Sustainable Competitive Advantage in the Airline Industry

Within two past decades, airline business has experienced landmark growth coupled with the ever-increasing dynamism in the sector market both locally and internationally (Desai et al., 2017). As a result, many airlines have been in the spotlight to balance between their current and future growth rate prospect and thus the need to come up with robust policies that will help in achieving the predefined goals (Heracleous & Wirtz, 2014). Nevertheless, it is clear crystal that presently there is a lot of rivalry and development in the airline industry. Subsequently, the growth and emergent of different airlines in the industry to exploit the ever-increasing demands have led to stiff competition among the players. Consequently, to mitigate on such adverse effects, the companies trading in this sector have to develop a sustainable competitive advantage. Indulgently, the nature of competitive advantage adopted by a company will dictate its position in the market; and such strategy needs to be highly differentiative to distinguish the services and products currently being offered by one airline to another (Kennedy et al., 2010).

The concept of sustainable competitive advantage

 Notably, a sustainable competitive advantage can be defined as the approach, the method or the process of ensuring that a company has a unique position in the market and the entire competitive environment through the safeguarding of its supported proposition (Desai et al., 2017). Summatively, sustainable competitive advantage can be briefly described as the firm’s assets, attributes, or even abilities which inherently are challenging to be duplicated, imitated or replicated by another company and therefore provide the firm with a superior, favorable and long-term position regarding value over its rivals in the market (O’Connell, 2011). To keep abreast continually, the organization has to frequently make some adjustments and improvements are such factors to remain competitive or else the opponents are likely to take advantage of them. The absence of competitive advantage will make an airline industry and its player undistinguishable and thus less competitive. Effectively, it has to be the exact representation of the firm’s strategy.

Moreover, competitive advantage is also significant as it reflects corporate culture, value proposition, service, delivery and the pricing of the same. To underscore the concept of competitive advantage in the airline industry, this paper will use Emirate Airline as a classic example to represents the players in the entire industry (Heracleous & Wirtz, 2012).

Sources of sustainable competitive advantage for an airline

Companies have a different form of resources and activities which can be the core sources of comparative advantage over their competitors. Therefore, it is highly recommendable that a rims carefully diagnosis the available resources which can be used to promote their competitiveness in the market and consequently and efficiently capitalize on them. Briefly, the discussed below are some of the conventional sources sustainable competitive advantage than an airline can utilize (Hameed, 2009).

Economic conditions: An airline economic strategy has got significant effects on its competitive advantage in the present as well as in the future The prevailing economic situation in the market in which a certain airline has established has the capacity to determining its future growth prospects over the key rivals (Desai et al., 2017). For instance, the famous Emirate Airline has been able to survive and expand its operation internationally based on the surrounding hometown economic conditions (O’Connell, 2011). Its establishment in Dubai which considered being the hub of global business and financial viability has helped it to remain competitive due to massive demand of travellers both locally and internationally.

Resources:  companies operating in the airline industry have the benefit and a chance of deriving their core competitive advantage from the resources that each company is endowed with.  The most common type of resources which can be utilized and be transformed into sustainable competitive advantage includes human capital resources and physical resources (O’Connell, 2011). For instance, the financial stability of a large airline can be used to deter other small carriers from exploiting the industry by increasing the switching costs as well as the value of investment needed to establish a business ion the airline industry. Human resources ion the other hand can be transformed into indispensable asset of the company through training and development which impart new skills and abilities to accomplish certain tasks in a professional manner like airline service delivery (Desai et al., 2017). Fundamentally, to be success the company will have to develop competencies in the three types of resources and makes them idiosyncratic from those of the competitors.

Capabilities: for there to be a competitive advantage for any Airline Company, then there must be capabilities. There is a need to come up with qualified designers who can create unique airline and services which are different from what the rivals provide the market (Barbot et al., 2008). Similarly, by referring to our classic example which is Emirates airline, the company has developed and nurtured a strong team composing of qualified and expert engineers who are tasked with the various upgrade of the airline to suit clients’ needs as well as developing and designing luxurious and comfort airlines (Hazel et al., 2012).

Competencies: These are the unique capabilities that the company have and distinguish it from other firms in the industry.  Among them include the fleet management, leadership style and Mutual Corporation within the company. A well-managed fleet has the ability of reducing unit cost as well as reduced expenses and thus enabling an airline to operate on a lean basis. (Desai et al., 2017). Additionally, diversity of the workface can also be a source of sustainable competitive advantage which is one of core competencies that a successful company ought to practice when hiring and promoting employees within the company.

