Aviation Strategy and Planning Report 2022

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Aviation Strategy and Planning
Name
Institution
Date

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Executive summary
The report aims at conducting Internal and external environmental analysis of Gulf
and Middle East aviation market and industry in order to determine the suitable corporate
strategy. Dubai Express is categorized as a low cost airline is privately held and planning to
start operations in UAE and Dubai region. Middle East aviation industry is very competitive.
There are over 10 airlines operating in the industry with key players being Etihad and
Emirates. The key trends in the industry include the increase in number of passengers,
increase in privatization and demand for more aircraft in the near future. The opportunities
that exist in the Dubai Market include open sky policies, economic support from Dubai and
the UAE government, established airline terminals, moderate taxation, changing consumer
patterns and enhanced technology. The challenges include high context cultures, established
brands by competitors, stiff competition in the market, political insurgencies, low number of
aircraft pilots and cabin crew, unfavourable economic crises like fluctuations oil prices,
variation in exchange rates, tightened capital markets and natural disasters. To enter into
Dubai, the Dubai airline should use both merging and acquisition market entry modes. The
company is also recommended to use product differentiation strategy upon successful entrant
into the market in order for it to gain a market share.

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Table of Contents
Executive summary....................................................................................................................2
1.0 Introduction..........................................................................................................................3
2.0 Brief Description of the Market & Business........................................................................4
3.0 Key Aviation Industry Trends..............................................................................................5
4.0 Strategic Opportunities for aviation business development.................................................7
5.0 Challenges & Opportunities.................................................................................................9
6.0 National / International aviation policy recommendations................................................12
7.0 Future impact on aviation business....................................................................................13
8.0 Government perspective.....................................................................................................14
9.0 Conclusion & Recommendations.......................................................................................14
10 References...........................................................................................................................15

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1.0 Introduction
The report aims at suggesting an appropriate corporate strategy for the Dubai Express
Airline which is a low cost airline in the Gulf & Middle East region. The Dubai Express
Airline is privately held and planning to start operations in UAE and Dubai region. In
addition, the report conducts PESTEL analysis as a tool for analyzing the external
environment to identify threats and strategic opportunities that exist in Dubai. The analysis of
opportunities and threats in the aviation industry is important as it helps to determine the
benefits of the industry and strategies that a company can use to utilize them to gain
competitive advantage and penetrate into the new markets. Through the analysis of the
trends, opportunities and threats, the report is able to provide conclusion and recommendation
of market entry strategies that will ensure there is the sustainability of the company in Dubai,
UAE.
2.0 Brief Description of the Market & Business
Gulf and Middle Eastern aviation industry are very competitive with diverse key
players dominating and controlling the market. Currently, the industry is revolutionizing as a
result of various external and internal environmental factors. The growth of passenger traffic
in the industry is the main reason why the industry is experiencing this rapid growth and
transformation. The key players in the Gulf and Middle East industry include Etihad, Qatar
and Emirates. Currently, the numbers of low cost airlines are increasing in the Middle East as
compared to the last decade (O’Connell and Bueno, 2018: 237-268). The key concepts of a
low cost airline had been there for over the last 200 years since it was started by Southwest
carrier from America in the 1970s and later networked to other parts of the world including
the Gulf and Middle East aviation industry (Roberts & Griffith (2019: 1). The main objective
of launching Dubai Express Airline was to offer cheap prices to passengers and other
consumers as a way of gaining market share and maintaining sustainability in the crowded

