraper in the world, stands another monument to this city-state¶s stubborn ambition.

Even in this oasis of extravagance, Terminal 3 at the Dubai International Airport startles. It
is not merely the world¶s largest air terminal. It is the world¶s largest building, period. And
all 370 acres of it ² all 82 moving walkways, 97 escalators, 157 elevators, 180 check-in
counters and 2,600 parking spaces ² were built with one very well-connected company in
mind: Emirates, Dubai¶s fast-growing flagship airline.

Emirates is pressing ahead with an ambitious expansion, despite the city¶s financial near-
collapse in 2009. Its executives, with the help of Dubai¶s rulers, want to place this Persian
Gulf city at the center of a transportation network linking vibrant economies like India and
China to Europe and the United States.

It might sound like bravado from the bubble years, another case of overreach in this sandy
fantasyland. This is, after all, Dubai, where exuberant developers planned not one but three
palm-shaped island chains and erected the glass-clad urj Khalifa ² more than twice the
height of the Empire State uilding ² alongside an indoor ski resort. What is more, the
recent political upheaval in Egypt provides a potent reminder that Dubai, for all its air-
conditioned ease and stability, lives in a dangerous neighborhood.

ut here inside Terminal 3, the rise of Emirates hardly seems a mirage. Since its founding in
1985, Emirates, which is fully owned by the government, has grown into the world¶s largest
airline by passenger miles flown. y 6:30 a.m., Terminal 3 is teeming with travelers.
Russians bound for Durban, Chinese headed for Khartoum and Indians traveling to San
Francisco weave through the restaurants and duty-free shops. Families snooze on the white
marble floors. It feels like a giant bazaar, devoted to a new era of air travel: crowded,
animated, cosmopolitan.

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Tim Clark, the president of Emirates, says his airline represents the future of mass air travel.
In an era when many international carriers are struggling to sustain themselves, Emirates
has filled its planes, raised fares and consistently turned a profit. It earned $925 million in
the six months ended last Sept. 30, up from $205 million in the year-earlier period.

To win over customers, its executives want to bring a bit of glamour back to air travel. On
the double-decker Airbus A380s, full bars are standard in business class, and the first-class
cabin includes showers. No one pays for food or drinks, of course, on any Emirates flight.

So far, Emirates¶ success is partly an accident of geography. Roughly four billion people live
within an eight-hour flight from here. ut to the consternation of rivals, Emirates also
enjoys the patronage of Dubai¶s rulers, in particular, Sheik Ahmed bin Saeed al-Maktoum,
who is its chairman. While home-grown airlines in places like Singapore and Hong Kong
have also turned those cities into global hubs, Emirates stands apart for the scale of its
ambitions.

COMPETITORS are fighting back. SkyTeam, the global alliance that includes Delta Air
Lines and Air France/KLM, said recently that it would add two airlines ² Middle East
Airlines, from Lebanon, and Saudi Airlines ² to counter Emirates¶ dominance in the region.

³There is a reason that airlines around the world are afraid of the success of Emirates,´ says
John Leahy, chief operating officer of Airbus, the European plane maker, referring to
Emirates¶ mix of quality service, operating efficiency and low costs. ³That should strike fear
in the hearts of airlines around the world.´ Emirates is one of Airbus¶s top customers.

Over the next two decades, air travel in the Middle East is expected to grow by more than 7
percent a year, outpacing every other region, according to a forecast from oeing in 2010.
Much of that growth will be spurred by Emirates and two other fast-expanding airlines
based in the Persian Gulf area: Etihad Airlines, based in Abu Dhabi, and Qatar Airways.

Emirates is by far the most ambitious of the three. Its greatest strides have come from
building routes to developing countries long neglected by traditional carriers and providing
an alternative to local airlines. Instead of connecting through European hubs like London or
Frankfurt, all of these new routes run through Dubai.

