Homework Question On Emirates Airline
Review of the external environment, identifying potential risks and costs for the region, country and businesses. Potential knock on effects which could be caused. Identifying how each element recognized will be interlinked.
Identify from the airlines point of view what would be the short term and long term ramifications of each scenario.
Propose steps which the airline company could take to minimize effects of each scenario.
Consider the implications on both the company and country at the international, regional and local level for each scenario.
Consider what those opportunities may exist and for whom, surrounding each scenario.
Introduction, conclusion, proper layout and referencing
Homework Answer On Emirates Airline
The aviation industry is largely affected by fuel costs that make up a substantial part of input costs for most airlines. The recent fluctuation in global oil prices has thus had an impact on airlines. For Emirates Airline operating out of Dubai, the fluctuation in prices has brought mixed fortunes due to the interlink of the airline’s business and the economy. This paper explores this interlink by exploring the ramifications of the lowered oil prices on the globe, the GCC region, and the UAE. The impact of these effects on emirates is also explored both in the short and long-term and suggestions proffered on how to mitigate against these risks and costs. Finally, the paper propositions that might exist for numerous players to take advantage of within the turmoil.
Current Trends in Oil Prices
Crude oil had enjoyed a resurgence since the early 2000s that saw it break the $100 per barrel mark before finally plummeting since 2014 to lows of $30 per barrel earlier in 2016. This is on the back of increased investment in renewables as well as the upscale of production by traditional producers of oil. Nations like the USA, India, China, as well as OPEC nations have been investing in cheaper alternatives to crude oil such as shale leading to an increase in supply that is not followed by demand. OPEC nations have also refused to cut back on production even as some witness diminished profits and increased inventory costs. Inventory is thus increasing at a rate of 0.7 million barrels per day, and even as disruptions begin affecting producers such as Nigeria and the USA, the price of oil is expected to remain low. Throughout 2016 oil is expected to remain below $60 per barrel and it is only expected to cross the $70 mark at the end of 2017, before finally leveling off.