Emirates dominating the skies

New services to Washington DC, Phuket, Adelaide, Lyon and a resumption of flights to Tripoli, with Warsaw just one of the new destinations for 2013, Emirates is not exactly short of ideas on where to fly to next.

And it’s precisely this targeted expansion policy that sets it apart from both its peers, rivals and critics.

Since the turn of the year, Emirates has launched flights to Dallas, Seattle, Rio, Ho Chi Minh, Barcelona, Lisbon, Lusaka, Harare, Buenos Aires and Dublin and has eyes on more US cities from next year onwards.

Even with record fuel prices that pummelled profits down by 72 per cent, Emirates still managed its unique feat of staying profitable by over $400 million. It is hard to pinpoint a single item relating to their success to date, but the cultured, experienced and in some ways, unmatchable management team has continued to be the catalyst for the airlines growth.

While not far to compare apples to oranges, Emirates’ recent growth has been partnered with that of the relentless expansion seen at flydubai.

Where Emirates is arguably the fastest growing full service carrier, flydubai holds that same accolade for the low-cost carrier market and between their partnership and interline arrangements, passengers flying to, through and in the GCC are benefiting immensely from this lucrative partnership.

Emirates has a current fleet of some 168 airplanes, dominated by the 777-300ER, which without a shadow of a doubt forms the backbone of all of its long haul operations.

The airline is phasing out its ageing A330-200s, in part due to increased maintenance and fuel costs and also because of the poor resale values for A330s in general, afflicted by the introduction of the revolutionary Boeing 787 Dreamliner. Emirates still has some 220 airplanes on order.These comprise as follow:

• 50x A350-900
• 20x A350-1000
• 68x A380-800
• 69x 777-300ER

As the flagship of its fleet, the A380 has come under scrutiny for cracked wings, forcing Emirates to stand down each of its A380s for days and weeks at a time to inspect and now to repair the broken brackets for which Airbus will not deliver a permanent fix until 2014, much to the ire of Emirates management.

Questions have in recent years been asked about where Emirates would eventually place all of these airplanes. Most usually from critics like European airlines and industry observers who know nothing about the way the GCC market works, much less understand how Emirates works.

The fact remains that the three key alliances today, the Star Alliance, Oneworld Alliance and SkyTeam would pretty much bend over backwards to have Emirates amongst their ranks. Emirates, however, has other plans.

Emirates has wisely avoided any of these alliances. All it would do is lead to customers flying on other carriers, driving traffic to other hubs and leave Emirates less well off and perhaps even slow or regress the current growth strategy that the carrier has. These three alliances need Emirates more than Emirates needs them. Emirates is better off without them. Strategic codeshares, such as the one struck with US low cost airline JetBlue is the way forward.

There’s less complication because of fewer parties involved and there’s a greater propensity to expand the codeshare across networks with relative ease as a result of that lessened complexity, as well as lower costs of implementation.

Dubai International Airport is firmly on track to smash through the 50 million passenger barrier mark for 2012, eclipsing the record year last year and that is in large part down to Emirates continued global reach and new services, complemented at the regional level by the expansion witnessed at flydubai — which incidentally is now the second biggest airline at the airport.

Emirates has used the progressive UAE and Dubai Government-backed aviation policy to its advantage. Where the likes of Europe continually and needlessly bleat on about how Emirates somehow has a mythical “subsidising support” behind it, the reality is that these critics, wherever they may be, are simply unfit to compete with Emirates agility.

A great case in point here is the ailing airline Qantas. It has sounded like a broken record when levelling charges at Emirates, yet it doesn’t have a single city in the GCC on its network to try and even compete with Arabian airlines, much less directly with Emirates.

The fact remains that Emirates is not afraid of competition. Its products, while perhaps not five-star rated by SkyTrax, simply blows that of its rivals out of the water. And Emirates fares, in some instances, aren’t even the cheapest, yet people still keep flocking to them to fly on.

Emirates’ plans to expand in North and Latin America is its next obvious push. New airplanes like the A380 and the 777-300ER is allowing the airline to initiate services that perhaps were not once reachable. Maximising the economic and technological performance out of these new jets is giving them a great competitive edge. After all, how many US airlines have reacted to Emirates’ flights to Dallas or Seattle by launching their own to Dubai? That in and of itself speaks volumes about not only the state of the US industry but also how airlines are not able to compete effectively against Emirates but instead pay low value lip service to the “subsidy” myth that has never ever been substantiated, despite the openness of Emirates financial workings available for everyone to peruse.

Like it or not, Emirates potential to growth further is matched not just by its planned fleet of around 300 airplanes by the turn of the decade. As Airbus gets to grips with the A380 wing issue, the airline will likely order more.

If the airline opts to shift or split operations between Dubai International Airport and Al-Maktoum International Airport, it will need even more capacity to placate that demand. Dubai is the true nexus of global air travel and Emirates is leveraging its position in the city to thrust forward its reach to all parts of the globe using its one-stop mantra.

Where the A380 is giving Emirates added capacity to destinations capped by restrictions, such as London Heathrow, it’s clear that Emirates growth today could not have come about had it not at the 777 in its fleet.

So its stands to reason that by mid-decade, the airline will be amongst the first, if not the first to order the 777-8X and 777-9X families.

Just as the 777-200ER pushed Emirates onto the world stage in the mid-to-late 1990s, it’s the 777X family that will propel Emirates to even greater heights at the turn of the next decade.

The writer is chief analyst at London-based StrategicAero Research, a private aviation consulting firm operating in Europe and the Middle East. Views expressed by the author are his own and do not reflect the newspaper’s policy.