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³The legacy carriers still see us as the monster of the Middle East, the bête noir of civil
aviation in the 21st century,´ says Mr. Clark, 61. ³ut they won¶t accept that the business we
are carrying wasn¶t theirs anyway. The 21st century is very different from the 20th century.´

Emirates, for instance, offers 184 flights a week from Dubai to India, to cities like
Ahmedabad, the commercial hub in the state of Gujarat. It flies to 17 cities in Africa and, in
China, to eijing, Shanghai, Hong Kong and Guangzhou. It runs two daily flights to
angkok and nine to Australia.

The strategy has prompted a strong reaction from airlines like Air France and Lufthansa of
Germany. These carriers hope to persuade their governments to limit Emirates¶ access to
French and German airports.

³Emirates¶ strategy is aggressive,´ says Pierre-Henri Gourgeon, the chief executive of Air
France, who complains that Emirates is siphoning off passengers from Europe¶s traditional
hubs. ³Europe is at the center of the global aviation world. It¶s the result of aviation history.´

Wolfgang Mayrhuber, the C.E.O. of Lufthansa, notes that it took 40 years for Lufthansa to
build up its fleet of 30 oeing 747s in Germany, one of the world¶s largest economies.
Emirates already flies 15 A380s, the world¶s largest passenger airliners, and has ordered 75
more for delivery by 2018. (Air France, Lufthansa and ritish Airways have ordered a total
of 39 A380s and, among them, have only eight flying.)

In Canada, discussions to expand Emirates¶ landing rights took a particularly bitter turn.
After the Canadian government turned down Emirates¶ request to fly to Calgary and
Vancouver and to increase the frequency of flights to Toronto, the United Arab Emirates
scrapped a military agreement that allowed Canadian forces to use a logistical base near
Dubai.

Craig Jenks, an airline consultant based in New York, says Emirates threatens established
carriers in the one market where these airlines are making money: long-haul international
trips. ³There¶s nothing better than a highly motivated cowboy airline in a small country,´ he
says.

LIKE so much in Dubai, Emirates started out small but dreamed big. It was established after
Gulf Air, a regional airline then owned by ahrain, Qatar, Oman and the United Arab
Emirates, reduced its service to Dubai in the early 1980s. Feeling shunned, Dubai¶s rulers
created their own carrier.

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The government provided $10 million in capital. Emirates began flying with two planes, a
oeing 737 and an Airbus A300, both leased from Pakistan International Airlines. The new
carrier was run by a band of ritish aviation executives, including Mr. Clark, who had been
at Gulf Air, and Maurice Flanagan, a former top executive at ritish Airways.

Much of Emirates¶ early traffic connected Dubai with cities throughout the Indian
subcontinent and a few European destinations, including London.

y the 1990s, however, new airplanes with longer reach, like oeing 777s, enabled Emirates
to establish Dubai as a world hub. Sheikh Ahmed, the company¶s chairman, boldly
proclaimed that Dubai would be ³at the center of the new Silk Road between East and
West.´

Rivals express grudging admiration for Emirates. ³Emirates recognized the value of a global
hub,´ says ritish Airways¶ chairman, Willie Walsh.

And Mr. Clark says: ³If you want to go from Africa to Asia, or from South America to China,
the straight line is through the Middle East.´

ut geography is only one element in the Emirates formula. Government support has also
been essential. From the start, Emirates was seen as integral to the government¶s ambitions
of building Dubai into a commercial, financial and tourism center in the Persian Gulf.

Sheik Ahmed plays a role in almost every aspect of air travel into and out of Dubai. Indeed,
he is known as ³Mr. Aviation.´ He is the chairman of FlyDubai, the city-state¶s budget
airline, and of Dnata, the airport¶s ground handling company. He is also the president of the
Dubai Civil Aviation Authority, which oversees the industry. And he happens to be the uncle
of Dubai¶s current ruler, Sheik Mohammed bin Rashid al-Maktoum.

Critics say this tight relationship among Emirates, airport authorities and regulators gives
the airline an unfair advantage. Emirates, these critics say, essentially receives government
subsidies, in the form of low tax rates and shiny new facilities like Terminal 3, where
another expansion is under way to accommodate Emirates¶ growing fleet of A380s.

