Emirates Airline posted record-breaking net profits of $708 million for 2005, a 49 percent increase over the previous year as it carried 12.5 million passengers across the globe.The carrier also made headlines when it placed the largest aircraft order in history worth $19 billion, adding 71 new Airbus and Boeing jets to its fleet. The carrier’s current order book for new aircraft stands at 127 aircraft, it also has a record 45, A380 super-jumbos on order.
Contrary to popular belief, Emirates is financially independent of its owner the Dubai government and is not subsidised in any way—other than its initial start up costs.
Now it is responsible for more than 50 percent of all flights in and out of Dubai’s airport, Emirates’ aims to increase this to 70 percent by 2010. Its investment towards the airport’s $4.1 billion expansion may help it achieve this target.
Sheikh Ahmed bin Saeed Al-Maktoum, chairman of Emirates tells Breaking Travel News about the airline’s plans for the next five years.
BTN: Emirates has won hundreds of awards. How do you maintain your competitive edge?
Al-Maktoum: Emirates is characterised by two key features, dynamic growth and a constant focus on top-quality service where the customer is at the heart of everything we do. Maintaining the latter, while developing the former, is the key to Emirates’ success.
We have made innovation, service and passenger amenities a high priority from the start of our operations; and our approach has been to analyse what passengers want, and focus on delivering it.
BTN: Where are you looking to go next in terms of regional expansion?
Al-Maktoum: Emirates now flies to 83 cities in 57 countries. In 2005, the airline started services from Dubai to the Seychelles, Seoul and Alexandria. In 2006 we have started passenger services to Abidjan, Thiruvananthapuram, Hamburg, Addis Ababa and Kolkata, and later this year, we will launch services to Beijing, Nagoya and Bangalore.
BTN: With so much expansion in the Middle East aviation scene how do you see the competition?
Al-Maktoum: Emirates believes that competition is good for all involved. Competition makes us better and helps to expand the customer base.
We take all competition seriously, especially those carriers with a profile similar to our own: global reach, full service and committed to excellence. But we do not spend a lot of energy worrying about them as we believe that we are best served by developing our own strengths.
BTN: Boeing forecasts that Middle Eastern carriers will buy 870 airplanes from manufacturers, worth $115 billion up to 2024. Will this new capacity be needed?
Al-Maktoum: W e have seen enormous growth in recent years and our expansion plans are carefully managed and calculated to keep up with this growth. Emirates is confident that the aircraft we have ordered will operate at load factors in keeping with our growth predictions.
In the time frame mentioned, we will have more than doubled in size as an airline. We are confident that there is a need for the aircraft we have ordered and that the region as a whole will continue to see enormous growth in the aviation sector.
BTN: Why has Emirates delayed its order of 20 Airbus A340-600 until 2012?
Al-Maktoum: Emirates has deferred its A340-600 order while Airbus develops an enhanced version of the aircraft. With $33bn of aircraft on order from both Boeing and Airbus, we have sufficient flexibility in our fleet planning to take this prudent step, which will not impact on our plans for continued growth but will ensure we get the best product available as and when we need it.
BTN: Low-cost airlines are emerging in the region, have they had any impact on the air travel landscape?
Al-Maktoum: Budget or low-cost carriers help to expand markets because they cater mostly to segments that we do not serve, and bring in large numbers of passengers to the region.
Our focus is on balance. Our competitive advantage stems from a combination of reasonable fares with high quality service. That is what we are good at. As a full service airline, we are not in head-to-head competition with budget carriers, and we differentiate ourselves on the basis of our customer services and superior equipment.
And while we have no plans to enter the low cost airline market and are concentrating our focus on the continued growth of our full service operation, our costs are often closer to those of the low-cost carriers than larger European and US carriers which means we can offer excellent service and good value to our customers.
BTN: Airline alliances have not developed in the Middle East as they have in other parts of the world. Why do you think this is? Would Emirates join an alliance?
Al-Maktoum: There is an alliance in the Middle East called the Arabesk Alliance, although Emirates has not signed up to it. Emirates sees its best interests being served by remaining independent.
The airline sees no advantage of being part of a collective group of companies, which some see as cartels. Neither does Emirates see an advantage in size. We prefer the flexibility that we currently enjoy to make codeshare and interline agreements where these are mutually beneficial and where we have ultimate choice over our own decisions.
BTN: Where are you in terms of in-flight technology?
Al-Maktoum: Emirates is at the cutting edge of innovative in-flight technology and we offer e-mail and telephone facilities in every seat in every class on the majority of our aircraft.
Our onboard services include the ice (information communication and
entertainment) system, which features 100 movies and 50 TV channels on demand, 350-plus audio channels and over 40 in-flight games - three times more than on any other airline.
We are also looking at the possibility of introducing mobile phones onboard, although we have not yet set a date for this service.
BTN: What do sporting sponsorships bring to the airline?
Al-Maktoum: Our primary goal is to establish Emirates as a global brand. We are a global airline and now we want to be a global brand—one that is instantly recognisable and associated with quality.
We believe sponsorships are one of the best ways to connect with our passengers. They allow us to share and support their interests and to build a closer relationship with them. Sponsorships also help the airline promote Dubai in the international arena as a premier business and tourist destination, as well as in the 82 other cities across its network.
As an official partner of the FIFA World Cup, we will have the opportunity to expose the Emirates brand to the billions of TV fans watching the matches and to be associated with the event and the other sponsors.
We have recently signed up as an official partner of FIFA for the next two World Cups, taking our association with football’s governing body up until 2014.
BTN: Why did Emirates launch a hotel and resorts division?
Al-Maktoum: Emirates Hotels & Resorts’ expansion brings a new dimension to our commitment to provide customers with the very best in premier travel services. Its presence both in Dubai and internationally will enable further development of our Emirates quality ethos throughout worldwide markets.
Emirates Hotels & Resorts holds as its central vision the provision of exceptional service, the best possible location in any destination, and remarkable, luxurious facilities.
It will develop its portfolio of exceptional properties in Dubai and other locations to support and enhance the growth of Emirates.
BTN: What are your predictions for airline travel landscape in the ME in the next 5 years?
Al-Maktoum: We expect to see the airline industry continue to grow for the next five years and well beyond that time frame. Geographically, we are extremely well located in this region to carry passengers between Australia, the Far East, and Europe.
The liberalisation of the aviation industry in the region and globally will see continued increase in air travel and the UAE is extremely well placed to take advantage of this growth and the growth in emerging markets such as Africa and China.
By Jilly Welch