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and competitive Gulf and Middle East aviation industry. Furthermore, low cost airlines
possess a great threat to the already established airlines in the Gulf and the Middle East as
they have facilitated the great players such as Etihad and Emirates to lose a significant
amount of market share. This has been facilitated by the ability of the existing low cost
airlines companies to charge prices which are much lower as compared to the traditional full
cost of airlines. If the penetration of new low cost airlines continues at these rates, many big
companies in the UAE aviation industry will be forced to close down or merge in the near
future.
3.0 Key Aviation Industry Trends
There are various trends in the Gulf and Middle East region that impacts the way
companies operating under this industry. There is a trend that the aviation industry of Gulf
and Middle East’s passenger traffic will grow by 5% in 2020 according to reports from
International Air Transport Association. In addition, the commercial aviation segment in the
Gulf and the Middle East is likely to experience a higher growth rate due to rapid growth of
number of passengers. Furthermore, with trend, countries in the Gulf and Middle East are
experiencing an increased GDP rate, the leisure and business activities in the countries are
growing faster resulting to an increase in the number of passengers. Presently, the
commercial segment has the highest market share as compared to all other segments that exist
in the Asia Continent. Over the last decade, the Gulf and Middle East industry has become a
key hub for civil aviation operations as a result of the increasing number of aircraft deliveries.
There is a trend that in the near future, Gulf and Middle East aviation industry is
expected to make an estimation of 2900 aircraft (Dresner et al., 2013: 31). Out of the 2900
aircraft deliveries, wide-body aircraft will be allocated almost half of the deliveries.
Furthermore, a report from Airbus also shows that the Middle East would need 3240
airplanes between 2019 and 2038. Despite the growth of aircraft deliveries, the number of air

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travellers in the area is projected to increase which in turn will increase the orders for the
commercial aircraft which operates under Gulf and Middle East aviation industry. Currently,
there is a trend that most of Gulf and Middle East countries are experiencing an upsurge in
middle and low income households hence pooling the potential customers into the air
transport.
There is also a trend that Dubai and UAE is forecasted to experience a growth rates
during a period from 2019- 2025 the same period that Gulf and Middle East aviation
industries are expected to register a Compound Annual Growth Rate (CAGR) of over 4% by
end of 2019 (Fan, 2018: 33). Currently, Dubai has a desirable market share in the entire
region of the Gulf and Middle Eastern aviation market. There is an increasing number of
developments in Dubai and the UAE aviation industry and the country is thoroughly
experiencing progressive change. This means that the economy of the country is growing
very fast and the issues of currency fluctuations are likely to reduce significantly in the
upcoming years.
There is also a trend about privatization in the Gulf and Middle East region. The
privatization of the aviation industry in Dubai is likely to boost economic growth.
Furthermore, over the last few years, the industry has experienced growth of airports which
have been able to handle over 84 million in the year 2016. Currently, diverse governments
across the Gulf and the Middle East are building more airports and further working on the
expansion of available airports to host more aircraft from diverse airlines across the regions.
Furthermore, there is a trend that the UAE is planning to introduce new routes and hire
qualified pilots from other countries who are more experienced in the airline industry.

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(Image source Mordor Intelligence, 2019:1)
There is a trend that Middle East countries are currently in need of over 2900 new
aircraft in the near future in order for the industry to be able to cater for the increased demand
of air traveller in Gulf and Middle East region. Furthermore, the trend that UAE is
experiencing shortages of pilots and cabin crew is a threating trend to both traditional and
international companies operating and penetrating in its market. The shortages will result in a
rapid competition of available pilots which in turn will result in high operations costs as a
result of high payment of pilots, cabin crew and other staffs members.
4.0 Strategic Opportunities for aviation business development
Gulf and Middle East aviation market has various opportunities for doing business.
The increasing number of aircraft travellers is one of the main strategic opportunities that
exist in the market for the Dubai Express Airline business development. The management of
Dubai Express Airline needs to grab this strategic opportunity and make use of appropriate
entry and expansion strategies for it to be successful. Currently, major carriers in the industry
such as Etihad, Emirates and Qatar are all expanding their fleet-size in order to be in a
position of accommodating the local and international air travellers. In addition, various
countries have been signed by the major players such as Boeing and Airbus companies for
new crafts in the industry over the past decade.

