The so-called "Emirates business model" is the business model that lies at the heart of Emirates's commercial success. Its main ingredients are a lean workforce comparable to a low-cost carrier and a flat organisational structure that allows the airline to maintain low overhead costs.
Some industry analysts believe the airline is second only to Ryanair on a cash cost per seat basis due to lower operating costs at its Dubai base. This enables it to serve secondary destinations profitably by connecting these via its global hub in Dubai.
Emirates has not joined any global airline alliance (although they planned to join Star Alliance in 2000, they remained independent), stating that unless an airline is the lead participant in such an alliance – e.g. Lufthansa in the Star Alliance or Air France in SkyTeam – individual alliance members' freedom of action is compromised by the imposition of common alliance goals that mainly serve the interests of the alliance leaders.
Since 1995, Emirates had operated an all-widebody fleet, largely composed of Airbus A380s and Boeing 777s. This results in lower unit costs compared to other large airlines operating a mix of narrow- and widebody fleets and allows the airline to use the aircraft's cargo capacity to increase its revenues and total profits. Since Dubai International Airport does not have any night flying restrictions, Emirates achieves a higher utilisation of its aircraft than competitors. It also has lower staff costs than longer established rivals, because in Dubai there are no unions and there is an abundance of cheap labour from India and Pakistan.
Accusations of unfair competition
The established network carriers in Europe, North America and Australasia, i.e. Air France–KLM, Lufthansa, British Airways, Air Canada, Delta Air Lines, American Airlines, Qantas and Air New Zealand, perceive Emirates' strategic decision to reposition itself as a global carrier as a major threat because it allows air travellers to bypass traditional airline hubs such as London–Heathrow, Paris–Charles-de-Gaulle, Frankfurt and Amsterdam Schiphol on their way between Europe/North America and Asia/Australia by changing flights at Dubai instead.
Some of these carriers, notably Air France, Delta, and Qantas, have accused Emirates of receiving hidden state subsidies and of maintaining too cozy a relationship with Dubai's airport authority and its aviation authority, both of which are also wholly state-owned entities that share the same government owner with the airline. They also allege that Emirates is able to reduce its borrowing costs below market rates by taking advantage of its government shareholders' sovereign borrower status. They claim that this government support cross-subsidises the airline, masking its true financial performance.
Fuel subsidies
Many airlines have accused Emirates of receiving fuel subsidies from the Government of Dubai. The airline has denied these accusations, stating that it purchases its fuel at the same price, as well as on the same terms and conditions, as every other commercial airline at all airports at which it operates. In FY 2007/08, fuel accounted for more than 30% of Emirates total expenditure, comparable with other international long-haul carriers such as British Airways, Lufthansa, Qantas or Singapore Airlines.
Airport user charges
Emirates has also defended itself against competitor accusations claiming it pays discounted airport user charges at its home base. The airline rejected these claims, stating that it paid the same user charges at Dubai as everyone else, which were similar to those prevailing at other comparable airports in the region, including Abu Dhabi, Doha, and Bahrain.
Local taxes
Many airlines have accused Emirates of having an unfair advantage, since it does not have to pay local taxes. The airline rejects these claims as misleading by clarifying that in the absence of income or corporate taxes in the UAE all airlines operating to and from Dubai benefit from this tax-free environment. In this context, Emirates also stresses that it has paid the Government of Dubai dividends to the tune of US$776 million, in return for US$10 million in seed capital gifted to the airline at its inception in 1985.