Emirates disputes this characterization. The airline publishes audited financial reports, and
its executives say Emirates gets no government subsidies.

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³Emirates works like a corporation,´ says Ram C. Menen, who runs the company¶s global
cargo operations. ³We¶re a business unit of Dubai Inc. And it¶s a happy relationship.´

The airline, however, does have undeniable advantages over competitors, including lower
labor costs. While Emirates pays its pilots international wages, it hires inexpensive workers,
usually from the Indian subcontinent, for tasks like handling baggage or working in catering
services.
Nathan Zielke, a transportation specialist at the consulting company Arthur D. Little,
estimates that Emirates¶ overall costs, including those for labor, are 30 percent lower than
those of its rivals

³It¶s extremely difficult for other airlines to close that gap,´ Mr. Zielke says. ³ecause their
costs are so much lower, Middle East carriers will be the most profitable carriers with the
lowest prices in the market.´

ON the road to Abu Dhabi, about an hour¶s drive from downtown Dubai, city planners want
to build the world¶s biggest airport. It would have five parallel runways and be able to
accommodate 160 million passengers a year. (Hartsfield-Jackson Atlanta International
Airport now handles 90 million passengers a year, more than any other airport in the
world.) The estimated cost of this giant is more than $34 billion.

Although Dubai has shaken off the worst of its financial crisis, the shock has nonetheless
stalled this grand plan for now.

Yet Emirates has proved remarkably resilient to recent financial shocks ² the economic
slowdown did not hamper its growth. The question now is whether Emirates can sustain its
momentum without jeopardizing quality and service.

Each week, as many as 90 new trainees file through the company¶s training academy, a
modern building near the Tennis Club, a popular Dubai spot among the expatriate
community, close to the historical center of the city.

Its growing fleet of A380s means that the airline will need to hire an additional 11,000 flight
attendants in coming years, nearly doubling its current roster of 12,000. Over eight weeks of
training, the new employees ² most in their early 20s and speaking some English ² learn
all the ropes of the job. Life-size mock-ups of airline cabins mounted on hydraulic legs are

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used to simulate safety drills. Elsewhere, the trainees are taught how to serve meals or use
the first-aid kits.

Emirates executives say they recognize the challenges ahead. ³We don¶t forget who we are,
and what we do,´ says Mr. Clark, the president. ³We¶re a bus company. We have seats, we
have people, and we recognize what it is that makes life more comfortable. If we hit the spot,
passengers come back.´

Emirates has emerged as a formidable player on the international travel scene. Its
innovations, including private suites in first class and individual entertainment screens in
the coach cabin, have been copied by many other airlines; its emphasis on quality has forced
traditional legacy carriers to pay more attention to their own products.

So far, Emirates has benefited from the weakness of some airlines in China, India and
African nations as it establishes its presence in those and other developing countries.

ut that advantage may one day come to an end. In India, the advent of a new generation of
quality carriers, including Kingfisher Airlines and Jet Airways, now offers some appealing
domestic alternatives for India¶s vast expatriate population, long one of Emirates¶ growth
engines.

The recent tensions in Egypt, Yemen and Jordan have also hurt Emirates. Mr. Clark said
last week that traffic to many of these destinations had a ³pretty resounding´ drop as
tourists postponed holiday plans.

Another threat is on the horizon. As more airlines start using long-range planes now in
development, like the oeing 787 Dreamliner and the Airbus A350, they will be able to fly
more people nonstop to most any other place in the world. That could pose a problem for
the Emirates business model: its reliance on the Dubai hub.

³One survey that is consistent is that people simply do not like to change planes,´ says
Richard L. Aboulafia, an aviation consultant at the Teal Group, a consulting firm in Fairfax,
Va. ut, he added, ³Underestimating the competition is a time-honored feature of the
airline business. Is it confidence or is it hubris? It is only hubris if you lose.´