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Low costs are also another opportunity for aviation business development. Currently,
most companies in the Gulf and the Middle East are offering their tickets at moderate prices.
Therefore, low cost airline has an opportunity of using the market share or penetration
strategy to explore the opportunity. Market penetration or market share include lowering of
costs such as fare tickets in order for the airline to focus on operational efficiencies and cost
containment while at the same time generating increased traffic of passengers. Furthermore,
with low fares as compared to those of competitors in UAE, the company is likely to include
low income class and middle class which have failed to use the airline industry. This will
stimulate demand from all classes of people such as business travellers and fare-conscious
leisure who have been opting other transportation means like road and water due to price
hikes issues in the UAE aviation industry.
Currently, most of the companies operating under the UAE aviation industry are
known to sell seats in two-way basis. This has led to the completion of services and schedules
from the industry resulting in difficulties in planning and management of airlines.
Furthermore, the sale of seats in two-way basis has also excluded a group of traveller who
prefers one-way ticket. Therefore, the management of the Dubai Express Airline should
consider this opportunity and sell tickets or seats in a one-way basis as it will significantly
remove the minimum stay requirements from travelling activities or scheduled services
regardless of fare.
Other opportunities for the strategic opportunity for the business development include
globalization, freedom of privatization in UAE, open up economy for foreign investment,
partnership and integration of world economy. The Dubai Express Airline should consider
using strategic opportunity of partnership to develop its business. A partnership will involve
the Dubai Express Airline combining with other airlines which have established brand
identity and sharing the profits equally. In addition, the risks in the aviation between the

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partnering companies are shared meaning that in case of losses, the company will incur
marginalized costs. The company also has a strategic opportunity of using increasing
privatization in UAE as it will increase efficiencies due to the ability of the low coast airline
to support internal and external stakeholders to introduce automation and innovation upon
studying process and procedures of low cost Airline.
UAE also has a free market for investors. The Dubai Express Airline planning to
penetrate into the UAE market should explore this opportunity. With free markets, the UAE
has recently supported diversified economy which has further facilitated the strong liberal
trade policy that assists foreign investment and trade. In addition, the free market of UAE has
further offered tax exemptions of foreign companies, open political mindsets, office facilities,
100% ownership or privatization of a company, cultures and conducive environment for
doing business.
5.0 Challenges & Opportunities
PESTEL tool will be used to determine opportunities and challenges that exist in
UAE markets. PESTEL is abbreviated from Political, Economic, Social, Technological,
Environmental and Legal factors that positively or negatively impact the way a company
does business. PESTEL is used to provide external environment scan and identify various
opportunities and threats which exist in a market or an industry. There are various challenges
or threat of penetrating into the UAE aviation market. Intense competition in the market is
one of the greatest challenges which exist in UAE. Currently, Textron Aviation, Inc., Airbus
SE, The Boeing Company, Bombardier and Lockheed Martin Corporation is the most
predominant key players that exist in UAE. In addition, other airlines that operate in the
entire Gulf and Middle East market including Etihad, Emirates and Qatar tighten the level of
competition. The companies have established customer loyalty; product innovations and
various initiatives which have made the key players strengthen their presence in the aviation

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industry. In addition, the competitive rivalry is extremely high in the industry. The
competitive rivalry has facilitated to some key players in the industry to dictate prices and
influencing suppliers. Furthermore, with Gulf and the Middle East remaining a profitable
market for aircrafts industry and business jets, and UAE looking to strengthen aerial
capabilities, several orders for aircraft are likely to be ordered resulting to intensified rivalry
among the key players.
(Image Source Mordor Intelligence 2019:1)
Political insurgencies in the Gulf and Middle East region is also another challenge
experienced in the industry as it puts the operations of companies at stake. This political
insurgency has significantly limited the forecasted growth of companies which will operate in
the industry in the near future. Despite the political factors, UAE and entire Middle East
region are distributed by unfavourable economic crises like fluctuations oil prices, variation
in exchange rates causing companies operating under this industry to incur great losses. If the
trend of exchange rates persists, most f companies in the Middle East are likely to experience
economic bankruptcy in the near future because oil is considered as the main portions of the
industry’s operational expenses.

