Sustainability strategies for luxury and low-cost Gulf Airlines

Learning outcomes By working through this case, participants will be able to analyse how regulatory frameworks, institutional pressures and post-pandemic constraints shape sustainability strategy in the global aviation industry; evaluate the trade-offs between cost, operational complexity and reputational legitimacy across alternative sustainability pathways for a mid-sized airline; use established strategy and sustainability frameworks (e.g. resource-based analysis, institutional analysis, stakeholder mapping) to evaluate alternative sustainability pathways and their competitive implications; and formulate and justify a coherent sustainability roadmap that balances financial resilience with long-term regulatory compliance and market credibility. These objectives form the foundation for the teaching plan (Section 7) and are directly assessed through the assignment questions (Section 8). Case overview/synopsis Set in Dubai in April 2024, this case examines the strategic sustainability dilemma faced by Ahmed Al Mansoori, sustainability director at Gulf Airways, a mid-sized UAE-based airline operating in an increasingly decarbonising global aviation industry. As environmental scrutiny intensifies, Gulf Airways found itself positioned between state-backed luxury carriers with deep financial resources and agile low-cost carriers (LCCs) built on extreme operational efficiency. The case unfolds against a backdrop of tightening international and regional regulations, including International Civil Aviation Organisation’s Carbon Offsetting and Reduction Scheme for International Aviation, the European Union’s “Fit for 55” package and the UAE’s Net Zero 2050 agenda. These developments have transformed sustainability from a reputational concern into a strategic requirement tied to regulatory compliance, market access and investor confidence. At the same time, the lingering financial aftershocks of the COVID-19 pandemic continued to constrain capital availability, heightening the risks associated with large-scale green investments. Drawing on industry benchmarks, regulatory developments and comparative evidence from high-cost carriers and LCCs, the case highlights the strategic ambiguity confronting Gulf Airways. Luxury carriers pursued capital-intensive sustainability leadership, while low-cost airlines embed environmental gains into efficiency-driven models. Gulf Airways, lacking both sovereign-backed scale and ultra-lean cost structures, must chart a pathway that balances financial resilience with visible progress on sustainability. After extensive analysis, Mansoori distilled the airline’s options into three strategic pathways: aggressive sustainability leadership, phased and adaptive adoption and minimum compliance. Each pathway presented distinct trade-offs in capital intensity, operational complexity, reputational positioning and competitive implications. As the executive board convenes, the decision remained unresolved. The case culminates in a strategic decision: whether Gulf Airways should commit to aggressive sustainability leadership, adopt a phased and adaptive pathway or limit itself to minimum compliance. Each option carries distinct implications for financial resilience, regulatory credibility and long-term competitive positioning. Complexity academic level This case is designed for Master of Business Administration-level courses in strategic management, corporate sustainability, business strategy in emerging markets and transport or aviation strategy. It is particularly suitable for participants who have prior exposure to competitive strategy, stakeholder analysis and sustainability frameworks. Subject code CSS 11: Strategy.