Fly Dubai Corporation: SWOT Analysis and Competitive Advantage

Company Overview

Fly Dubai is an operating name for Dubai Aviation corporation established in 2008. The company operates as a low-cost carrier specializing in international flights only (CAPA, n.d.). The company is the second-largest airline operating from Dubai International Airport (Fly Dubai, n.d.). Fly Dubai has over 90 destinations in the Middle East, Africa, Asia and Europe, and the number of destinations is growing every year (Fly Dubai, n.d.). The history of the company started with only 50 aircraft and four destinations in the Middle East in 2009 (Fly Dubai, n.d.).

However, by the beginning of 2010, the company had added seven new destinations in Europe and Africa. The company has a fleet of 236 Boeing 737 aircraft, around 500 pilots, and more than 1,000 cabin crew members. Overall, the company employs more than 4,000 people from 128 countries, which represents the true diversity of the cosmopolitan city of Dubai (Fly Dubai, n.d.).

In 2020, the company experienced a significant financial crisis, as the company declared a $194 million loss in 2020, while the company’s profits were as high as $53.9 million (Fly Dubai, 2021). In 2020, the company had more than 26% f the employees on unpaid or voluntary leave, the number of destinations decreased from 95 to 63, and the number of flights decreased from over 70 thousand in 2019 to 27.5 thousand in 2020 (Fly Dubai, 2021). Thus, the company needs a significant change to address its current problems.

SWOT Analysis

A SWOT analysis is a commonly used method of company assessment that allows outlining strengths, weaknesses, opportunities, and threats of a company. A summary of the SWOT analysis for Fly Dubai is provided in Table 1 below.

Table 1. SWOT analysis summary.

Strengths
  1. Effective low-cost strategy;
  2. Relatively young fleet;
  3. Financial and fuel backing.
Opportunities
  1. Market rebound after the pandemic;
  2. Increased opportunities for partnerships to expand the company’s geography.
Weaknesses
  1. Weak product diversification;
  2. Does not operate in North America.
Threats
  1. The COVID-19 pandemic;
  2. Increased competition in the market;
  3. Increased regulation.

Strengths

One of the major strengths of Fly Dubai is its low-cost strategy. According to International Labor Organization (2021), average wages in African and European countries decreased by 10%, which implies that fewer people will be able to afford highly priced tickets and will switch to low-cost carriers. Additionally, it should be mentioned that the company has a relatively young fleet of Boeing 737 with an average age of 5 years (Fly Dubai, 2021). In comparison, Delta, the largest aviation company in the world, has a fleet that is more than ten years old on average (Delta Air Lines, 2021). Finally, it should be mentioned that the founder of the company is Ahmed bin Saeed Al Maktoum, one of the wealthiest people on Earth and a member of the ruling family (CAPA, n.d.). Since the United Arab Emirates (UAE) is an oil-rich country that owns a significant part of the company, Fly Dubai’s operations are backed by the country’s supply of fuel and financial potential.

Weaknesses

The primary weakness of the company is that it does not offer any unique products or experiences in comparison with other carriers. Moreover, Fly Dubai does not have much diversification in its product line, as it mostly offers economy class flights (Fly Dubai, n.d.). Another problem is that the company does not operate in the US and Canada, which are among the largest markets in the airline industry in the world.

Opportunities

The strongest strike of the pandemic was in 2020, and today, rapid economic growth of the developing countries and market rebound after the first waves of the pandemic creates a favorable environment to re-establish the pre-pandemic positions (KoĹ‚odko, 2020). Moreover, the company’s geography is relatively limited, which creates room for further expansion (Fly Dubai, 2021). The expansion can be achieved by establishing new partnerships with airlines and other companies around the world.

Threats

The central threat today remains the pandemic and associated financial and regulation limitations (Fly Dubai, 2021). Since it is impossible to predict how the situation will develop, the pandemic remains a source of uncertainty. The pandemic also has a negative impact on human resource management and relationships with employees (Fly Dubai, 2021). Additionally, Dudley (2017) reported that the rising competition in the middle east airline industry was a significant threat to the profitability of the companies in the sector. Finally, Fly Dubai has to operate in a strict regulations environment of UAE, which limits its expansion ability (Leader, 2015).

Creating Competitive Advantage

The SWOT analysis suggests several recommendations for acquiring a competitive advantage.

  1. Increase the number of offered destinations. Since the market is expected to rebound in the nearest future, it is recommended that Fly Dubai gradually increases the number of destinations based on the needs of customers. This strategy of achieving a competitive advantage is based on responsiveness to customers.
  2. Utilize strategic HR management. It is crucial to plan human resources during the time of the pandemic, as it will help to adapt the company culture and HR strategy to the changing needs of the company (Kankaew et al., 2021). Without strategic HR management, Fly Dubai may experience problems in terms of increased turnover and adequate talent retention. This strategic advantage is based on increased efficiency.
  3. Introduce more business class options. Introducing high-quality business class options can improve the image of the company as a low-cost carrier. This strategic advantage is based on increased quality.

References

CAPA. (n.d.). About flydubai. Web.

Delta Air Lines. (2021). Annual report 2020. Web.

Dudley, D. (2017). Rising Competition Threatens Profits of Middle East Airlines. Forbes. Web.

Fly Dubai. (2021). Flydubai announces Annual Results amid one of the toughest years in aviation history. Web.

Fly Dubai. (n.d.). About us. Web.

IBIS World. (2021). Domestic Airlines Industry in the US – Market Research Report. Web.

International Labor Organization. (2021). Global Wage Report 2020-21. Web.

Kankaew, K., Kangwol, K., Guzikova, A. L., Kungwol, S., Sitikarn, B., & Suksutdhi, T. (2021). Organizational structure enhancing airlines efficiency amid the pandemic: low-cost carriers in Thailand as a case. GeoJournal of Tourism and Geosites, 38(4), 1189-1194.

Kołodko, G. W. (2020). After the Calamity: Economics and Politics in the Post-Pandemic World. Polish Sociological Review, 210(2), 137-156.

Leader, J. (2015). Aviation industry in Dubai and UAE: Bespoke guide. Web.

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