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The attractive political connectivity across the Gulf and Middle East region provides
an opportunity for Dubai Express Airline to penetrate in the competitive UAE aviation
industry and do the business. Currently, the UAE government has signed various business
agreements with other countries around the globe from America, European and Asian
countries. The agreements have strengthened the political integration of the country. In
addition, through the agreements, there have been attractive trade exchange markets between
the countries in the Gulf and Middle East region which in turn have shaped the operations of
the aviation industry.
In the economic perspective, the airline of UAE has changed significantly over the
last few years as a result of economic support from the UAE government. The government
has improved airline infrastructure which has made the industry favourable for passengers.
This has created accessibility of airports hence improving convenient and customer
satisfaction which in turn have facilitated to high demand experienced in the market.
Furthermore, the government has established diverse exclusive terminal for carries in Abu
Dhabi and Dubai airports which have facilitated the aviation companies in the Gulf and the
Middle East to serve its passenger at slightly lower prices as compared to others. The
government of UAE also has an open skies policy which is making it easier for people to
obtain work permits for expatriates in order to fulfil the demands of labour markets and
requirements of employment (Abeyratne, 2017: 126). In addition, the open skies policies and
no taxation policy is also facilitating effective issuing of visit visa policy.
UAE is experiencing the changing trend of customers’ consumption. Unlike the past
where road transportation had been dominant, the current low inflation rates and taxes being
experienced in UAE has increased the spending rate of consumers as they are likely to afford
aeroplane tickets. The high growth of the internet and technology in the UAE and the entire
Middle East region has created a major opportunity for low cost airline to do business. For

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example, through technology, companies operating under this industry have been able to
provide high –quality services at low prices through minimization of sound pollution as well
as fuel usage (Wu and Maher, 2018: 238). In future, the contemporary establishment of an
information system like E-Ticketing is likely to reduce significantly the time taken by
customers to access ticket and customer service expenses. Other challenges include
mortgages crisis pushing the financial institution to lend less which in turn limits debts and
equity enabling an airline to be insecure during high cash periods.
6.0 National / International aviation policy recommendations
After assessment of key trends, challenges and opportunity that exist in the UAE
market, the report has recommended the National or International aviation policy that will
enable Dubai Express Airline to penetrate into Dubai and UAE market successfully. I will
recommend the Dubai Express Airline to penetrate Dubai and UAE using acquisition, joint
venture or merging as their market entry policies. Through the acquisition market entry
strategy, the low- airline will purchase another company’s shares and be able to gain control
of operations of the company in the deal. In addition, through the strategy, the Dubai Express
Airline will be able to break the high context cultures of UAE. People from UAE have high-
risk avoidance culture, high political power and long oriented cultures according to Hofstede
cultural dimension (Alfaqeeh, Hossan and Slade, 2019: 232). With high risk avoidance,
people from the UAE consider purchasing a service or a product from a well-established
company or local companies as compared to international as they fear taking risks and trying
new products or services in the market. Therefore, the acquisition strategy will be an effective
market entry strategy in regard to this context as it will break these cultures and believes as
most people will have mind perception that the business is owned and operated by internal
investors. In addition, the acquisition will enable the Dubai Express Airline to create a strong

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relationship with potential customers and suppliers in the UAE which will assist address the
barriers of communications in the country as well as breaking of long oriented cultures.
Dubai Express Airline can also opt to use merging policy to penetrate into the UAE
competitive environment. Merging will involve Dubai Express Airline combining two or
more airlines in order to gain a competitive advantage. Through the merging strategy, low-
cost airline is likely to have adverse access to the control system as merging will increase
market capability rapidly. In addition, with companies in UAE having a workforce of
effective aircraft controllers, cabin crew, expert engineers, flight deck crew, qualified pilots
and airline maintenance personnel, the Dubai Express Airline will be in a position of
managing flight time and therefore ensuring there are reliable and better services to the
customers. This will help the company to adapt easily to the changing marketing types of
UAE aviation industry.
7.0 Future impact on aviation business
Penetration of the Dubai Express Airline in Dubai and UAE will have a future impact
on the aviation business. Furthermore, the UAE industry will be dominated by low costs
carriers as a result of intense competition. There will also be capacity expansion as Airbus
and Boeing will offer aeroplanes which increase capacities of passages. The spoke networks
and hub will fuel ability of the Dubai Express Airline to grow. The currency fluctuation and
change of tariffs will likely to be experienced in aviation business as long as trade war
between China and USA will persistently exist. In addition, Low Cost carriers will create
hubs.
In future, the Dubai Express Airline is likely to increase competition in the industry
leading to positive change on processes in which airlines work. For example, with increasing
competition in the near future, companies will be forced to differentiate their products and
adopt new technologies to gain a competitive advantage. This will enhance customer deliver