Technology advancement: technology has increasingly remained to the most souse of competitive advantage that companies in different industries can utilize, more persistently in the most competitive and fragile airline industry. Technological advancement and development have direct as well as albeit consequences on the airline industry. The success of the company in the sector will be cardinally be determined by the extent to which the firm is competitive in relation to how disruptive and incremental innovation are handled (O’Connell, 2011). Technology can be integrated into effective fleet management, customer relations, advertisement and marketing, coordination of the company production and ordering in the supply chain among many others. As a result, it is highly advisable to ensure that airline companies have fully utilized technology which is so diverse to gain a competitive advantage over their core opponents.

Brand development: another component which an airline can obtain its competitive advantage is from its brand name and corporate image (Grant, 2016). Comparatively, a strong brand name, as well as positive public image that is deeply entrenched in peoples’ mind, is highly invaluable. The resultants effects would be the automatic preference of the airline services over the rivals in the market. Therefore, it is highly recommendable to embrace a strong airline brand name because it has the capacity of positively influencing an organization’s sustainable competitive advantages over the other service providers in the sector. For instance, companies such as Emirates have for years developed one of the tactful and public swaying public image which has contributed to its success and thus becoming a core competitive advantage that the company has used to rival extra airiness in the industry significantly.

Qualified human resource:  For any airline company to be successful in the market and be able to attract h colossal scale of competitive advantage, human resource become the most indispensable asset that the company can afford to do away with; and therefore the need to preserve and develop them compared to other rivals in the market (Nataraja & Al-Aali, (2011). For instance, they can use creativity and quality, material alongside expertise personnel to produce products which are current innovations to suits customer needs. The qualified staffs can help to streamline the airline service delivery by ensuring they offer premium services compared to the rivals.

Capitalizing on strategic assets: An airline company can also source sustainable competitive advantage from strategic assets that define the scope of its operations. Major factors under this category including the patent rights, trademarks as well as the long-term contract with suppliers and clients are some of the core assets which airline companies can build on a valuable sustainable competitive advantage (Barbot et al., 2008).

Cost leadership: the issues relating to cost leadership of an airline the industry cannot be downplayed (Grant, 2016). One of the factors which can be used to offsets threat by rival companies in an industry relates to the investment capacity that has been done by the company and its ability to block other firms from investing in the same company. Such factors have the importance of also contributing greatly to the pricing of services and products which result in the sustainable competitive advantage. When a company is characterized with cost leadership regarding investment level and prices, then it has got significant benefits over other companies which cannot operate on such a large scale with high-quality services which are cheaply priced and thus opting out of the market. Consequently, airline companies such as Emirate have strongly capitalized on this aspects and thus keeping other small airiness companies out of the industry (Desai et al., 2017).

Product and service differentiation: products and services which are unique are less to lose customers to challengers. Consequently, airlines are encouraged to build on such factors to ensure that they develop a strong brand base of different and captivating services both at the terminus and while on board (Barbot et al., 2008). The use of different services towards client has the capacity of attracting customer loyalty and thus developing into a sustainable competitive advantage over time.

Advisement and marketing; a strong marketing campaign can be used as a core sustainable competitive advantage that airline companies can embrace. For instance, the advertisement and publicity can be done on their official websites, through Google ads, as well as print media. The aim is to attract more customers. Some companies have adopted referral mode to enhance the awareness of their services and destinations including their flight costs. In reference to our example, Emirates has gained the sustainable competitive advantage through massive advertisement of its facilities and destination (Desai et al., 2017). For instance; the company has used its websites to display unique services being offered compared to tier competitors. Social media like Twitter has also been widely embraced (Banerjee, 2013). Also, the company also advertise its services and products on international global media such as Aljazeera, BBC, and CNN which have a capacity to reach a large audience.

Give one example to illustrate how an airline has identified a competitive advantage

 A Classic organization which has embraced sustainable competitive advantage is the Emirate Airline. The central core sustainable competitive advantage that has been adopted and fully exploited is the cost leadership or cost-effective. Notably, Emirates has incorporated cost efficient in the operations of its airlines and the entire management in the airline industry. Cost Leadership has become an excellent source of competitive advantage. As a result, the company has a considerable lean workforce in contrast with other low-cost carriers which have flat structures that are responsible for low the costs (Desai et al., 2017). The primary sources of cost-efficient operation are a result of an ever-increasing passenger number for both short and long destinations which keeps the forced cost low, by only operating wider body fleet carriers which reduce the overall unit costs. Generally, the cost-effective strategy has been well utilized, implemented and made it one of core sustainable competitive advantage over the other competitor in the industry. The low cost approach adopted by Emirates Airline has enabled the company to offer quality and affordable airline services to its clients and thus being highly regarded by many customers compared to other competitors in the market. The cost operation cost approach has allowed the company to come up with cost leadership strategy which has results in lower prices compared to other carriers.

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