Airline Management - Term Paper Example

Emirates Airline management structure The Emirates airline is one of the most successful businessempires that control most of the Arabic business environment and the globe as a whole (Belobaba et al 34). The Emirates Group is a huge firm with diversified interests in the leisure industry, tourism, travel and most importantly, the aviation industry. The group’s diversification gives it an edge in the global market and therefore its services are established on almost every part of the globe. It is a multinational company that has one of the largest numbers of employees offering employment to over fifty five thousand employees across over fifty branches of their business and other partner firms (Graeme 342).

To maintain such a large employee base and manage the various business units worldwide effectively, operational management practices ought to be efficient. Developing the right management team is a difficult process (Wensveen 2007). The shareholders interests also have to be maximized to ensure that they are satisfied so that they can continue to support the management’s efforts in running the company for their best interests. Emirate airlines operate a total of one thousand flights in a week to all the six continents.

It is based in Dubai and according to previous records; the company can be able to handle a capacity of seventy thousand passengers in a year. The company has introduced several management strategies that have helped the company stay on top despite tight competition against other aviation giants in Dubai and around the globe since the company competes at a global level. The company was the first to implement on-flight phone services whereby the passengers are able to use their phones in the flight.

This was a first and boosted the company’s profitability a great deal. The company enjoyed increased returns due to this innovation by the management. The company’s strategy for effective management is to deal with their employees openly, meeting the government’s requirements on time in terms of legal matters, honoring the financial obligations with the banking institutions, giving the best services to passengers and liaising well with the aviation industry . The management also carries out their economic duties of preparing comprehensive financial statement analysis according to the requirements of the international financial reporting standards The management consists of competent individuals with an integral background and vast experience in the aviation and management areas.

Led by the team’s president Mr. Tim Clark, the company’s management is made up of one of the most educated individuals and moreover, their working as a team has helped elevate the company to greater heights in terms of consistency In terms of taxation policies, the management considers the memorandum of understanding that exists in the different countries and their reciprocal exemptions where one exist. The management will not provide for tax liabilities if they expect that the authorities in charge will provide for an exemption in taxation in the different countries.

If such an exemption is not probable, the management ensures that the liability is provided for in a conservative manner until the tax liability issue is solved and the final outcome on tax policies is reached. In terms of estimation techniques on flight programs, the management uses several of them to maximize returns from daily flights. Some of them include weighted average of various variables such as partner rewards, fare per sector and flight upgrades. The management uses a twelve year historical base, for its calculations.

In calculation of the value of the financial statements the company, the company’s management uses value-in-use method that incorporates a discount rate that has been adjusted for risks and growth rates. These are based on the expectations of the management in terms of market development and also the gross margins that are the historical in nature. The management takes all stakeholders interests to consideration. This involves taking into account employees’ needs and problems to keep them motivated and improve on their productivity.

It is for this aspect that management designed several retirement packages for its employees. This also goes in line with the requirements of the provisions of the international accounting standards number nineteen. The management values the benefits expected at the end of the employees’ services at present value. These benefits are packaged according to various rules and regulations governing employees in the different countries. This resulted to five percent increase in the employees’ salaries by March year 2011.

The company also exercises financial risk management. This is because the company is exposed to various risks which could result in disastrous outcomes if they are not minimized or contained. The management’s objectives therefore are to obtain a favorable balance between the levels of return given the risks involved in each venture. The management puts in place measures to identify potential risks and designs appropriate controls and risk limits. They ensure that their information systems are updated and reliable.

One of the methods that the company uses is taking derivative financial instruments and using them to hedge various exposures to risk. Credit risks are one of the most significant risks that can lead to reduction of returns to multinational companies such as Emirates Airlines. The management takes care of this risk by using some external ratings to monitor and measure credit risks. These ratings include Moody’s rating and Standards and Poor’s rating. When these credit risks are identified, they are monitored and controlled.

The company places significant deposits with quality financial institutions and high credit banks to cushion it from the losses in case these risks occur. It is with this control in mind that the management kept approximately ninety two percent of the company’s cash balances in these financial institutions. The management also undertakes capital risk management, by monitoring the returns on owners’ equity which by the interest of the shareholders is supposed to generate higher percentage of returns.

The company therefore carries out the above activity by taking operating leases and borrowing so as to meet the company’s expected growth rate. Gearing ratios are also used to monitor the company’s capital. The company could increase its returns by a considerable amount by undertaking increased advertisement on their products and services. Advertising will increase the company’s client base and this would in turn increase the company’s profitability and will also a widened market base.

Some of the advertising options available to the management include online advertising and using their vast business units to hire competent sales persons to enlighten the general public about the advantages of using the company’s services. The company should also issue brochures to different travel and tourism learning institutions so that the students can use them to alert their friends and relatives. The company can also organize seminars to educate the corporate why they should choose Emirates Airlines to provide them with travel services.

The corporate world is especially an important source of business opportunities for the company. This is because the executive officers and other corporate world players travel by air a lot as they go to meetings frequently. Another way to improve the company’s management is to train their own managers so that the trainees can have adequate knowledge on the company’s activities and their goals and objectives. This would reduce the risk of hiring incompetent personnel in the management that would embezzle the company’s funds or get involved in corruption acts which would taint the company’s name in the face of worldwide competition.

These acts might also result to reduced returns and the company might go under these circumstances. The company cans also engage in corporate social responsibility to improve the society and in turn, these actions will be received well by the local society thereby earning the company a good name. The management could allocate some funds for the building of schools, local hospitals, or sponsorship programs to support the disadvantaged in the different countries where they operate. This gives incentives to potential clients and this may lead to increased returns for the company (Morrison and Winston 98).

In conclusion, Emirates Airline has a reliable management team that applies unique management techniques in carrying out the business activities of the company. This has resulted to consistent improvement in the company’s profitability and growth of the company’s value. Despite there being some other companies in the airline travel industry, the company has created an ever improving client base and is one of the most well known companies worldwide. Works Cited Belobaba, Peter, Odoni, Amedeo, and Banhart, Cynthia.

The Global Airline Industry. New York. Wiley and Sons. 2009. Print. Graeme, Wilson. Emirates: The airline of the future. New York: Media Prima, 2005. Print. Wensveen, John, and Wells, Alexander. Air transportation: a management perspective. 6th ed. Aldershot, England: Ashgate, 2007. Print. Morrison, Smith, and Winston, Christian. The economic effects of airline deregulation, Washington, D.C.: The brookings Institution. 1986. Print. Sivak, M., & Flannagan, M. J. (2003). Flying and driving after the September 11 attacks.

American Scientist, 91, 6–8.