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which indirectly will increase the demand for airline services in the UAE. UAE is likely to
experience pilot shortages, currency fluctuations and shifting oil pricing which may
negatively affect the growth of the market in the near future. If little is done to these
economic issues, the airline operating under UAE will be forced to shut down as a result of
high costs of operations.
8.0 Government perspective
Government plays a crucial role in support of the international business. Government
supports the entrant of international companies in UAE as it is one way of generating wealth
to the country. However, with increasing competition and various international airlines still
working in the UAE aviation industry, the Government has imposed high taxation on
international business as a way of preserving the indigenous and local airlines.
9.0 Conclusion & Recommendations
In conclusion, the keeping of diverse trends and external factors that exist in the UAE
aviation industry is important to Dubai Express Airline as it will assist it to access
opportunities and threats that exist in the industry. This helps the airline to access the
profitability of the market. Conducting of external environment of the market analysis
(political. Economic, social, technological, environmental and legal) is important as it assists
the Dubai Express Airline to assess the market capabilities and come up with strategy that
will gain competitive advantage or make a company penetrate and expand its operation to
Gulf and Middle East industry.
To successfully venture into UAE, I would recommend the Dubai Express Airline to
use market penetration or market share strategies alongside merging and acquisition
strategies. Away from prices, the Dubai Express Airline should further consider setting its
prices on the demand basis for a chosen flight through referencing to the period remaining to

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the date of departure of the flight. Dubai Express Airline should also consider using a product
differentiation strategy in the UAE market. Product differentiation involves a company
launching product with new features from competition. With the assistance of technology
growth, differentiating the products will attract many customers and facilitate sales.
10 References
Fan, T.P.C., (2018). Strategic response from Singapore Airlines to the rapid expansion of
global, full-service hub carriers in the Middle East. In Airline Economics in Asia (pp. 33-60).
Emerald Publishing Limited.
Wu, C.L. and Maher, S.J., (2018). Airline capacity planning and management. In The
Routledge Companion to Air Transport Management (pp. 238-258). Routledge.
Alfaqeeh, K., Hossan, C. and Slade, B.W., (2019). Influence of Arab culture on managing an
innovative work environment: an exploratory study in the United Arab
Emirates. International Journal of Business Innovation and Research, 19(2), pp.232-250.
Abeyratne, R., (2017). Application of the Theory of Contracts to Open Skies Agreements in
Air Transport. Estey Journal of International Law and Trade Policy, 18(1753-2017-2800),
pp.126-141.
O’Connell, J.F. and Bueno, O.E., (2018). A study into the hub performance Emirates, Etihad
Airways and Qatar Airways and their competitive position against the major European
hubbing airlines. Journal of Air Transport Management, 69, pp.257-268.
Roberts, D., & Griffith, J. C. (2019). A Tale of Two Airlines: A Comparative Case Study of
High-Road versus Low-Road Strategies in Customer Service and Reputation
Management. International Journal of Aviation, Aeronautics, and Aerospace, 6(2), 4.

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Dresner, M., Eroglu, C., Hofer, C., Mendez, F. and Tan, K., 2015. The impact of Gulf carrier
competition on US airlines. Transportation Research Part A: Policy and Practice, 79, pp.31-
41.